Imperial Oil Ltd. v. R., [1974] SCR 623

Supreme Court of Canada

Imperial Oil Ltd. v. R., [1974] S.C.R. 623

Date: 1973-02-28

Imperial Oil Limited Appellant;

and

Her Majesty The Queen Respondent.

1972: March 27; 1973: February 28.

Present: Judson, Ritchie, Hall, Spence and Laskin JJ.

ON APPEAL FROM THE EXCHEQUER COURT OF CANADA

Expropriation—Public works—Injurious affection—Pipe lines laid below harbour bed, relocated because of extension to harbour facilities—Right to compensation.

The appellant was granted an easement for 21 years by the Hamilton Harbour Commissioners to lay down, construct, operate and maintain not more than four pipe lines below the Hamilton Harbour bed. The way in which the appellant laid the pipe lines was subsequently approved by the Minister of Public Works. In 1961, it was decided to increase the dock facilities and to dredge the harbour. It became apparent that the appellant’s pipe lines would have to be relocated. Purporting to act under s. 2(3) of the Works in Navigable Waters Regulations, the Minister directed the appellant to relocate its pipe lines. These directions were followed at a cost of $95,000. The trial judge held that the appellant was not entitled to compensation for damage allegedly done to property injuriously affected by the construction of a public work. An appeal was launched at this Court.

Held (Judson J. dissenting): The appeal should be allowed.

Per Ritchie, Hall, Spence and Laskin JJ.: It does not appear that there is any provision in the Expropriation Act or the Navigable Waters Protection Act giving clear and unambiguous expression to the intention of Parliament to empower the Minister by regulation or otherwise to provide that a suppliant’s land may be injuriously affected by the construction of a public work without compensation. There can be no doubt that the proposed extension of the dock into the waters of Hamilton Harbour constituted a public work within the meaning of s. 2(g) of the Expropriation Act. The pipe lines were required to be moved because the dock would cover them and prevent

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access to them and also because they would interfere with the dredging operations. It was because of the decision to proceed with these public works that the pipes had to be moved and lowered and the fact that this was done before the public works were constructed affords no ground for proceeding on the assumption that the injurious affection which was undoubtedly suffered by the appellant was not occasioned “by the construction of any public work”.

Per Judson J., dissenting: The 1952 agreement between the parties did not and could not confer an unqualified right to maintain these pipe lines in situ. The 1961 direction of the Minister to lower the pipe lines and relocate them in part was properly given for navigation purposes as authorized by s. (2) of the Regulations. It was a risk which had existed from the very beginning and it does not give rise to a claim for compensation.

APPEAL from a judgment of Cattanach J. of the Exchequer Court of Canada, refusing compensation. Appeal allowed, Judson J. dissenting.

D.K. Laidlaw, Q.C., and T.G. Heintzman, for the appellant.

P.M. Troop, Q.C., and E.A. Bowie, for the respondent.

JUDSON J. (dissenting)—I agree with the single reason upon which Cattanach J. founded his judgment in the Exchequer Court. The 1952 agreement between Imperial Oil and the Harbour Commissioners did not and could not confer an unqualified right to maintain these pipe lines in situ. The right was always subject to the provisions of the Navigable Waters Protection Act and the Regulations made under that Act.

The subsequent approval of the Minister does not improve Imperial’s position. That approval was also subject to the terms of the Act and Regulations. The 1961 direction of the Minister to lower the pipe line and relocate it in part was properly given for navigation purposes as authorized by s. 2 of the Regulations. It followed as a consequence of completion of the

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Seaway. It was a risk which had existed from the very beginning and it does not give rise to a claim for compensation.

City of Toronto v. Consumers’ Gas Company[1] is not in point. The Gas Company had an unqualified and unconditional right given by its own Act of incorporation (11 Vict., c. 14) to lay its mains under city streets.

