T-358-75
Manitoba Fisheries Limited and Harry Gordon
Marder and Sophia Marder (Plaintiffs)
v.
The Queen (Defendant)
Trial Division, Smith D.J.—Winnipeg, March 24
and April 25, 1975.
Crown—Motion to strike statement of claim or for leave to
extend time for filing defence—Governments of Canada and
Manitoba taking over plaintiffs' fish exporting business—
Plaintiffs claiming compensation—Whether reasonable cause
of action—Statutory construction—Freshwater Fish Market
ing Act, R.S.C. 1970, c. F-13, ss. 22, 25(2)(c)—Fisheries Act,
R.S.M. 1970, c. F-90, ss. 7 and 29.
Plaintiffs, owners and operators of a fish exporting business
were taken over by the Freshwater Fish Marketing Corporation
with the passing of the Freshwater Fish Marketing Act. Under
it, the Federal Government was authorized to enter into agree
ments with, inter alia, the Manitoba Government to provide
compensation to owners of plants or equipment adversely
affected. Despite repeated demands, plaintiffs have been
offered no compensation save offers of disposal allowance,
rejected because the equipment is now worthless. While stating
its readiness to accept valuation of plaintiff's equipment as an
ongoing business, the Federal Government has insisted that
plaintiffs look to Manitoba for assistance. Plaintiffs claim that
they have neither been granted a licence under the Act to
export fish, nor have they been exempted from the provisions of
Part III, and have, therefore, been deprived of goodwill without
compensation. Likewise, plaintiffs claim that their assets have
been rendered valueless without compensation. Defendant
moves to strike plaintiff's statement of claim on the ground that
it discloses no reasonable cause of action; alternatively, defend
ant moves for leave to extend the time for filing its defence.
Held, dismissing the motion to strike, and granting seven
days to file a statement of defence, it has been held that unless
the words of a statute expressly so demand, it is not to be
construed so as to take away property without compensation. A
statute should be interpreted to respect personal and property
rights; it is a proper rule of construction not to construe an Act
as interfering with or injuring such rights without compensation
unless one is obliged to so construe it. It cannot be said that
Parliament, in enacting the Freshwater Fish Marketing Act,
intended to deprive plaintiffs of their property without compen
sation. Nor must the permissive provisions of the Act providing
for the making of arrangements with the Manitoba Govern
ment to compensate for assets necessarily be read so as to
exclude the possibility of compensating for incorporeal assets
such as goodwill. It is, however, not good practice to use such a
motion to determine disputed or uncertain points of law.
Trego v. Hunt [1896] A.C. 7; Central Control Board
(Liquor Traffic) v. Cannon Brewery Company Limited
[1919] A.C. 744; Attorney-General v. De Keyser's Royal
Hotel Limited [1970] A.C. 508; London and Northwestern
Railway Co. [1893] 1 Ch. D. 16, followed. Mayor of
Montreal v. Drummond [1875-76] 1 A.C. 384; In re
Collins and Water Commissioners of Ottawa (1878) 42
U.C.Q.B. 378; Sisters of Charity of Rockingham v. The
King [1922] 2 A.C. 315 and The King v. Bradley [1941]
S.C.R. 270, distinguished. B.C. Power Corporation Ltd. v.
Attorney General of B.C. and B.C. Electric Co. Ltd.
(1962) 34 D.L.R. (2d) 25, agreed with.
MOTION.
COUNSEL:
K. Arenson for plaintiffs.
S. Lyman for defendant.
SOLICITORS:
Ken Arenson, Winnipeg, for plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
SMITH D.J.: This is a motion by the defendant
for an order pursuant to Rule 419 of the Federal
Court Rules, striking out the statement of claim'
herein on the ground that it discloses no reason
able cause of action or, in the alternative, for leave
to extend the time to file a statement of defence
until such time as this Court shall deem meet.
The motion was heard on the 24th day of March
1975. No evidence was adduced, and in conse
quence, for the purpose of this motion, it is neces
sary to assume that all the facts alleged in the
statement of claim are true.
The facts set out in the statement of claim may
be stated as follows:
1. The corporate plaintiff is a Manitoba com
pany, of which the male plaintiff is president
and of which the two individual plaintiffs are
the principal shareholders.
