T-4085-78
Irving Oil Limited (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Cattanach J.—Ottawa, January 17
and February 14, 1979.
Crown — Compensation for imported oil — Plaintiff an
"eligible importer" of petroleum seeking compensation
allegedly withheld for overpayment — Oil used to fuel British
ships lawfully plying Canadian coasting trade — Earlier
regulations allowing compensation only for fuel used in ships
of Canadian registry — Whether or not petroleum supplied
before change in regulations for use as fuel on ships of British,
not Canadian, registry plying the Canadian coasting trade
should have been included in the quantity of petroleum in
respect of which petroleum is payable — Energy Supplies
Emergency Act, S.C. 1973-74, c. 52, s. 3 — Petroleum
Administration Act, S.C. 1974-75-76, c. 47, ss. 72(1),(2), 78
— Oil Import Compensation Regulations, SOR/74-627 —
Imported Oil and Petroleum Products Compensation Regula
tions, SOR/74-232, ss. 3(1), 5(2)(b), 6(2)(b) — Oil Import
Compensation Regulations No. 1, 1975, SOR/75-140, s.
6(2)(b)(i) — Petroleum Import Cost Compensation Regula
tions, SOR/75-384, s. 9(2)(b)(î).
This is a special case set down for adjudication by the parties
pursuant to an order of the Court. Plaintiff, an "eligible
importer" of oil and petroleum products, filed applications for
compensation for petroleum imported prior to the coming into
force of the Oil Import Compensation Regulations No. 1, 1975,
on March 12, 1975, and received payment. As a result of an
alleged overpayment, the Energy Supplies Allocation Board, in
dealing with later applications by the plaintiff for import
compensation, withheld $2,005,073 from such compensation
payable. Plaintiff claims that sum was wrongfully withheld.
The Court is to decide whether the quantities of petroleum
imported before March 12, 1975, and used as fuel in ships not
registered in Canada and engaged (as permitted by law) in the
coasting trade of Canada should have been included in the
quantity of petroleum in respect of which compensation was
payable to the plaintiff. The wording of the Regulation in force
prior to that date had provided only for compensation for fuel
imported and used in ships of Canadian registry, while the
Regulation in force after that date included fuel used in ships
of British registry lawfully engaged in the coasting trade of
Canada.
Held, the action is dismissed. All legislation prior to March
12, 1975, clearly excluded any petroleum sold or supplied for
use as fuel in a ship "not registered in Canada" from that for
which compensation may be payable. The Oil Import Compen
sation Regulations No. 1, 1975, SOR/75-140, effective on that
date, permitted the payment of compensation for fuel used in a
ship "not registered in Canada" but permitted by law to engage
in the coasting trade of Canada. The Court will not create a
casus omissus by interpreting the limitation of the supply of
fuel to Canadian ships exclusively to qualify for compensation
to be an error to the extent that British vessels engaged in the
coasting trade should also be supplied. The fact that it might
have been better to extend a statute or regulation to other cases
or that such an intention was probable is not enough to justify
an interpretation necessitating the reading into the statute
words which are not there. Section 12 of Oil Import Compen
sation Regulations No. 1, 1975, SOR/75-140 and section 78 of
the Petroleum Administration Act are not a ratification of the
propriety of compensation in light of eligibility for compensa
tion under subsequent Regulations. Section 12 does not avail
the plaintiff. A person who applies under those Regulations for
compensation for oil imported during the period from January
1, 1974 to March 11, 1975 must qualify for compensation
under the Regulations that were in effect from time to time in
that period—for oil supplied as fuel for ships registered in
Canada. The provisions in section 78, that payments made or
authorized to be made under prior Regulations shall be deemed
to have been made or authorized as import compensation for
the purposes of the Petroleum Administration Act, do not
detract from the applicability of the prior Regulation to deter
mine the quantity of petroleum for which compensation is
payable and the amount of that payment. The Act does not
authorize an amount of compensation to be paid beyond that
authorized under prior Regulations and in respect of the quan
tity of petroleum upon which compensation is payable under
the prior Regulations.
ACTION.
COUNSEL:
E. Neil McKelvey, Q.C. and Robert G. Vin-
cent for plaintiff.
Eric Bowie and Robert P. Hynes for
defendant.
SOLICITORS:
McKelvey, Macaulay, Machum, Saint John,
for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
CATTANACH J.: On the close of pleadings
herein the parties, by notice of motion dated Octo-
ber 26, 1978, applied pursuant to Rule 475 of the
Federal Court Rules that a special case as pro
posed by the parties should be set down for adjudi
cation by the Court.
By order dated October 31, 1978 the Associate
Chief Justice ordered that the special case as set
forth by the parties be set down for argument.