I have accepted one finding of the trial judge with some doubt. These pipe lines should have been laid six feet below the bed of the harbour. Instead of doing this, the Company had them laid on the surface of the bed, hoping that they would sink to the required depth. The trial judge’s opinion was that they had not sunk more than two feet. Nevertheless, he declined to found his judgment on this ground, being of the opinion that the Minister, if he was not satisfied with the material before him at the time of the application for approval, should have demanded further proof that the lines were where they should have been. The trial judge might well have found that the lines were in their proper position. However, he based his opinion upon the over-riding authority of the Act and Regulations, and with this opinion I agree.

I would dismiss the appeal.

The judgment of Ritchie, Hall, Spence and Laskin JJ. was delivered by

RITCHIE J.—This is an appeal from a judgment of Cattanach J. of the Exchequer Court of Canada in which he held that the suppliant was not entitled to compensation from Her Majesty the Queen for damage allegedly done to property injuriously affected by the construction of a public work.

By lease dated April 1, 1952, the suppliant was granted an easement for 21 years by the

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Hamilton Harbour Commissioners according it the right to

lay down, construct, operate, maintain, inspect, alter, remove, replace and reconstruct not more than four pipe lines over land far the greater part of which constitutes the bed of Hamilton Harbour perpetually covered by water.

One of the provisions of the lease was that all pipes were to be buried to a minimum depth of six feet below the Harbour bed, and although the suppliant did not comply with this condition, it will be seen that the way in which it laid the pipe lines was subsequently approved by the Minister of Public Works.

At the time when the pipe lines were initially laid, s. 4(1) of the Navigable Waters Protection Act, R.S.C. 1952, c. 193, provided that:

4. (1) No work shall be built or placed in, upon, over, under, through or across any navigable water unless the site thereof has been approved by the Governor-in-Council, nor unless said work is built, placed and maintained in accordance with the plans and regulations provided or made by the Governer-in-Council.

The suppliant’s initial application for approval was not granted because the work had already been completed when the application was made, but the Navigable Waters Protection Act, was amended by c. 41, S.C. 1956, the following sections of which appear to me to be pertinent to the present case:

4. (1) No work shall be built or placed in, upon, over, under, through or across any navigable water unless

(a) the site and plans thereof have been approved by the Minister; and

(b) the work is built, placed and maintained in accordance with the plans and the regulations.

5. …

(2) The Minister may, subject to deposit and advertisement as in the case of a proposed work, approve of the plans and site of a work after construction thereof has commenced.

…

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(b) if five years have elapsed since completion of construction of the work;

and such approval has the same effect as if given prior to commencement of construction of the work.

Pursuant to the power afforded by the last-quoted section, the Minister gave formal approval on February 19, 1958, in the following terms:

APPROVAL
TWO 6-INCH PIPE LINES WATER LOT “A”,
WATER LOT “B”, HAMILTON HARBOUR,
WATER LOT ADJOINING HAMILTON
HARBOUR PROVINCE OF ONTARIO.

The Honourable the Minister of Public Works, pursuant to the provisions of the Navigable Waters Protection Act, Revised Statutes of Canada, 1952, Chapter 193, as amended by Chapter 41 of the Statutes of Canada, 1956, hereby approves the site according to the attached description, and the annexed plans, of the above-mentioned work.

By paragraph 3(a) of its amended defence the respondent pleaded that this ministerial approval was based on a misrepresentation by the suppliant as to the position of the pipe and it was further alleged that the two pipe lines of the suppliant were not built or placed on the site approved by the Minister or built in accordance with the plans so approved. In this regard I adopt the view expressed by the learned trial judge where he said:

