Carpenter Fishing Corporation v. The Queen, docket T-554-91

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docket T-554-91

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Carpenter Fishing Corp. v. Canada (T.D.) [1997] 1 F.C. 874

T-554-91

Between:

CARPENTER FISHING CORPORATION, DON JOHANNES,

KAARINA ETHERIDGE, WHITE HOPE HOLDINGS LTD.,

SIMPSON FISHING CO. LTD. and NORMAN JOHNSON,

Plaintiffs,

- and -

HER MAJESTY THE QUEEN IN RIGHT OF CANADA,

and BERNARD VALCOURT, MINISTER OF

FISHERIES AND OCEANS,

Defendants,

T-974-91

Between:

TITAN FISHING LTD.,

Plaintiff,

- and -

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

and BERNARD VALCOURT, MINISTER OF

FISHERIES AND OCEANS,

Defendants.

REASONS FOR ORDER

CAMPBELL J.

OVERVIEW

In 1990, the halibut fishery on our West Coast was in trouble and, accordingly, a quota system was established for the commercial fishery. The plaintiffs all agree that to do so was a good idea, but they adamantly object to a restriction placed on their share of the catch and to the process whereby it was established. This case is, therefore, about the relationship between the Government of Canada and halibut licence holders and about their fair and equal treatment.

The pacific halibut¹ is perhaps not as well known to Canadians as salmon, but, nevertheless, it is a fish which has received a great deal of professional attention. Dr. Peter Pearce in his extensive and detailed work Turning the Tide: A New Policy for Canada's Pacific Fisheries² describes the halibut fishery as one of the oldest on the Coast with the stocks being amongst the most valuable. The use of this valuable resource has experienced many, but not unique, problems as described this way by Dr. Pearce fourteen years ago:

We begin with a paradox. We have some of the world's most valuable fish resources, they are capable of yielding great economic and social benefits; yet many commercial fishermen and fishing companies are near bankruptcy, sport fishermen and Indians are preoccupied with declining opportunities to fish, and the fisheries are a heavy burden on Canadian taxpayers.

The problems now facing the Pacific fisheries are numerous, grave and very complicated. They include overfishing, conflicts among users, overexpansion of the fishing fleets, and eroding marine and freshwater habitat....Major and fundamental changes in fisheries policy are needed to correct this situation and to achieve the policy objective stated in this Commission's terms of reference of ensuring "that fish resources and their use make the highest possible contribution to the economic and social development of the people of Canada".³

...

During the last few years the organization of the halibut fishery has deteriorated seriously. The licensing system applied to this long-established fishery has been extremely troublesome and badly managed. In spite of a limited-entry system intended to prevent it, the licensed fishing capacity has expanded alarmingly. At the same time, both the available catch and prices have fallen sharply. Submissions made at the public hearings reveal that the administration of fishing licences has been unsatisfactory to those engaged in the fishery as well as to those excluded.

...

Poor regulation of the halibut fishery has allowed the capacity of the licensed fleet to grossly overexpand. What is urgently needed now is firm action to rationalize the fleet to the available catch. In view of the current pressures on the fishery this will be difficult, but the longer it is postponed the more dislocation it will cause.

Dr. Pearce's recommendations are important because they set a standard which definitely had impact on the plans which were subsequently developed. His views are as follows:

Fortunately, the characteristics of this fishery lend it well to a simple individual fisherman's quota system. The allowable catch does not fluctuate widely and can be (and is) predicted in advance of each season. A quota system is the only approach, as far as I can see, that offers any real promise in dealing with the alarming excess capacity in this fishery, and if it is carefully designed, it appears to offer a more equitable solution than any other. I therefore recommend the following changes:

10. Initial 10-year halibut quota licences should be issued in 1983 to owners of licensed halibut vessels that reported landings of halibut in 1980 or 1981. The quotas authorized under each licence should be related to the licensee's reported landings in those years.

...

The proposed grandfathering in of licensees' quotas according to their recent catch shares appears to be the most equitable way of recognizing the difference between those who comprise the main halibut fleet and those who qualified for licences by way of incidental catches....⁴

This case concerns decisions made by officials of the Department of Oceans and Fisheries, Canada (DFO), and the Minister of Fisheries in 1990 (the Minister) to meet the challenge expressed by Dr. Pearce by implementing a quota system (called the "IVQ" which is a fishing trade term standing for "individual vessel quota") within the halibut fishery. The system went into effect in 1990 following a "consultative" process between DFO and halibut licence holders and remains in effect today.

Within the IVQ implemented, there is a condition called the Current Owner Restriction (COR). The plaintiffs' claim is for a declaration that the Current Owner Restriction in the formula for individual vessel quotas is unlawful. If the declaration is granted, the plaintiffs request that the Current Owner Restriction be severed from the formula since such a severance will not impair the effective operation of the quota system or the fishery. In the plaintiff's submission, the result of doing this will be to return to them the quota of which they were wrongly deprived.

In the details of the argument, the plaintiffs maintain that the formula for allocation of quota under the IVQ program discriminates against recent entrants to the halibut fishery by denying those recent entrants the same eligibility for catch history calculation as longer term licence holders. They also argue that the discrimination was exacerbated by granting the most recent entrants to the fishery a greater period of eligibility than licence holders who purchased their licences in the period 1986 to 1989.

As it was put into effect, the formula for allocation of halibut IVQ is based 30% on the length of the vessel and 70% on the catch history of the licence over a four year period, 1986 through 1989. However, the catch history of the licence is restricted to the current owner unless the licence was acquired after the start of the 1989 halibut fishery, in which case historical performance would be based on the catch history of the immediately preceding owner. The effect of the current owner restriction is to grant a longer period of eligibility to some licence holders, arguably to the detriment of others. There are 435 licence holders and the plaintiffs assert that perhaps 44 of them, including themselves, are so detrimentally affected.

The heart of the case concerns the introduction of the COR into the formula adopted, and the heart of this feature concerns what took place during a particular meeting in the consultative process in which the idea of a current owner restriction was first discussed and subsequently adopted. The plaintiffs say that the current owner restriction does not advance the management of the fishery or conservation of fish in any way and was only adopted by DFO because a group alleged to represent a majority of halibut licence holders requested the restriction in the formula, and that the licence holders in the minority, who were prejudiced by the restriction, were given no opportunity whatsoever to contest the restriction.

To properly interpret the results of the critical meeting which I have referred to, which took place on May 3, 1990 in Richmond, B.C., it is first necessary to make some findings of fact about the background which led to the meeting. Once this is accomplished, I will judge the meeting, its results, and then the follow-up which occurred. The legal issues will then be determined and solved, and finally a decision made about whether to grant the relief requested.

By agreement, the issues to be decided at trial have been split into two parts. The trial days to date have focussed on the issue of whether the decision to implement the Current Owner Restriction is unlawful. If I now decide for the plaintiffs on this issue, then the trial must continue to determine what relief should be granted to them as a result.

BACKGROUND TO THE MEETING OF MAY 3, 1990

A. The DFO plan to implement a quota system

(1) Who took the initiative to take action?

To solve the problem identified by Dr. Pearce and in accepting his solution, the Minister of Fisheries at the time took immediate action by appointing an advisory committee of halibut fishers to assist in developing a quota system for the 1983 halibut fishing season. The plan did not go ahead because of lack of industry support.

However, in 1988, the idea of a quota system was revived as a result of an approach to DFO by halibut licence holders to discuss alternative management strategies for the fishery, including individual quotas.

There is no doubt that this approach found fertile ground. The DFO had been sharply criticized by Dr. Pearce in his report for mismanagement of the fishery and an early attempt to answer this criticism by attempting to gather support for a quota system amongst the fishers had failed. Some five years later, however, there was a show of interest by the fishers themselves. It is not difficult to conclude that this was the opportunity that DFO had been waiting for to put a quota system in place. And they took it.

An important aspect of this case is the way in which DFO displayed its interest in securing a quota system. On the evidence, it is clear that DFO made the decision to downplay its interest in establishing quotas in the process implemented to draw licence holders on side to this point of view.

Proof for these points can be clearly found in three DFO memoranda dated September 26, October 18, and October 20, 1989.

The September 26th memorandum is from A.F. Lill, Regional Director, Fisheries Branch to P.S. Chamut, Director-General, Pacific Region suggesting that Mr. Chamut attend at the first informational meeting for halibut licence holders to provide some opening remarks. The following is Mr. Chamut's hand written reply:

I would be pleased to attend the meeting on the 23rd. I would appreciate it if you could have staff outline some general notes for opening remarks. I would want to encourage industry representatives to give careful and favourable consideration to the ITQ [quota] proposal by pointing out the benefits to fishermen and the resource. As a tactical point, it would be useful to identify industry leaders whose opinion has a lot of weight with their peers, and try to obtain their support...⁵

In his October 18th response, Mr. Lill said:

As per your opening remarks at the upcoming industry meetings, the following is suggested. It is important for you to solidify DFO's position on ITQ's in the halibut industry. To date we have said that this is an industry initiative and that it will be up to the halibut licence holders to develop an ITQ plan which is strongly supported by licence holders. The Department will assist this process but has no intentions of forcing the industry to accept something it does not want.

...

If following the meetings in Richmond and Prince Rupert there is a clear indication of strong support for the concept of individual quotas, DFO should recommend that a committee of halibut fishermen be formed to develop a detailed ITQ proposal. This industry proposal would take into consideration the concerns expressed at the industry meetings and the Department's requirement for monitoring and enforcement. Once completed each halibut licence holder should be provided a copy and asked to vote yes or no to the proposal. [emphasis mine]⁶

More precise on to the position of DFO, are the following comments in the October 20th briefing note in response to Mr. Chamut's request from A. Gibson, Chief, Resource Allocation:

As per your request, provided are specific points which are considered important to emphasize and would be most useful in convincing halibut fishermen to agree to individual quotas.

General Points: The idea to introduce ITQ's into the halibut fishery came from halibut fishermen not DFO....The Department has no intentions of forcing the halibut industry to accept an ITQ proposal they do not support. Although DFO will assist in the process, it will be up to halibut licence holders to develop an ITQ plan which is backed by licence holders....

Other Incentives: There are a [sic] some key issues which could potentially help sway halibut fishermen to try an individual quota system. However, these issues are sensitive ones and will require you to take positions that may contradict the existing Departmental stance. Retention of Incidental Sablefish By Halibut Fishermen:...Enforcement Costs:...Enforcement Penalties:...Concentration of Quota By Processing Companies:...[emphasis mine]⁷

There is nothing wrong with the DFO adopting a strategy to get what it wanted, but the often repeated statements that interest in a quota system was initiated by the licence holders and DFO did not want to force the issue, must be seen as a promotional strategy move.

