Judgments

Decision Information

Decision Content

T-2289-84
Pacific Salmon Industries Inc., Cheena B.C. Tra ders Limited, H & K Sales Ltd., Seaborn Enter prises Ltd. and O.K. Gift Shop Ltd. (Plaintiffs)
v.
The Queen, the Attorney General of Canada, the Minister of Transport and Chern S. Heed (Defendants)
Trial Division, Strayer J.—Vancouver, November 1 and 5, 1984.
Transportation Regulation of commercial activities at
Vancouver International Airport Judicial review Motion seeking interim declarations, injunction and prohibition Plaintiffs delivering goods to tourist groups at airport
Avoiding provincial sales tax airport manager warning plaintiffs to stop conducting business without proper licensing from Transport Canada Business necessitating written
authorization of Minister Whether plaintiffs' activities business within meaning of Government Airport Concession
Operations Regulations s. 7 (GAcoR) Whether s. 7 author
ized by Department of Transport Act Declaration unavail
able on motion unless defendants consent No authority for
giving declarations on interim basis Plaintiffs contending defendants acting unlawfully as s. 7 not prohibiting delivery Injunction cannot issue against Crown but open against gov ernment officials acting beyond lawful authority Plaintiffs having adequate remedy in damages if injunction now refused but right established at trial Undertaking to pay damages to defendants due to granting of injunction inadequate Balance of convenience in favour of denying injunction Prohibition available but, unless defect patent, Court has discretion Affidavit evidence insufficient to warrant grant ing of prohibition Department of Transport Act, R.S.C.
1970, c. T-15 Crown Liability Act, R.S.C. 1970, c. C-38 Government Airport Concession Operations Regulations, 1979,
SOR/79-373, s. 7 Aeronautics Act, R.S.C. 1970, c. A-3.
Judicial review Equitable remedies Injunctions
Interim and permanent injunctions sought restraining The Queen and government officials from interfering with delivery
of goods to airport Whether business being conducted at
airport American Cyanamid test applied Plaintiffs
raising point of substance Adequacy of damages Plain tiffs' undertaking to pay damages inadequate Passenger circulation obstructed by plaintiffs' activities Inconve nienced passengers not compensable pursuant to undertaking
Losses to concessionaires Balance of convenience Other reasons for exercising discretion against granting injunction.
Judicial review Prerogative writs Transportation
Prohibition Implementation of Government Airport Concession Operations Regulations, s. 7 as to delivery of goods to airport Prohibition or certiorari available as to validity of delegated legislation if ground alleged appropriate for adjudication Court having discretion if defect not patent Alternative remedies Government Airport Concession Oper ations Regulations, 1979, SOR/79-373, s. 7.
Jurisdiction Federal Court Trial Division The Queen, Attorney-General, Transport Minister and airport manager sued for damages over implementation of Regulation
governing commercial undertakings at airports Court cannot entertain damages claim against individual defendants
Not struck out as Crown potentially vicariously liable for servants' acts Injunction available against government offi cials if acting outside authority.
Practice Joinder of parties R. 1716 application by concessionaire Jet Set Sam Services Inc. to be added as party defendant claiming losses suffered through activities of plain tiffs Court having no jurisdiction over applicant as no such action could be brought against it for relief sought No new viewpoint submitted, applicant not added as intervenor Federal Court Rules, C.R.C., c. 663, R. 1716.
The plaintiffs are businesses in Vancouver that sell to tourist groups in transit at the Vancouver International Airport. Prod ucts are sold through the plaintiffs' stores then delivered to these groups at the airport in order to avoid provincial sales tax. Although they sell various products, their main item is smoked salmon. Sales of the smoked salmon are arranged through tour guides also responsible for collecting money from the buyers. In July 1984, the plaintiffs received letters from the airport's general manager advising them that they were contravening section 7 of the Government Airport Concession Operations Regulations (GAc0R) forbidding the conducting of business in an airport without proper licensing from Transport Canada and to cease their activities immediately. Following these events the plaintiffs commenced an action seeking a declaration that they are not in breach of section 7 of the Regulations and that the section is invalid as not being authorized by the Transport Act. Furthermore, they seek an injunction restraining the defend ants from prosecuting them and hindering the delivery of their products. A writ of prohibition is also sought to prevent the enforcing of section 7 against the plaintiffs with respect to the delivery of their goods. The plaintiffs limited their request to restraining the defendants from interfering in the "delivery" of
their products maintaining that "delivery" does not fall within the scope of section 7. They also seek damages. The plaintiffs then brought a motion seeking interim relief with respect to the declarations, injunction and prohibition.
