Section 71(2) of the Fisheries Act provides that “. . . a court may order any . . . 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 satisfactory to the Minister.” In this case, the owner of two seized prawn fishing vessels brought an application in B.C. Provincial Court for return of its vessels upon the posting of security. In support of its application it filed copies of valuation surveys of the fishing vessels. However, the Crown refused to “entertain any form or amount of security” for release of the vessels. It submitted the proper remedy for the applicant was an action in the Supreme Court based upon replevin or a Charter remedy. Unfortunately for the applicant, the court ruled that as a court of statutory jurisdiction, it could not substitute its view of what would be an acceptable form and amount of security in the absence of any suggestion by the Minister. The Court did, however, make some non-binding (obiter dictum) comments. It said:

The court has a discretion which should be exercised on judicial grounds. If the Minister can persuade the court that the circumstances are such that it would truly bring the administration of justice into disrepute, then such an order would not be made, but it is for the court to make that determination, not the Minister. Otherwise, there is no need for the court to ever be involved. It is only the Minister who can make the decision (para. 23).
It is my view that, to interpret this section in the manner the Crown seeks . . . would be in violation of the Charter. It permits the Minister to act arbitrarily for items, which may be lawfully seized for a very minor offence, to be withheld without any recourse. This clearly is not the way this section is intended to act (para. 24).

Editor’s Notes:
1) See the subsequent companion B.C. Supreme Court case of McNeill Fishing Ltd. v. Canada, 2017 BCSC 1598 where the Court dismissed McNeill Fishing Ltd.’s interlocutory application for replevin on the grounds that the applicant had not established irreparable harm because its loss of profits could be compensated by damages.

2) Based upon recommendations from the Canadian Maritime Law Association, when the Government of Canada tabled Bill C-32 in 2007 for a broad amendment of the Fisheries Act, it proposed amendments to s. 71(2) that would have given the court the authority to determine the security to be posted for release. Unfortunately, this Bill died on the order paper.

This was an appeal and cross appeal from a decision of the Federal Court (2015 FC 932) allowing in part the Appellant/Defendant’s motion for summary judgement to dismiss the Respondent/Plaintiffs’ claims. In their action, the Plaintiffs’ claim included the following:

1) Expropriation without compensation;
2) Breach of contract;
3) Unjust enrichment; and
4) Misfeasance of Public office.

The motions Court granted summary judgement dismissing the claim for breach of contract and unjust enrichment. It then dismissed the remainder of the application allowing the claims for unjust enrichment, expropriation without compensation and misfeasance to go to trial.
Some of the background to this case is described in the case of Arsenault v. Canada, 2008 FC 299 (digested on this webpage). The Plaintiffs were a group of approximately 30 snow crab fish harvesters residing in Prince Edward Island. They were licenced to fish in area 12 in the early 1990’s and were referred to as “traditional inshore fishermen”. They had some conflicts with a group of 130 “traditional mid-shore fishermen” from outside P.E.I. who were licenced to fish in areas 25 and 26. In 1993 the competitive shotgun type fishery for snow crab was replaced by an individual quota system. It was alleged by the Plaintiffs that at that time that they agreed to give up the competitive fishery, they also agreed to finance some research and conservation measures.

In 1997, the inshore fish harvesters were integrated into areas 25 and 26 with the mid-shore fish harvesters and agreed to a five-year management plan that involved them making significant contributions of funds for Department of Fisheries (“DFO”) management activities.
After the Marshall decision in 1999, DFO purchased two snow crab licences from two members of the inshore fishery pursuant to a government funded “buy back” program.
In 2003 DFO approved a three-year management plan which was the source of the Plaintiff’s complaints. They alleged that the plan reduced the Plaintiff’s share of the total allowable catch (“TAC”) in the following three ways: (a) integrating the inshore fishers into areas 25 and 26; (b) allocating 15.8% of the TAC to First Nations when only 5% of the TAC was freed up by the buy back; and (c) reserving an additional 15% of the TAC for new entrants. An additional complaint arose from DFO’s setting aside part of the snow crab resource between 2003 and 2006 to finance research activities. This practice was declared illegal by the Laroque decision in 2006 (2006 FCA 237.