In the period October 1989 to June 1990, DFO led a very elaborate and energetic consultation with licence holders on the implementation of a quota system. There is no doubt that all this effort was not taken to see the initiative fail. I find that DFO wanted a quota system to result from the process and managed the process to see that this result occurred.

To understand the decision making process within DFO it is important to recognize that a high degree of responsibility for a successful result was placed in the hands of one middle management official, Mr. Bruce Turris.

Mr. Turris holds a Master's degree in economics, and during 1989 worked as an economist in the DFO's Program Planning unit and, in this capacity, acted as the DFO point man throughout the whole process of coming to a Departmental and Ministerial decision to implement a quota system. In fact, he was the only witness called by the defendants.

In his pivotal role, Mr. Turris first met with the licence holders in 1988, produced all the paper that went to the licence holders over the signature of Mr. Chamut, organized and ran the consultative meetings, received all responses from licence holders, and indeed drew all the memoranda that went up and down the line between various officials within DFO itself.

At trial, Mr. Turris was closely questioned on the degree to which he was personally invested in the outcome of the process. The questioning went to determine whether he would benefit professionally, either in terms of increased salary or promotion, if he was successful in achieving an agreement with the licence holders to implement a quota system. These considerations aside, I find that Mr. Turris' contact with this project was so direct, intensive and prominent, that he was thoroughly professionally committed to get an agreement.

Thus, the consultative process with the licence holders began with strong DFO commitment to see a quota system implemented. And even though perhaps the licence holders came to DFO to show interest in 1988, I find that DFO took the initiative to take action to achieve this objective.

(2) What was the true nature of the consultative process?

For the reasons set out above, even though it had been billed as a consultation, I find that the process entered into between DFO and the licence holders was in fact a support building process for a quota system to which DFO was committed before the process began.

I believe this finding is important because it sets the mental approach taken by DFO throughout the process and, in particular, by Mr. Turris in the critical meeting of May 3, 1990.

The following is a bare outline of the sequence of events within the consultative process:

(a) Letter dated September 11, 1989:

A letter and discussion paper was sent to all licence holders examining the "potential for implementing individual quotas in the halibut fishery", explaining that the paper "was requested by halibut industry representatives and is for discussion purposes only", and that "decisions regarding changes in the management of the halibut fishery will be made by the Minister of Fisheries and Oceans following extensive industry consultation and input from DFO personnel". The next step was stated to be that "in October, DFO will be meeting with all halibut fishermen's organizations to hear industry's views and to determine the viability of individual quotas in the halibut fishery". Licence holders were also invited to voice concerns or support for the proposal.⁸

(b) Letters dated October 1, and 6, 1989:

All licence holders were invited to attend meetings in Richmond on October 23rd and 24th, and Prince Rupert on October 30th respectively "to determine if there is general support of individual quotas, and if so, what would be the most equitable means of allocating individual quotas".⁹

All licence holders were sent a summary of the results of the October meetings, with a request to complete a survey. The survey asked whether or not licence holders liked the concept of individual quotas and also asked that each choose their preference from five basic suggested methods of allocating individual quotas. The report also contained the statement that "if the results of the survey indicate support for the concept of individual quotas, then a halibut industry committee will be formed to prepare a detailed final proposal for licence holders to consider. In the event that a committee is necessary, the survey asks you to select which method should be used to form the committee".¹⁰

(d) Letter dated December 4, 1989:

All licence holders were advised that the survey "indicates clearly that licence holders support the concept of individual quotas and that a halibut industry committee should be formed to develop a detailed IQ [individual quota] proposal for halibut licence holders' further consideration".¹¹

As to the composition of the committee the following statement was made:

Since the results of question three (options for selecting a halibut committee) were inconclusive, the Department has selected an alternative method of forming the halibut committee which is democratic and provides for comprehensive and fair representation.

The announced process for selecting representatives was quite complicated. In securing representation on the committee, each licence holder was given 14 options from which to choose. The first 12 were organizations that DFO identified as representing halibut licence holders. The 13th option was to choose an organization not on the list and the 14th option was an opportunity to select an individual not affiliated with any organization. The results of the vote would be handled this way:

For options 1 through 13, the number of representatives chosen from each halibut industry organization will depend on the number of licence holders which select the organization. As a guide, for each 20 votes an organization receives they will be asked to provide one committee representative....If you choose option 14, you, or the selected representative, must provide to DFO a list of twenty signatures of halibut licence holders who have not chosen any other option and have authorized you, or the representative, to represent them.¹²

(e) Halibut Advisory Committee (HAC) Meetings:

The halibut advisory committee met in Sidney in January, 1990 for four days and May 1-3, 1990 in Richmond to develop a detailed IVQ proposal for halibut licence holders' further consideration. All licence holders were advised that these meetings were taking place.

(f) Letter of June 4, 1990:

All licence holders were sent a proposal outlining the results of the consultative process with a ballot and a request to signify acceptance or rejection of the suggested allocation formula and funding requirements.¹³

(g) August 13, 1990:

All licence holders were advised of the results of the ballot, which were that 70% of those who voted were in favour of the halibut IVQ proposal distributed. The licence holders were advised that "the Minister's decision regarding halibut IVQ's will be made following full consideration of the impacts of all aspects of the IVQ program on the halibut resource and the fishing industry".¹⁴

(h) Memorandum of September 27, 1990:

The Minister approved the Deputy Minister's recommendation to proceed with a "non-transferable IVQ pilot".¹⁵

(B) The HAC process

(1) Was the HAC process democratic?

As can be seen in Mr. Lill's October 18, 1989 memorandum to Mr. Chamut as quoted above, before the consultative process got under way, the steps had been decided. They were, if there was a clear indication of strong support for the concept of individual quotas, then DFO should recommend that a committee of licence holders be formed to develop a detailed ITQ proposal and upon the proposal being prepared, then each halibut licence holder should be provided a copy and asked to vote yes or no.

This anticipated, very straightforward process was fundamentally altered as it evolved. In December 1989, the decision was taken by DFO to form a "halibut committee which is democratic and provides comprehensive and fair representation" as described under heading (2)(d) above.

I find that DFO held out that decision making would be guided by some form of a practical licence holders' representative government. In taking this position, I find that DFO assumed the obligation to see that the basic attribute of the democratic process would be maintained.

So, what is the basic attribute? Students of government argue about the proper functioning of representative government. This debate centres on conflicting delegate and representative theories. The conflict has been described from a political science perspective this way:

According to the former theory, the member is a mouthpiece of his constituency, the necessary human agent through which the voters continually register their will. According to the latter, the member is chosen to represent the nation as well as the local area, and he [sic] is expected to use his talents and make his decisions largely by the exercise of his own personal judgment.¹⁶

However, Dawson provides his instructive opinion on the debate as follows:

The ideal relationship is one where, as Macaulay said, the electors choose cautiously and confide liberally; then, after the term has expired, they will review the conduct of the member and pronounce on his stewardship as a whole. The indispensable ingredients are tolerance, compromise, and mutual respect. The member must be conscientious, yet not stubborn; tactful, yet firm; he will give way when possible, and he will refuse to make concessions when he feels it unwise or against his deep convictions. The constituency still hold its representative to his pledges; it will at all times place its views before him and urge their acceptance; yet it should be willing to recognize the sincerity of his opinions, his honesty, his actual inability on some occasions to comply with his wishes. [emphasis mine]¹⁷

Whatever the theory, it can be readily seen that the primary ingredient of representative government is accountability. Mr. Turris apparently had an understanding of accountability concept, since he testified on discovery that the democratic process was used to meet past complaints that DFO decisions had been made by listening to self-interests without accountability. Even with this understanding, however, he did absolutely nothing to enforce and reinforce it when it came to the halibut advisory committee.

In the letters that were sent out to the individuals selected to act as representatives on HAC there was no mention of any responsibilities of undertaking the role.¹⁸ In addition, throughout the process, there was no monitoring of how the representatives viewed their function, and, in particular, no information was gathered on whether they had clear instructions upon which to express views. Indeed, no support was offered to assist in this activity if it occurred.

I gathered from Mr. Turris's evidence that the HAC representatives were free to sort out their own obligations to their constituents. I also gathered that DFO had no interest in scrutinizing this relationship obligation and was prepared to accept contentious opinions by HAC representatives as representative of the people that voted to put that person on the committee. Even if one subscribes to the delegate theory, no weight should be placed on such an opinion without knowledge of the support behind it. I say this simply because there was no accountability built into the process.

I find that the HAC process was not only not democratic, but also it was highly unreliable in reflecting the views of licence holders. Bruce Turris and his superiors in DFO should have known this.

I, therefore, give no weight to the defendant's argument that because the plaintiffs participated in the selection of representatives to HAC that they are bound by the result. In addition, as I will outline below in detail, the critical decision reached in the May 3, 1990 meeting regarding COR was reached with absolutely no advance notice to anyone outside of HAC. Therefore, it is impossible to say that because the plaintiffs willingly participated in the consultative process, including HAC, that they should be taken to have agreed to HAC's opinion regarding COR.

The plaintiffs advanced the argument that by following the views expressed by a majority of the HAC representatives this was an unlawful abdication of functions and powers by DFO and the Minister to HAC. As I have said, opinions reached by HAC were the result of a highly managed, and from DFO's point of view, very successful support building process for an outcome that DFO wanted. Accordingly, DFO cannot be said to have followed the requests of HAC, and therefore, the abrogation argument fails.

(b) Was the HAC process fair?

The successful support building process evolved from discussion, to a strong show of interest in a quota system, to the appointment of HAC, the taking of a licence holders approval vote, and finally the approval of the Minister.

The plaintiffs did not voice any objection to the general consultative process or its results up to the point in time that HAC went into operation. Indeed, there was nothing for them to complain about since they supported the idea of a quota system and, therefore, supported the process as a way of achieving it. They do, however, point to now known irregularities in the formation of the halibut advisory committee, the way it operated, and to the reliance placed on the HAC experience by DFO to say that the HAC element of the process was unfair.

The evidence also raises the question of the advisability of attempting to achieve industry change by a "democratic" HAC process. That is, how fair was it of DFO to reflect reliance on a seriously flawed process in making important decisions? Regarding reaching decisions on IVQ and COR, the defendants suggest that the vote of all licence holders corrects any defects in the consultative process. It seems to me that for this conclusion to be reached, each of IVQ and COR would need a separate vote. Since this did not occur, I find that no defect was cured and an unfairness resulted.¹⁹

As to irregularities in the formation of HAC, I can see why the plaintiffs complained.