Held, the application is dismissed with costs.
At the outset, an application was made by Jet Set Sam Services Inc. to be added as a defendant pursuant to Rule 1716 of the Federal Court Rules. Jet Set Sam Services Inc., an authorized concessionaire selling smoked salmon at the airport, maintains that the plaintiffs' businesses are causing it substan tial harm and loss of revenue. It wishes to support the validity of the Regulations and their application to the plaintiffs. In light of the case law on the subject, the application cannot be allowed. An action of this nature could not be brought against Jet Set Sam Services Inc. for any of the relief sought by the plaintiffs. The applicant could not be a defendant over which the Court would have jurisdiction.
As a preliminary matter, it was also decided that the plain tiffs could not seek the declarations requested. The consent of the defendants must be secured in order to proceed by way of motion. Furthermore, there exists no authority for giving decla rations on an interim basis.
While an injunction cannot be granted directly against the Crown, it is available to restrain government officials acting or threatening to act beyond their authority. It is alleged that the defendants are acting unlawfully in applying section 7 of the GACOR to the plaintiffs as delivery is not prohibited by the section. In determining the advisibility of granting an injunc tion one must consider if damages would be an adequate remedy if the injunction did not issue at this time, but plain tiffs' rights were later established at trial. Offering an under taking to cover potential damages resulting from issuance of the injunction is unsatisfactory. It is unlikely that damages could compensate the travelling public for being inconvenienced or the authorized concessionaires for their lost revenue.
On the balance of convenience, granting of the injunction should be refused. The defendants' duty to provide a safe and uncongested terminal for the travelling public outweighs the interests of the plaintiffs to use public property for private gain. Furthermore, the true nature of the activities of the plaintiffs has not been established. As long as that issue is not settled, the question of application of section 7 to the plaintiffs remains purely hypothetical. The Court is compelled to exercise its discretion and refuse the injunction.
As to the request for a writ of prohibition preventing the application of section 7 to the plaintiffs, the Court must exercise discretion where the defect invoked is not patent. Although prohibition is available, the affidavit evidence pre sented is insufficient to warrant granting of the order at this time.
CASES JUDICIALLY CONSIDERED
APPLIED:
American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.); Le groupe des éleveurs de volailles de l'est de l'Ontario v. Canadian Chicken Marketing Agency, [1985] 1 F.C. 280.
REFERRED TO:
Dene Nation v. The Queen, [1983] 1 F.C. 146 (T.D.); Waterside Cargo Co-operative v. National Harbours Board (1979), 107 D.L.R. (3d) 576 (F.C.T.D.); Alda Enterprises Ltd. v. R., [ 1978] 2 F.C. 106 (T.D.); Alberta Government Telephones v. Canadian Radio-television and Telecommunications Commission, [1983] 2 F.C. 839; 76 C.P.R. (2d) 268 (C.A.); Sankey v. Minister of Transport, [1979] 1 F.C. 134 (T.D.); Pacific Western Airlines Ltd. v. R., [1980] 1 F.C. 86; (1979), 105 D.L.R. (3d) 44 (C.A.); Conseil des Ports Nationaux v. Langelier et al., [1969] S.C.R. 60; (1968), 2 D.L.R. (3d) 81; Lodge v. Minister of Employment and Immigration, [1979] 1 F.C. 775; 94 D.L.R. (3d) 326 (C.A.); Canadian Pacific Air Lines, Ltd. v. R., [1979] 1 F.C. 39; (1978), 87 D.L.R. (3d) 511 (C.A.).
COUNSEL:
C. J. O'Connor for plaintiffs.
G. C. Carruthers for defendants.
P. G. Plant for Jet Set Sam Services Inc.
SOLICITORS:
Ladner Downs, Vancouver, for plaintiffs.
Deputy Attorney General of Canada for defendants.
