This case involved a fishing enterprise type partnership where one partner continued to carry on the enterprise after the break up of the partnership. This appeal concerned the following issues:

(1) Whether the trial judge erred in law in determining that the value of the assets, for the purpose of sharing between the partners, is the value at the time of distribution and sale of the assets rather than the estimated value as at dissolution;

(2) Whether the trial judge erred in determining the share of post-1999 income of the partnership payable to the departing partner on the basis of the estimates, without admitting the income tax returns of the partner who continued the business; and

(3) Whether the trial judge erred in ordering that the licences and the boat be sold.

With respect to item one (time of valuation), the appeal court ruled that the time of the valuation would be the time at which the assets are distributed. As a result the departing partner retained the benefit of an increase in value of the assets.

With respect to item two (entitlement to post break up income), the court ruled that "[w]here a partnership has existed and has either been dissolved, or if there has not been a formal dissolution but a partner has 'otherwise stopped being a partner', without a final settlement of accounts as between the partners, and one or more partners continue to use the assets, name or business connections and earn income, that income must be accounted for to the partner or partners who have not continued to make use of the partnership assets, name or business connections" (para. 60).

In this case, the only real income producing assets were the fishing licences. Since the partner that continued to carry on the business deliberately obstructed the court's ability to provide the other partner with an accounting, the court relied upon the unchallenged expert evidence of the departing partner regarding the the type of income that fishing enterprises of the same type normally earned during the relevant time period.

With respect to item three (order for sale of licence and vessel), since there was a true dissolution of the partnership, under the provisions of the Partnership Act, a partner is entitled to insist that the partnership property be sold to ascertain its true value.

This case involved a civil action by the owner of the Spanish Trawler "Estai" against the Government of Canada arising out of its highly publicized seizure on the high seas in March of 1995. In response to various arguments advanced by the vessel owner, the trial court (2005 FC 1011 (link)) concluded as follows:

(1) Pursuant to the terms of the Coastal Fisheries Protections Act the regulations authorizing the arrest of the "Estai" on the high seas were valid and the ensuing arrest was therefore legal;

(2) When arresting the vessel, the authorities were not reckless and did not use excessive force;

(3) Ice damage was not proven;

(4) Given the stay of proceedings and remarkable circumstances, damages were awarded to cover out of pocket legal, ships agents expenses, loss of fishing income, and extra bunkers; and

(5) No punitive damages were ordered.

The Crown appealed the trial court's award of damages and the the plaintiff cross appealed on a number of grounds, the main one being that the trial court erred in concluding that the regulations authorizing the arrest of vessel on the high seas were not authorized by the Coastal Fisheries Protection Act.

The court rejected the vessel owner's cross appeal primarily upon a conclusion that the challenged regulations were intra virus. However, prior to doing so, it embarked upon an interesting review of the law with respect to the liability of the Crown for damages arising from the enactment of laws subsequently found to be unconstitutional. In doing so, it concluded that the Crown will not be liable unless it can be established that it was either acting in bad faith, was negligent or was reckless (para 61).

Appliction for leave to SCC dismissed [2007] SCCA 119

This case involved a fish processing plant that was refused a fish processing licence from the Provincial Minister of Fisheries because of its alleged indebtedness to the Provincial Government arising from a loan guarantee. The fish processor commenced a judicial review proceeding against the Government and its officials and then obtained an interim declaration that the fish processor had a right to have its 2004 processing licence issued to it and order that the licence be issued pending litigation.

On appeal by the Crown, the appeal court vacated the interim declaration on the grounds that it was unnecessary as an interlocutory injunction was available.

With respect to the issue of whether or not an interlocutory injunction should be issued, after a lengthy review of the applicable authorities on injunctions and related authorities on stays of proceedings, the court the court set out the following test:

All these comments suggest that it is time to set aside attempts to develop separate jurisprudence for mandatory versus prohibitory interlocutory injunctions or to make distinctions between interlocutory injunctions and stays of proceedings. Rather, there needs to be a focus on the principles applicable to all these analyses.