As outlined above, licence holders were given the option of electing a representative to HAC from a list of 12 named organizations or of electing an individual who was not associated with any established organization. Published procedures for the election of HAC provided that before an individual could be elected, he or she was required to obtain the votes of at least 20 halibut licence holders. The ballot form for electing a representative to HAC had to be mailed to DFO by December 15, 1989 and any elected individual not associated with one of the named organizations had to supply DFO with the list of 20 signatures by the 2nd day of January, 1990.

It is not contested that DFO unilaterally changed the number of votes necessary for an individual to be elected to HAC and extended the deadline for voting without notice to the licence holders who were called upon to elect representatives to HAC. In the result, less than 20 votes were required by DFO for eligibility and DFO continued to accept votes for an undetermined period after the deadline.

In addition, DFO unilaterally named other representatives to HAC who received no votes on the premise that a wider industry presence was required on HAC. DFO also gave two of the elected organizations which received 37 and 40 votes respectively an additional delegate on HAC but did not give individuals with a large number of votes any greater number of votes. DFO refused a seat on HAC to a few licence holders who sought input on IVQ but did not have the requisite votes.

Mr. Turris's answer to these irregularities was that HAC was a DFO advisory committee and he saw no need to advise on the changes in composition. It seems, however, that the rules were simply broken because it was considered necessary to do so to reach the planned objective of industry support. While this decision might have been strategically sound, it was certainly offensive and unfair to those who expected the rules to be followed.

III

THE MEETING OF MAY 3, 1990

The current owner restriction, as it was finally put into effect, arose from the discussion at the May 3rd meeting of the halibut advisory committee. It is this element of the formula which brings this case to court, and in this regard, the purpose for which this element was adopted is of major importance.

Fortunately the meeting of May 3, 1990 was audio-taped, and the tapes and their transcription were entered in evidence through Mr. Phil Parish, a HAC representative.²⁰ Against objections by DFO and other HAC members, Mr. Parish testified he did the taping so that he might inform those that he represented about what transpired in the meetings. I think it is fair to say that Mr. Parish disagreed with the results of the HAC process, and gave some detailed evidence of his concerns.

The end result of the January 1990 HAC meeting in Sidney was the adoption by the committee of the 70/30 formula. However, Mr. Parish was not pleased with this result or the process whereby it was reached. In his thoroughly credible testimony he told how HAC representatives were advocating for one position or another during the January meeting, and thus although numerous proposals were discussed, there was really only one on the table for discussion, and that was 70/30. It happens that Mr. Parish favoured an "equal shares" formula, calculated by dividing the total allowable catch by the total number of licence holders.

Mr. Parish testified that Bruce Turris advised the HAC members which formulas would be on the table and which would be taken off. He said that "equal shares" was taken off by Mr. Turris because it was considered not to be fair since it did not consider the capacity of the vessel or the capacity of the person fishing the licence to catch halibut. Regardless of the merits of these views, as a consequence of Mr.Turris' actions, Mr. Parish felt that there had not been an open discussion on the formula and thus did not feel that the process was democratic.

Further, regarding Mr. Turris' role in the May 1990 HAC meeting, Mr. Parish testified that he understood that Mr. Turris would be the facilitator of the HAC to develop a plan. But as far as Mr. Parish was concerned, Mr. Turris turned out to be "a facilitator with an agenda". In this respect he complained that the concept of COR being added to the 70/30 formula was never presented on the agenda, that the idea came up on the last day of the meetings which was May 3rd, indeed at the tail end of the morning when only one and a half to two hours was spent on it. As a result, he said that there was no notice the topic would come up, no time for consultation with licence holders not at the meeting, and really no time to even understand the implications of the COR feature before it was adopted by those present by a vote of 12 in favour, 3 against, with 2 abstentions.

The implication behind Mr. Parish's evidence is that Bruce Turris wanted a 70/30 formula and Bruce Turris wanted COR, so pressure was generated within the meetings to see that these results occurred. Regarding COR, the following analysis of the evidence on the tapes of the May 3rd meeting proves this to be true.

(A) The Current Owner Restriction (COR) as a limit on appeals

(1) Why was the appeal process raised?

It was understood that an appeal process would accompany the IVQ and from the outset of the consultation this was a point of concern with licence holders. However, the manner in which the issue of the appeal process was raised leaves the impression that DFO wanted to distance itself from the topic but did want it discussed and resolved. In his evidence, Bruce Turris stated that he raised the issue on a request to do so by HAC representative Mike Bazilli. At the meeting, here is how Mr. Turris did it:

Let's move on in the agenda. It's nearly 12:30 we've got about 40, 35-40 minutes. I think there is only one thing that I would like to, and I don't want to bring it up, believe me I don't want to bring it up, but I'm going to bring it up because its been discussed and I said to a few people earlier that we would have time to talk about it.²¹

(2) What was the concern about the appeal process?

The contention about the appeal process was based in a concern held by Mr. Bazilli, and perhaps other licence holders, that they would have their quota reduced by the successful appeals of licence holders who were detrimentally affected in the switch over from a "shotgun fishery" to a fishery controlled by a quota system. This would arise because, under the quota system, a total allowable catch is set by DFO for a given year and each licence holder's proportion of the catch is determined by the IVQ formula. Thus, if a successful appeal increases a licence holder's quota from that which was stipulated by the formula, the licence holder's increased quota or percentage of the total allowable catch has to come from somewhere. It comes from other licence holders.

Thus, it is not difficult to see that an individual licence holder's respect for the appeal process depends on the degree to which that licence holder is willing to share his or her quota with licence holders who are found to have suffered.

Mr. Bazilli's primary worry appeared to be that, if during 1986 to 1989 a licence holder sold a licence which under the formula is considered a "good" licence because under the 70/30 formula it provides a high quota, and then bought a "bad" licence because the quota is smaller than the one sold, he did not want the licence holder's quota increased by a sympathetic appeal recommendation for the Minister's approval.

(3) How did COR arise?

The concept of a current owner restriction was not initially raised as a discrete agenda item but was an idea constructed during the ensuing debate on the detriments of the appeal process. Consequently there could be no advance notice about the idea being raised.

The options suggested to deal with the appeal problem ranged from limiting the latitude within which an appeal board could make recommendations to introducing a restriction into the formula itself which would have the same effect.

A critical feature of the search for a way to restrict the impact of appeals on quotas set under the IVQ formula was the willingness of both Mr. Turris and Mr. Bazilli to see people get hurt.

As evidence supporting this conclusion, these are statements made by Mr. Turris and Mr. Bazilli near the beginning of the meeting before COR was discussed:

Bruce Turris: Well, it's a double edged sword, how the appeal process may deal with this. I think we put in the guidelines...(cough) that we stick to the formula OK. And that as the allocation formula is set out we would like the committee to stick to that. In other words, if I'm to appeal because I sold, I bought a shitty licence, then that's tough. Those aren't good grounds for appeal...(inaudible) all you are doing is inflating the quota and that is just part of the system the way its been established and set up, we went through this democratic method of selecting it. There's always going, there's going to be winners, it doesn't matter what system you pick, you can pick any formula any way you can, there is going to be winners and losers and everybody has to realize that and they do. And this is one of the cases where there is winners and losers because of following the L tab. [emphasis mine]²² ...

Mike Bazilli: Yeah. I believe firmly that that is much fairer than transferring my good years to somebody else and me not having a good year and then me going to the appeal board and saying "look, I didn't get a good year this is what my history is and somebody gives me some". My history is already gone, so if we don't go to some sort of, based on the most recent transfer, I don't think you can have an appeal based on "I used to produce big and I've bought a licence with no quota". That's tough titty, you have to draw the line somewhere. I think it's fair to try and draw a fair line than to draw a hard line. But we have to draw a line.²³ [emphasis mine]

And these are supporting statements made near the end of the meeting after COR was discussed:

Bruce Turris: Let's stick to the topic and keep the conversation directed towards progressing this issue. Okay, so do you want to talk about this a bit more? Do you have any more questions now? Do you understand what Mike is trying to suggest, what that means. It's an equity issue, ok? It doesn't change the formula at all. You've got the same formula, identical formula. It's an equity issue in terms of whether who gets the gain, and who gets screwed. I haven't heard a motion, just clarify the suggestion. [emphasis mine]²⁴...

Mike Bazilli: If you know the boats, and you know how long they've been fishing that licence then you know they can't be hurt, all they can do by my proposal is to be helped unless they just bought the licence recently. Everybody else in the fleet is gaining. Except, and some of the people that just bought aren't hurting at all. The only people that are hurting are the ones that just got in and were basing their quota on the previous history of the licence. Everybody else is gaining and it's probably 15%, minimum of 10% probably closer to 15% that everybody else is gaining if we did the numbers....[emphasis mine]²⁵

Understanding this mindset of these critical players in the May 3rd meeting goes a long way to explaining how the COR could arise and be adopted with the knowledge that some licence holders would suffer.²⁶

(4) How was COR explained?

Ironically, Mike Bazilli supports his position in favour of COR by speaking on terms of fairness. But his intention is clear from the following statements:

... but everything that I'm looking at helps anybody whose been in the business and just hurts people that have just recently got in and that may not be fair but I don't think I agree with Egil, but if we stick with the 70/30 one best year, all I'm saying is that we can't allow any appeals to water that down. I don't think that is the fairest way to the fleet to look at it, but if, I don't want my numbers to get watered down more because somebody else has got an appeal because they had a big history. [emphasis mine]²⁷

I have no doubt that, for Mr. Bazilli, fairness was a euphemism for self interest and there is no question that Bruce Turris understood the implications of the proposal. This can be seen from the following exchange:

Bruce Turris: Ok, those are the arguments, that's the proposal, the arguments are as we said, it's a business decision. You take the risk that goes with it and if you're going to do that, you're going to stick to the formula. You're going to stick to a hard line. You want to recommend a hard line on the appeal process.

Mike Bazilli: There's one thing I'd like to point out here. You've got the formula down quite well, but to every other licence holder, what we're doing is knocking off quite a few peak years that weren't justifiably earned and all those peak years, it's pounds in everybody else's pocket. So it's fair to the people that have bought and sold and it's fair to the whole fleet.

Bruce Turris: What it does, is it takes, right now our quota is inflated to 16 million pounds, right, because, or 17 or something. We' ll bring that down undoubtedly we'll bring that down, well less than 17 million, less than the number we've got, we might get 14 or 15 million. So that when you take your personal history and divide it by 15 million it's going to be, the percentage is going to be higher than if you divide it by 17. So it favours obviously people who have been in the industry.