Upon appeal, the Court of Appeal held that:

1) The Plaintiffs’ claims based upon expropriation without compensation and unjust enrichment should have also been dismissed by summary judgement;
2)The cross appeal was dismissed;and
3)The claim for misfeasance was allowed to continue to trial.

With respect to the claim for expropriation without compensation, the court held there was no genuine issue to go to trial because at law the case could not succeed. The court said that:

The law does not recognize a proprietary interest on the part of fishers in uncaught fish or the fishery, nor does the law recognize a right to compensation for a reduction in quota: Kimoto v. Canada (Attorney General), 2011 FCA 291 (CanLII), 426 N.R. 69

The Court also declined to follow a previous trial court decision of the Federal Court that declined to dismiss an expropriation without compensation case on summary judgement.

With respect to the unjust enrichment claim, given the Court of Appeal’s finding that there was no expropriation without compensation, the Court held that there could be no unjust enrichment because the Plaintiffs did not suffer a deprivation.

With respect to the misfeasance claim, the Court adopted the following test from Odhavji Estate v. Woodhouse, 2003 SCC 69:

"[T]he tort of misfeasance in public office is an intentional tort whose distinguishing elements are twofold: (i) deliberate unlawful conduct in the exercise of public functions; and (ii) awareness that the conduct is unlawful and likely to injure the plaintiff. Alongside deliberate unlawful conduct and the requisite knowledge, a plaintiff must also prove the other requirements common to all torts. More specifically, the plaintiff must prove that the tortious conduct was the legal cause of his or her injuries, and that the injuries suffered are compensable in tort law."

In allowing the misfeasance claim to continue to trial, the court noted that “the existence of a proprietary interest forms no part of the elements of the tort and that damages for the tort can legally embrace economic matters beyond proprietary interests (para 26)". In allowing this claim to proceed to trial the court limited the claim to DFO using the TAC to finance its activities and obligations it believed it had towards other groups of fish harvesters.

With respect to the counterclaim, the Court of Appeal upheld the Trial Court’s finding that the Plaintiffs did not produce evidence to support a finding that there was a contract that the TAC would only be freed upon for First Nations out of buy back quota. The Court found that the Minister’s statement only amounted to statements of policy objectives.

The Court of Appeal closed by commenting on the palpable and overriding error test as follows:

"One must keep front of mind that palpable and overriding error is a high standard: “[w]hen arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing,” but rather “[t]he entire tree must fall.” See Benhaim v. St Germain, 2016 SCC 48 (CanLII) at para. 38, citing Canada v. South Yukon Forest Corporation"

This case was brought by a group of fish packer owners whose businesses declined to the point where they were no longer economically viable. They sought a declaration based upon the common law doctrine of "taking". They argued that the state cannot take property without compensation except where such taking is supported by clear unambiguous statutory language. They submitted that a series of regulatory changes from the early 1980s up to the 2000s, including the buy-back of licences, fleet reduction, and commencement and enhancement of the Aboriginal Fisheries strategy eliminated available work for their packers. The Plaintiffs noted that during the period in question a number of fishing vessel owners and licence holders received compensation from the Government and question why no such compensation was offered to packers. In a decision rendered 11 March 2016 (2016 FC 312) (digested on this webpage) the Federal Court concluded that the Plaintiffs had not established "on a balance of probabilities, that the loss of their packing business was a direct result of government action."

In a subsequent hearing to determine costs, the Plaintiffs were successful in obtaining an order that each party bear their own costs on the following basis:

1)Rule 400(3) of the Federal Court Rules provides that the Court may consider whether the public interest in having a proceeding justifies a particular award in costs.