I would adopt the view that, while there must be a serious issue to be tried, to begin with all that is required is a finding that the issue is neither frivolous not vexatious. Once that is determined the court must consider the issues of irreparable harm and balance of convenience. Those latter two issues may be weak for the applicant, in which case it may be necessary to take another look at the seriousness of the issue to be tried. Where the case for the applicant appears almost certain to be found in his favor, then the other issues may not need to have a particularly strong weight in their favor, they could even be neutral. However, even where a judge is doubtful about the success of a case, but cannot find the issue to be frivolous, then irreparable harm to the applicant and/or overwhelming inconvenience to the applicant as opposed to very little inconvenience to the respondent, can decide the issue in the applicant’s favor. (para. 64-5).

Although the trial level judge granted an injunction, he did not state state what test, if any, he applied in granting the injunction. Accordingly, his decision amounted to an error of law. Since all of the material in support of the original application was before the appeal court, it considered the injunction application on its merits.

With respect to the first part of the three part test, although the material put forward was not strong, it convinced the court that there was a serious issued to be tried, because of the allegations that the discretion of the Treasury Board on whether or not to direct the minister to issue a processing licence was fettered by public announcements of the premier of the province. In addition, there was some evidence to suggest that the fish processor was not truly indebted to the province. However, given the existence of a strong privative clause, the existence of a serious issue to be tried was not sufficient to support an injunction without strong evidence of irreparable harm or balance of convenience.

In this regard, the Government provided no evidence of irreparable harm. Conversely for the fish processor there was evidence that: (1) the processor had been issued licences for the 12 previous years; and (2) the failure to obtain a licence would mean it could not hire its workers, process fish, meet the requirements of its suppliers and possibly go out of business.

Based upon all of the above, the appeal court was prepared to issue an interlocutory injunction. Although it was not prepared to order the government to issue a licence in the future, it granted an order enjoining the Minister of Fisheries, Aquaculture and the Environment from refusing to issue a fish processing licence to the fish processor on the basis that it was indebted to the province (para. 101).

This case involved the ranking of Canadian fishing vessels on a list that allowed these vessels to participate in the U.S. tuna fishery. Under this list, it was anticipated that only the first 94 fishing vessels would be able to participate in this fishery in 2007 and thereafter. After being placed at 97th position on the list, the applicant appealed its ranking to the Minister of Fisheries by way of appeal to the Pacific Region Licence Appeal Board ("PRLAB"). Based upon a non binding recommendation from the PRLAB, the Minister refused to change the applicant's position on the list. Approximately three weeks after the thirty day deadline for filing an application for judicial review of the Minister's decision, the applicant filed an application for an extension of time. Shortly thereafter, Azulemar Fishing Ltd. was added to the proceeding as a respondent, as it occupied the 94th position on the list and would be unable to fish in 2007 if bumped off of the list by the applicant.

Upon hearing the application, the court denied the extension for the following reasons:

1) With respect to the existence of a reasonable explanation for the delay, the court concluded that the applicant did not form the intention to appeal until three weeks after the due date. Efforts to determine what is behind an impugned decision and determining what remedies to take do not constitute adequate explanations for delay.

2) With respect to the existence of an arguable case, the court concluded that judicial review of a decision not to vary a policy is not readily available.

3) With respect to prejudice, there was prejudice to the public in that there is a public interest in finality of decisions (Grenier v. Canada 2005 FCA 348). There was also clear prejudice to Azulemar Fishing Ltd., because it expended funds for the refit of its fishing vessel for the tuna fishery after the 30 day appeal period expired. This prejudice was compounded by the failure of the applicant to serve Azulemar with notice of its application in a timely manner.

This case involved a quantity of herring spawn on kelp that was seized pursuant to s. 58(1) of the Fisheries Act (1970) and subsequently sold pursuant to s. 58(1) and paid into the consolidated revenue fund. After a successful appeal by the fishermen to the Supreme Court of Canada, the matter was eventually stayed by the Crown and the proceeds of sale were paid out to the fisherman eight years later pursuant to s. 73.1 of the Fisheries Act without interest. It was agreed that if interest were payable, it would be $132,000.

The issue before the Supreme Court was whether or not the Crown was required to pay interest on the funds for the period in which the funds were held.