2. From 1928 till about May 1, 1969, the plain
tiffs owned and operated a fish exporting busi
ness, catching and buying freshwater fish in
Manitoba and elsewhere in Canada, storing,
preparing and processing those fish in Manito-
ba, and from Manitoba selling them in the
United States of America, and outside of
Manitoba in Canada.
3. In operating the said business during the
years 1965 to 1969 inclusive the plaintiffs made
an average annual operating profit of
$43,323.15.
4. In December 1968, at a meeting with an
assistant to the Minister of Fisheries for Canada
and other employees of the Federal Department
of Fisheries and employees of the Government
of Manitoba the plaintiffs were informed that
the Governments of Canada and Manitoba were
taking over the fish exporting businesses operat
ing in Manitoba. In January 1969 they were
informed that the takeover was to be effective
May 1, 1969.
5. At the January meeting the plaintiffs were
informed that their business would be purchased
or compensation would be paid for loss suffered
by the plaintiffs.
6. The Parliament of Canada, by the Freshwa
ter Fish Marketing Act, S.C. 1968-1969, c. 21,
now R.S.C. 1970, c. F-13, on or about May 1,
1969 created the Freshwater Fish Marketing
Corporation, and by Part III of the Act gave it
the exclusive right to carry on the business of
exporting fish from Canada or from one prov
ince to another. The said Part permitted the
Corporation to issue fish exporting licences to
persons, but no such licence has been issued to
the plaintiffs, or, to the knowledge of the plain
tiffs, to any other person. Section 22 also
empowered the Governor in Council by regula
tion to exempt from the provisions of Part III,
inter alfa, any person, but the Governor in
Council has not so exempted the plaintiffs or, to
the knowledge of the plaintiffs, any other
person.
7. The said Act authorized the Government of
Canada to enter into an agreement with, inter
alla, the Government of Manitoba, providing for
the undertaking by the Province of arrange
ments for the payment, to the owner of any
plant or equipment used in storing, processing or
otherwise preparing fish for market, of compen
sation for any such plant or equipment that
would or might be rendered redundant by
reason of any operations authorized to be car
ried out by the Corporation under Part III of
the Act. By section 5 of an agreement between
the Governments of Canada and Manitoba,
dated June 4, 1969, the Province undertook to
make any arrangements necessary for the
foregoing purpose.
8. The Government of Manitoba has not paid,
or offered to pay, compensation to the corporate
plaintiff for the destruction of value of its plant
and equipment, despite repeated demands to do
so. It has made two offers of amounts by way of
disposal allowance to assist the corporate plain
tiff in selling its equipment. The first of these
offers was made on or about March 24, 1971,
and. was for $1,500. The second was made on or
about May 24, 1972 and was for $4,104. Both
these offers were refused because, since it was
unlawful for any person other than the Freshwa
ter Fish Marketing Corporation to carry on a
fish exporting business in Manitoba, the resale
value of the corporate plaintiff's plant and
equipment was almost nothing.
9. On the 1st day of May 1969, the corporate
plaintiff's fish exporting business, including the
goodwill and tangible assets, had a value of
about $450,000 as an ongoing business, which
business was its only asset. [This figure of
$450,000 cannot be anything more than an esti
mate, though given as a statement of fact.]
10. By reason of the Freshwater Fish Market
ing Corporation's failure to grant a licence to
the corporate plaintiff and of the Government of
Canada to exempt the plaintiffs from the provi
sions of Part III of the Act, the corporate plain
tiff has been deprived of property, namely the
goodwill of its business, without compensation,
and the corporate plaintiff's tangible assets,
being fit for no purpose other than a fish export
ing business, have been rendered almost value
less, likewise without compensation.
11. On divers occasions the plaintiffs or some
one on their behalf have demanded that the
Government of Canada pay compensation to
them.
12. In a letter to Northern Lakes Fisheries
Company, dated January 24, 1974, the Minister
of Fisheries for Canada stated, inter alia:
... the Government [i.e. the Government of Canada] is
now prepared to accept for the purposes of compensation,
that the assets could be valued on the basis of an ongoing
business.
However, the Government of Canada has not
paid, or offered to pay or offered to negotiate
the amount of compensation, and has insisted
that the plaintiffs look to the Government of
Manitoba for compensation.