2)A losing party who raises a serous legal issue of public importance will not necessarily bear the other party’s costs;

3)The case explored the constraints on powers of the Minister of Fisheries and Oceans, as a steward of the fisheries, which requires a balancing of different public and private interests;

4)The impact of such issues extended beyond the parties to the action;

5)The issues were not cut and dry;

6)The Plaintiff’s did not have a defined pecuniary interest in the outcome, apart from reliance upon the Crown to do the honourable thing if they obtained their declaration;

7)Altruism and having little to gain financially work better than the pecuniary interest test;

8)The question of whether public access to a common property resource is “property” that can be subject to a regulatory taking is an issue that has not been previously resolved by a Court, and therefore the action was novel.

This case involved a borrower that granted a number of Personal Property Security Act ("PPSA") interests under the Nova Scotia PPSA Act over its enterprise allocation of silver hake. Two of the PPSA security holders had registered their security interests as follows:

"all of the debtor’s rights, title and interest of every kind which the debtor has in, to or under a fishing license, more particularly described as ground fish license number 304715 issued by the Minister of Fisheries and Oceans… and any books, records or documents related to such license…"

These registrations were held by the trustee in bankruptcy to be invalid because the financing statements did not include a description of the quota by item or kind and consequently were not perfected as against third parties.

Upon appeal to the Nova Scotia Supreme Court, the appellants argued that since a quota is usually transferred along with a license in the event of an application for transfer of the license, a financing statement describing the collateral as "all rights, title and interest of ever kind into and under a fishing license" should be interpreted to include a quota that is automatically transferred with the license. However, this argument was rejected and the decision of the trustee in bankruptcy was upheld for the following reasons:

1)The hake fishery in question was a quota based fishery where quota and licenses were administered separately by the Department of Fisheries;

2) There was a separate commercial market for hake licenses and quotas;

3) The hake quota was transferable independently of the license to which it has been assigned;

4) Commercial practice did not support the applicant's arguments as two of the applicant's other creditors separately described the license and quota in their financing statements;

5 It was "arguably 'unreasonable and unrealistic' to expect an interested party to ignore the specific word 'license' and to infer there may be additional collateral - such as a fishing quota - subject to the security agreement" (para 47);

6) There was no reference to the quota by item or kind or by reference to intangibles; and

7) The description was seriously misleading in that it would give not reason for a reasonable searcher to conclude that quota was included (para 58).

Upon Appeal, the decision was reversed and the validity of the security upheld based upon the following facts:

1)The applicable regulations do not use the word "quota";
2)There can be no participation in a fishery without a licence;
3)The regulations provide that licences can specify conditions;
4)Conditions can specify quantity and species that can be fished pursuant to the licence;
5)Quota is attached as a condition of the licence;
6)When the trustee in bankruptcy transferred the licence, no document other than the one transfer document was required to transfer both the licence and quota.

Based upon these facts the court concluded "[b]ecause the quota is attached as a condition of D'Eon's licence, I am satisfied that reference to the licence in the financing statement as registered was sufficient to include the quota as it existed at the time the security was given."

Editor's Note: In this particular case for the licence in question, one transfer form transferred all of the quota when the licence transferred. However, one should not assume that the transfer rules are the same for all licences.

This case involved an alleged agreement whereby the plaintiff paid a First Nation for the exclusive right to manage and operate its commercial fisheries for the 2013, 2014 and 2015 fisheries. The agreement allegedly gave the plaintiff full control over the commercial fishery operations, the right to lease licences at will from the First Nation and be the designate as defined by Fisheries and Ocean's (DFO) guidelines.

The contract worked well until there was a change in composition of the Band council. After that time there were a number of alleged breaches including forwarding a resolution to DFO that appointed a new chief councillor as the "fishing authority".

As a preliminary matter the court had to determine whether it had jurisdiction, as the Defendants argued that the Federal Court had jurisdiction because the Band Council was a "federal board, commission or other tribunal". In upholding its jurisdiction the court ruled that because the Band Council decisions being reviewed involved a private commercial matter, it was not acting as a "federal board, commission or other tribunal".