Although there was a dearth of authority directly on point, the trial court canvassed a great deal of jurisprudence dealing primarily with non fisheries cases to reject all of the fishermen’s arguments and conclude that the Fisheries Act is a complete code and “in the absence of statutory authority there is no obligation on the Crown to pay interest.” (2002 BCSC 1447)

Upon appeal, the decision of the trial court was reversed in a decision written by Madam Justice Huddart. In making an order for the payment of interest, the court based its order upon a breach of fiduciary duty, though not one arising from the fact that the fisherman was aboriginal. The court classified the Crown as an “administrator of special purpose funds” who by virtue of its discretionary power and other factors became a fiduciary.

Upon further appeal, the Supreme Court of Canada reversed the B.C.C.A. and held that no interest was payable by the Crown. In doing so, it relied upon R. v. Ulybel Enterprises Ltd. [2001] 2 S.C.R. 867 in support of its finding that the Fisheries Act was a complete code dealing with the return of seized property. The Act provides for payment of interest in other circumstances (s. 71.1(2) and s. 79.4(1)), but not when the proceeds of seized items are returned under s. 73.1. Since no provision is made by the Fisheries Act for the payment of interest, no payment is required. In making its decision, the court rejected arguments based upon the requirements of the Financial Administration Act, unjust enrichment, fiduciary duty and trust. With respect to unjust enrichment, the court found that the provisions of the Fisheries Act referred to above fell into the "disposition of law" category of juristic reasons for an enrichment. With respect to breach of fiduciary duty, the court distinguished the case of Authorson v. Canada (2002), 58 O.R. (3d) 417 that had been relied upon by the B.C..C.A.

This case involved a prosecution under the Fisheries Act. In the course of a pre-trial application by the defence for disclosure of Crown documents, the matter was adjourned so that the parties could exchange and file written submissions. Although written submissions from both parties were filed, for some unexplained reason only the Crown's submissions were provided to the judge hearing the motion. In the course of the subsequent hearing it became apparent that the judge had not received the written submissions of the defence and attempted to remedy the situation by hearing oral submissions from counsel for the defence.

Upon receiving an adverse ruling on the disclosure motion, the defence brought an application for certiorari of the ruling and an order of mandamus directing that the disclosure application be heard afresh before a different judge.

After reviewing the evidence and the applicable authorities, the court concluded that "an informed person viewing the events realistically and practically would concluded that in the circumstances that occurred here there was an appearance of bias" (para 39). Accordingly the requested remedies of certiorari and mandamus were granted.

This case involved a bankrupt fisher who because of poor health, arranged for another person to fish his crab licence. At issue was the extent to which the trustee in bankruptcy could collect the revenue received from the licence revenue. Although it was agreed that the licence itself was exempt from seizure (see s. 2 of the Bankruptcy Act), the court ordered that the revenue from the licence in 2003 was payable to the trustee. From that money the trustee was obliged to pay all necessary expenses relating to the fishery.

Editor’ note: For other cases on Bankruptcy as it relates to fishing licences see:Re Bennet (1988), 67 C.B.R. (NS) 314 (B.C.S.C.); Waryk v. Bank of Montreal (1990) 80 C.B.R. (N.S.) 44 (B.C.S.C.); Caisse Populaire de Shippagan Ltee v. Ward [2000] N.B.J. No. 378 (N.B.Q.B.); Careen v. Fewer & Strathie Ltd. 2003 NLCA 33 (digested herein).

This case was upheld on appeal.

See also 2004 NBQB 200 where an application for discharge is refused.

This case involved the breach of agreement respecting the purchase and sale of a fishing licence. This agreement included a declaration of trust concerning the status of the licence prior to it being transferred to the purchaser. Prior to the licence being completely paid for and prior to the transfer of the licence, the vendor made an assignment in bankruptcy. In order to facilitate the completion of this transaction by the trustee, a court made an order authorizing the trustee to sign documents in place of the bankrupt vendor. Upon appeal by the bankrupt, the court refused to set aside the order and revised the order to provide that “any benefits, and any obligations necessary to claim those benefits, of the agreement . . . flow through to the trustee in bankruptcy, and for greater certainty, the authority of the trustee in bankruptcy to sign, in the place of [the bankrupt] any and all documentation required by the Department of Fisheries and Oceans, or others, to effect the transfer of fishing licences . . . is confirmed.”

Editor’s note: It is not known whether or not D.F.O. recognized the validity of this order and transferred the licence?