Mike Bazilli: It favours everybody except the windfall purchasers.

Bruce Turris: Yes. It favours those who have been in the industry and have had historical performance. Okay? That is the premise that Mike is trying to promote...[emphasis mine]²⁸

The premise that Mike Bazilli was trying to promote is clearly expressed in this statement of his:

OK, it takes care of a lot of windfalls and it squares it up with the whole process is it's going to knock maybe a million or two pounds off that 16.4, so it levels everybody else out. People that have owned the licence for four years are going to be levelled out, are going to be helped, and it's going to take care of people. [emphasis mine]²⁹

Of course, the "people" that Mike Bazilli is talking about are himself and anyone else in his position as a long term licence holder.

Thus, the idea that it is fairer to favour those that have been in the industry longer is legitimized by the labelling of new entrants to the fishery as "windfall purchasers" just because they happen to have acquired licences with the potential for a favourable quota under IVQ. In addition, the concept was introduced that favouring some licence holders over others is part of doing business in the fishing industry.

On these points it is important to note that the May 3, 1990 discussion occurred after the events which would establish a licence holder's quota. That is, the fishing that took place between 1986 and 1989, and the transferring of licences within that period were already completed when the decisions about the impact of these events were being made. Obviously, when the events were occurring no one knew how they would be viewed within a quota system, so it is impossible to say that they were part of any business decision.

A complaint about this apparent inequity raised early in the meeting by a HAC representative was dealt with this way:

Egil Elvin: I've got a problem with it because we've discussed the formula in Sidney and it was picked that a year in the last three or four years. All of a sudden because you're lucky you bought a boat there in the last couple of years with some poundage on it then you're going to try and squeeze him out of that poundage. It's just like you having a farm in Richmond for 60 years and then you sell it and all of a sudden there's some development in a couple of years that starts up and you sub-divide it and make some money on it. I mean that's the system ...(inaudible)... I think we've got to stick with what we've decided was to whoever happens to have the licence when it comes in that's the way it is that's the way it always will be.

Bruce Turris: I tend to agree Egil that we don't want to change the formula and spend a lot of time getting to a formula. I'm not sure if Mike's doing that or suggesting a way of dealing with what some people have suggested is an inequity within the formula, that they feel and some people don't feel it's an inequity, they think it is, as you're suggesting, just part of doing business and you deal with it that way. That the risk of getting into the industry is, uh, includes such things as we've talked about here. [emphasis mine]³⁰

This is Mr. Bazilli's frankest statement about his interest in COR:

That's what bothers most people about this whole process is that somebody who has been fishing regularly ends up with less quota than somebody who just bought a licence and it's a real hard pill for a lot of people to swallow.³¹

(5) What objections were raised to COR and how were they handled?

During the course of the May 3rd meeting, strong objections were raised to the process whereby COR was to be adopted and also about the proposal itself. In the following example, it is very clear that Bruce Turris did not want to delay HAC's endorsement of COR even though he did not have the information requested by HAC member Richard Roussin:

Richard Roussin: This is a pretty serious matter. All the appeals can really throw the whole thing out of whack. We've spent three and a half days fighting before, over the formula. To solve this in the amount of time we've spent it's pretty hard you know. I don't really think that we are giving it adequate consideration like we could, I'm not a guy that wants to drag things out, but just to deal with something like this in a haphazard quick manner is pretty irresponsible and when we followed the numbers for everything else at least we had the benefit of having the computer and seeing how this would affect the overall amount. We really could make a, you know, you could accurately forecast what is going to happen. We really don't know how it affects and how many people there are, how many licences there are, what it does to people you know, and I think we would have to really meet again, I'm not really trying to prolong things, but I think we have to meet again and give it better consideration than we are now in order to do a good job.

Bruce Turris: Well, first of all, I don't think we're dealing with this in a haphazard way. It's an important agenda item and we've spent the better part of the morning, oh pardon me, the afternoon dealing with this. The uh, we can't predict, I mean, we can have appeals anywhere from zero to 435. And I can't tell you how much on average they're going to get if they're going to get any. And we could look at this until the cows home and go out again. I don't know how much information or how precise you're going to get. Really I don't. [emphasis mine]³²

In this exchange, HAC member Art Sterrit voices a strong objection to proceeding to adopt COR because of the lack of information about the impact of doing so:

Art Sterrit: Well, it was mentioned earlier that everybody has been popping figures based on a lot of figures and been able to see how it affects a certain percentage of the fleet and the people that they represent as a whole and to try and put a motion on the floor to pass something like this without seeing how that impacts. To me, that is just ludicrous. You might as well turn the lights off.

Bruce Turris: Art, the question I put to you first is if you have people you represent and people that the Native Brotherhood represents, are they all new entrants to the fishery or are they established fishermen?

Art Sterrit: There's a fair number that are people that have been at it for the last couple of years, or three years, and some of those people are knowledgeable but weren't unable to capitalize and went out with 5 skates three years ago, 10 skates two years ago, and last year worked their way up to 15, that sort of thing and then maybe throw a breakdown in the middle of that, I mean, you get so many fluctuations.

Bruce Turris: I guess what I'm asking Art, is are they better off by having, using just the four years of that licence? Are they better off by just using the one best year of the four years of the history of that licence or are they, does it make a difference?

Art Sterrit: It's certainly a picture that I have in my mind. I know what one best year or two best years or that kind of stuff means. But I sure as hell couldn't vote on the suggestion of the new formula that you're talking about because I'd have to look at all those boats again to see how it averages out. [emphasis mine]³³

On the issue of knowledge of impact, Bruce Turris admitted just before the vote was taken that there had been "an awful lot" of transfers in the preceding five year period and that COR would affect most of those transfers.³⁴

Finally, after the objections are voiced, rather than to delay discussion and decision on COR, Bruce Turris leaves the issue open for a vote to be taken:

OK, to go back to Art's point of order. There's nothing stopping this committee from putting forward a motion based on Mike's suggestion and voting on it, and that is not out of order. And there's nothing to stop Art from putting forward a motion that we reopen the whole discussion on allocation, and that's not out of order and can be voted on as well. So, I don't think we're out of order in any respect so far. So I put it back to the floor.³⁵

(6) Was COR accepted by the plaintiffs as a result of the votes cast by the members of HAC ?

Just prior to the vote being taken Bruce Turris made the following comment:

Howard Pattinson: You know it's complicated but I like it.

Bruce Turris: It's not complicated at all it's just hard to explain. It is. It's not complicated at all. It's just very hard for me to put into words.

Hard to explain or not, Bruce Turris did his best in asking for a vote on the following motion:

The motion put forward by Mike is that the history of the 70/30 allocation will be based on um the person's history with that licence prior to October 1, 1989, his own history with that licence prior to October 1, 1989, up until the last transfer um prior to that, in other words his own ownership of that licence. If any licences are purchased after October 1, 1989 then the quota for that person for that licence is based on the history of the previous owner, the one previous owner to that person, using the exact same formula that we laid out in Sidney. Assuming that everybody understands that then I'll ask the licence holders in favour of that motion to please raise your hands. Leave your hands up please because I'll need to take an accurate count of it.³⁶

Yes, this cobbled together description is confusing, and accordingly, I wonder what everyone thought he said. But, as did Mr. Turris, I must assume that those who voted knew what they were voting about. The results of the vote were 12 in favour, 3 opposed, 2 abstentions and 1 absent. It is agreed that when the votes of the HAC representatives are weighted, those in favour of COR represented 215 licence holders, those opposed represented 66 licence holders, the abstentions represented 43 licence holders and the absent members represented 19 licence holders. That is, on the way HAC was set up, one interpretation of the results would be that approximately 63% of licence holders voted in favour.

Not surprisingly, Egil Elvin voted against. Richard Roussin, who raised the objections quoted above, in the end, voted in favour. But, Art Sterrit, who was the most adamant objector, maintained his objection, and voted no. In addition to the 20 licence holders that voted to put him on HAC, he also voted for 12 licence holders who were members of the Native Brotherhood. Thus, his voice represented about 10% of licence holders. From what he said at the meeting, he was very much aware to the views of the Aboriginal licence holders he represented. Nothing in the transcript of the meeting allows a similar conclusion to be drawn about how well the other HAC representatives reflected the views of those that put them there.

Ironically, the votes cast on behalf of the plaintiffs were either in favour or abstentions. But the evidence of each of the plaintiffs proves to my satisfaction that their support for IVQ and the HAC process did not include authorizing a vote in favour of COR.

As can be seen from the above excerpts of what was said at the meeting, the plaintiffs had no notice that COR would be raised on May 3rd, and because of the way the concept was developed then and there that day, there was no time for any of the HAC representatives to consult with licence holders about it even if they were inclined to do so. In fact, Carpenter Fishing Corporation and White Hope Holdings Ltd.'s representative at the meeting was Mike Bazilli. How could the self interest he maintained in promoting the motion and the vote for COR be said to be representative of consent by these plaintiffs. Well, of course, it could not, and I find the same goes for the other plaintiffs as well.

(7) In the end, what was the purpose of COR?

On examination for discovery, and conforming with the evidence of the May 3rd meeting, Mr. Turris had no difficulty making admissions that DFO did not have a purpose for introducing COR:

189 Q Going back on the record, Mr. Turris, my question for you is what was DFO's purpose in incorporating the Current Owner Restriction into the Halibut Allocation Formula?

A The purpose for the COR would be best explained by talking to Mr. Bazilli. Our purpose was putting forward a total package that was supported by HAC as a result of their deliberations for consideration by licence holders.

190 Q If I understand you correctly then, what you're saying is that HAC may have had a purpose for the Current Owner Restriction but you don't know what it was and can't say?

A Well, I may have some recollection of that but it was not DFO's purpose.

191 Q Exactly. So you're saying if I want to know what the purpose of COR was I'd have to go and ask Bazilli or somebody at HAC?

A Yes.

192 Q So DFO had no particular purpose in mind when incorporating COR into the IVQ formula, it was simply incorporated in order to give effect to the recommendation of HAC?

A And to find an agreeable proposal that industry would support, yes.

193 Q So COR only became a part of IVQ because it was recommended by HAC?

A It became a part of the proposal because it was recommended by HAC and it did not have any apparent conflict with our departmental objectives for conservation, et cetera.

197 Q And DFO had no purpose in mind for the Current Owner Restriction, it was just part of the package that HAC recommended?