The special case so formulated for opinion of the
Court reads:
STATEMENT OF FACTS
1. The Plaintiff is a company incorporated under the laws of
the Province of New Brunswick with its head office at the City
of Saint John, in the said Province, and at all material times
was an "eligible importer" within the Regulations, Orders in
Council and Statutes hereinafter referred to.
2. The Plaintiff filed six (6) applications to the Minister of
Energy, Mines and Resources, between January 1, 1974 and
March 31, 1974, claiming compensation under the Imported
Oil and Petroleum Products Compensation Regulations, SOR/
74-232 (P.C. 1974-806, April 9, 1974) as amended, made
pursuant to Energy, Mines and Resources Vote No. 1lb of
Appropriation Act No. 1, 1974.
3. Attached hereto as a schedule, is a Table, Part "A" of which
deals with the six (6) applications, numbered 001 to 006 and
referred to in paragraph 2 hereof:
Column 1 of the Table shows the total quantity of
petroleum imported into Canada and set out in
number of barrels;
Column 2(a) shows the amounts as disclosed in applications
001 to 006, of petroleum imported into Canada
and sold or supplied to any person for use as a
fuel in an aircraft or ship not registered in
Canada;
Column 2(b) shows the volume of petroleum imported into
Canada and sold or supplied for export from
Canada;
Column 2(c) shows the total number of barrels arrived at by
adding column 2(a) and 2(b);
Column 3 shows the net barrels of petroleum imported
into Canada in respect of which the Plaintiff
claimed compensation (i.e. column 1 less
column 2(c));
Column 4 shows the amount of compensation paid to the
Plaintiff;
Column 5 shows the amounts of petroleum imported into
Canada and sold or supplied to any person for
use as a fuel in an aircraft or ship not registered
in Canada, but which were sold or supplied to a
ship or ships which were permitted by law to
engage in the coasting trade of Canada and
were so engaged, (and which had not been
included as part of the exclusions and set out in
column 2(a) of this Table);
Column 6 shows the revised net barrels of petroleum
imported into Canada which the Energy Sup
plies Allocation Board alleges is the quantity of
petroleum in respect of which compensation is
payable (i.e. column 3 less column 5);
Column 7 shows the revised total amount of compensation
which the Energy Supplies Allocation Board
alleges is payable to the Plaintiff;
Column 8 shows the amounts of monies which the Energy
Supplies Allocation Board alleges constituted
an overpayment to the Plaintiff and in respect
of which a set-off has been made.
4. The Plaintiff filed eighteen (18) applications to the Minister
of Energy, Mines and Resources, between April 1, 1974 and
October 31, 1974, pursuant to arrangements between industry
and government for oil imported into Canada. These amounts
of compensation were paid to the Plaintiff pursuant to Special
Warrants issued by the Governor-in-Council and Section 23 of
the Financial Administration Act, (a) P.C. 1974-1176 of May
22, 1974, (b) P.C. 1974-1519 of June 27, 1974, (c) P.C.
1974-1697 of July 25, 1974, (d) P.C. 1974-1943 of August 28,
1974, and (e) P.C. 1974-1973 of September 4, 1974.
5. Attached as a schedule hereto is a Table, Part "B" of which
deals with the eighteen (18) applications, numbered 007 to 024
and referred to in paragraph 4 hereof. The explanation of the
meaning attributable to the columns in Part "B" of the Table is
the same as that set out in paragraph 3.
6. The Plaintiff filed fourteen (14) applications to the Energy
Supplies Allocation Board between November 1, 1974 and
March 11, 1975 claiming compensation under the Oil Import
Compensation Regulations, SOR/74-627, (P.C. 1974-2149,
November 5, 1974) as amended, made pursuant to Energy
Supplies Allocation Board Vote No. 52a of Appropriation Act
No. 3, 1974.
7. Attached as a schedule hereto is a Table, Part "C" of which
deals with the fourteen (14) applications, numbered 025 to 038
and referred to in paragraph 6 hereof the explanation of the
meaning attributable to the column in Part "C" of the Table is
the same as that set out in paragraph 3.
8. Subsequently the following were made and enacted:
Oil Import Compensation Regulations No. 1, 1975 SOR/75-
140 (P.C. 1975-545, March 11, 1975), made pursuant to
Energy Supplies Allocation Board Vote No. 53c of Appropria
tion Act No. 5, 1974;
Petroleum Administration Act, Statutes of Canada, 1974-1975
c. 47;
Petroleum Import Cost Compensation Regulations SOR/75-
384 (P.C. 1975-1487, June 30, 1975) made pursuant to the
Petroleum Administration Act.
9. As a result of the alleged overpayment of compensation set
out in column 8 of the three Tables of the schedule hereto the
Energy Supplies Allocation Board, in dealing with later
applications by the Plaintiff for import compensation, withheld
$2,005,073.00 from such compensation payable.