Russell & DuMoulin, Vancouver, for Jet Set Sam Services Inc.
The following are the reasons for order ren dered in English by
STRAYER J.: The plaintiffs are all businesses in Vancouver which engage, in a large way, in sales of products to tourist groups. Most of these groups consist of Japanese tourists. Many of them only stop at Vancouver in transit to other parts of Canada or to Japan. All of the plaintiffs except the O.K. Gift Shop Ltd. sell principally smoked salmon to members of these groups. O.K. Gift Shop, which has stores in Vancouver, sells Canadi- an products such as furs, woollens, souvenirs, etc. For the most part, the smoked salmon sales are arranged with the plaintiffs through the tour
guides who also look after collecting from mem bers of their groups and paying the plaintiffs. With respect to O.K. Gift Shop Ltd., tourists usually select items at their stores but arrange for delivery at the airport in order to obtain exemption from paying provincial sales tax. With respect to all of the plaintiffs they deliver the goods, whose pur chase has been prearranged, to the airport where they are turned over to the tour groups and checked in as baggage with the carrier which is taking them to Japan.
On July 11, 1984, Mr. Chern S. Heed, the general manager at the airport, sent the following letter to each of the plaintiffs and to other persons engaged in similar activities at the airport:
It has come to our attention that a number of operators are conducting business at the Vancouver International Airport Terminal building without benefit of a valid Transport Canada license. This activity is in conflict with our licensed operators and in violation of the Government Airport Concession Opera tions Regulations and, in particular, Section 7 thereof which provides:
"7. Subject to Section 8, except as authorized in writing by the Minister, no person shall
(a) conduct any business or undertaking commercial or otherwise, at an airport;
(b) advertise or solicit at an airport on his own behalf or on behalf of any person; or
(b) [sic] fix, install or place anything at an airport for the purpose of any business or undertaking."
Operators conducting such unauthorized business at the Van- couver International Airport are advised to cease and desist these activities or action will be taken to prevent the continued breach of the Regulations.
The plaintiffs commenced this action to obtain a declaration that they are not in breach of section 7 [Government Airport Concession Operations Regulations, 1979, SOR/79-373] because by "delivering products to the airport, they are not `carrying on business at the airport' ". They seek a declaration that section 7 is invalid because not authorized by the Department of Transport Act [R.S.C. 1970, c. T-15]. They further seek an interim and permanent injunction restraining the defendants from interfering with the plaintiffs' "delivering pre-purchased products to the airport" and restraining the defendants from prosecuting
the plaintiffs "for the delivery of pre-purchased products to the airport" pursuant to section 7. They further seek a writ of prohibition to prevent the defendants from implementing section 7 against the plaintiffs with respect to "the delivery of pre-purchased products to the airport". They also seek damages in this action.
The plaintiffs then brought this motion seeking declarations, an injunction, and prohibition, along the same lines as described above except that they are only asking for an interim injunction and not a permanent injunction at this time.
At the outset, I heard an application from Jet Set Sam Services Inc. to be added as a party defendant pursuant to Rule 1716 of the Federal Court Rules, [C.R.C., c. 663]. Jet Set Sam Ser vices Inc. is a concessionaire at the airport pursu ant to an agreement with Her Majesty. It is the only concessionaire at the airport that sells smoked salmon. For this privilege and the spaces which it occupies, it pays very substantial rents. It claims to have suffered a loss of business through the activi ties of the plaintiffs at the airport in delivering pre-purchased smoked salmon there to tour groups. It therefore wishes to support the validity of the Regulations and their application to the plaintiffs in such a way as to restrict their activi ties at the airport. I dismissed this application on the authority of Dene Nation v. The Queen, [1983] 1 F.C. 146 (T.D.), Waterside Cargo Co-operative v. National Harbours Board (1979), 107 D.L.R. (3d) 576 (F.C.T.D.); and Alda Enterprises Ltd. v. R., [1978] 2 F.C. 106 (T.D.). Using the test enunciated in those cases, it appeared to me that Jet Set Sam Services Inc. could not, in the present action, be a defendant party over which this Court would have jurisdiction. Using that test it is hard to see how, if the other defendants were removed, such an action could be brought in this Court against Jet Set Sam Services Inc. for any of the relief being sought herein. I also noted that while it might be at least arguable that Jet Set Sam Services Inc. could, in theory, be added as an intervenor (see Alberta Government Telephones v. Canadian Radio-television and Telecommunica-
tions Commission, [1983] 2 F.C. 839; 76 C.P.R. (2d) 268 (C.A.)), I would have doubts about this as a matter of law and, as a matter of discretion which I would in any event have to exercise, I would not be inclined to add it as an intervenor since I could not see how it would bring to the case a point of view different from that of the existing defendants.
