Date: 20090630
Docket: A-439-08
Citation: 2009 FCA 219
CORAM: SHARLOW
J.A.
RYER
J.A.
TRUDEL
J.A.
BETWEEN:
JOHNSTON CANYON CO. LTD.
Appellant
and
THE ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT
TRUDEL J.A.
[1]
This
appeal arises out of the refusal of the Minister of the Environment, then the
Honourable Rona Ambrose (the Minister), to grant a new lease to the appellant Johnston
Canyon Co. Ltd. (Canyon) at a rental rate to be selected by the appellant. In a
decision dated August 14, 2008 (2008 FC 940), Mosley J. dismissed Canyon’s
application for judicial review of the Minister’s decision. Canyon has appealed
the decision of the applications judge to this Court.
[2]
For the
reasons that follow, I am of the view that this appeal cannot succeed.
The relevant facts
[3]
Since
1927, Canyon has run a seasonal accommodation facility, consisting largely of
rustic bungalows, in Banff National Park. Canyon is one of several entities
operating out of national parks that are classified by Parks Canada as Outlying
Commercial Accommodation (OCA).
[4]
In 1963,
Canyon and the Crown signed a lease for 42 years, which was to expire on
December 31, 2004. That lease contained a right of renewal for a further
21-year term “at a rent to be determined by the Minister” (then, the Minister
of Northern Affairs and Natural Resources).
[5]
Well
before the expiration of the 42-year term, the Minister of Canadian Heritage
imposed a moratorium on OCA development in the mountain national parks. A panel
was appointed to review the OCA development issue and to deliver reports, which
would later serve as the basis for the Parks Canada’s guidelines respecting
OCAs. However, Parks Canada did not accept certain of the panel’s
recommendations respecting Canyon’s facility because of ecological concerns. These
concerns translated into site-specific guidelines applicable to Canyon, which
were detailed in a letter sent to the appellant by Parks Canada dated May 30,
2001.
[6]
This
letter initiated a series of unsuccessful negotiations between Canyon and Parks
Canada for a mutually-acceptable redevelopment plan and a new lease. The issues
in contention included redevelopment, the length of a replacement lease, and
the rental rate.
[7]
Effective
May 21, 2004, Parks Canada adopted a Revised Policy Directive for Commercial
Rent Setting (Policy Directive), which applied to all commercial leases for
lands under the administration of Parks Canada, including Canyon’s OCA. According
to the Policy Directive, if the Minister accepted the surrender of a lease, a
new replacement lease would be granted with rent based on a negotiated
percentage of gross revenue. However, if prior to May 20, 2004 “substantive
negotiations” had been completed between Parks Canada and the lessee regarding
the surrender of an existing lease and the granting of a replacement lease, the
lessee would be permitted to select another rental rate pursuant to subsection
6(1) of the National Parks of Canada Lease and Licence of Occupation
Regulations, S.O.R./92-25 (Regulations).
[8]
In June
2005, having not agreed on the terms of a new lease, Canyon exercised its right
of renewal of the 1963 lease, which would now expire on December 31, 2025
(Renewal Lease). However, Canyon continued its attempt to obtain Parks Canada’s
approval of a redevelopment proposal. After several letters were exchanged
between Parks Canada and Canyon regarding the redevelopment, Parks Canada sent
a letter to the appellant dated August 17, 2006, which outlined the acceptable
terms of a new lease. More specifically, the letter stated that if Canyon
wished to enter into a lease having a longer term than the existing Renewal
Lease, the new lease must be in line with the Policy Directive and thus subject
to rent based on the application of a negotiated percentage of gross revenue.
[9]
It is this
letter which forms the basis of Canyon’s judicial review application.
The Regulations
[10]
The
Minister’s authority to accept the surrender of a lease and to grant a new
lease is found in section 3 of the Regulations.
|
3. (1) Subject to subsection
(2) and sections 4 and 19, the Minister may, for any term not exceeding 42
years and on such terms and conditions as the Minister thinks fit, grant
leases of public lands …
(e) outside the
Town of Banff or the Town of Jasper, visitor centres and resort subdivisions
for the purposes of tourism, schools, churches, hospitals, service stations
and places for the accommodation, recreation or entertainment of visitors to
the parks.
…
(8) The Minister may
accept the surrender of a lease of public lands.
|
3. (1) Sous
réserve du paragraphe (2) et des articles 4 et 19, le ministre peut octroyer
des baux d’une durée d’au plus 42 ans, selon les modalités qu’il juge
indiquées, à l’égard des terres domaniales situées : […]
e) à
l’extérieur de la ville de Jasper, du périmètre urbain de Banff, des centres
d’accueil et des centres de villégiature, aux fins de tourisme, d’écoles,
d’églises, d’hôpitaux, de stations-service, de logement et de lieux de
divertissement ou de récréation pour les visiteurs des parcs.