10. The Plaintiff claims that the said $2,005,073.00 was
wrongfully withheld.
11. The question for opinion of Court is whether the quantities
of petroleum set forth in column 5 of parts "A", "B" and "C"
of the schedule hereto should have been included in the quanti-
ty of petroleum in respect of which compensation was payable
to the Plaintiff.
12. (1) If the Court shall be of opinion in the positive, then
judgment is to be given for the Plaintiff, in the sum of
$2,005,073.00 to be paid by the Defendant to the Plaintiff
together with the costs of the action to be taxed;
(2) If the Court shall be of opinion in the negative, then
judgment is to be given for the Defendant, with the costs
of the action to be taxed.
Attached to the special case is a Table divided
into Parts A, B and C which I have not reproduced
because I believe that the effect thereof and the
pertinent portion can best be explained in narra
tive form.
The Table consists of thirty-eight applications to
Her Majesty by the plaintiff for import compensa
tion for crude oil or petroleum loaded by it during
the period January 1, 1974 to March 11, 1975.
Part A of the Table details the particulars of six
of those applications made in the period from
January 1, 1974 to March 31, 1974 (the signifi
cance of the second date may be that it is the
termination of the 1974 financial year).
The compensation so claimed in these six
applications during the period January 1, 1974 to
March 31, 1974 was pursuant to the Imported Oil
and Petroleum Products Compensation Regula
tions, SOR/74-232, (P.C. 1974-806 dated April 9,
1974) as amended, made pursuant to Energy,
Mines and Resources Vote No. 1 lb of the Appro
priation Act No. 1, 1974. These Regulations as the
long title indicates are to provide for compensation
to certain refiners and importers of crude oil and
petroleum products for consumption in Canada.
Obviously if the crude oil or petroleum products
are imported into Canada but are not consumed in
Canada then compensation is not payable.
The provisions of SOR/74-232 pertinent to this
matter are sections 3(1), 5(2)(b) and 6(2)(b).
Section 3(1) reads:
3. (1) Upon application therefor to the Minister by an
eligible importer who establishes that he qualifies for import
compensation by reason of the purchase by him of a quantity of
petroleum, the Minister may, subject to these Regulations,
authorize the payment to the eligible importer of import com
pensation pursuant to these Regulations in an amount deter
mined by the Minister in respect of that purchase of petroleum.
It is agreed that the plaintiff is an eligible
importer.
Section 5(2)(b) reads:
5....
(2) In calculating the amount of import compensation pur
suant to subsection (1), there shall be excluded from the
quantity of petroleum
(b) the volume of any petroleum product obtained there
from, sold or supplied to any person for use as fuel in an
aircraft or ship not registered in Canada;
Section 6(2)(b) reads:
6....
(2) In calculating the amount of import compensation pur
suant to subsection (1), there shall be excluded from the
quantity of a petroleum product
(b) any portion thereof sold or supplied to any person for use
as fuel in an aircraft or ship not registered in Canada.
Section 5 applies to compensation for crude oil
imported and section 6 applies to compensation for
petroleum products imported.
Part B of the Table lists 18 applications for
import compensation with respect to importation
by the plaintiff during the period from April 1,
1974 to October 31, 1974. The amounts deter
mined as compensation were paid to the plaintiff
from funds available pursuant to Special Warrants
issued by the Governor in Council no doubt
because the funds provided under the Appropria
tion Act were no longer available.
However the eligibility for compensation was
still governed by the provisions of SOR/74-232.
The remaining 14 applications for compensation
made by the plaintiff, out of the total of 38, are
listed in Part C and were made in the period
between November 1, 1974 and March 11, 1975.
These applications for compensation were made by
the plaintiff pursuant to the Oil Import Compen
sation Regulations, SOR/74-627, (P.C. 1974-
2419, November 5, 1974) these Regulations being
made pursuant to authority in Energy Supplies
Allocation Board Vote No. 52a of Appropriation
Act No. 3, 1974.
By virtue of section 4 of these Regulations,
SOR/74-627, compensation payable to an appli
cant therefor is determined and authorized by a
Board called the Energy Supplies Allocation
Board established by section 3 of the Energy Sup
plies Emergency Act, S.C. 1973-74, c. 52, and its
composition, duties and the like are provided for in
sections 4 to 10. This is a departure from the prior
Regulations where applications for compensation
were made to the Minister.
The section of these Regulations particularly
applicable in this matter is section 6 and particu
larly subsections (1) and (2)(b) thereof.
Under section 6(1) compensation is for
petroleum imported for domestic consumption and
no distinction is made between crude oil and
petroleum products as was the case in SOR/74-
232.
Section 6(2)(b) reads:
6....