In my view this defence is not supported by the evidence adduced. What is alleged is that the pipe lines were not laid as represented in the plan accompanying the application for approval in that the pipe lines were not at the elevation, nor buried to the depth indicated on the plan and that the Minister was misled into approving something he did not intend to approve. The plan was nothing more than a diagramatic schematic sketch. It flows from a section taken along the centre line and does not purport to show nor could it show with exactitude where the two pipe lines, which were far removed from the centre line, lay with respect to the surface of the Harbour bed. There was no misrepresentation nor any intention to mislead. If the plan was inadequate or deficient in any particular for the Minister’s purposes, it seems to me that the remedy was to require

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a more specific and detailed plan. It was ascertained subsequently that the pipes were not 6 feet below the surface of the bed but, in my opinion, what the Minister approved in February 19, 1958 was the vertical and horizontal location of the pipe lines as they then lay. In this conclusion I am fortified by a statement in the examination for discovery of a Crown witness which was read in as part of the suppliant’s evidence that approval was given to the works ‘as they then were’.

In 1961 it was decided by the Hamilton Harbour Commissioners and the Minister of Public Works that as a result of the completion of the Seaway and the heavier traffic which was therefore to be anticipated in Hamilton Harbour, it would be necessary to increase the dock facilities and to dredge the harbour to a depth of 27 feet to accommodate vessels of that draft.

Accordingly the Harbour Commissioners, in conjunction with the Department of Public Works, undertook to extend the dock at the foot of St. Catherines Street westward into the waters of the harbour in such fashion as to cover the suppliant’s two pipe lines for a distance of approximately 960 feet, and to prevent access thereto by the suppliant. Such an extension, taken in conjunction with the anticipated increase in the use of the harbour by vessels of a deeper draft, made it apparent that the suppliant’s pipe lines would have to be relocated and buried to a further depth of six feet. In this regard the learned trial judge observed:

There was the utmost co-operation between the parties with respect to engineering design and the like to accomplish this end with the least inconvenience to either party. The only disagreement between them was which party should bear the cost.

The cost of dredging the bay was assumed entirely by the Crown and paid from the Consolidated Revenue Fund.

The cost of the construction of the wharf was shared equally by the Crown and the Hamilton Harbour Commissioners. The 50% burden assumed by the Crown was paid from the Consolidated Revenue Fund. The 50% share of the cost assumed by the Commissioners was paid to the extent of 25% from

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the Commissioners’ funds and the balance of 75% assumed by the Commissioners was financed by a loan from the Crown.

Therefore there is no question that the dredging of the Harbour and the construction of the wharf constituted ‘public works’ within the meaning of those words as defined in section 2(g) of the Expropriation Act, nor was this disputed by counsel for the Crown.

By two letters dated July 18th, 1961 and December 4th of the same year, the Minister of Public Works directed the suppliant to lower its pipe lines six feet below the level shown on the plans approved by the Minister in 1958 and to relocate them in order to make way for the new extended dock facilities. These directions were followed by the suppliant to the satisfaction of the Minister at a cost of $95,000 and as I have indicated, the only issue on this appeal is the question of whether the suppliant is entitled to be compensated for this expenditure.

The Minister’s direction in relation to the pipe lines purport to be given pursuant to the authority of s. 2(3) of the Works in Navigable Waters Regulations, S.O.R. 1956‑300 which provides that:

2. (3) The owner or person in possession of a work shall comply with such directions for navigation purposes as may be given by the Minister in respect of such work.

The broad foundation upon which the suppliant bases its claim for compensation is its reliance upon the general principle expressed by Lord Warrington of Clyffe in Colonial Sugar Refining Co. Ltd. v. Melbourne Harbour Trust Comrs.[2], where he said in relation to the statute in question in that case:

In considering the construction and effect of this Act, the board is quided by the well‑known principle that a statute should not be held to take away private rights of property without compensation unless the intention to do so is expressed in clear and unambiguous words.