A Yes.³⁷

At trial, however, Mr. Turris testified that, before COR was discussed by the Halibut Advisory Committee on May 3rd, DFO had decided that in establishing the quota formula a licence holder's catch history should be earned and not inherited. That is, in his words, "those that participated more should get more".

Because of the distinct difference between the evidence on discovery and at trial, the plaintiffs have called Bruce Turris's credibility into question. To explain the discrepancy, Mr. Turris testified that his trial evidence should be accepted over his discovery evidence because when he answered on discovery he had not properly briefed himself in that he had not read all the documents on the file to refresh his memory but had spent two months doing so in preparation for trial.

On behalf of the plaintiffs, Mr. Smith's assessment of this explanation is that Mr. Turris has deliberately changed his answer at trial because he thinks it will help the case to say that DFO had a legitimate purpose for implementing COR.

I find that because of Mr. Turris's intensive and central position in the development of the IVQ, and because of the strong leadership position that he played in the May 3rd meeting, it is difficult to imagine how his answers on discovery would be so significantly altered by reading the file.

Moreover, in the documentary evidence at trial there is no mention of a policy being adopted by DFO before the HAC meetings in favour of earned as opposed to inherited quota. The following admission substantiates that this issue was never raised with the licence holders:

1 Q Mr. Turris, continuing your discovery, I want to ask you about the history of the Current Owner Restriction in the notices that went to licence holders. First of all, is it correct that prior to the recommendation by HAC that catch history be tied to the current owner, had you or DFO published any document whatsoever which suggested that catch history would be restricted to the current owner of the licence?

A Not that I'm aware of.³⁸

In addition, the way that Bruce Turris introduced the concern about appeals is evidence that he had not considered the concept of a current owner restriction prior to the discussion which he prompted. On this point, it is very obvious from the tape that, at the beginning of the meeting, he was most confused about how to limit the impact of the appeal process:

...The issue I said that I would bring up which is a sore point maybe to some and very contentious issue and I'm not sure we're going to solve it no matter if we're here 'till 1:00 or until one in the morning is this issue of, as Howard had said, that people lose out, and Mike said people lose out because of the purchase their licence and the formula that we've talked about and are going to be presenting in the package that the policy - history of the licence follows the licence and that the person who bought the licence last year, sold his licence last year and bought another one -- may have sold a licence with a great history and bought one with a shitty history, is that fair for him, or should we be concerned with that as part of the process. The reason we want to talk about this a little bit here is that it is going to be a concern during the appeal process and we also in this group we never really, I don't think we've dealt with that issue a lot in Sidney. I guess the alternatives that we can look at, and I can really only think of one at the moment, is that the actual history follow the CFV [commercial fishing vessel] or the vessel. Or, well I guess the other alternative is to follow the person, but that becomes very, that becomes even more difficult because it's almost impossible to track the person. We've used the licence and the history of the L tab [halibut licence]. I am just opening it up because we've brought it up maybe five or six times in the last two days and I want to hear your opinions on it were. Ron. [emphasis mine]³⁹

It is also very obvious from the tape that when Mr. Bazilli started to formulate how the restriction concept would operate, that while he had the germ of the idea already in his head when the meeting began, he made up the details as the meeting went along. Bruce Turris, once having raised the appeal problem, probed Mike Bazilli for more details on his idea, and as Mike Bazilli thought it out, Bruce Turris became more and more committed to the idea.

Accordingly, I find Mr. Smith's assessment is accurate.

Further on the question of Mr. Turris's credibility, in an article entitled "Canada's Pacific Halibut Fishery: A Case Study of an Individual Quota Fishery" which he wrote for a management trade journal some time after the quota system went into effect, there appears the following paragraph:

The greed and incredible ingenuity of individual fishermen, the common property environment under which the halibut fleet had flourished, and various government management initiatives such as licence limitation had created an unmanageable halibut fishery. [emphasis mine]⁴⁰

When confronted with this clearly disparaging remark in cross-examination by Mr. Smith, Mr. Turris denied that he thought fishermen were greedy. He attempted to explain away the obvious lack of respect the statement displays by saying that the system promotes them to act that way.

These instances of unwillingness to face the obvious meaning of his own words in an apparent attempt to protect himself from criticism have caused me to doubt the reliability of the evidence Mr. Turris has offered in defense of the Minister's, DFO's and his own position. Accordingly, when offered for this purpose, I give it little weight.

However, since Mr. Turris's evidence on discovery conforms with the tape of the May 3rd meeting, I find his discovery admission to be accurate that the purpose for COR was not DFO's purpose. But, because of the evidence provided by the transcript of May 3rd, I do not accept Mr. Turris's statement on discovery that COR was simply put into the quota formula because it was part of the package that HAC recommended.

Once the concept of a current owner restriction was raised by Mike Bazilli, Bruce Turris adopted it as his own, pressed it to a vote, and as described below, incorporated it in the quota formula. That is, I find COR was adopted because Bruce Turris concluded that to get HAC approval for the quota system it was necessary to support Mike Bazilli and his ideas.

On the whole of the evidence, I am satisfied on a balance of probabilities that the purpose of COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli.

(8)Is COR part of IVQ?

Since the intended purpose of COR was to discriminate against new entrants to the halibut fishery, it was not developed as an integral part of the overall formula. Bruce Turris admitted as much in the following very clear statement:

I don't perceive this as opening the formula at all. It does not change the formula, at all. The formula is the same. The best year, ok, given the history of that vessel, 30% on vessel length - that doesn't change. It is an addition that has to be considered when you derive the formula or carry out the formula and it is an equity issue, and it is an addition to say ok this has to be considered at the same time. It's not a change in the formula. [emphasis mine]⁴¹

Therefore, I find the Current Owner Restriction is not part of IVQ.

THE FOLLOW UP TO THE MAY 3, 1990 MEETING

(A) The approval process for COR

(1) Was COR approved by the licence holders?

On June 4, 1990, a detailed proposal for introducing a quota system was sent to all licence holders together with a ballot which they could use to vote for or against it. The proposal provided background information for the initiative, explained the consultative process, described the proposed 70/30 allocation formula, and included a description of how COR would operate, but in a certain way.

The current owner restriction was not described as such but was explained under the heading "70% of IVQ Allocation by Historical Performance" by using fact examples of how it would affect "Joe Fisherman" depending on when he or she acquired the licence. This description conformed with a statement in an attached appendix as follows:

The following recommendations were made by the Halibut IVQ Advisory Committee during meetings held in January and May. Where applicable, the voting results by licence holder representatives is provided in brackets at the end of the recommendation.

-The IVQ allocation is to be based 70% on the halibut licences one best year of catch between 1986 and 1989, and 30% on vessel length. (13 in favour, 1 oppose, 4 abstain)

-The best year of catch must be taken from catch history of the current owner of the halibut licence between 1986 and 1989. For owners who purchased a licence after the start of the 1989 halibut fishery their best catch year will be based on the catch history of the previous licence holder. (12 in favour, 3 oppose, 2 abstain, 1 absent)⁴²

There was, however, no mention in the proposal about the rationale for including COR, and accordingly it was not linked to the concerns about appeals, inherited versus earned quotas, or benefits to be bestowed on certain licence holders at the expense of others. From the description, therefore, it is impossible to gather the true importance of the provision.

The ballot asked the following question:

"Do you support Individual Vessel Quotas, the allocation formula, and funding requirements as presented in the halibut IVQ proposal? YES_____NO_____⁴³

It was, therefore, impossible for licence holders to accept or reject the COR provision in isolation to the whole proposal. In addition, in the proposal the question was put as an all or nothing proposition:

The alternative to IVQ's, as presented, is a continuation of the current short, intense, shotgun style fishery.⁴⁴

Thus, on the question of whether the process was fair as discussed above, I find that the way the question was put was manifestly unfair to those that would be hurt by the provision because they had no meaningful chance to object. This finding is a complete answer to the defendant's argument that since some of the plaintiffs voted "yes" for the IVQ, that they were estopped from complaining about COR. Because of the way the question was put, I find that any "yes" votes, including those cast by the plaintiffs, can only be interpreted as support for the IVQ and not necessarily COR.

Therefore, I consider COR not to have been approved by licence holders, and so should have Mr. Turris.

(2) In fact, was COR approved by the Minister of Fisheries and Oceans?

The Minister placed the new quota system into effect by signing his concurrence to a recommendation drawn by the Deputy Minister dated September 27, 1990. The memorandum, of which the recommendation formed a part, included an attachment entitled "Facts About the Halibut IQV [sic] Initiative" which described the quota formula as follows:

The halibut IVQ proposal supported by 70% of the respondent halibut licence holders recommends the following:

-non-transferable IVQ's for the halibut fishery for a two-year trial period:

-IVQ allocations based 70% on the halibut licence holder's one best year of catch between 1986 and 1989, and 30% on vessel length...⁴⁵

Two things are very apparent on the face of the Deputy Minister's recommendation memorandum. First, the extent of the support for the proposal was somewhat imprecise since 70% of those that responded on the vote to the proposal turns out to be only 47% of all licence holders. And second, there is absolutely no mention of any current owner restriction in the documents that the minister signed. Indeed, on the evidence at trial, I find that on a balance of probabilities the Minister was never told about the current owner restriction, let alone how it came to be, and any objection to it before signing his concurrence.

Thus, I find that COR was not approved by the Minister of Oceans and Fisheries. The fact that the quota system has been extended beyond the initial two year trial period does not change this fact or cure any defect which arises from it.

(3) Was COR accepted by the plaintiffs by accepting the IVQ?

The IVQ program, including COR, was put into effect as terms of a contract between the Minister of Fisheries and individual licence holders, the signing of which was a licensing condition. Each of the plaintiffs signed the contract in order to continue fishing their licences. I find this fact is irrelevant to whether they can be successful in their arguments in this case, since what else could they do? Give up their licences under protest, stop fishing, and sue? Not likely.

The defendants have made much of the fact that the plaintiffs have no complaint because an appeal process was built into the IVQ system adopted by each licence holder, including them. It is very obvious from the description of what happened on May 3rd as provided above that the appeal process was not intended to provide fully equitable solutions or relief from any prejudice suffered because of COR. In fact, the terms of reference sent to each member selected to serve on the appeal board had the following provision:

The PRHQRB's [Pacific Region Halibut Quota Review Board's] terms of reference does not include considering changes to the halibut IVQ allocation formula or the halibut IVQ proposal. Rather, the Board is to consider individual circumstances, assess to the best of their ability whether or not an individual halibut licence holder has been unfairly treated by the implementation of the halibut IVQ program, and recommend to the Minister whether or not the quota should be increased, and if so, then by how much.⁴⁶

Thus, I find that whether or not any licence holder, including the plaintiffs, used the appeal process and might have been somewhat successful in having the quota raised is irrelevant to this action, since the complaint is not with the appeal process, but with COR which was specifically excluded from its jurisdiction.

