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T-2655-75
Pan American World Airways Inc. (Plaintiff) v.
The Queen and the Minister of Transport (Defendants)
Trial Division, Mahoney J.—Ottawa, November 9 and 10, 1978 and January 3 and 10, 1979.
Aeronautics — International civil aviation — Chicago Con vention — Fees, prescribed by Regulation, charged American aircraft not landing in Canada, for telecommunication and en route navigation services — Plaintiff seeking return of fees paid under protest and defendant the Queen counterclaiming for amounts billed but unpaid — Whether or not fees contrary to National Transportation Policy, the Chicago Convention, and the 'fundamental principle of equity" — Whether or not Regulations ultra vires authority delegated by Parliament Whether or not Parliament authorized imposition of fees, even if fees validly prescribed — Aeronautics Act, R.S.C. 1970, c. A-3, ss. 4, 5 — National Transportation Act, R.S.C. 1970, c. N-17, s. 3(b) — Chicago Convention, 15 UNTS 295, Arts. 15, 69, 70.
The plaintiff asserts the illegality of fees charged it by the defendants for telecommunication and en route navigation ser vices provided to and used by flights, operated by the plaintiff, which did not land in Canada. The charges in issue were levied pursuant to Regulations made under what is now section 5 of the Aeronautics Act. Plaintiff seeks return of those fees paid under protest, while defendant the Queen counterclaims for amounts billed but unpaid. Plaintiff argues that the fees are contrary to the National Transportation Policy expressed in the National Transportation Act; that they are contrary to the Chicago Convention; that they are contrary to the "fundamen- tal principle of equity" in that the United States does not charge Canadian aircraft for similar services; that the Regula tions are ultra vires the authority Parliament has given the Governor in Council and/or the Minister of Transport; and that, even if Parliament authorized the Minister to prescribe the fees in issue, it has not authorized him to impose them or to enforce their collection.
Held, the action is dismissed. Plaintiff adduced no evidence to support the allegation that the Governor in Council and subsequently the Minister of Transport have not demonstrated that the fees established represent a fair proportion of the real costs of the services provided, pursuant to section 3(b) of the National Transportation Act. The telecommunications and en route services fees charged are not contrary to the Chicago Convention. Neither the Canadian nor the American aircraft is charged for services provided to it while over Canadian territo ry and each is charged identically for services provided to it
while over the high seas. Article 15 of the Convention says that Canada shall not charge more for the use of a given facility than it charges a Canadian aircraft for the use of the same facility. It does not say that Canada shall not charge an American aircraft more for the use of a given facility than the United States charges a Canadian aircraft for the use of a similar facility. The existence in law of a fundamental principle of equity and/or reciprocal obligation as between nations has not been established, by evidence or argument; even if it had been established, the Court is not satisfied that its breach would give rise to a cause of action at the suit of a subject. The Regulations, to the extent that they apply to aircraft over the high seas, are not ultra vires because of Parliament's authoriza tion for extraterritorial effect being allegedly unclear. The nature of the subject matter makes an element of extraterritori- ality inevitable. When a Regulation prescribing a charge under section 5 of the Aeronautics Act for the use of a facility or service is made, the charges for that use are not only fixed, but a legal obligation to pay the charges is also imposed on their user. That obligation, arising under a law of Canada, is subject to enforcement by Her Majesty by action in this Court.
ACTION. COUNSEL:
M. E. Corlett, Q.C. and G. B. Greenwood for plaintiff.
J. A. Scollin, Q.C. and D. T. Sgayias for defendants.
SOLICITORS:
Maclaren, Corlett & Tanner, Ottawa, for
plaintiff.
Deputy Attorney General of Canada for
defendants.
The following are the reasons for judgment rendered in English by
MAHONEY J.: The plaintiff asserts the illegality of fees charged it by the defendants for telecom munication and en route navigation services pro vided to and used by flights, operated by the plaintiff, which did not land in Canada. The flights were on two routes: the Polar Route between points on the west coast of the United States of America and Europe and the North Atlantic Route between points in the eastern U.S. and Europe. The aggregate of the fees in issue amounts
to $6,201,047.50. The entire amount has been billed; what has been paid was paid under protest.