It is contended on behalf of the respondent that the ministerial approval given in February

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1958 was conditional upon compliance by the suppliant with the provisions of the Navigable Waters Protection Act and the regulations made thereunder and that as Regulation 2(3), supra, was made pursuant to the powers vested in the Minister under s. 10 of the Navigable Waters Protection Act, and it being agreed that the pipe lines in question constituted “a work” within the meaning of that statute, the suppliant’s position was that its title was at all times subject to the requirement that it “comply with such directions for navigation purposes as may be given by the Minister in respect of such work”.

Assuming this to be the case, it does not appear to me that there is any provision in the Expropriation Act or the Navigable Waters Protection Act giving clear and unambiguous expression to the intention of Parliament to empower the Minister by regulation or otherwise to provide that a suppliant’s land may be injuriously affected by the construction of a public work without compensation.

It cannot be disputed that the rights which the suppliant enjoyed under its agreement with the Hamilton Harbour Board are included in the definition of “land” in s. 2(d) of the Expropriation Act nor can there be any doubt that the proposed extension of the St. Catherines Street dock into the waters of Hamilton Harbour constituted a public work within the meaning of s. 2(g) of that statute. It appears clear to me that the intention to compensate a land owner for injurious affection created by the construction of any public work is made manifest by the provisions of s. 23 of the Expropriation Act which provide:

The compensation money agreed upon or adjudged for any land or property acquired or taken for or injuriously affected by the construction of any public work shall stand in the stead of such land or property; and any claim to or encumbrance upon such land or property shall, as respects Her Majesty, be converted into a claim to such compensation money or to a proportionate amount thereof, and shall be

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void as respects any land or property so acquired or taken, which shall, by the fact of the taking possession thereof, or the filing of the plan and description, as the case may be, become and be absolutely vested in Her Majesty.

In relation to the circumstances of the present case, I take this section to support the view that if the suppliant was required to move its pipe lines by reason of the intrusion of the dock into the area occupied by them, the suppliant is entitled to compensation payable in accordance with the statutory procedures established to that end.

The learned trial judge, in describing the reason for requiring the pipe lines to be moved, had this to say:

On completion of the Seaway the Hamilton Harbour Commissioners decided to increase their dock facilities and where necessary to dredge the Harbour to a depth of 27 feet to accommodate the larger vessels of that draft which it was anticipated would be using the Harbour.

To accomplish this end the Commissioners undertook to extend their dock, known as the Catherine Street dock, westward into the waters of the Harbour. This would cover the suppliant’s two pipe lines for a distance of approximately 960 feet and would prevent access thereto by the suppliant. Further, the presence of the pipe lines at their then depth presented the danger of their being fouled by the anchors of ships using the area and also prevented the necessary dredging operations to deepen the Harbour and the use of fill to construct the dock.

This appears to me to be a clear finding that the pipe lines were required to be relocated and lowered as a result of the Crown’s decision to construct a public work, but notwithstanding this finding, the learned trial judge found the suppliant’s claim for compensation to be fallacious on the following grounds:

The fallacy of the argument on behalf of the suppliant is, as I see it, that the suppliant was required to move its pipe lines by reason of the intrusion of the public work into the area occupied by its pipe lines. That was not the case.

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It is well settled that the right to expropriate, being an unusual and exorbitant right, must be found in the express words of a statute for the right is never implied. The Minister did not, nor did he purport to expropriate anything from the suppliant. Section 3 of the Expropriation Act outlines what the Minister is empowered to do. Those powers were not invoked, nor did he purport to act under any other statute giving the power of expropriation. Of course counsel for the suppliant directed my attention to the words in section 23 of the Expropriation Act where reference was made to compensation for lands injuriously affected by the construction of any public work, but here there was no public work constructed until after the removal of the pipe lines.

The suppliant was required to move its pipe lines because it was so directed to do by the Minister as he was authorized to do for navigation purposes by virtue of section 2(3) of the Regulations. Approval had been given to the suppliant to lay its pipe lines where and as it did but that approval was conditional upon the Regulations and the Regulations were invoked to direct the removal of those pipe lines from that location. Since the approval originally given was qualified, it could not have been an absolute approval but one that was subject to revocation or amendment as was done.