(2) In calculating the amount of import compensation pur
suant to subsection (1), there shall be excluded from the
quantity of petroleum
(b) any portion thereof sold or supplied to any person for use
as fuel in an aircraft or ship not registered in Canada; .. .
There is no question whatsoever that under
these Regulations, as applicable throughout the
period January 1, 1974 to March 11, 1975 that, in
calculating the amount of import compensation,
there shall be excluded therefrom any portion of
petroleum sold or supplied to a ship "not registered
in Canada". That was agreed upon by the counsel
for the parties.
In Column 5, headed "Unreported Ship or Air
craft", of Parts A, B and C of the Table annexed
to the special case are the respective totals of
49,991 bbl., 196,094 bbl. and 104,923 bbl. which I
compute to be a total of 351,008 bbl.
In paragraph 3 of the special case it is explained
that Column 5 shows the amounts of petroleum
imported into Canada by the plaintiff and sold or
supplied by it for use as fuel in ships not registered
in Canada.
Paragraph 3 continues to state that this quantity
of petroleum, while sold as fuel to ships not regis
tered in Canada, was in fact sold to ships of
foreign registry but permitted by law to engage in
the coasting trade of Canada and were so engaged.
It is candidly admitted by the plaintiff that this
quantity of petroleum was not excluded from the
quantity for which compensation was claimed.
Rather it was included and compensation was paid
therefor.
Later upon review by the Board it was decided
by the Board that the plaintiff was not entitled to
the compensation for which it had applied and had
been paid for fuel oil sold or supplied by it for use
as fuel in ships not registered in Canada during the
period from January 1, 1974 to March 11, 1975
when SOR/74-232 and SOR/74-627 were in
effect and accordingly the Board has recouped or
is in the process of recouping the compensation so
paid which was in the amount of $2,005,073 by the
simple expedient of withholding from import com
pensation applied for by the plaintiff subsequent to
March 11, 1975 which the Board is entitled to do
by virtue of the Financial Administration Act as
well as by virtue of section 76 of the Petroleum
Administration Act.
Because the decision that the amount of
$2,005,073 which was paid to the plaintiff was not
properly payable in respect of petroleum. sold or
supplied for use as fuel in ships not registered in
Canada under all legislation in effect prior to
March 11, 1975 wherein no exception was made
for ships authorized by law to engage in the coast
ing trade in Canada, and that therefore the
amount was paid in error and was properly recov
erable by the Board, was a decision of a Federal
Board, I invited the representations of counsel as
to whether the matter was not the proper subject
of an application to the Appeal Division to review
or set aside the decision of the Board in accord
ance with section 28 of the Federal Court Act and
if that should be the proper course then the Trial
Division would be without jurisdiction to entertain
the matter.
After hearing those representations I concluded
that the decision of the Board was an administra-
tive one not made on a quasi-judicial basis and so
not within section 28 (supra).
The question posed for the opinion of the Court
is, as outlined in paragraph 11, of the special case,
whether the petroleum supplied by the plaintiff for
use as fuel in ships not registered in Canada should
have been included in the quantity of petroleum in
respect of which compensation was payable to the
plaintiff and this despite the fact that the
petroleum in question was supplied as fuel, not to
ships registered in Canada but to foreign regis
tered ships engaged in the coasting trade in
Canada, that is transporting cargo between
Canadian ports.
By virtue of section 663 of the Canada Shipping
Act, R.S.C. 1970, c. S-9, only British ships, in
addition to Canadian ships, may engage in the
coasting trade in Canada except that, by subsec
tion (3) of section 663, the coasting trade on the
Great Lakes and the St. Lawrence River is
restricted to Canadian ships exclusively.
Obviously a British ship, in plying the coasting
trade would be consuming fuel in Canada and fuel
purchased in Canada for that purpose would be
purchased for consumption in Canada.
The same may be said of any foreign registered
ship licensed or authorized by law to engage in the
Canadian coasting trade.
As is previously indicated the language of all
legislation prior to March 12, 1975 is clear and
unequivocal to the effect that any petroleum sold
or supplied for use as fuel in a ship "not registered
in Canada" is excluded from that for which com
pensation may be payable.
Counsel for the parties are in agreement that
the petroleum supplied by the plaintiff between
January 1, 1974 and March 11, 1975 was for use
as fuel in ships of British registry (which are ships
of foreign not Canadian registry) and perhaps to
ships of foreign registry other than British. During
the course of the argument it was explained to me
that the plaintiff owns a fleet (either directly or
indirectly) the ships of which are registered in
Bermuda and are accordingly ships of British
registry and it was to those ships that the imported
petroleum, the exclusion of which is in question,
was supplied as fuel by the plaintiff.