By agreement, the evidence in this action, with the exceptions noted, is to apply in two other actions against the same defendants: one by Trans World Airlines, Inc.,' and the other by Seaboard World Airlines Inc. 2 The exceptions are, firstly, that the latter plaintiff, Seaboard, a cargo carrier, did not operate flights on the Polar Route and, secondly, that the aggregate of the fees in issue in those actions amount, respectively, to $6,094,- 120.50 and $1,194,556.
The bulk of the material evidence was admitted by way of statements of agreed facts. The Schedules 3 and 4 to the statement of agreed facts filed in each action are transposed; references in the . statements to Schedule 3 should be to Schedule 4 and vice versa.
Amounts billed and unpaid are the subject of a counterclaim by the defendant, Her Majesty the Queen, in each action. The amounts thus claimed were generally those billed and unpaid up to the end of 1975: $567,195 in this action; $140,289 in the Seaboard action and $720,996.50 in the TWA action. Her Majesty, with consent, was granted leave to amend each counterclaim by increasing the amount claimed to that disclosed in the state ment of agreed facts as billed and unpaid up to March 31, 1977: $1,716,566.50 in this action; $357,364 in the Seaboard action and $1,960,752 in the TWA action.
International civil aviation is governed by a treaty, the Chicago Convention, signed December 7, 1944 [15 UNTS 295]. Canada and the United States of America are both bound by that treaty. The plaintiff is a domestic corporation of one of the United States of America and its aircraft are registered in that country.
' Court No. T-2657-75. 2 Court No. T-2656-75.
The amounts in dispute are charges for services provided by Canada and used by the plaintiffs aircraft in flights between the United States of America and Europe. In the course of those flights, the plaintiffs aircraft did one or both of two things: they passed over Canadian territory and/or over international waters within the Gander Oceanic Control Area, which lies beyond Canadian territorial waters and generally to the west of 30° west longitude and to the north of 45° north latitude. They did not, however, land in Canada.
The Chicago Convention recognizes Canada's sovereignty over the airspace above its land and adjacent territorial waters. Canada provides tele communication and en route navigational services to aircraft using its airspace and those aircraft are required to use those services. In fulfilment of obligations undertaken pursuant to the Chicago Convention, Canada provides the same services to aircraft in the airspace over international waters in the Gander Oceanic Control Area and the United States of America requires that its registered air craft in the Gander Oceanic Control Area airspace use those services. The services provided were those from time to time recommended by the International Civil Aviation Organization.
The charges in issue were levied pursuant to Regulations made under what is now section 5 of the Aeronautics Act. 3 It will be necessary to deal with the pertinent provisions of the Act in some detail in considering the plaintiffs argument that the Regulations are ultra vires the authority Par liament has given the Governor in Council and/or the Minister of Transport. I will return to that. The other bases upon which the illegality of the charges is contended are:
1. That the fees in issue are contrary to the National Transportation Policy set forth in the National Transportation Act; 4
3 R.S.C. 1970, c. A-3.
4 R.S.C. 1970, c. N-17.
2. That the imposition of the charges is contrary to the terms of the Chicago Convention; and
3. That the imposition of the charges contra venes "the fundamental principle of equity" and a reciprocal obligation to the United States of America.
The National Transportation Policy is set forth in section 3 of the National Transportation Act. Section 2.1 provides that the Act is binding on Her Majesty in right of Canada and section 4 provides that it applies, inter alia, to transport by air to which the Aeronautics Act applies. The only provi sion of the Policy which the charges in issue are said to contravene is paragraph (b):
3. It is hereby declared that an economic, efficient and adequate transportation system making the best use of all available modes of transportation at the lowest total cost is essential to protect the interests of the users of transportation and to maintain the economic well-being and growth of Canada, and that these objectives are most likely to be achieved when all modes of transport are able to compete under condi tions ensuring that having due regard to national policy and to legal and constitutional requirements
(b) each mode of transport, so far as practicable, bears a fair proportion of the real costs of the resources, facilities and services provided that mode of transport at public expense;
It is alleged that "the Governor in Council be tween July 1, 1968 and September 9, 1970, and subsequently the Minister of Transport have not demonstrated that the Telecommunication Service Fee and the establishment of an En Route Facili ties and Services Fee represents a fair proportion of the real costs of the services provided which can be charged against the plaintiffs aircraft when in transit over Canada and its territorial sea".