Post script: The use of trust agreements on the East coast of Canada has been challenged in a discussion paper released by D.F.O. entitled "Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries" December 2003 www.dfo-mpo.gc.ca/afpr-rppa

This case involved an application to set aside the arrest of a commercial fish packing vessel. The Plaintiff alleged that gillnet herring licences supplied to a herring joint venture for vessels that caught fish and then delivered them to the fish packer were necessaries or services supplied to the packer. The court rejected this argument and struck the in rem part of the plaintiff’s claim for the following two reasons:

Based upon Radil Bros. Fishing Co. v. Canada (2001) 207 D.L.R. (4th) 82 (F.C.A.) (digested herein), the supply of fishing licences is not considered a necessary or services supplied to a ship; and
Even if the fishing licences or the services in providing them could be considered a necessary, they were not supplied to the arrested packing vessel, they were only supplied to the vessels that delivered fish to the packer.

This case involved a Nova Scotia corporation involved in the business of fishing for silver hake and selling it to an offshore market. The company alleged that it was injured as a result of : (1) a delay in approving its fishing licence and quota in 1995; (2) it received a shortfall in its quota allocation in 1995; and (3) in 1996 it was denied a licence because it did not meet a 15 per cent Canadian processing requirement.

The Crown made a pre-trial application to strike the statement of claim on the grounds that under s. 28 and 18.1 of the Federal Court Act the Nova Scotia Supreme Court did not have jurisdiction because the action was really judicial review dressed up as a tort action.

In denying the Crown’s motion, the court applied the test set out in Horseman v. Horse lake First Nation [2002] A.J. No. 1020 (Q.B.) to the effect that the plaintiff need only show that it was not plain and obvious at this stage that its action was not based on a cause of action other than judicial review. In applying this test, the court reviewed the plaintiffs claims of: (1) abuse of public office; (2) interference with the respondent’s economic interests; and (3) interference with the Respondent’s economic relations to conclude that these were clearly issues of tort law and not within the scope of judicial review.

Editor's note: For more cases dealing with this issue see footnote 17 in the paper CROWN LIABILITY C.L.E. of British Columbia FEDERAL COURT PRACTICE UPDATE - 2003 by Brad Caldwell and Robin Whittaker located in the Papers Section of the Fisheries Page.

This case involved an action by a fish processing company to enforce an alleged agreement by a fisherman to hold a lobster licence as nominee for the company. Upon a summary judgement application, the court gave judgement for the fish processing company and ordered the fisherman to execute all necessary documents to transfer the licence to a nominee of the fish processor. The fisherman appealed the decision and sought a stay of execution of the order pending appeal.

The Court of Appeal applied the test set out in Fulton Insurance Agencies Ltd. v. Purdy (1990), 100 N.S.R. 92d) 341 (C.A.) to deny the stay for the following reasons:

(1) The applicant satisfied the first part of the test by establishing it had an arguable case on the appeal;

(2) Since the applicant could be compensated in damages and the respondent appeared to have the financial ability to pay the damages, there was no irreparable harm; and

(3)There were no exceptional circumstances, such as an egregious error on the face of the judgement, which would make it fit and just to grant a stay.

This is not a fisheries case, but the decision of R. v. Hertel (1986) 32 C.C.C. 93d) 335 (B.C.S.C.) referred to herein, could be useful when interpreting s. 71(2) of the Fisheries Act. This section provides that “a court may order any fish or other thing seized under this Act to be returned to the person from whom it was seized if security is given to Her Majesty in a form and amount that is satisfactory to the Minister.” On the basis of Hertel, it could be argued that the portion of this section giving the Minister rather than the court the discretion to fix the amount of security is contrary to the doctrine of separation of powers and independence of the judiciary.

Note: Although not a fisheries case, this case could be applicable to a case involving failure to maintain a fishboat that has been seized by the Department of Fisheries.