However the Oil Import Compensation Regula
tions No. 1, 1975, SOR/75-140 (P.C. 1975-545,
dated March 11, 1975) made pursuant to Energy
Supplies Allocation Board Vote No. 53c of the
Appropriation Act No. 5, 1975 became effective
on March 12, 1975.
Section 6(2)(b)(î) of these Regulations, under
the heading "Compensation for Crude Oil", reads:
6....
(2) In calculating the amount of import compensation pur
suant to subsection (1), there shall be excluded from the
quantity of crude oil
(b) the volume of any petroleum product obtained there
from used by the eligible importer or sold or supplied to any
person for use as a fuel
(i) in a ship that is not registered in Canada, unless it is
permitted by law to engage in the coasting trade of
Canada or in other marine related activities in Canada and
is so engaged, ...
The same provision is made for compensation
for petroleum products by section 7(2)(b)(i).
Thus for the first time provision is made effec
tive on March 12, 1975 for the payment of com
pensation for crude oil or petroleum products sold
or supplied by an eligible importer for use as fuel
in a ship that is not registered in Canada but is a
foreign registered vessel permitted by law to
engage in the coasting trade of Canada and was so
engaged. It is not disputed that the foreign vessels
to which the plaintiff supplied petroleum during
the period from January 1, 1974 to March 11,
1975 for use as fuel therein were so permitted and
so engaged, that is prior to the effective date of
this Regulation.
It was suggested by counsel for the plaintiff at
one point in his submission that limitation of the
supply of fuel to Canadian ships exclusively to
qualify for import compensation with respect
thereto was in error particularly in the light of
section 663 of the Canada Shipping Act, to which
previous reference has been made, to the effect
that British ships may engage in the coasting trade
of Canada excepting only therefrom the Great
Lakes and the St. Lawrence River and such omis
sion should be supplied by construction.
I do not think that a Court should create a casus
omissus by interpretation save in some case of
strong necessity where an omission is obvious and
must be supplied to give effect and meaning to the
words used.
The mere fact that it might have been better to
extend a statute or regulation to other cases, or
that it can conceivably be gathered that such an
intention was probable, is not enough, in my opin
ion, to justify the putting of an interpretation upon
the statute or regulation which would necessitate
reading into it words which are not there. The
language cannot be extended beyond its natural
meaning in order to meet particular cases.
In my view a provision including all ships
engaged in the coasting trade of Canada rather
than one restricting that trade to Canadian ships
in this particular legislation is one which should be
made by the legislature and for a Court to insert
language by implication is not interpreting legisla
tion but altering it.
Neither do I think that the frequently cited rule
in Heydon's Case (1584) 3 Co. 7a, 76 E.R. 637,
avails the plaintiff. That rule, as I appreciate it to
be, is that to ascertain the legislative intent of an
enactment, the mischief or defect sought to be
prevented and the remedy and the reason for the
remedy should be looked for.
Here the prior state of the law was that no
compensation should be payable for imported
petroleum sold or supplied as fuel in a ship not
registered in Canada.
That law was changed with the effect from
March 12, 1975 to make compensation available
for petroleum supplied as fuel to all ships author
ized to engage in the coasting trade of Canada and
so engaged.
The subsequent legislation was not legislation to
suppress a mischief that had occurred and advance
a remedy therefor.
It was, in my view, merely a change in the
legislation previously in effect. The subsequent
Regulation is tantamount to an amendment or
repeal of the prior Regulation. It cannot be con
strued as a declaration that the prior legislation
was any different from what it was nor in any way
as being a declaration as to what the previous
legislation was or meant in the absence of very
express language to the contrary.
These conclusions would effectively conclude the
matter were it not for section 12 included in the
Oil Import Regulations No. 1, 1975, SOR/75-140
under the heading "Transitional" and subsequent
legislation and regulations thereunder.
Section 12 reads:
12. Where a person qualified for import compensation in
respect of a quantity of petroleum the date of loading of which
is in the period commencing January 1, 1974 and terminating
the day before these Regulations come into force, the Board
may authorize import compensation to be paid to that person in
respect of that quantity of petroleum in the same amount that
he would have received had import compensation been author
ized to be paid before the date these Regulations come into
force.
The Petroleum Administration Act, S.C. 1974-
75-76, c. 47, was enacted by Parliament and
received Royal Assent on June 19, 1975. This
statute is therefore effective from that date.
The long title of the statute, giving an insight
into the purpose and objects of the statute, reads:
An Act to impose a charge on the export of crude oil and
certain petroleum products, to provide compensation for
certain petroleum costs and to regulate the price of Canadian
crude oil and natural gas in interprovincial and export trade.
I think it is safe to assume that the government
of the day considered it expedient to provide funds
by Appropriation Acts and provide for the making
of compensation, regulations thereunder to govern
the disposition of the funds so provided as it did
because of the emergent nature of the situation
which arose rather than to enact legislation not
subject to change and variation to cover
unforeseen circumstances as might arise.