The plaintiff adduced no evidence whatever in support of that allegation. The defendants adduced evidence establishing that while the telecommuni cations service fee has resulted in a recovery, over the years in issue, of almost the cost of the service, pro rata attributable to civilian flights, the en route services fees, both North Atlantic and Polar, have fallen far short of covering the same pro rata share of the costs. On the evidence, I conclude that the telecommunications service fee has been fixed with a view to civilian flights bearing a fair propor-
tion of the cost of service. As to the en route facilities fees, if there is a legitimate complaint to be made, it lies with the Canadian taxpayers and not with users of the services. In the circum stances, I do not find it necessary to consider what the consequences would be had the plaintiff proved its factual premise. I should not, however, wish silence to be taken as necessarily implying agree ment with any of the assumptions that the plaintiff must have made in order to raise the matter as a cause of action at all.
There are two bases upon which the plaintiff asserts that the Regulations are contrary to the terms of the Chicago Convention: firstly, because they impose compulsory charges on the plaintiff's aircraft while over the high seas and, secondly, because they impose charges on those aircraft, both while over Canada and the high seas, greater than those imposed on Canadian aircraft "engaged in similar scheduled international air services to those of the plaintiff'. The only provisions of the Chicago Convention that mention payment to a State providing services are Articles 15 and 70. The latter must be read with Article 69.
Article 15
Every airport in a contracting State which is open to public use by its national aircraft shall likewise, subject to the provi sions of Article 68, be open under uniform conditions to the aircraft of all the other contracting States. The like uniform conditions shall apply to the use, by aircraft of every contract ing State, of all air navigation facilities, including radio and meteorological services, which may be provided for public use for the safety and expedition of air navigation.
Any charges that may be imposed or permitted to be imposed by a contracting State for the use of such airports and air navigation facilities by the aircraft of any other contracting State shall not be higher,
(a) As to aircraft not engaged in scheduled international air services, than those that would be paid by its national aircraft of the same class engaged in similar operations, and
(b) As to aircraft engaged in scheduled international air services, than those that would be paid by its national aircraft engaged in similar international air services.
All such charges shall be published and communicated to the International Civil Aviation Organization: provided that, upon representation by an interested contracting State, the charges imposed for the use of airports and other facilities shall be subject to review by the Council, which shall report and make recommendations thereon for the consideration of the State or States concerned. No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon.
Article 69
Iff the Council is of the opinion that the airports or other air navigation facilities, including radio and meteorological ser vices, of a contracting State are not reasonably adequate for the safe, regular, efficient, and economical operation of interna tional air services, present or contemplated, the Council shall consult with the State directly concerned, and other States affected, with a view to finding means by which the situation may be remedied, and may make recommendations for that purpose. No contracting State shall be guilty off an infraction of this Convention if it fails to carry out these recommendations.
Article 70
A contracting State, in the circumstances arising under the provisions of Article 69, may conclude an arrangement with the Council for giving effect to such recommendations. The State may elect to bear all of the costs involved in any such arrange ment. If the State does not so elect, the Council may agree, at the request of the State, to provide for all or a portion of the costs.
As to Article 70, there is, again, no evidence whatever that Canada's provision of the services in issue arose on the initiative of the Council as contemplated by Article 69. That is a prerequisite to bringing Article 70 into play. Since Article 70 is not in play, it cannot be found that Canada, not having asked the Council to provide some or all of the costs of the services in issue, must be taken to have elected to bear them all.
As to Article 15, on a plain reading, it clearly contemplates charges for the sort of services sub ject of the fees in issue. Further, nothing in the Article precludes Canada from levying those charges in respect of services supplied to flights in transit over Canada or elsewhere. I find confirma-
tion of my understanding of Article 15 among the Statements by the Council to Contracting States, 5 adopted December 13, 1973.