With respect to the request for an injunction, the court applied the three part test set out in RJR MacDonald Inc. v. Attorney General (Canada) (1994), CanLII 117 (SCC). The court had no difficulty finding that there was a serious issue to be tried. The court also found irreparable harm, based upon (a) the fact that the Band Council was under third party management by the Department of Aboriginal Affairs and (b) if the contract were terminated there would be a ripple down effect impacting other parties the plaintiff had contracted with such as fishing captains and crews who were supposed to fish for the plaintiff. With respect to balance of convenience, since the three year contract would end approximately seven months after the decision was being issued, the court ruled in favour of the status quo.

Based upon its application of the RJR MacDonald test, the court granted the injunction to the end of 2015.

This case involved the appeal of a decision of the Federal Court issued on 28 February 2014 restraining the Minister of Fisheries from opening a commercial herring roe fishery(digested on this website). Since the commercial herring fishery was completed before the Crown requested an expedited appeal in June of 2014, the court ruled that there were no factors that would justify allowing an appeal notwithstanding mootness.

This case involved a class action by a group of halibut fishers against the Minister of Fisheries alleging that the halibut management scheme that held back 10 per cent of the halibut quota and assigned it to the Pacific Halibut Management Society was illegal and that it cost the fishers more to access the quota than it had under the previous management scheme. In response to a argument by the Minister that it had additional defences against directors of the Society the Plaintiff brought an application to create a subclass of directors of the Society.

In response to the application, the court created a subclass comprised of the following:

"All owners of fishing vessels with a Category L Commercial Halibut License to fish for halibut issued by the Minster of Fisheries and Oceans (“Licensed Vessels”) between 2001 and 2006 inclusive (the “Material Time”) for which quota was purchased from PHMA and:

(a) who at any time during the Material Time:

i. were directors of PHMA; or,

ii. were corporations in which a PHMA director owned more than 50% of the shares; or

(b) who claim that they were in a partnership with a PHMA director in relation to a Licensed Vessel and the purchase of quota from PHMA at any time during the Material Time."

The court also made some additional changes to the definition of the class.

In this case the applicants were a group of five First Nations located on the West Coast of Vancouver Island who had recently had their right to to fish and sell fish affirmed by the Supreme Court of B.C. with the issue of justification and infringement to be later determined. When affirming this right, the court had given the parties a period of time to consult and attempt to negotiate the manner in which the aboriginal rights to fish and sell fish would be exercised. During this period the the Minister made a decision for a small scale opening of the commercial roe herring fishery, despite the fact that his officials had recommended keeping the fishery closed. It was also noteworthy that the fishery had been closed for the previous nine years because of conservation concerns. Shortly before the commencement of the commercial fishery, the group of First Nations brought an application for an interlocutory injunction.

The issues addressed by the court were as follows:

1) Does a serous issue arise;
2) Will irreparable harm occur if the injunction was not granted; and
3) Does the balance of convenience favour the injunction.

DOES A SERIOUS ISSUE ARISE

Without a great deal of analysis, the court found a serious issue arose with respect to:
a) Conservation issues concerning the fishery; and
b) The acknowledged Aboriginal rights of the Applicants to fish and sell fish.

IRREPARABLE HARM

The court found that there would be irreparable harm because of:
a) Serious conservation concerns;and
b) The Applicants would "lose their position and opportunity to reasonably participate in negotiations for establishment of their constitutionally protected Aboriginal rights to a community-based commercial herring fishery [para. 27].

Although inadequate consultation does not always constitute irreparable harm, the court distinguished Musqueam Indian Band v. Canada, 2008 FCA 214 on the basis that "the Applicants have established an Aboriginal right to fish and sell fish and are therefore operating within an established rights legal framework and because they are in the process of negotiating the manner in which the Applicants' Aboriginal rights can be accommodated and exercised. [para. 28].

BALANCE OF CONVENIENCE

In finding the the the balance of convenience favoured the applicants, the Court emphasized the need to consider the public interest in ensuring that the Crown followed the previous court's direction to participate in negotiations concerning how the applicant group would exercise its fishing rights.

The public interest also favoured conservation.