(B) The decision to implement COR?

(1) In fact, whose decision was it?

After the idea was raised by Mike Bazilli on May 3rd, Bruce Turris adopted it with enthusiasm and forced it to a vote against strong objection. As the DFO official responsible to see the quota system put into effect, he put it into effect, including COR, as I have described.

That is, it is not as if DFO was standing by waiting for the results of the HAC process. The results were highly managed by Bruce Turris. Indeed, the results regarding COR were what he wanted, and therefore, the decision to include COR should not be seen as a HAC decision but as a HAC endorsement of Bruce Turris's decision. Therefore, the plaintiffs' argument that there was an abrogation of authority to HAC fails on the facts.

Whatever any of Bruce Turris's superiors knew about the current owner restriction and its impact, he was in no way deterred from implementing it. From this I infer that he was fully supported. Therefore, I find that the implementation of COR was an authorized decision of the administration of DFO.

THE LEGAL ISSUES

Because of a defect or error in jurisdiction, the plaintiffs claim a declaration that the Current Owner Restriction as implemented is unlawful. Jones and DeVillars⁴⁷ provide this very useful overview of the legal issues involved in deciding this claim:

"Jurisdiction" is one of the most elusive concepts in Administrative Law. In its broadest sense, "jurisdiction" means the power to do every aspect of an intra vires action. In a narrower sense, however, "jurisdiction" means the power to commence or embark on a particular type of activity. A defect in jurisdiction "in the narrow sense" is thus distinguished from other errors - such as a breach of natural justice, considering irrelevant evidence, or acting for an improper purpose - which take place after the delegate has lawfully started his activity, but which cause him to leave or exceed his jurisdiction. Lord Reid's analysis of these difficulties in defining "jurisdiction" in Anisminic Ltd. v. Foreign Compensation Commission [1969] 2 A.C. 147 at 171, is particularly useful:

It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word "jurisdiction" has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it has no power to make. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take in account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly. I understand that some confusion has been caused by my having said in Reg. v. Governor of Brixton Prison, Ex parte Armah [1968] A.C. 192, 234 that if a tribunal has jurisdiction to go right it has jurisdiction to go wrong. So it has, if one uses "jurisdiction" in the narrow original sense. If it is entitled to enter on the inquiry and does not do any of those things which I have mentioned in the course of the proceedings, then its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law. I think that, if these views are correct, the only case cited which was plainly wrongly decided is Davies v. Price [1958] 1 W.L.R. 434. But in a number of other cases some of the grounds of judgment are questionable.

It is important to remember that virtually all grounds for judicial review of administrative action depend upon an attack on some aspect of the delegate's jurisdiction to do the particular activity in question. Consequently, it is equally important to remember that any behaviour which causes the delegate to exceed his jurisdiction is just as fatal as any error which means that he never had jurisdiction "in the narrow sense" even to commence his action.

(A) Was there a defect in jurisdiction "in the narrow sense"?

(1) Was the administration of DFO authorized to implement COR?

Having found as a fact that the implementation of the Current Owner Restriction was an authorized decision of the administration of DFO, the legal issue arises as to whether it had authority to make it.

In the course of the support building process, there was a consistent message provided as to who would be the decision maker. For example, in the discussion paper sent with the early support building mailing to licence holders on September 11, 1989, the following statement appears in the first paragraph:

Decisions regarding changes in the management of the halibut fishery will be made by the Minister of Fisheries and Oceans following extensive industry consultation and input from DFO personnel.⁴⁸

And in the program proposal which was included with the letter of June 4, 1990 asking each licence holder to vote on acceptance or rejection, the following introductory paragraph appeared:

This paper outlines a proposal for allocating, implementing, managing, and enforcing individual vessel quotas (IVQ's) in the halibut fishery. The proposed IVQ program is the product of extensive consultation between DFO and the halibut fishing industry during the last twelve months. Following your consideration of this proposal the Department will advise the Minister of Fisheries and Oceans of halibut licence holders' input and level of support and recommend to him whether or not individual quotas should be implemented in the halibut fishery. However, decisions regarding changes in the management of the halibut fishery are solely those of the Minister. [emphasis mine]⁴⁹

On the representations made, there is no question that licence holders had every right to believe that the Minister would make the decision to implement COR. As a matter of good faith, therefore, the decision to implement COR was the Minister's to make and since he did not make it, the administration should not have made it. But apart from whether the administration should have breached the faith, could it do so as a matter of law?

An early end to this analysis would come if I were to decide that because the Minister himself did not make the decision to implement COR, then the decision was made by the administration without jurisdiction in the narrow sense. I was not strongly urged to make this finding by Mr. Smith for the plaintiffs, I think because it provides too simple an answer to a very complex legal problem.

Mr. Partridge, on behalf of the defendants, urged me to accept the position that the decision made by the administration was authorized as if it were a decision of the Minister on the basis of implied authority. This argument went substantially unanswered by the plaintiffs.

To make the point, the defendants rely on the authority of the Supreme Court of Canada in Regina v. Harrison (1976) 66 D.L.R. (3d) 660, where at 665 Dickson J. said:

In my opinion, there is implied authority in the Attorney-General to delegate the power to instruct, in s. 605(1). I do not think that s. 605(1) requires the Attorney-General personally to appeal or personally to instruct counsel to appeal in every case. Although there is a general rule of construction in law that a person endowed with a discretionary power should exercise it personally (delegatus non potest delegare), that rule can be displaced by the language, scope or object of a particular administrative scheme. A power to delegate is often implicit in a scheme empowering a Minister to act. As Professor Willis remarked in "Delegatus Non Potest Delegare", 21 Can. Bar Rev. 257 (1943) at p. 264:

... in their application of the maxim delegatus non potest delegare by modern governmental agencies the Courts have in most cases preferred to depart from the literal construction of the words of the statute which would require them to read in the word "personally" and to adopt such a construction as will best accord with the facts of modern government which, being carried on in theory by elected representatives but in practice by civil servants or local government officers, undoubtedly requires them to read in the words "or any person authorized by it".

See also S.A. deSmith, Judicial Review of Administrative Action, 3rd ed. (1973), p. 271. Thus, where the exercise of a discretionary power is entrusted to a Minister of the Crown it may be presumed that the acts will be performed, not by the Minister in person, but by responsible officials in his Department: Carltona Ltd. v. Com'rs of Works et al., [1943] 2 All E.R. 560 (C.A.). The tasks of a Minister of the Crown in modern times are so many and varied that it is unreasonable to expect them to be performed personally. It is to be supposed that the Minister will select deputies and departmental officials of experience and competence, and that such appointees, for whose conduct the Minister is accountable to the Legislature, will act on behalf of the Minister, within the bounds of their respective grants of authority, in the discharge of ministerial responsibilities. Any other approach would but lead to administrative chaos and inefficiency.

On the basis of this authority I find that, in law, the administration of DFO could make the decision to implement the Current Owner Restriction on behalf of the Minister. Thus, from this point, I will consider the decision to be that of the Minister.

(2)What was the Minister's jurisdiction to impose a quota system? The Minister chose not to implement the quota system by way of regulation but simply imposed it as a condition of licence. The plaintiffs admit that the Minister had power to do this, regardless of the apparent delegation to the Governor in Council under the then applicable s.43 of the Fisheries Act (the Act)⁵⁰, the pertinent portions of which read as follows:

43. The Governor in Council may make regulations for carrying out the purposes and provisions of this Act and in particular, but without restricting the generality of the foregoing, may make regulations

(a) for the proper management and control of the sea-coast and inland fisheries;

(b) respecting the conservation and protection of fish;

...

(g) respecting the terms and conditions under which a licence and lease may be issued;

But in so doing, I find that the Minister still required to operate within the limits of his jurisdiction.

(3) What were the limits of the Minister's jurisdiction to impose a condition of licence?

The discretion granted to the Minister is not unlimited. Almost forty years ago in [1959] S.C.R. 122">Roncarelli v. Duplessis, [1959] S.C.R. 122, the Supreme Court of Canada affirmed the right of the Courts to limit the exercise of ministerial discretion to the purpose and objects of the statute granting the discretion. Rand J. set out the scope of absolute discretion at 140 as follows:

The field of licensed occupations and businesses of this nature is steadily becoming of greater concern to citizens generally. It is a matter of vital importance that a public administration that can refuse to allow a person to enter or continue a calling which, in the absence of regulation, would be free and legitimate, should be conducted with complete impartiality and integrity; and that the grounds for refusing or cancelling a permit should unquestionably be such and such only as are incompatible (sic) with the purposes envisaged by the statute: the duty of a Commission is to serve those purposes and those only. A decision to deny or cancel such a privilege lies within the "discretion" of the Commission; but that means that decision is to be based upon a weighing of considerations pertinent to the object of the administration.

In public regulation of this sort there is no such thing as absolute and untrammelled "discretion", that is that action can be taken on any ground or for any reason that can be suggested to the mind of the administrator; no legislative Act can, without express language, be taken to contemplate an unlimited arbitrary power exercisable for any purpose, however capricious or irrelevant, regardless of the nature or purpose of the statute. Fraud and corruption in the Commission may not be mentioned in such statutes but they are always implied as exceptions. "Discretion" necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate; and any clear departure from its lines or objects is just as objectionable as fraud or corruption. Could an applicant be refused a permit because he had been born in another province, or because of the colour of his hair? The ordinary language of the legislature cannot be so distorted. [emphasis mine]

A more recent application of the "purposes" and "objects" aspect of [1959] S.C.R. 122">Roncarelli is Multi-Malls Inc. v. Minister of Transportation (1976), 73 D.L.R. (3d) 18 (O.C.A.) In Multi-Malls, the Ontario Minister of Transportation and Communications bowed under political pressure to stop the development of a shopping centre by refusing to issue necessary road access and entrance permits. The Ontario Court of Appeal set aside the Minister's decision and referred the matter back for reconsideration on proper principles. In the judgment leading to this result, Lacourciere, J.A. cited [1959] S.C.R. 122">Roncarelli and at 32 said:

I am of the opinion that the Minister of Transportation and Communications allowed himself to be influenced by extraneous, irrelevant and collateral considerations which should not have influenced him in the exercise of his discretion to refuse the entrance permit. It seems clear that the purpose of the Act in general is not to ensure proper land use planning but generally to control traffic.