30. The providers of route air navigation facilities and services for international use may require the users to pay their share of the cost of providing them regardless of where the utilization takes place. In the particular case where the aircraft does not fly over the provider State there are however difficult and complex problems associated with the collection of route facili ty charges, and it is for the States to find the appropriate kind of machinery on a bilateral or regional basis for meetings between provider States and those of the user airlines, aiming to reach as much agreement as possible concerning the costs of the facilities and services provided, the charges to be levied and the methods of collection of these charges.
I recognize that the Statements are not treaty provisions binding on the contracting States; they are, however, recommendations and conclusions of the Council of the International Civil Aviation Organization which was constituted by the Chi- cago Convention and are expressed to be intended "for the guidance of Contracting States in the matters dealt with".
The plaintiff says that the charges are higher than those paid by Canadian registered aircraft "engaged in similar international air services" or, if non-scheduled, "engaged in similar operations" in breach of the limitations imposed by the second paragraph of Article 15. I do not think, for pur poses of this action, any distinction is to be made between the two phrases.
The plaintiff's position is - that, for example, a Canadian aircraft on a scheduled flight from a point in eastern Canada to a point in the Carib- bean is "engaged in similar international air ser vices" to an American aircraft on a scheduled flight on the North Atlantic Route. After leaving Canadian domestic airspace, the Canadian aircraft crosses American territory and then the high seas over the New York Oceanic Control Area. After leaving American domestic airspace, the American aircraft crosses Canadian territory and then the high seas over the Gander Oceanic Control Area. Neither country charges the other's aircraft for
5 ICAO Document 9082-C/1015.
telecommunication or en route services supplied it while over the other's territory. Canada charges the American flight while over the high seas but the United States Government does not charge the Canadian flight while over the high seas. 6 The defendants say that that example is not apt. They say that, for example, a Canadian aircraft on a flight from Montreal to Europe via the North Atlantic Route is "engaged in similar international air services" to the American aircraft. Neither the Canadian nor the American aircraft is charged for services provided to it while over Canadian territo ry and each is charged identically for services provided to it while over the high seas.
Neither country, it appears, charges the other's aircraft for telecommunication or en route ser vices, per se, provided to transborder flights, e.g. Seattle-Vancouver, nor to flights between two points in one that cross the territory of the other, e.g. Chicago-Anchorage or Toronto-Halifax. The purpose of the Chicago Convention was to effect a multilateral arrangement for international civil aviation. I do not think that bilateral transborder and overflight arrangements between Canada and the United States are of assistance to an under standing of the Convention.
The limitation in Article 15 applies to charges that a contracting State "may impose or permit to be imposed". It says nothing of the charges that
6 It is necessary to stipulate that it is the United States Government that does not charge for services provided the Canadian flight. The evidence is that radio communication between points in the United States and aircraft over the high seas in Oceanic Control Areas to which it provides the services is conducted by a private corporation, jointly owned by a number of American airlines including the plaintiff, rather than by an agency of the United States Government. That corporation does charge for its services on a "per message" basis, the rate being the same for foreign as American aircraft. If the communication is one the aircraft is required by law to make with American aviation authorities, the United States Government pays; otherwise, the owner of the aircraft pays.
another State may impose or permit. Article 15 says that Canada shall not charge more for the use of a given facility than it charges a Canadian aircraft for the use of the same facility. It does not say that Canada shall not charge an American aircraft more for the use of a given facility than the United States charges a Canadian aircraft for the use of a similar facility. The defendants' understanding of what are "similar international air services", in the context of Article 15, is correct.
The evidence is that Canadian aircraft en route to Europe via the Polar Route are charged precise ly the same fee as American aircraft overflying Canada on the same route. The only distinction between the Polar and North Atlantic en route fees, other than rates, is that the former are for Canadian services and facilities used by aircraft while over Canadian territory while the latter are for Canadian services and facilities used by air craft while over the high seas. As to the telecom munications service fee, there is no evidence what ever that it is not levied as provided in the Regulations. The Regulations take no account of the nationality of the aircraft using and charged for any of the services.