The arrangement provided flexibility not avail
able in a statute until such time as a period of
experience and experiment elapsed to justify the
embodiment of that experience into a statute.
This is what I think the Petroleum Administra
tion Act does. Division I of Part IV of the Act is
entitled "Petroleum Import Cost Compensation".
The sections of the statute reproduced are ranged
under that heading.
Section 72(1) and (2) under the heading
"Importation of Petroleum" reads:
72. (1) Upon application therefor to the Board by an eli
gible importer who establishes that he qualifies for import
compensation by reason of the purchase by him of a quantity of
petroleum, the Board may, subject to this Division and the
regulations thereunder, authorize the payment to the eligible
importer of import compensation pursuant to this Division in an
amount determined by the Board in respect of that purchase of
petroleum.
(2) A person who imports petroleum into Canada for proc
essing, consumption, sale or other use in Canada is eligible
under this Division to receive import compensation in respect of
that petroleum if, in the period from January 1, 1974 to the
date of the application under subsection (1), he or the persons
for whom he imported petroleum, as the case may be, has or
have voluntarily maintained the level of prices for the
petroleum products obtained from imported petroleum at the
level that is suggested from time to time in any manner
prescribed by the regulations, which, for that purpose, may be
retroactive in respect of the calendar year 1974, and the first
half of the calendar year 1975 and has or have given assurances
that he or they will continue to maintain the suggested level of
prices in respect of the quantity of petroleum for which import
compensation is paid pursuant to this Division.
Section 78 under the heading "Transitional"
reads:
78. (1) Any payment to a person made or authorized by any
regulations made pursuant to Energy, Mines and Resources
Vote No. 11b of Appropriation Act No. 1, 1974 in respect of
the importation of a quantity of petroleum shall be deemed to
have been made or authorized, as the case may be, as import
compensation in respect of the importation of that quantity of
petroleum and all the provisions of this Division apply mutatis
mutandis in respect thereof.
(2) Any payment to a person made or authorized under any
guidelines or regulations made, respectively,
(a) for the purposes of Special Warrants issued by the
Governor in Council for
(i) $200,000,000 on May 22nd, 1974 under Order in
Council P.C. 1974-1176,
(ii) $80,000,000 on June 27th, 1974 under Order in Coun
cil P.C. 1974-1519,
(iii) $50,000,000 on July 25th, 1974 under Order in Coun
cil P.C. 1974-1697,
(iv) $70,000,000 on August 28th, 1974 under Order in
Council P.C. 1974-1943, or
(v) $70,000,000 on September 4th, 1974 under Order in
Council P.C. 1974-1973;
(b) pursuant to Energy Supplies Allocation Board Vote No.
52a of Appropriation Act No. 3, 1974, Statutes of Canada
1974-75;
(c) pursuant to Energy Supplies Allocation Board Vote No.
53c of Appropriation Act No. 5, 1975, Statutes of Canada
1974-75; or
(d) pursuant to Energy Supplies Allocation Board Vote No.
65 of Appropriation Act No. 2, 1975, Statutes of Canada
1974-75
in respect of the importation of a quantity of petroleum shall be
deemed to have been made or authorized, as the case may be,
as import compensation in respect of the importation of that
quantity of petroleum and all the provisions of this Division
apply mutatis mutandis in respect thereof.
(3) Where an eligible importer qualifies for import compen
sation in respect of a quantity of petroleum loaded in the period
commencing on January 1, 1974 and ending on the day
immediately preceding the commencement of this Part that is
delivered to the importer in Canada or at a point of entry for
Canada after December 31, 1974, the Board may authorize
import compensation to the importer for that quantity of
petroleum in the same amount that he would have received had
the petroleum been so delivered to him and import compensa
tion authorized to be made before that day.
The regulations made pursuant to the Appro
priation Act No. 1, 1974 referred to in subsection
(1) of section 78 above are the Imported Oil and
Petroleum Products Compensation Regulations,
SOR/74-232 under which the plaintiff made the
first six applications for compensation which are
Part A to the Table annexed to the special case.
The 18 claims for compensation outlined in Part
B of the Table annexed to the special case were
paid to the plaintiff from funds under the Special
Warrants mentioned in paragraph (a) of subsec
tion (2) of section 78 above and the remaining 14
claims outlined in Part C of the Table to the
special case were paid to the plaintiff under SOR/
74-627 made pursuant to the Appropriation Act
No. 3, 1974 mentioned in section 78(2)(b) above.