This was an appeal from an order of a motions Judge setting priorities to the sale proceeds of the Defendant vessel. The vessel had been seized by the Crown for violations of the Fisheries Act and was later arrested and sold at the application of the Crown. The claimants were the Crown, the mortgagee, and the co-owners of the vessel. The Crown claimed a priority for the costs of sale, the costs of maintaining the ship, for $50,000.00 ordered forfeited to the Crown and for a $120,000.00 fine imposed by the Supreme Court of Newfoundland for violations of the Fisheries Act. The Prothonotary granted the Crown priority ahead of the mortgagee for the costs of sale and for the $50,000.00 ordered forfeited. The Prothonotary refused to grant the Crown a priority for the $120,000.00 fine or for the costs of maintaining the vessel. The Prothonotary further ordered that the amount owing to the mortgagee should rank after the claim of one of the co-owners of the vessel to the surplus. On appeal the motions Judge altered the priorities. The motions Judge gave the highest priority to the Crown for the costs relating directly to sale. Second priority went to the mortgagee. Third in priority came the costs of the Crown incurred for the care of the crew. Fourth and fifth in priority, respectively were the claims for the $50,000.00 forfeiture and $120,000.00 fine. The balance of the fund was to be distributed to the owners of the ship. The Crown’s claim for the costs of preserving the ship were disallowed. On further appeal, the Federal Court of Appeal upheld the decision of the motions Judge except with respect to the $50,000.00 forfeited. With respect to the forfeiture, the Court of Appeal held that this was an in rem claim pursuant to s. 72(1) of the Fisheries Act and that pursuant to s. 75 of that act such a claim should be ranked in priority to all other claims.

This case involved an application under s. 71(4) of the Fisheries Act on behalf of a number of First Nations fishermen to have seized gear returned pending trial on charges of illegal fishing. At issue was whether or not the Crown had to make application under s. 71(4) of the Act if they wished to retain seized gear for more than 90 days. The fishermen argued that such an application was always necessary, but the court held that such an application was only necessary if proceedings were not instituted within 90 days. The Motions Judge accepted the argument of the Crown and held that such an application was only required if proceedings were not commenced within 90 days.

Upon denying an application for certiorari against the decision of the trial judge, the court held that although “it seems there is a failure in the legislation to have the issue of interim possession of important items determined judicially”, in quasi-criminal matters such as Fisheries Act prosecutions there are no interlocutory appeals except in exceptional circumstances.

Upon appeal, the court upheld the decision of the motions judge. In doing so, the court refused to follow the obiter comments of the court in R. v. Hung Van Nguyen (2000) Surrey Registry No. 107078-01 (B.C. Prov. Ct.).

Editor’s Note: With respect to the obiter comments in R. v. Hung Van Nguyen, in a subsequent case the judge in R. v. Hung Van Nguyen also made a decision that was inconsistent with his prior obiter comments. For another case, which also holds that a Crown application is only required if proceedings are not instituted within 90 days, see: R. v. Peter Paul 2001] N.S.J. NSPC 1 (N.S. Prov. Ct. – Batiot C.J. Prov. Ct.) (digested herein).

This case involved an appeal from an order of the trial division of the Federal Court (2000 F.C.J. 1885) allowing an appeal from an order of a Prothonotary (reported at (1999) 175 F.T.R. 182). The alleged facts, as taken from several of the judgements, are quite complicated as the case arose out of what is commonly called a “licence swap” transaction. The aggrieved party in this case was the owner of an 86-foot fishing vessel with a category “T” trawl licence which had both a good history of landings and a high priority position in the Hake Consortium selection process (the “Owner”). In 1993 the Owner entered into an agreement to purchase a category “A” salmon licence from a fish processor for placement upon its vessel. An “A” licence was then transferred to the Owner’s vessel by way of a transaction whereby a married set of “A” and “T” licences belonging to the fish processor were transferred to the Owner’s vessel and the Owner’s single “T” licence was transferred back to the vessel from which the married licences had come. The result was a classic “swap” transaction.

It was alleged by the Owner, that prior to the swap it was known to all parties that a quota system would likely be introduced in the ground fish fishery and that catch history would be a factor in calculating individual vessel quotas. Subsequently, when the individual quota fishery was instituted into the ground fish fishery in 1997/8, the quota allocation was based 70 per cent upon the catch history of the vessel. Since the swapped “T” licence obtained from the fish processor did not have as good a landings record as the original “T” licence, the Owner lost a considerable amount of quota. In addition, it lost its priority on the Hake Consortium selection process.

It was alleged by the fish processor that prior to the swap, it had discussed the proposed transaction with the director of licensing for D.F.O., and had been given a verbal assurance that the transfers would be affected so that the catch histories of the vessels would stay with the vessels and not be transferred with the licences. Unfortunately for the Owner and fish processor, the director of licensing had died and there was no written record of the alleged agreement with him.