[…]
(8) Le ministre peut
accepter l’annulation du bail visant des terres domaniales.
|
[11]
Subsection 6(1) of
the Regulations dictates the rental rates available to the lessee.
|
6. (1) At the time a lease is granted, the lessee
shall choose a rental rate set out in section 7, 8, 11, 13 or 14 that is
applicable to the location, use and conditions of occupancy of the leased
public lands and the purpose for which the lease is granted, and that rental
rate shall be a term of the lease.
|
6. (1) À
l’octroi du bail, le preneur doit choisir, parmi les taux prévus aux articles
7, 8, 11, 13 et 14, le loyer qui est exigible d’après l’emplacement, l’usage
et les conditions d’occupation des terres domaniales louées, ainsi que les
fins auxquelles le bail est octroyé; ce loyer est indiqué dans le bail.
|
[12]
There is no dispute
that the provision applicable to Canyon’s OCA is section 11 of the Regulations.
This provision lists several rental rates, including Canyon’s preferred rate,
wherein the rent is calculated on the basis of a percentage of the appraised
land value, and the rate preferred by Parks Canada, wherein the rent is
calculated on the basis of a percentage of gross revenue.
The
Federal Court Decision
[13]
On the basis of the
parties’ arguments and the evidence before him, the applications judge
concluded that the August 17, 2006 decision was made in accordance with the Canada
National Parks Act, S.C. 2000, c. 32 (the Act) and the Regulations. He
found that it was open to the Minister to decline to accept the surrender of
the Renewal Lease and to refuse to grant a new 42-year lease on the terms
sought by the appellant.
[14]
The applications
judge applied the standard of review of correctness to issues of jurisdiction
and legitimate expectations, and the standard of reasonableness to the exercise
of the Minister’s discretion.
[15]
The applications
judge envisioned the process relating to the granting of a new lease to occur
in two steps: (1) the Minister makes a discretionary decision to grant a lease
pursuant to subsection 3(1) of the Regulations, fettered only by subsection
3(2), section 4, and section 19; (2) once the decision is made, the lessee
makes the choice of rental rate pursuant to subsection 6(1) (reasons for judgment
of Mosley J. at paragraphs 23, 25). Thus if the Minister declined to grant a
lease pursuant to subsection 3(1), the second step would never come into play.
[16]
Furthermore, the
applications judge found that no “substantial negotiations” had taken place
between Parks Canada and Canyon before May 20, 2004, such that Canyon would be
able to choose its rental rate pursuant to the Policy Directive (ibid.
at paragraph 26).
[17]
The applications
judge also responded to Canyon’s assertion that the Minister had discriminated
between it and other OCAs by allowing other OCAs to select their rental rate. Relying
on this Court’s decisions in Parks Canada v. Sunshine Village Corp.,
2004 FCA 166, [2004] 3 F.C.R. 600 and Moresby Explorers Ltd. v. Canada
(Attorney General), 2007 FCA 273, [2008] 2 F.C.R. 341, he held that it was
within the authority of the Minister to discriminate unless her actions were
contrary to public policy (reasons for judgment of Mosley J. at paragraphs 29-30).
Furthermore, he found that there was no clear evidence of discrimination with
respect to the respondent’s treatment of other OCAs.
[18]
Finally, the
applications judge concluded that the Minister’s decision did not breach
Canyon’s legitimate expectation of obtaining a new lease with its desired
rental rate. The applications judge noted that the doctrine of legitimate
expectations can only give rise to procedural rights and, in any case, no
substantive promises were made by the Minister. He found that the appellant was
given many opportunities to respond to the Minister’s assertion that Canyon’s
only option was a new lease subject to a rental rate based on a negotiated
percentage of gross revenue (ibid. at paragraphs 36-38).
Issue
[19]
As held by this Court
in Canada Revenue Agency v. Telfer, 2009 FCA 23, 386 N.R. 212,
the role of this Court on an appeal from a decision disposing of an application
for judicial review is to determine “whether the court below identified the
appropriate standard of review and applied it correctly” (ibid. at
paragraph 18).
[20]
Both parties are in
agreement that the standards of review applied by the applications judge were
the appropriate ones. I agree. Accordingly, the only issue for this Court is
whether the applications judge applied these standards correctly to the facts
before him.
Analysis
[21]
The appellant submits
that the applications judge erred in failing to find that the Minister had
abused the discretion afforded to her in section 3 of the Regulations. It
asserts that subsection 6(1) of the Regulations gives the lessee a statutory
right to select the rental rate of its choice and that this right fetters the
Minister’s discretion. According to the appellant’s interpretation of the
Regulations, the Minister can never trump the lessee’s right to pick its rental
rate.
[22]
I agree with the
conclusion of the applications judge that it was within the Minister’s
discretion to refuse to accept the surrender of the current lease and to refuse
to grant a new lease except on the basis of a rental rate based on a percentage
of gross revenue.
[23]
Section 8 of the Act
gives both powers and duties to the Minister. It states:
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8. (1) The
Minister is responsible for the administration, management and control of
parks, including the administration of public lands in parks and, for that
purpose, the Minister may use and occupy those lands.