The italics are my own.

It appears to me that the learned trial judge recognized the force of the suppliant’s argument based on section 23 of the Expropriation Act but considered that because the public work was not constructed until after the removal of the pipe lines the suppliant’s rights were not injuriously affected by reason of its construction. I am unable to subscribe to this argument because, as the learned trial judge himself pointed out, the pipe lines were required to be moved because the dock would cover them for approximately 960 feet and prevent access to them and also because they would interfere with the dredging operations. It was because of the decision to proceed with these public works that the pipes had to be moved and lowered and the fact that this was done before the public works were constructed in my view affords no ground for proceeding on the assumption that the injurious

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affection which was undoubtedly suffered by the suppliant was not occasioned “by the construction of any public work”. The reasoning of the learned trial judge appears to me to involve the proposition that if the suppliant’s rights are injuriously affected as a necessary prerequisite to the construction of a public work he is not entitled to any compensation, whereas different considerations apply if the work has been constructed. This kind of reasoning was rejected by the Privy Council in Toronto Corporation v. Consumers’ Gas Co.[3] The gist of that case was in my view accurately described in the course of the reasons for judgment of Mr. Justice Cattanach where he summarized it as follows:

The city constructed a sewer under a street in which the freehold vested in the city. This construction made it necessary for the Gas Company to lower its gas mains. It was held that the gas mains were within the definition of land in section 321(b) of the Ontario Municipal Act (1913) Ontario. The definition in that section included a right or interest in, and an easement over land. The definition of ‘land’ in section 321(b) of the Ontario Municipal Act (supra) then in effect is similar to and even narrower than the definition of ‘land’ in section 2(d) of the Expropriation Act.

It was also held that the Toronto Corporation was liable for the cost of lowering the gas mains in that the gas company’s ‘land’ was injuriously affected by the Toronto Corporation’s exercise of its statutory powers under section 325(1) of the Ontario Municipal Act the language of which is substantially similar to that of section 23 of the Expropriation Act.

In the course of the reasons for judgment delivered by Meredith, C.J.O., on behalf of the Court of Appeal of Ontario in the Consumers Gas case[4], he took note of the fact that the reason for lowering the gas mains was so that the sewer could be constructed, saying, at page 23:

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It is conceded by the appellant that the lowering of the gas main was necessary to enable the sewer to be constructed, and that, if the appellant is liable to pay the expense incurred in lowering the gas main, the respondent is entitled to recover the amount sued for; and the action is really brought for the purpose of obtaining a judicial determination as to whether the cost of such a work is to be borne by the appellant or by the respondent.

In conclusion, Meredith C.J.O. said, at page 24:

The land of the appellant, (Consumers’ Gas Co.) i.e., the soil in which its pipes were laid, was injuriously affected by the exercise of the power of the respondent or its council in the construction of the sewer, the laying of which necessitated the removal of the pipes, and the appellant was entitled to compensation for the damages necessarily resulting from the exercise of that power, and it follows that the appellant cannot be required to repay to the respondent the expense incurred in taking up and relaying the pipes.

Mr. Justice Cattanach’s view that compensation should be denied under s. 23 of the Expropriation Act because “there was no public work constructed until after the removal of the pipe lines” appears to me to run directly contrary to the reasoning in the Consumers’ Gas case, and as I am in any event unable to subscribe to it, I would allow this appeal and grant the prayer of the suppliant for compensation in the amount of $95,000 together with interest thereon at the rate of 5 per cent per annum from October 1, 1962, when the work of lowering and relocating the pipe lines was completed until the date of judgment.

The appellant will have its costs in this Court and in the Exchequer Court of Canada.

Appeal allowed, Judson J. dissenting.

Solicitors for the appellant: McCarthy & McCarthy, Toronto.

Solicitor for the respondent: D.S. Maxwell, Ottawa.