On this last point I agree with the contention of
the plaintiffs that any claim they may have must
be made against the defendant, not the Govern
ment of Manitoba. It was a statute of the Parlia
ment of Canada that took away their business and
prohibited them from engaging in the fish export
ing business. This was necessarily so, since inter-
provincial and international trade fall within the
sole jurisdiction of the Parliament and Govern
ment of Canada, and though it seems to be the
case that the statute in question, the Freshwater
Fish Marketing Act, was enacted in response to
requests from several of the provinces, the statute
is an Act of Parliament alone. Nor does the agree
ment of June 4, 1969, between Canada and
Manitoba alter the situation. The plaintiffs are not
parties to the agreement and were given no legal
rights under it.
At this point some reference to what is meant by
goodwill is desirable. Goodwill has been variously
defined, sometimes in a narrow sense, but I consid
er the views of two eminent law lords have apt
significance for the present case. In Trego v. Hunt
[1896] A.C. 7 Lords Herschell and Macnaghten
both reviewed judicial pronouncements concerning
the meaning of this term, and were in agreement
that on a sale it means much more than the
probability that the old customers will continue to
resort to the old place. At page 24 Lord Mac-
naghten described it in these terms:
Often it happens that the goodwill is the very sap and life of the
business, without which the business would yield little or no
fruit. It is the whole advantage, whatever it may be, of the
reputation and connection of the firm which may have been
built up by years of honest work or gained by lavish expendi
ture of money.
In the present case the plaintiffs submit that the
goodwill of their business was the element which
brought substantial profits.
Following the enactment of the Freshwater Fish
Marketing Act the Legislature of Manitoba enact
ed The Fisheries Act, S.M. 1969 (2nd Session) c.
9, now R.S.M. 1970, c. F 90. Section 7 of this Act
authorized the Government of Manitoba, with the
approval of the Lieutenant Governor in Council to
enter into agreements with the Government of
Canada, or a minister thereof, for the purpose,
inter alia, of
(a) co-operating in the control and regulation of the marketing
of fish;
Section 29(1) of the provincial Act provided:
29 (1) Where, in the opinion of the minister, [meaning the
minister charged with the administration of the Act], any real
or personal property that, before the coming into force of this
Act, was used by the owner thereof in, or in connection with,
his business as a fisherman, fish dealer or fish processor, as an
earning asset in that business, can no longer be used by the
owner because of the operations of the corporation (meaning
the Freshwater Fish Marketing Corporation established under
the Canadian Act), the minister may, at any time not later than
the first day of May, 1971, for and on behalf of the govern
ment, purchase the property.
This is the only provision in the Act that
touches, even indirectly, on the question of com
pensation. I note that its language is permissive,
not imperative, and that it provides no means by
which the purchase price is to be ascertained. I
note further that there is no mention, in the Act, of
The Expropriation Act and that subsection (4) of
section 29 expressly provides that The Land
Acquisition Act and The Government Purchases
Act do not apply to acquisition by the minister
under subsection (1).
On the other hand the terms used throughout
section 29 are "real or personal property" or
"property". Nowhere is the term "tangible proper
ty" used, or any other term that would indicate
that the "property" referred to must have a physi
cal existence. The term "personal property"
includes "goodwill" along with all other kinds of
intangible property. Here I note that counsel for
the plaintiffs stated that the tangible property used
in the plaintiffs' business was of relatively little
value, and that it was mainly the goodwill enjoyed
by the business that had enabled the corporate
plaintiff to earn the substantial average annual
profits stated in the statement of claim and
indicated supra. The principal element in the
plaintiffs' claim is for the loss of goodwill.
The plaintiffs claim that, having been totally
deprived of their business by a statute of Canada,
they are entitled to reasonable compensation from
the defendant for its loss. Counsel for the defend
ant contends that there is no inherent right to
compensation from the Crown and that any right
to compensation must depend for its existence
upon a contract or upon statutory provision for it.
He submits that there is no contractual or statu
tory provision giving a right to compensation in
this case, and no statutory provision dealing in any
way with the subject of compensation other than
the permissive provisions in section 25(2)(c) of the
Freshwater Fish Marketing Act and section 29(1)
of the Manitoba Fisheries Act. He submits that as
section 25(2)(c) of the federal statute makes some
provision for compensation, permissive and limited
though it be, anything different or more extensive
is excluded on the maxim expressio unius est
exclusio alterius.