DECISION

Given its finding as described above, the Court granted an interlocutory injunction prohibiting the Minister from opening the West Coast of Vancouver Island commercial herring fishery. It also relieved the applicants from the normal requirement of having to give an undertaking as to damages.

Editor's Note: At the time of writing, this decision was under appeal.

This case involved a fish company that had loaned money to an individual for the purchase of a fishing licence. The fish harvester made an assignment into bankruptcy, but did not list his fishing licence as an asset. Despite a request by the fish company, the Trustee in Bankruptcy refused to take legal proceedings against the licence. Based upon an apparent consent received from an encumbrance holder and the court taking judicial notice of the fact that "commercial fishing licences can be sold to satisfy outstanding debts and judgements and the Department of Fisheries and Oceans Canada DFO will issue new licences if it receives the appropriate documentation relinquishing and requesting re-issuance of fishing licences ..." the court granted an order under s. 38 of the Bankruptcy and Insolvency Act allowing the fish company to take proceedings against the discharged bankrupt. The court also enjoined the bankrupt from disposing of its licence pending completion of the legal proceedings to be commenced by the applicant against the licence.

Editor's note: For a related proceeding where the Superior Court confirmed the Bankruptcy Court order enjoining the Bankrupt from selling its licence see: Beothic Fish Processors ltd. v. Burt, 2009 NLTD 65 [link]

This case involved a claim by a plaintiff who allegedly paid $130,000 for a lobster licence. Since DFO regulations prevented him from holding it himself, he arranged to have it held by a nominee who later sold it and kept the proceeds of sale. In an action against the various parties involved, the court refused to impose a trust over the licence because it had been sold and transferred to a purchaser who had no knowledge of the trust. Although the licence had apparently been purchased by the plaintiff with money obtained from illegal activities (illegal cigarette and alcohol sales), the court was prepared to grant judgement against the party who received the money (but no longer held the licence) because:

In the case at bar, the ‘illegality’ upon which the Defendants would seek to rely refers to the source of Hurley’s funds [the plaintiff], and possibly to his failure to disclose their existence to a relevant authority - in other words, his ‘general depravity’. However, the source of the purchase funds need not be established to prove the existence of the trust relationship arising between the parties in respect of the property purchased. The underlying ‘illegal transaction’, if indeed one exists, is simply not relevant.

Moreover, illegality should only exceptionally lead to such a severe consequence as the forfeiture of a person’s property, especially where that forfeiture would be in favour of a person who was a willing party to the illegality.’

This case involved the holder of a lobster licence, a herring licence, a swordfish licence and a mackerel licence, the combined value of which exceeded $600,000. Upon the holder of the licence making an assignment into bankruptcy (after being placed in receivership by the bank), an application was made by the Royal Bank for a declaration that these fishing licences were intangible personal property so as to be encumbered pursuant to a general security agreement granted by the licence holder to the bank under the Nova Scotia Personal Property Security Act (PPSA). Since the value of the licences was sufficient to cover more than just the debt owed to the Bank, an application was also made by the Trustee in Bankruptcy seeking a declaration that the licences were property for the purposes of the Federal Bankruptcy and Insolvency Act (BIA). This would give the Trustee the ability to require the bankrupt to execute a transfer of the licences to a purchaser.

Judicial History

At trial, the court accepted evidence that these licences had a high commercial value, were regularly bought and sold, and sometimes accepted as security by financial institutions. After reviewing authorities including some obiter (non binding comments) of the Ontario Court of Justice as affirmed by the Ontario Court of Appeal in Sugarman v. Duca Community Credit Union (1988), 13 P.P.S.A.C. (2d) 117, affirmed (1999), 44 OR. (3d) 257 (Ont. C.A.), National Trust Co. v. Bouckhuyt (1987), 7 P.P.S.A.C. 273 (Ont. C.A.) and F.A.S. Seafood Producers Ltd. v. Her Majesty the Queen 98 TTC 2034 (digested herein), the Court concluded that "it is not necessary that the holder have the complete power of exclusion [as suggested in Bouckhuyt] to allow those rights to be property in the real and practical context" (para. 48 of trial level decision as quoted at para. 10). On the basis of this conclusion the court declared that the licences were intangible property for the purposes of the PPSA and property for the purposes of the B.I.A. (see 2006 NSSC 34)

Upon appeal, the appeal court rejected the trial judges finding that the licence holder had a property interest in the licence based upon the commercial reality of licences being treated as property. It held that the proper approach was to review the definition sections of both the BIA and PPSA.