It follows that the telecommunications and Polar and North Atlantic en route services fees charged are not contrary to the Chicago Conven tion. Having arrived at that conclusion, I find it unnecessary to deal with the places, if any, of Articles 15 and 70 of the Chicago Convention in Canadian domestic law.
The plaintiff also argues that imposition of the charges contravenes "the fundamental principle of equity" and a reciprocal obligation to the United States of America. That is based on the allegation that Canada is charging American aircraft for services in circumstances in which the United States does not charge Canadian aircraft and on
the notion that the bilateral arrangements as to transborder and overflying domestic flights ought to be extended to the international flights under taken by the plaintiff. The plaintiff relies here on the same evidence as adduced in support of the argument that Article 15 of the Chicago Conven tion was breached. The existence in law of such a fundamental principle of equity and/or reciprocal obligation as between nations has not been estab lished to my satisfaction either by evidence or argument. Neither am I satisfied that, if such were established as binding sovereign nations, the breach thereof would give rise to a cause of action at the suit of a subject.
In this regard I should mention the expert evi dence of Norman P. Seagrave, which, on reflec tion, I feel was wholly inadmissible notwithstand ing that counsel for the defendants did not press his objection. The statement of his proposed evi dence in chief, filed pursuant to Rule 482, begins:
My testimony is directed to the question whether, under Inter national Law, Canada has the right to levy on the United States' airlines charges for air navigation and services provided by Canada over the High Seas.
While expert evidence as to foreign law is, of course, admissible, expert evidence as to domestic law is not. It is well established that international law has no force in Canada unless it has been adopted as domestic law. 7 Opinion evidence as to the proper construction to be placed on the Chi- cago Convention was not admissible and I have not, therefore, considered Mr. Seagrave's state ment as evidence but, on the assumption that plaintiff's counsel would willingly adopt it as argu-
7 Reference re Exemption of Members of U.S. Military Forces from Proceedings in Canadian Criminal Courts [1943] S.C.R. 483, per Taschereau J., at 516 ff.
... international law has no application in Canada unless incorporated in our own domestic law.
If not accepted in this country, international law would not be binding, but would merely be a code of unenforceable abstract rules of international morals.
ment, I have considered it such.
The contention that the imposition of the fees is ultra vires because of the overriding authority of the Chicago Convention is without merit for the reasons already given. Their imposition is simply not contrary to any obligation assumed by Canada under the treaty and it is unnecessary to consider the consequences if it were.
The Regulations are also said to be ultra vires to the extent that they bear on the plaintiff's aircraft over the high seas. That is because their extraterritorial operation is said not to have been clearly authorized by Parliament.
The facilities in issue physically exist in Canada. The services in issue are rendered by persons, physically present in Canada, using those facilities. The information generated by those persons using those facilities and performing those services is transmitted by radio. By the nature of that mode of transmission, the information can and is intend ed to be received anywhere, and put to use where received. To the extent that there is an element of extraterritoriality in the operation of the Air Ser vices Fees Regulations, the nature of the subject matter makes it inevitable.
The Regulations are made pursuant to section 5 of the Aeronautics Act, not section 4. 8 The author ity to make regulations under section 4 is limited, inter alia, to apply "in respect of flights within Canada". No such limitation appears in section 5.
8 4. The Governor in Council may make regulations imposing upon the owners or operators of aircraft, wherever resident, in respect of flights within Canada, charges for the availability during such flights of any facility or service provided by or on behalf of the Minister, and every charge so imposed constitutes a legal obligation enforceable by Her Majesty by action in the Federal Court of Canada.
5. The Governor in Council may make regulations, or, sub ject to . and in accordance with such terms and conditions as may be specified by him, authorize the Minister to make regulations prescribing charges for the use of
(a) any facility or service provided by the Minister or on his behalf for or in respect of any aircraft; and
(b) any facility or service not coming within paragraph (a) provided by the Minister or on his behalf at any airport.
The competence of Parliament to legislate with extraterritorial effect is not open to question. Its general intention to legislate with that effect, in enacting the Aeronautics Act, is to be inferred from its subject matter and, in so far as section 5 itself is concerned, the intention to delegate the authority seems apparent when that section is compared with section 4.