In addition, the Ontario Court (General Division) applied [1959] S.C.R. 122">Roncarelli in Re Doctors Hospital and Minister of Health (1976), 68 D.L.R. (3d) 220 where Orders in Council were declared invalid which revoked approval for a number of hospitals on the basis that it was necessary to reduce expenditures. Addressing the challenge by the hospitals to the validity of the orders, Cory J. (as he then was) at 231 said:

We have then determined from a review of the Public Hospitals Act and its history that it is regulatory in nature. Section 4(5) was not designed or intended to be used as a means of closing hospitals for financial or budgetary considerations.

It was apparent from the material before us, that the decision of the Lieutenant-Governor in Council to revoke the approval of the hospitals was based upon financial considerations. The Lieutenant-Governor in Council was acting, not pursuant to royal prerogative, but by the statutory authority contained in s.4(5) of the Public Hospitals Act.

We repeat and emphasize that the Court would not and could not, per se, review a decision made pursuant to royal prerogative. However, in the absence of clear words to the contrary in the Act in question, the Court can review the decision of the Lieutenant-Governor in Council to ensure that the discretion to revoke had only been exercised in pursuance of the objects and policy of the Act.

Since the Lieutenant-Governor in Council in its decision took into account financial considerations, it considered extraneous matters that were beyond the objects and policy of the Public Hospitals Act. [emphasis mine]

These decisions allow me to find in the case at bar that the Minister, when exercising statutory discretion, must act within the purposes, objects and policy of the Act. Therefore, I find that these features within which the Minister might have exercised his discretion to impose the Current Owner Restriction as a condition of licence were found within s.43(a) and (b) of the Act. Thus, the allowed purposes, objects and policy were only for the proper management and control of the sea-coast and inland fisheries and respecting the conservation and protection of fish.

(4) Does COR fall within the allowed purposes, objects and policy?

I have found that the purpose of COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli. It is clear to me that s.43 of the Act was not designed or intended to be used as a means of attaining this result. The answer on this issue is no.

Accordingly, I find there was a defect in jurisdiction "in the narrow sense".

(B) Did the Minister make an error which caused him to leave or exceed his jurisdiction?

Even if it can be said that there was no defect of jurisdiction in the narrow sense, then the question arises as to whether, on the considerations suggested by Jones and DeVillars, the Minister breached natural justice or acted in a discriminatory manner, with improper motive. A finding that either of these events occurred will result in a declaration that the implementation of the Current Owner Restriction is unlawful.

(1) Was there a breach of natural justice?

(a) Were the plaintiffs entitled to procedural fairness?

In [1979] 1 S.C.R. 311">Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police [1979] 1 S.C.R. 311 at 324-325, Chief Justice Laskin recognized that the common law duty of fairness applies to administrative decision making:

The emergence of the notion of fairness involving something less than the procedural protection of traditional natural justice has been commented on in de Smith, Judicial Review of Administrative Action [3rd ed. 1973] at p.208, as follows:

That the donee of a power must "act fairly" is a long-settled principle governing the exercise of discretion, though its meaning is inevitably imprecise. Since 1967 the concept of a duty to act fairly has often been used by judges to denote an implied procedural obligation. In general it means a duty to observe the rudiments of natural justice for a limited purpose in the exercise of functions that are not analytically judicial but administrative....

What rightly lies behind this emergence is the realization that the classification of statutory functions as judicial, quasi-judicial or administrative is often very difficult, to say the least; and to endow some with procedural protection while denying others any at all would work injustice when the results of statutory decisions raise the same serious consequences for those adversely affected, regardless of the classification of the function in question.

In Cardinal and Oswald [1985] 2 S.C.R. 643, the Supreme Court clarified the extent of the duty owed where at 653 Le Dain J. stated:

...there is a general common law principle, a duty of procedural fairness lying on every public authority making an administrative decision which is not of a legislative nature and which affects the rights, privileges or interests of an individual.

Thus, administrative decisions which are legislative in nature are excluded from the duty of fairness. The definition of a legislative decision is found within the following passage written by Mr. Justice Estey in [1980] 2 S.C.R. 735">Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735 at 758 to 759:

Where...the executive branch has been assigned a function performable in the past by the Legislature itself and where the res or subject-matter is not an individual concern or a right unique to the petitioner or appellant, different considerations may be thought to arise....In such a circumstance the Court must fall back upon the basic jurisdictional supervisory role and in doing so construe the statute to determine whether the Governor in Council [the Cabinet] has performed its functions within the boundary of the parliamentary grant and in accordance with the terms of the parliamentary mandate. [emphasis mine]

On this definition, the imposition of the Current Owner Restriction upon halibut licence holders by way of a condition on the licence to fish is not an administrative decision which is legislative in nature. Therefore, the plaintiffs were entitled to procedural fairness.

(b) To which specific procedural fairness rights were the plaintiffs entitled?

Mr. Justice Le Dain in Cardinal and Oswald at 664 confirmed that the specific procedural rights that will discharge the duty of fairness depend on the context of the case:

The question, of course, is what the duty of procedural fairness may reasonably require of an authority in the way of specific procedural rights in a particular legislative and administrative context and what should be considered to be a breach of fairness in particular circumstances.

To answer the above question, Mr. Justice Dickson in [1980] 2 S.C.R. 1011">Homex Realty & Development Company Ltd. v. Wyoming, [1980] 2 S.C.R. 1011 at 1051 provides the guidance that it is first necessary to decide where on the spectrum a particular case lies:

In Martineau it was said that review by certiorari was available whenever a public body has power to decide "any matter affecting the rights, interests, property, privileges or liberties of any person". Once it is clear that rights are being affected it is necessary to determine the appropriate procedural standard that must be met by the statutory body. Above all, flexibility is required in this analysis. There is, as it were, a spectrum. A purely ministerial decision, on broad grounds of public policy, will typically afford the individual little or no procedural protection. On the other hand, a function that approaches the judicial end of the spectrum will entail substantial procedural safeguards, particularly when personal or property rights are targetted, adversely and specifically. [emphasis mine]

In Homex, a village council and a land developer were embroiled in a dispute, and without notice to the developer, the council passed a by-law which seriously affected the developer's rights in the subject matter of the dispute. Upon deciding where on the spectrum the case lay, at 1052-1053 Dickson J. then stipulated which procedural safeguards should have been provided:

What we have here is not a by-law of wide and general application which was to apply to all citizens of the municipality equally. Rather, it was a by-law aimed deliberately at limiting the rights of one individual, the appellant Homex. In these circumstances, I would hold that Homex was entitled to some procedural safeguards. This does not mean that the municipality was under a duty to observe the procedures appropriate to a court of law. But, at a minimum, it was under a duty to give Homex notice of the proposed by-law and the opportunity to be heard.

In the case at bar, there was no notice to any licence holder that a Current Owner Restriction would be on the agenda for the May 3rd meeting when the decision was made by Bruce Turris to implement COR. And thereafter, before COR was implemented, there was no opportunity provided for licence holders to object to it separate from the whole of the IVQ proposal and, specifically, no provision was made for the plaintiffs to object to any adverse effect COR had upon them. The HAC process was so flawed that it cannot be considered a means of providing procedural fairness to the plaintiffs or other licence holders adversely affected by COR, and the appeal process specifically excluded the impact of COR as a consideration. On these facts, at a minimum, under what duty was the Minister?

In my opinion, at the very least, the Minister had a duty to provide those adversely affected by the Current Owner Restriction proposal the right to be heard, either through hearings or written submissions before it was implemented. Because the plaintiffs did not have the opportunity to exercise this procedural fairness right, I find that there was a breach of natural justice.

(2) Did the Minister act for an improper motive?

As found, the Current Owner Restriction is discriminatory. The defendants argue that even if COR is discriminatory, the Minister did not make an error which caused him to leave or exceed his jurisdiction. In this respect, the defendants argue that the test for such an error is that cited in Lacewood Development Co v. Halifax (1975) 58 D.L.R. (3d) 383 (N.S.C.A.) where McKeigan C.J. states at 395 to 396:

Wrongful discrimination involves two elements, both of which must be present hbefore a by-law should be condemned on this ground:

(1) The by-law must discriminate in fact. To use the words of Middleton J. in the "classic definition", by-laws discriminate if they "give permission to one and refuse it to another".

(2) The factual discrimination must be carried out with the improper motive of favouring or hurting one individual and without regard to the public interest.

On this authority, I find that to meet the test for wrongful discrimination an act must discriminate in fact, and this discrimination must be carried out with the motive of favouring or hurting one individual and without regard to the public interest. If these latter two features are present, the motive can be termed improper.

In order to extend the test further, however, the defendants have asked me to consider Lacewood in context with an earlier decision of the Supreme Court of Canada which it follows, being Township of Scarborough v. Bondi, (1959) 18 D.L.R. (2d) 161. At page 394 of Lacewood, McKeigan C.J. makes the following observation:

In my respectful opinion Bondi lays at rest the idea that a Court can presume to interfere with an otherwise valid enactment of a municipality or, in this case, of a planning appeal board, merely because it treats one person differently than another. Undoubtedly, "arbitrary or unjust discrimination" (Newcombe, J., in Read, supra. ) can invalidate a by-law, but such discrimination I conceive occurs only when a by-law favouring or hurting an individual has been passed in bad faith for that purpose and without regard to the public interest.

As a result of this observation, I have been urged to interpret McKeigan C.J.'s words "improper motive" in his two-part test as meaning "bad faith".

McKeigan J.A.'s observation is a restatement of the following sentence in Bondi found at page 260 of that case:

In a case of this kind I think the matter must be approached from the point of view of whether or not the municipal council in passing the by-law acted in good faith in the public interest or acted to promote some private interest.

I believe that the correct interpretation of this sentence from Bondi is that in judging the decision of a municipal council it is necessary to see if one or other of two options exist; good faith in the public interest, or the promotion of some private interest. Thus, I think that McKeigan C.J.'s observation is a misinterpretation of the sentence in Bondi and I do not find, therefore, that his words can be given the weight the defendants have asked me to place on them.

I am, however, willing to judge the Current Owner Restriction according to both the two-part test provided by McKeigan C.J. in Lacewood, and the options test from Bondi.

As I have found, the purpose for implementing COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli. On the Bondi test, there is no doubt that the decision was made to promote a private interest. On the Lacewood test, there is no question that the decision is discrimination in fact. There is also no question that the motive for making the decision was to favour old and hurt new entrants to the fishery. The only question that remains is whether doing so was without regard to the public interest.