To make matters worse, the vessel to which the original “T” licence was transferred, was subsequently sold by the fish processor to a third party who claims to have specifically purchased the vessel because of the high landings associated with the swapped licence. It claimed to have had no knowledge of the alleged agreement with D.F.O. and opposed the enforcement of any such agreement.

Previous Proceedings

The plaintiff originally commenced legal proceedings by way of a judicial review application under Federal Court Rule 300 seeking both mandamus and declaratory relief against the Crown. Upon the application of the third party purchaser, the court later ordered that the application be converted to an action so as to allow for full discovery and viva voce (oral) evidence. However, when converting the proceeding to an action, the Owner also claimed for damages in addition to the declaratory relief originally claimed.

During a summary trial application before Rouleau J., the third party purchaser was then successful in having the portion of the prayer for relief struck which claimed relief above and beyond what was originally contained in the (originating) application under Rule 300. In response, the Owner then commenced an action in Federal Court claiming both the declaratory relief and damages which had been claimed in the previous action as converted from an (originating) application. This action was against the Crown, the fish processor and the third party purchaser. An identical action was also commenced in the Supreme Court of British Columbia. In response, the Crown brought an application in Federal Court to strike out the Owners statement of claim pursuant to Rule 221(1) as disclosing no reasonable cause of action.

At first instance before Prothonotary Hargrave, the Court denied the motion to strike, provided the plaintiff amended its statement of claim to include grounds upon which the “a minister’s discretionary decision might be challenged, grounds which might include malfeasance, or grounds similar to those set out in Thomson v. MCI . . . or in Williams v. Canada . . .”

Upon Appeal to the trial division of the Federal Court (McKeown J.), the decision of the Prothonotary was reversed by striking out the statement of claim in the Federal Court action.

Decision of the Federal Court of Appeal

Upon further appeal to the Federal Court of Appeal by the Owner, the court of appeal in a decision written by Decarry J.A., allowed the statement of claim to be struck, but gave the Owner leave to file a re-amended statement of claim alleging negligent misrepresentation against the Crown. In doing so, the court applied the test set out in Hunt v. Carey Canada Inc, [1990] S.C.R. 959 as modified as it relates to parallel Federal Court proceedings in the case of Sweet v. Canada, [1999] F.C.J. No. 140 (F.C.A.). The court also rejected the assessments of the case provided by both the Prothonotary (malfeasance) and the Motions Judge (illegality). The appeal court was of view that the motions judge construed the decision of Comeau’s Sea Foods Ltd. v. Canada, [1995] 2 F.C. 467 to narrowly in rejecting negligent misrepresentation as a possible cause of action because of the availability of an administrative law remedy to the plaintiff.In this regard, the court said:

It is premature, at this early stage of the proceedings, to conclude that Radil has no chance, with appropriate amendments, to demonstrate that the alleged negligent misrepresentation was part of an operational, as opposed to policy decision, that there was a prima facie duty of care and that the scope of the duty was not, in the circumstances, to be negatived or limited. Radil has a steep hill to climb, but it cannot, at this state, be said that it cannot be done. (para. 37)

Editor’s note: With respect to the issue of negligence, see the dissent of the Federal Court of Appeal in Comeau’s Sea Foods v. Canada where Linden J. argues for a remedy against the Minister of Fisheries based upon the law of negligence as set out in Anns v. Merton London Borough Council. See also [1994] 76 CBR 253, where the author argues that in Comeau, the Supreme Court of Canada missed an opportunity to clarify the law regarding negligence of public officials. Given the dissenting opinion of Linden J., I would agree with the Federal Court of Appeal that the trial level appeal court was over zealous to the extent that it held that it was plain and obvious that a claim base upon negligence must fail.

See also the digest of this case under the heading, “Practise – Admiralty jurisdiction over fisheries matters”

Postscript: See also 2002 FCT 1237 where the Crown brings a partially successful motion on the grounds that the amended statement of claim exceeds what is allowed by the order of the Court of Appeal. See also 2003 FCT 79 where Prothonotary Hargrave fore the most part denies a Crown application to strike out the amended statement of claim.

This case involved a Canadian registered ship which was given a provisional registration in Panama without first obtaining a deletion certificate from the Canadian Registrar of Ships. It then fished in the NAFO fishing zone without a licence, which it could do legally if it was a foreign ship, but not as a Canadian ship.