With respect to the BIA, the court followed earlier decisions such as Re Bennett (1987), 67 C.B.R. (N.S.) 314 to hold that a licence holder's interest in earnings from a subsisting licence during its annual term were rights that could be assigned to a trustee in bankruptcy (para 378). With respect to a licence holder's right to future renewals of a licence, after reviewing a number of authorities that limit the discretion of the Minister of Fisheries to issue licences under s. 7 of the Fisheries Act, the court concluded that the licence holder's "rights to apply for, and resist an arbitrary denial of, a renewal or reissuance of his license are [intangible] 'property' passing to the trustee under each of ss. 67(1)(c) and 67(1)(d) of the BIA.' (para. 55). Accordingly, under s. 158(1) of the BIA, the licence holder was required to sign documents required by the trustee in bankruptcy to re-designate the licence to the trustee's designate.

With respect to the PPSA, for similar reasons, the court found that the licence holder's rights to the fishing licence were intangible property for the purposes of that Act. (see 2006 NSCA 91)

Decision of the Supreme Court of Canada

Upon further appeal to the SCC, the court conducted an analysis of the different approaches taken by the courts to the issue of whether or not a licence is property for the purposes of the BIA and PPSA.

When reviewing the traditional property approach, the court endorsed the movement to restrict Bouckhuyt to its facts and "consider traditional common law notions of property as less of a stumbling block . . ." The court also noted that a licence to fish is similar to a "profit of piscary" (a type of profit a prendre) which could be a type of "profit" referred to in the definition of property in s. 2 of the BIA. (para. 26-35)

When reviewing the regulatory approach, as adopted by the Sugarman case, the court was unable to find sufficient fettering of the Minister's discretion to convert a fishing licence into a property right. (para. 36-40)

When reviewing the commercial realities approach as adopted by the trial judge in Saulnier, although the court recognized that fishing licences have a commerical value (para. 23-4), it was not prepared to adopt this approach. (para. 41-2)

Preferred Approach

With respect to the BIA, the court noted that the definition of "property" was very broad with the "intention to sweep up a variety of assets of the bankrupt not normally considered 'property' at common law". This broad definition includes "any type of property . . . and profit . . . arising out of or incident to property". As such, "a licence to participate in the fishery coupled with a proprietary interest in the fish caught" would fall within the scope of that definition. (para. 43-9)

With respect to the Nova Scotia PPSA, the court noted that its purpose was to "enable holders of personal property to use it as collateral, and to enable lenders to predict accurately the priority of their claims against the assets in question (para. 19). As with the BIA, the court found that the definition of personal property, including intangible personal property, was sufficiently broad so as to include "a licence coupled with an interest at common law" (para. 50).

In response to concerns raised by the Attorney General of Canada, the court rejected the notion that the treatment of a fishing licence as property for the purposes of the BIA and PPSA could be raised in future litigation so as to fetter the Minister's discretion.

Editor's notes:

Beware that not all PPSA legislation has the same wording. In September of 2012,an amendment to the British Columbia PPSA was made to allow it to apply to licences. Note, that this likely only has prospecive effect.
See Also: Article dealing with the trial level decision.

For other cases involving the treatment of fishing licences upon bankruptcies see: Dugas (Re Bankruptcy) 2004 NBCA 15 (digested herein); 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 involved a groundfish licence that was transferred by a father to one of six sons. After his death, the father's estate commenced an action alleging that the licence was held pursuant to an express trust to hold it for the benefit of the holder's other siblings. After citing recent jurisprudence involving express trusts over fishing licences, the court declined to find a trust on the grounds that the the plaintiff failed to establish certainty of intention and certainty of object.