Finally, the plaintiff says that while Parliament has authorized the Minister to prescribe the fees in issue, it has not authorized him to impose them or enforce their collection. This contention is based on a rather odd discrepancy between sections 4 and 5.
Section 4 authorizes the making of regulations imposing charges while section 5 authorizes the making of regulations prescribing charges. Section 4 expressly provides both a liability for the imposed charges and a procedure for their collec tion while section 5 is silent on those matters. The plaintiff says that, in the circumstances, "prescrib- ing" cannot mean "imposing" and that, in effect, the authority under section 5 is limited to fixing the charges and does not extend to the creation of a liability to pay them or an authority to collect them.
This argument has given me considerable dif ficulty. It occurred to me that if liability to pay the fees did not arise under the legislation it might arise elsewhere and there might be some question as to the Court's jurisdiction to entertain the coun terclaim. The question of jurisdiction was not raised by the plaintiff in its pleadings nor in the initial argument. I reopened the hearing for fur ther argument on the point. The defendants expressly reject the proposition that the liability arises in contract or quasi-contract and, with that, deny the existence of any question as to jurisdic tion. The plaintiff apparently remains content with its initial position that there is a fatal gap in the legislative scheme whereby Parliament has over looked imposing a liability to pay the prescribed charges. Under the circumstances, I do not intend to deal further with the matter and shall proceed on the basis that the statute is to be interpreted
with a view only to the alternative results pro pounded by counsel.
"Prescribing" as used in section 5 is the gerund of the word "prescribe", a transitive verb. It is not used in a medical context nor can it be found that Parliament intended to use it in one of its obsolete meanings. As a word having a technical legal meaning "prescribing" may be a word relating to the loss of a right by effluxion of time but it is plainly not employed in that sense in section 5. It is to be given its ordinary English meaning.
The Oxford English Dictionary (1933) defines the current, transitive, verb "prescribe" as follows:
To write or lay down as a rule or direction to be followed; to appoint, ordain, direct, enjoin.
Funk and Wagnall's New `Standard" Dictionary of the English Language (1961) has the following definition:
To set or lay down authoritatively for direction or control; give as a law or direction.
Webster's Third New International Dictionary (1961) defines it in the following terms:
to lay down authoritatively as a guide, direction or rule of action: impose as a peremptory order; DICTATE, DIRECT, ORDAIN.
Referring to the same dictionaries, the Oxford's pertinent definition of "impose" is:
To lay on, as something to be borne, endured, or submitted to; to inflect (something) on or upon; to levy or enforce authorita tively or arbitrarily.
Funk & Wagnall's definition is:
To lay or place, as something to be borne or endured; levy or exact as by authority; as to impose a tax, toll, or penalty.
Webster's definition is:
to make, frame or apply (as a charge, tax, obligation, rule, penalty) as compulsory, obligatory or enforceable; LEVY, INFLICT.
The words are synonyms. They have the same general meaning. Parliament may have intended to make a significant distinction between the authori ties delegated by using "imposing" in section 4 and "prescribing" in section 5; however, that is not the most reasonable construction to be put on the
sections. The corollary of the plaintiff's argument would, it seems, be that when the. Governor in Council "imposes" a charge under section 4, he does everything necessary but fix the amount of the charge and that there is no authority for him to do that, thereby rendering the legislative scheme fatally deficient. It is not, I think, to be assumed that Parliament, speaking in ordinary English, intends synonyms necessarily to have very different meanings, thereby rendering a legislative scheme as incomplete as the plaintiff would have this one. It is not an argument that would have occurred to any but a lawyer nor, very likely, even to a lawyer had the sections not appeared in immediate proximity.
I therefore conclude that when the Governor in Council or Minister of Transport, with due author ity, which is not questioned in this action, makes a regulation prescribing a charge under section 5 of the Aeronautics Act for the use of any facility or service, he not only fixes the charges for such use but imposes on their user a legal obligation to pay the charges. That obligation, arising as it does under a law of Canada, is subject to enforcement by Her Majesty by action in this Court. The action will be dismissed and the counterclaim allowed, all with costs.
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