Unquestionably the Parliament of Canada has
the constitutional and legal power to legislate out
of existence any or all fish exporting businesses
being carried on in Canada by persons or corpora
tions and to empower the Government of Canada
to operate all such business as a public undertak
ing of the State. It can do these things without
incurring any obligation to pay compensation for
losses sustained thereby by those whose businesses
are terminated. The plaintiffs submit that such a
course of action would be manifestly unfair and
that it cannot be assumed that Parliament intends
to act unfairly, unless such intention is clearly
expressed. They point to the fact that section
25(2)(c) of the federal statute recognizes that
compensation should be paid for losses sustained
by reason of the legislation in respect of tangible
assets that were being used in the business. The
letter from the Minister of Fisheries of January
24, 1974 (supra) supports this last point. It con
tains this statement:
Although it was generally agreed that compensation was with
respect to assets, the Government is now prepared to accept for
purposes of compensation, that the assets could be valued on
the basis of an ongoing business;
In addition, while stating that the responsibility for
making payments of compensation rested with the
provinces, the letter advised that the Government
of Canada had offered to reimburse the provinces
up to 50 per cent of payments made. It also stated
that such payments had already been made on the
basis of an ongoing business, to the Alberta
Government.
It is clear from a perusal of the whole of the
Minister's letter that the Government of Canada,
though asserting that the payment of compensa
tion was the responsibility of the provinces was in
agreement that compensation should be paid and
was willing that assets be valued on the basis of an
ongoing business and also to reimburse the prov
inces up to 50 per cent of payments made on this
basis. Thus it was not the intention of the Govern
ment of Canada, speaking through Her Majesty's
responsible Minister, that the plaintiffs and others
in the same position should be denied
compensation.
I turn now to the jurisprudence on the issue.
In Mayor of Montreal v. Drummond [1875-76]
1 A.C. 384, at page 410, Sir Montague Smith,
delivering the judgment of the Privy Council, said:
Upon the English legislation on these subjects, it is clearly
established that a statute which authorizes works makes their
execution lawful, and takes away the rights of action which
would have arisen if they had been executed without such
authority. Statutes of this kind usually provide compensation
and some procedure for assessing it; but it is a well understood
rule in England that though the action is taken away, compen
sation is only recoverable when provided by the statutes and in
the manner prescribed by them.
In Re Collins and Water Commissioners of
Ottawa (1878) 42 U.C.Q.B. 378, Harrison C.J. at
page 385 adopted the words of Sir Montague
Smith in the latter portion of the above quotation.
In Sisters of Charity of Rockingham v. The
King [1922] 2 A.C. 315, a Nova Scotia case that
went to the Privy Council, Lord Parmoor, in deliv
ering the judgment of the Judicial Committee said,
at page 322:
Compensation claims are statutory and depend on statutory
provisions. No owner of lands expropriated by statute for public
purposes is entitled to compensation, either for the value of
land taken, or for damage, on the ground that his land is
"injuriously affected," unless he can establish a statutory right.
See also The King v. Bradley [1941] S.C.R.
270—a patent case.
In all of these four cases there was legislative
authority for payment of compensation.
The views expressed in these four cases and in
others which might be cited are strong judicial
pronouncements by Courts of very high authority.
But judical opinion has not been unanimous, as the
following examples of statements of the law, made
by Courts of equally high authority, indicate.
In Central Control Board (Liquor Traffic) v.
Cannon Brewery Company Limited [1919] A.C.
744, an English case involving the compulsory
acquisition of a certain licensed public house under
the authority of The Defence of the Realm Act
1915, and Liquor Control Regulations made there-
under, Lord Atkinson said, in the House of Lords,
at page 752:
; nor was it contended that the principle recognized as a
canon of construction of statutes by many authorities ... did
not apply to the body of legislation under which the Board
purported to act. That canon is this: that an intention to take
away the property of a subject without giving to him a legal
right to compensation for the loss of it is not to be imputed to
the Legislature unless that intention is expressed in unequivocal
terms. I used the words "legal right to compensation" advised
ly, as I think these authorities establish that, in the absence of
unequivocal language confining the compensation payable to
the subject to a sum given ex gratia, it cannot be so confined.