Pending the trial, the ship was seized pursuant to section 51 of the Fisheries Act. During that time, it was also arrested by two claimants in two separate Federal Court admiralty proceedings. One claimant was a bank suing for default under a marine mortgage and the second claim involved a claim to title by some shareholders of the vessel’s owner. Both claimants arrested the vessel. The Crown intervened in one of the Federal Court proceedings and obtained an order that the vessel be released from arrest and sold pending litigation. The stated reason for the Crown’s application was to avoid the heavy costs being incurred by the Crown for the preservation of the vessel. Subsequent to the sale of the vessel, the owner of the vessel was convicted of fishing without a license and sentenced with a term of the sentence providing for forfeiture of $50,000 from the proceeds of sale.

Upon appeal, to the Newfoundland Court of Appeal one of the issues raised was whether or not the sale of the vessel prior to the determination of the criminal proceedings prevented the Crown from claiming forfeiture of the proceeds of sale of the vessel. The court analyzed sections71 & 72 of the Fisheries Act and concluded that the legislation did not authorize the court to dispose of a seized vessel prior to trial and retain the proceeds of sale. The court concluded that by selling the vessel, the Crown had released it from detention which terminated any forfeiture rights the Crown had in the criminal proceeding pursuant to the provisions of the Fisheries Act.

Upon appeal to the Supreme Court of Canada, this decision was reversed. In doing so, the court relied upon the following principles of statutory interpretation to arrive at the following conclusions:

1. Using the grammatical and ordinary meaning of the words in section 72 of the Fisheries Act, the court concluded that an order of forfeiture could include the forfeiture of the proceeds of a fishing vessel.

2. From a review of the legislative history of the Fisheries Act, the court concluded that the 1991 amendments to the Act broadened the scope of the forfeiture provisions beyond that of forfeiture of proceeds of perishables.

3. Looking at the scheme of the Act, the court concluded: (a) section 489.1 of the Criminal Code (restitution of seized property) has no application; (b) a person charged under the Fisheries Act cannot rely upon the presumption of innocence to delay a person with an in rem action from obtaining his remedy and correspondingly, after a person charged under the Fisheries Act has been found guilty and the presumption of innocence is spent, there is nothing in the Fisheries Act that would immunize the proceeds of sale realized pursuant to a civil (presumably in rem) proceeding from forfeiture.

4. Looking at the legislative context, the court concluded that the words “any proceeds” in section 71(1) of the Fisheries Act are not limited to proceeds of perishables.

5. Looking at the legislative context, the court concluded that the bail provisions (s. 71(2) of the Fisheries Act were inconsistent with an Court of Appeal’s interpretation of the Act which concluded that the right to forfeiture was lost upon the vessel the Crown losing physical detention. In doing so the court noted that although the Act does not provide for forfeiture of a security deposit granted as bail, the right to forfeiture upon the posting of security was contractual. The Act should be interpreted so as to “harmonize the interest of the accused, the Crown, the employees and creditors that have an interest in getting productive, income-earning property back into circulation.

6. Looking at the legislative context, the court noted that parallel in rem proceedings were contemplated as demonstrated by section 75 of the Act which allows a person who has an interest in property ordered forfeited by the court to apply for relief from forfeiture. Although this is ordinarily done in a provincial superior court, it is also possible to do by way of in rem action in the Federal Court.

7. Looking at the legislative context, the “provisions of the Federal Court Act and the provisions of the Fisheries Act can and should be read as a consistent, harmonious scheme for the regulation of maritime matters.” For example, if a fishing vessel were seized pursuant to the provisions of the Fisheries Act and the owner was unable to obtain its release by posting a bail, a mortgage holder ought to be able to obtain a court ordered sale of the vessel in admiralty court and have the Crown’s claim to forfeiture dealt with in the same court.

In allowing the Crown to claim forfeiture of the proceeds of sale, the court suggested that it might have held otherwise, if the Crown had instituted proceedings in the Federal Court itself for the sole purpose of an “end run around the limitations in the Fisheries Act”.