(2) Maintenance or restoration of ecological
integrity, through the protection of natural resources and natural processes,
shall be the first priority of the Minister when considering all aspects of
the management of parks.
|
8. (1) Les
parcs, y compris les terres domaniales qui y sont situées, sont placés sous
l’autorité du ministre; celui-ci peut, dans l’exercice de cette autorité,
utiliser et occuper les terres domaniales situées dans les parcs.
(2) La préservation ou
le rétablissement de l’intégrité écologique par la protection des ressources
naturelles et des processus écologiques sont la première priorité du ministre
pour tous les aspects de la gestion des parcs.
|
[24]
Accordingly, given
the responsibilities and powers allotted to the Minister, it is unsurprising
that section 3 of the Regulations affords the Minister a broad discretion in
dealing with leases of public lands.
[25]
As noted above, the
Minister is under no obligation to accept the surrender of a lease. The use of
the word “may” denotes that, while she is given the power to accept the
surrender of a lease, she has the discretion to refuse. In addition to the
word “may”, subsection 3(1) gives the Minister the authority to grant leases
“on such terms and conditions as the Minister thinks fit”. Accordingly, the
Minister may be guided by a rental rate policy, such as the Policy Directive at
issue, in exercising its discretion to grant leases.
[26]
Furthermore, I note that,
contrary to the appellant’s interpretation, subsection 6(1) does not give the
lessee an absolute right to select its rental rate, nor does it fetter the
Minister’s discretion. It merely requires the lessee, when granted a lease, to
select a rate in accordance with the criteria set out in subsection 6(1);
namely, one that is “set out in sections 7, 8, 11, 13 or 14 that is applicable
to the location, use and conditions of occupancy of the leased public lands and
the purpose for which the lease is granted”. The existence of subsection 6(1)
does not preclude the Minister from determining that a lease will not be
granted unless the lessee consents to a rental rate acceptable to the Minister.
[27]
The appellant
obtained every right contractually owed to it pursuant to the 1963 lease,
including its right to a 21-year renewal lease. The surrender of that lease and
the granting of a new lease were not based on such a right, but were in the
discretion of the Minister. Accordingly, I find that the Minister’s exercise of
this discretion was reasonable in the circumstances.
[28]
The appellant also
raised another aspect of its abuse of discretion argument before the
applications judge. It asserts that, unlike Canyon, other OCAs were permitted
to select the rental rate of their choice. Accordingly, the appellant submits
that the applications judge erred in failing to find that the Minister abused
her discretion by discriminating against Canyon.
[29]
I do not agree with
this assertion. The applications judge rightly held that it was within the
Minister’s discretion to negotiate different lease terms with different OCAs. Furthermore,
I note that the circumstances of each OCA, including the precise location of the
leased land, are different. This Court is not equipped to differentiate between
OCAs in order to determine if Canyon was treated discriminatorily.
[30]
Accordingly, I find
that the Minister did not abuse her discretion by discriminating against
Canyon, or for any other reason raised by the appellant.
[31]
Finally, the
appellant submits that the applications judge erred in failing to find a breach
of its legitimate expectations. While it concedes that the legitimate
expectations doctrine does not give rise to substantive rights, the appellant
claims that it is simply asserting a procedural right to have the Minister
review Canyon’s lease proposal in accordance with subsection 6(1) of the
Regulations.
[32]
In my view, the
appellant is merely attempting to cloak its argument for a new lease with a
rental rate of its choosing, clearly a substantive right, in procedural
language.
[33]
The Supreme Court of
Canada’s decision in Moreau-Bérubé v. New Brunswick (Judicial Council),
2002 SCC 11, [2002] 1 S.C.R. 249 makes it clear that the doctrine of legitimate
(or reasonable) expectations can only be used to create procedural, and not
substantive, rights. At paragraph 78, Arbour J. held:
The doctrine of reasonable
expectations does not create substantive rights, and does not fetter the
discretion of a statutory decision-maker. Rather, it operates as a component of
procedural fairness, and finds application when a party affected by an
administrative decision can establish a legitimate expectation that a certain
procedure would be followed: Reference re Canada Assistance Plan (B.C.),
[1991] 2 S.C.R. 525, at p. 557; Baker, supra, at para. 26. The
doctrine can give rise to a right to make representations, a right to be
consulted or perhaps, if circumstances require, more extensive procedural
rights. But it does not otherwise fetter the discretion of a statutory
decision-maker in order to mandate any particular result: see D. Shapiro, Legitimate
Expectation and its Application to Canadian Immigration Law (1992), 8 J. L.
& Social Pol’y 282, at p. 297.
[34]
In any case, the
applications judge found that there had been no substantive negotiations which,
based on the Policy Directive, would have allowed Canyon to choose its rental
rate.
[35]
Accordingly,
I find that the appellant’s legitimate expectations argument must fail.
Conclusion
[36]
I find
that the applications judge correctly applied the standards of review to the
Minister’s decision. Consequently, I would dismiss the appeal with costs to the
respondent.
"Johanne
Trudel"
“I
agree
K.
Sharlow J.A.”
“I
agree
C. Michael Ryer J.A.”
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