The Defence of the Realm Act 1915 authorized
the acquisition of property like that of the respond
ent but gave no indication as to whether compen
sation would be paid for land so acquired. Having
mentioned this fact, Lord Atkinson proceeded to
say, at page 754:
On the other hand, it contains not a single clause expressing in
any kind of language, clear and unequivocal, or obscure and
ambiguous, that the owners of the property are not to be paid
or compensated for it. According to the authorities I have
already referred to, this statute must therefore be construed on
the assumption that any property taken will be paid or compen
sated for.
The decision of the House of Lords was unani
mous, confirming that of the Court of Appeal,
where it had been held that compensation should
be sought under the Lands Clauses Act of 1845.
The House of Lords held that this Act must be
considered to be incorporated in the Defence of the
Realm Act.
In Attorney-General v. De Keyser's Royal
Hotel Limited [1920] A.C. 508, Lord Atkinson
reasserted the views expressed by him in the
Cannon Brewery case. At page 542 he said:
The recognized rule for the construction of statutes is that,
unless the words of the statute clearly so demand, a statute is
not to be construed so as to take away the property of a subject
without compensation.
He then quoted words expressed by Bowen L.J.
in London and Northwestern Railway Co. [1893]
1 Ch. D. 16, where that learned Judge said [at
page 28]:
... the Legislature cannot fairly be supposed to intend, in the
absence of clear words shewing such intention, that one man's
property shall be confiscated for the benefit of others, or of the
public, without any compensation being provided for him in
respect of what is taken compulsorily from him. Parliament in
its omnipotence can, of course, override or disregard this ordi
nary principle ... if it sees fit to do so, but it is not likely that it
will be found disregarding it, without plain expressions of such
a purpose.
Lord Atkinson continued:
There is not in the Act of 1914 [Defence of The Realm Act] or
in the Regulation framed under it any indication of such a
confiscatory purpose.
In B.C. Power Corporation Ltd. v. Attorney
General of British Columbia (1962) 34 D.L.R.
(2nd) 25, at page 44, Wilson J.A. of the B.C.
Court of Appeal, quoted with approval the follow
• ing from Maxwell on Interpretation of Statutes,
11th ed., pages 275-277:
Statutes which encroach on the rights of the subject, whether as
regards person or property, are similarly subject to a strict
construction in the sense before explained. It is a recognized
rule that they should be interpreted, if possible, so as to respect
such rights .... Proprietary rights should not be held to be
taken away by Parliament without provision for compensation
unless the legislature has so provided in clear terms. It is
presumed, where the objects of the Act do not obviously imply
such an intention, that the legislature does not desire to confis
cate the property or to encroach upon the right of persons, and
it is therefore expected that, if Such be its intention, it will
manifest it plainly if not in express words at least by clear
implication and beyond reasonable doubt. It is a proper rule of
construction not to construe an Act of Parliament as interfering
with or injuring persons' rights without compensation, unless
one is obliged so to construe it.
On the facts available to me on this motion it
cannot be said that the Parliament of Canada, in
enacting the Freshwater Fish Marketing Act,
intended to deprive the plaintiffs, or other similar
ly placed, of their property without any compensa
tion. Nor is it clear to me that the permissive
provisions in the Act under which arrangements
might be made for the Government of Manitoba to
pay compensation for physical assets, namely,
plant and equipment that might be rendered
redundant by the operations of the Freshwater
Fish Marketing Corporation, must necessarily be
read as excluding the possibility of compensation
being paid for incorporeal assets like goodwill. If
the views expressed, e.g.: by Lord Atkinson, are
accepted, it would seem that an intention to pro
duce such a result would need to be clearly
expressed.
In my view, it is not good practice to make use
of a motion of this kind to determine disputed or
uncertain points of law. Such questions are better
left for decision at the trial when all the facts are
known.
It is possible that when all the facts are present
ed at the trial the Court may hold that the plain
tiffs have failed to establish their claim, but on the
evidence on which I must decide this motion I am
unable to say that the statement of claim does not
disclose a reasonable cause of action.
The motion for an order to strike out the state
ment of claim is dismissed. The alternative order is
granted. Any statement of defence shall be filed
within seven days following delivery of this order
to the defendant's solicitor or counsel.
Costs of this motion to the plaintiffs in any
event of the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.