It is in SOR/75-140, made under the Appro
priation Act No. 5, 1974 mentioned in section
75(2)(c) that it is first provided, with effect from
March 12, 1975, that petroleum supplied by an
importer for use as fuel in a ship that is not
registered in Canada may be the subject of import
compensation if the ship is permitted by law to
engage in the coasting trade of Canada and is so
engaged.
In the Petroleum Import Cost Compensation
Regulations, SOR/75-384, June 30, 1975 made
pursuant to the Petroleum Administration Act,
section 9(2)(b)(i) provides:
9....
(2) In determining the volume of petroleum in respect of
which import compensation may be authorized there shall be
deducted from the quantity of petroleum
(b) any portion thereof, and the volume of any petroleum
product obtained therefrom used by the eligible importer or
sold or supplied to any person for use or used as a fuel
(i) in a ship that is not registered in Canada, unless it is
permitted by law to engage in the coasting trade of
Canada or in other marine related activities in Canada and
is so engaged, ...
The effect of this Regulation is to perpetuate the
right of an importer to claim compensation for
petroleum imported and supplied as fuel to a ship
not registered in Canada but lawfully engaged in
the coasting trade in Canada first permitted by
SOR/75-140 effective on March 12, 1975.
The rival contentions are:
(1) on behalf of the plaintiff that as a result of section 12 of
SOR/75-140, the enactment of the Petroleum Administration
Act and the Petroleum Import Cost Compensation Regulations
thereunder the plaintiff thereupon became entitled to the
import compensation in the amount of $2,005,073 which had
been previously claimed by it for the 38 applications therefor in
the period from January 1, 1974 to March 11, 1975 under
SOR/74-232, the Special Warrants and SOR/74-627 and
which amount had been paid to the plaintiff in error by the
Minister and the Board in respect of petroleum sold for use in
ships not registered in Canada but permitted by law to engage
in the coasting trade of Canada; and
(2) on behalf of the defendant that section 12 of SOR/75-140,
the Petroleum Administration Act and the Regulations there-
under are not retroactive in their effect to provide for payment
to the plaintiff of the amount of $2,005,073 paid to it and the
defendant, therefore, contends that the plaintiff is not entitled
to retain that sum and that the Board is entitled to recoup itself
from subsequent import compensation to which the plaintiff
becomes entitled.
It is not disputed that, if the plaintiff is not
entitled to the sum of $2,005,073, then an equiva
lent amount has not been wrongfully withheld
from the plaintiff by the Board, authority for
doing so being provided in section 76 of the
Petroleum Administration Act.
While I agree with the contention on behalf of
the defendant that section 12 of SOR/75-140 and
section 78 of the Petroleum Administration Act
are not retroactive there still remains the conten
tion on behalf of the plaintiff that section 12
(supra) and section 78 (supra) are a ratification of
the propriety of the payment of the amount of
$2,005,073 in the light of eligibility of petroleum
supplied to such ships for import compensation
under subsequent regulations.
That contention, in my view, is to be determined
by the plain meaning of the sections.
A careful consideration of the language of sec
tion 12 leads me to the conclusion that this section
does not avail the plaintiff.
Under the section a person must be "qualified"
for import compensation in respect of a quantity of
petroleum loaded between January 1, 1974 and
March 12, 1975. The word is "qualified". To be
qualified for import compensation it follows that
the requirements thereto must be satisfied. It was
a requirement under the Regulations in effect
during the period from January 1, 1974 to and
including March 11, 1975 that petroleum supplied
as fuel to a ship not registered in Canada shall be
excluded from the quantity of petroleum for which
import compensation was payable.
The plaintiff does not meet that qualification in
respect of the petroleum in question and accord
ingly in respect of that petroleum the plaintiff is
not a "person qualified for import compensation"
within the meaning of those words as used in
section 12.
Section 12 then continues to provide that the
Board may authorize the payment of import com
pensation in respect of a quantity of petroleum in
the same amount if import compensation might
have been authorized to be paid under prior
regulations.
That language, in my opinion, contemplates the
circumstance where an importer has not made
application for compensation prior to March 12,
1975 in which event the Board may authorize
payment pursuant to an application therefor but
the amount of the compensation is to be governed
by prior regulations rather than an amount that
may be fixed by these Regulations, that is Oil
Import Compensation Regulations No. 1, 1975
which may differ.
Put another way, a person who applies under the
Regulations set out in SOR/75-140 for import
compensation for petroleum imported from Janu-
ary 1, 1974 to March 11, 1975 must qualify for
that compensation under the regulations that were
in effect from time to time in that period, that is to
say for oil supplied as fuel for ships registered in
Canada, and the importer is entitled to the amount
of compensation fixed by the prior regulations.
The words "had ... compensation been author
ized to be paid" before SOR/75-140 came into
effect are susceptible of two interpretations.
