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.