Editor’s note: This case is very useful because of its thorough review of the forfeiture provisions of the Fisheries Act. Although it appears to confirm the discretion of the Minister to refuse to accept a security deposit to secure the release of a vessel (para. 48), it only does so in obiter and does not consider whether or not this would be contrary to the Charter (see R. v. “Peonia No. 7” and Jeon Meang Yel (20 March 1986) (Prov. Ct. of Nfld. District of St. John’s) (Wicks, L.W., P.C.J.). It deals with the issue of whether or not the seizure provisions of the Criminal Code apply and it also suggests that parties releasing vessels on bail should include a contractual provision governing what happens in the event of a conviction. With respect to the priority between a Crown claim to forfeiture and a mortgage, see an early proceeding between these parties at 2001 FCT 1034 which at the time of writing, was under appeal.

This was a net damage case involving a claim for damages incurred by a vessel when its net was fouled by another vessel during a very short opening in the 1997 herring seine fishery. The issues raised by this case included the following:

1)Recovery for contractual relational economic loss;
2)Limitation of Liability;
3)Restitution for unjust enrichment with an accounting of profits earned by the defendants;
4)Punitive damages;and
5)Quantification of damages.

At the trial level, Warren J. applied the former provisions of the s. 574 of the Canada Shipping Act to allow the defendants to limit their liability to approximately $40,000 dollars.

Although damages were limited to $40,000, the trial court also addressed the issue of how damages should be quantified.

With respect to unjust enrichment, the trial judge applied the reasons of Lowry J. in the “Cape Flattery” (1 December 1997) Vancouver C953623 (B.C.S.C.) to reject this claim. With respect of quantification of the loss of fish, the court based its award upon the daily average of the vessels fishing in the area. In doing so, the court said “[f]rom time immemorial fish have been among the more elusive of prey. The only certain catch is the one stored on board.”

The trial court also rejected the claim for punitive damages.

With respect to contractual relation economic loss, the trial court followed the decision of Lowry J. in the “Cape Flattery” to allow the claim of members of a fishing pool who had an interest in the catch of the plaintiff vessel. However, it rejected the claim of a fish processor, which had supplied a licence to the plaintiff vessel at a discounted rate in exchange for the right to purchase its catch.

Upon appeal, the decision was varied as set out below.

With respect to limitation of liability, the court reversed the trial court and prevented the defendants from limiting their liability. In doing so, it adopted the following quote from Lowry J. in Savage Fisher (The) v. Prosperity (The) (2000) 78 B.C.L.R. (1124) (B.C.S.C.):

I would have considered that the owner or the charterer of a vessel that participates in a shotgun herring opening must be privy to damage to the property of others its vessel may cause. I say that because of the nature of the activity. As indicated at the outset, large trawlers are operated in a high stakes competition for fish which forces them to maneuver (sic) at speed in close proximity. Masters are encouraged to catch as much herring as they can in what is most often a very short period of time. . . It is an activity where an owner’s instruction to exercise caution, end even to put safety first, must for all practical purposes be lost in the priority of making a large catch. As I said at the outset, it is a most unusual kind of maritime adventure – one that compels masters to sacrifice good seamanship for profit as happened in this case. [para. 51]

. . . I have difficulty seeing on what basis an owner or charterer that engages its vessel in that activity could meet the standard of care required to be permitted the privilege of limiting its liability. [para. 52]

With respect to quantification of damages, instead of basing it award on the daily average as did the trial court, the court made a larger award based upon ½ of the amount caught by the offending vessel. In doing so, the court considered the maxim omnia praesumuntur contra spoliatorem (all things presumed against a wrongdoer) as well as the fact that “[f]rom time immemorial fish have been among the more elusive of prey. The only certain catch is the one stored on board” (para. 36).

With respect to the claim of a fish processor for the value of a herring licence given to the claimants at a discounted price in exchange for a promise by the claimants to sell their catch to the fish processor, the court was unable to find any evidence to support the claim, as the processor had led no evidence regarding its profits. The court also cautioned that it did “not wish to be taken as holding that such a claim for economic loss would lie” (para. 50).

With respect to the claim based on unjust enrichment, the court said “actions for negligence in the operation of vessels are actions for compensation for losses caused. There is no need to complicate such actions with notions of unjust enrichment” (para. 49). Similiarly, with respect to the claim for punitive damages the court said, “it is not for this Court to introduce into maritime law a concept which is unknown to it” (para. 49).