I suppose it can be said that, with regard to the public interest, the ends of getting the IVQ formula implemented, including the Current Owner Restriction, justify the means of promoting a private interest through a discriminatory decision. But, in my opinion, this argument does not reflect the values that most Canadians expect of the Government of Canada.

As a representative of the Government of Canada, Mr. Turris was conducting the quota system initiative to act in the best interests of not only the fishery but also the licence holders as those most affected. From this standpoint, I would expect that he would be cautious to ensure that the greatest care possible be taken to protect licence holders' interests in the radical change contemplated. I would think that if one licence holder was aggrieved by this change that this should be cause for great concern.

From this point of view, I would expect Bruce Turris to have shunned any suggestion that would benefit some licence holders to the detriment of others, particularly when the benefit derived would be based in pure self interest, or greed, to uncut the language.

He did not do this, but rather turned from facilitator of the ideas of licence holders to an advocate for a certain group who would personally benefit by the COR decision reached. As I have said, Bruce Turris should have known that the "democratic process" which he designed was unreliable. Thus, he should have been extremely careful in agreeing to, much less advocating for, something which was so much in the self interest of the few at the table on May 3rd when so many were outside with absolutely no knowledge of what was being decided.

Bruce Turris should have listened to the strong statements of concern made by Art Sterrit, who spoke not only on behalf of Aboriginal fishers, but really also on behalf of the then unidentified 44 licence holders who would be detrimentally affected by the decision. This objection alone should have caused him to pause to reflect, to get the information and statistics requested, to have adjourned the meeting then in its eleventh hour, to have consulted his superiors and possibly the Minister on the precise details of COR before anything was done, and then to have reconvened HAC after this careful analysis and expressed the concerns of DFO, if there were any.

But most of all, he should have consulted with those licence holders who would be detrimentally affected and given their opinions on the subject much greater weight than those of Mr. Bazilli and others who adopted his opinion.

The decision to implement the Current Owner Restriction should not have been made as it was because it was remarkably unfair and unequal to do so. I find the paramount public interest in this case to be enforced is the principle that public officials must be scrupulously fair and equal in their decision making. Against this standard, unfortunately, the decision to implement COR was very unprincipled. On the whole of the evidence, therefore, I am left with no doubt that the decision was made without regard to the public interest.

I, therefore, find that the Current Owner Restriction fails both the Lacewood and Bondi tests. Accordingly, I find that in implementing COR, the Minister acted for an improper motive. As a result, he left or exceeded his jurisdiction.

CONCLUSION

(A) What relief should be granted?

As found, the Minister made one jurisdictional error in the narrow sense and two which caused him to leave or exceed his jurisdiction. As a result, I have no hesitation in granting the primary relief claimed by the plaintiffs, being a declaration that the Minister's decision in 1990 to implement the Current Owner Restriction is unlawful, and I so declare. As a result, on the basis of Lord Reid's decision in Amisminic Ltd. v. Foreign Compensation Commission as quoted by Jones and DeVillars above, I declare the decision to implement the Current Owner Restriction is a nullity.

It is important to note that the powers of the Minister under s.43 of the Act were made specific by regulation in February, 1993⁵¹, and now the Minister's authority is limited by s.22(1) of that regulation which reads:

22(1) For the proper management and control of fisheries and the conservation and protection of fish, the Minister may specify in a licence any condition that is not inconsisent with these Regulations or any of the Regulations listed in subsection 3(4) and in particular, but not restricting the generality of the foregoing, may specify conditions respecting any of the following matters:

(a) the species of fish and quantities thereof that are permitted to be taken or transported;...

The quota system, including the Current Owner Restriction has been continued since 1990 under a succession of Ministers acting under both s.43 of the Act and s.22(1) of the current regulations. Because the wording of the two provisions is virtually identical, I find that the limits of the Minister's jurisdiction are the same under each authority. Thus, since the 1990 decision to implement the Current Owner Restriction is unlawful, and is therefore a nullity, I declare that each similar decision made up to the present day is also unlawful and is also a nullity.

As set out in the Overview above, by agreement, the issues to be decided at trial have been split into two parts. The trial days to date have focussed on the issue of whether the decision to implement the Current Owner Restriction is unlawful. Since I have decided for the plaintiffs on this issue, the trial must continue in order to determine what further relief should be granted to them as a result.

I request both Mr. Smith and Mr. Partridge to work with the Registrar to allow me to set a mutually agreeable date for the continuation of the trial.

(Sgd.) "Douglas Campbell"

Judge

November 14, 1996

Vancouver, British Columbia

__________________

¹ The Pacific Halibut (Hippoglossus stenolepis from the Greek hippos, glossus, steno and lepis meaning respectively, horse, tongue, narrow and scale) is quite a fish. The maximum recorded size is 267 cm. (105 inches), and 225 kg. (495 pounds), and it is found from Santa Rosa Island in Southern California, to St. Lawrence Island and throughout the Bering Sea and south to Northern Japan. For the average person, the following description is enough to cause an immediate loss of interest in halibut fishing:
The lucky and surprised angler who catches a large Pacific halibut for the first time is often ill prepared and without the necessary heavy tackle. Even salmon fishermen mooching or slowly trolling for chinook sometimes hook this species which has a thick, but streamlined body and lunate, or crescent shaped tail. The large-mouthed Pacific halibut readily seizes baits such as octopus, squid or herring before charging off in long powerful runs. Subdue this large fish before hauling it into your small boat because the slapping tail of a large Pacific halibut has maimed and even killed people. (Lamb & Edgell, Coastal Fishes of the Pacific Northwest, Harbour Publishing, 1986, p. 201.)

² The Commission on Pacific Fisheries Policy Final Report, Dr. Peter H. Pearce, Commissioner, Vancouver, September, 1982, extensively reproduced in Brief of Documents, Vol.2, 155.

³ Turning the Tide, p.3.

⁴ Turning the Tide, p.124.

⁵ Brief of Documents, Vol.2, 157.

⁶ Brief of Documents, Vol.2, 157.

⁷ Brief of Documents, Vol.2, 158.

⁸ Brief of Documents, Vol.2, 111, 112.

⁹ Brief of Documents, Vol.2, 113, 114.

¹⁰ Brief of Documents, Vol.2, 115, 116.

¹¹ Brief of Documents, Vol.2, 117.

¹² Brief of Documents, Vol.2, 117.

¹³ Brief of Documents, Vol.2, 121.

¹⁴ Brief of Documents, Vol.2, 123.

¹⁵ Brief of Documents, Vol.2, 166.

¹⁶ Dawson, The Government of Canada, University of Toronto Press, 1964, p.346.

¹⁷ The Government of Canada, p.348.

¹⁸ See Brief of Documents, Vol.2, 118 for examples.

¹⁹ This issue, the way HAC operated and the reliance placed on the HAC experience is analyzed in greater depth in Section IV below.

²⁰ Both the plaintiffs and defendants filed transcripts. For the purposes here I will quote from the defendant's since it provides more detail of difficult to hear portions of the tapes.

²¹ Exhibit P-3, p.1.

²² Exhibit P-3, p.2.

²³ Exhibit P-3, p.5.

²⁴ Exhibit P-3, p.20.

²⁵ Exhibit P-3, p.23.

²⁶ In fact, there is credible evidence to establish that after the May 3rd vote, Bruce Turris knew that COR had in fact caused harm.
Walter Simpson, President of Simpson Fishing Co. Ltd. testified that when he went to see Bruce Turris to complain about the negative impact that COR had upon him, Bruce Turris acknowledged this fact by admitting that "unfortunately, I was one of the people who fell through the cracks". Mr. Norman Johnson testified that he also complained to Bruce Turris about the unfair and inequitable way he was treated, and that in response Mr. Turris was "kind of arrogant" and muttered, "big winners - big losers". And Rick Jones, President of Titan Fishing Ltd. testified that some time after the 1990 plan went into effect, in relation to his quota on sablefish, Bruce Turris acknowledged, "we got screwed in the halibut thing and that he would make it up". (While these quotations are taken from my bench notes and, therefore, might not be exactly as recorded, I am confident that they are close enough to make the point.)

²⁷ Exhibit P-3, p.13.

²⁸ Exhibit P-3, p.18.

²⁹ Exhibit P-3, p.11.

³⁰ Exhibit P-3, p.12.

³¹ Exhibit P-3, p.27.

³² Exhibit P-3, p.15.

³³ Exhibit P-3, p.22.

³⁴ Exhibit P-3, p.27.

³⁵ Exhibit P-3, p.25.

³⁶ Exhibit P-4, p.1.

³⁷ Read-in from Bruce Turris' Discovery Transcript of April, 12, 1995.

³⁸ Read-in from Bruce Turris' Discovery Transcript of April, 12, 1995.

³⁹ Exhibit P-3, p.2.

⁴⁰ Exhibit P-5.

⁴¹ Exhibit P-3, p.21.

⁴² Brief of Documents, Vol.2, 122.
This statement that the cut-off was decided to be the start of the 1989 season is possibly at odds with the vote that was taken on May 3rd which set the cut-off date at October 1, 1989 (see text for footnote 36). Bruce Turris' trial and discovery evidence establishes that the cut-off was to be the end of the 1989 season, and that COR provided those that purchased thereafter with the previous owner's catch history since those purchases would not have one of their own established prior to the cut off. My understanding of the evidence is that the halibut fishing season occurs between the spring and fall each year, which is consistent with the fact that, under the quota system approved in 1990, the season was to be March 1st to November 30th. (see Brief of Documents, Vol.2, 122, p.5.) If I am right in my understanding, the information provided to the licence holders prior to the final vote misrepresents what occurred at the May 3rd meeting. In any event, the failure to describe the exact terms of the vote taken is another example of the high degree of control that DFO retained over what it represented to be a democratic process.

⁴³ Brief of Documents, Vol.2, 122.

⁴⁴ Brief of Documents, Vol.2, 122.

⁴⁵ Brief of Documents, Vol.2, 166, 167.

⁴⁶ As an example, Brief of Documents, Vol.2, 174.

⁴⁷ Jones and DeVillars, Principles of Administrative Law (Toronto: Carswell, 1994), p.94-95.

⁴⁸ Brief of Documents, Vol.2, 112.

⁴⁹ Brief of Documents, Vol.2, 122.

⁵⁰ R.S.C. 1985, c.F-14.

⁵¹ Fisheries (General) Regulations, SOR/93-53.

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Carpenter Fishing Corporation v. The Queen, docket T-554-91

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