They might mean that compensation had been
authorized to be paid by the Minister or the Board
or the words might mean that compensation to be
"authorized" must meet the conditions precedent
to "qualification" for payment prescribed in the
prior regulations.
However in view of the conclusion I have
reached as to the significance of the words "quali-
fied for import compensation" I need not come to
a conclusion in this latter respect but if it should
have been necessary I should have thought this
might be a proper case for reading in the word
"lawfully" immediately before the word "author-
ized" in which event the result may well have been
the same in the light of the interpretation placed
upon the words "qualified for import compensa
tion".
It is for these reasons I have concluded that
section 12 of the Oil Import Compensation Regu
lations No. 1, 1975 does not assist the plaintiff.
The like considerations are applicable to section
78 of the Petroleum Administration Act.
The first six applications for compensation were
made by the plaintiff between January 1, 1974 and
March 31, 1974 under Imported Oil and
Petroleum Products Compensation Regulations,
SOR/74-232.
Section 78(1) of the Petroleum Administration
Act deals specifically with these payments.
The 18 applications for compensation made by
the plaintiff between April 1, 1974 and October
31, 1974 under Special Warrants are specifically
covered by section 78(2)(a) and the remaining 14
applications made by the plaintiff between
November 1, 1974 and March 11, 1975 were
under Oil Import Compensation Regulations,
SOR/74-627 with which section 78(2)(b) specifi
cally covers.
Section 78 is transitional in nature. That follows
from the heading under which the section is
ranged.
As I appreciate the purpose and language of
section 78 it is to the effect that any payment
made or authorized to be made pursuant to any
prior regulations in respect of the importation of
a quantity of petroleum, shall be deemed to have
been made or authorized as import compensation
and the provisions of Division I of Part IV of the
Petroleum Administration Act apply mutatis
mutandis with respect thereto, that is to say with
necessary changes in points of detail.
The payments must have been paid or author
ized to be paid by prior regulations in respect of a
quantity of petroleum. This is clear from the initial
language of section 78(1) which reads:
78. (1) Any payment to a person made or authorized by any
regulations made ....
The initial language of section 78(2) is to identi
cal effect and reads:
78....
(2) Any payment to a person made or authorized under any
guidelines or regulations made ...
When payments have been made under those
prior regulations or authorized to be made there-
under those payments are, for the purposes of the
Petroleum Administration Act, deemed to have
been paid as import compensation and so within
the ambit of the provisions of that statute as are
applicable thereto, as for example section 76 which
counsel points out as being applicable to the pay-
ments made to the plaintiff and as the authority
under which excess payments alleged to have been
made to the plaintiff under the prior legislation are
being withheld from subsequent compensation
payable to the plaintiff under the Petroleum
Administration Act and regulations thereunder.
Incidentally the Petroleum Import Cost Com
pensation Regulations, SOR/75-384 made under
the authority of section 77 of the Petroleum
Administration Act perpetuates in section
9(2)(b)(î) the provision in Oil Import Compensa
tion Regulations No. 1, 1975, SOR/75-140 effec
tive March 12, 1975 and the rates payable under
Schedule III of the Petroleum Import Cost Com
pensation Regulations under the statute are lower
than those made or authorized to be made under
the prior regulations.
The provisions in section 78, that payments
made or authorized to be made under prior regula
tions in respect of the importation of a quantity of
petroleum shall be deemed to have been made or
authorized as import compensation as to the quan
tity of petroleum for the purposes of the Petroleum
Administration Act, do not, in my opinion, detract
from the applicability of the prior regulation to
determine the quantity of petroleum for which
compensation is payable and the amount of that
payment.
That conclusion follows necessarily from the
words "made under regulations" and "authorized
under regulations". The context from which such
words were taken means "prior" regulations.
This conclusion is reinforced by section 78(3).
Under subsection (3) in respect of a quantity of
petroleum loaded in the period from January 1,
1974 to June 18, 1975 (the day before the
Petroleum Administration Act came into effect):
78....
(3) ... the Board may authorize import compensation to the
importer for that quantity of petroleum in the same amount
that he would have received ... and import compensation
authorized to be made ... .
In my view it is clear that this language does not
authorize an amount of compensation to be paid
beyond that authorized under prior regulations
and in respect of the quantity of petroleum upon
which compensation is payable under the prior
regulations.
Paragraph 11 of the special case reads:
11. The question for opinion of Court is whether the quantities
of petroleum set forth in column 5 of parts "A", "B" and "C"
of the schedule hereto should have been included in the quanti
ty of petroleum in respect of which compensation was payable
to the Plaintiff.
For the foregoing reasons I answer the question
posed therein in the negative.
That being so the plaintiff is not entitled to any
of the relief sought in its statement of claim and
the action is therefore dismissed. Her Majesty is
entitled to her taxable costs.
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.