I also decided, as a preliminary matter, that the plaintiffs could not seek on this motion the decla rations which they requested. I so held on the basis that, at least without the consent of the defendant, declarations cannot be sought by way of motion: see my decision Le groupe des éleveurs de volailles de l'est de l'Ontario v. Canadian Chicken Market ing Agency, [ 1985] 1 F.C. 280 and the authorities referred to therein at pages 288-289. Further, the request appears to be for interim declarations and there is no authority for giving declarations on an interim basis: see, for example, Sankey v. Minister of Transport, [1979] 1 F.C. 134 (T.D.). Therefore the only matters in issue are the requests of the plaintiffs for the interim injunctions restraining the defendants from interfering with or prosecut ing the plaintiffs with respect to "delivering pre- purchased products to the airport" or "the delivery of pre-purchased products to the airport"; and the request for prohibition to prevent the defendants from implementing section 7 of the Regulations "with respect to the delivery of pre-purchased products to the airport".
It will be noted that the plaintiffs have carefully limited their requests to restraining the defendants from taking action against the "delivery" of the products to the airport. In effect they say that this is all they have been doing, but if they have been doing more than delivery they would be prepared to restrict their activities just to that. They further say that mere delivery does not come within sec tion 7 of the Regulations which provides that no person shall, except as authorized in writing by the Minister, "conduct any business or undertaking, commercial or otherwise, at an airport". While
counsel was unable to cite any judicial authority on the meaning of the words "conduct any busi ness" he argued that it was comparable to "carry- ing on business", a phrase which has been fre quently interpreted. Authority was cited to me to demonstrate that mere delivery by a retailer of pre-purchased goods to his customer does not by itself constitute "carrying on business".
Counsel for the defendants contends that the airport manager, Chern S. Heed, is not a proper defendant because as a private individual he is not sueable for damages in the Federal Court where liability does not arise under a federal statute. He further contends that because section 7 says that no one without permission shall "conduct any busi ness or undertaking, commercial or otherwise, at an airport" [emphasis added], the activities of the plaintiffs are prohibited as undertakings, whether commercial or otherwise, being carried on on air port property. Further, he introduced some evi dence to suggest that, in some cases at least, one or more of the plaintiffs had collected money at the airport from their customers and that there was more involved than simply delivery.
Jurisdiction of the Court
It is contended by counsel for the defendants that this Court cannot entertain a claim for dam ages against the individual defendants. This appears to be firmly established by the jurispru dence. See Pacific Western Airlines Ltd. v. R., [1980] 1 F.C. 86; (1979), 105 D.L.R. (3d) 44 (C.A.). Just as in the Pacific Western case, in the present case there is no "law of Canada" govern ing or establishing liability of the individual defendants for damages. This does not mean, how ever, that they necessarily should be struck out of the action or that the claim for damages should be struck out at this time. It may well be possible in the trial of the action to establish the vicarious liability of the Crown for damages arising out of the action of its servants, pursuant to the Crown Liability Act, R.S.C. 1970, c. C-38. Therefore, I need not consider that matter further in the present context.
It is also contended by counsel for the defend ants that an injunction cannot issue against any of the defendants because injunctions are not avail able against the Crown or servants of the Crown. While it is clear that injunctions may not be issued directly against the Crown, there is ample author ity for the proposition that an injunction can be issued against government officials where they are acting, or threatening to act, beyond their lawful authority: see e.g. Conseil des Ports Nationaux v. Langelier et al., [1969] S.C.R. 60; (1968), 2 D.L.R. (3d) 81; Sharpe, Injunctions and Specific Performance (1983) at pages 167-171. I have used the term "government officials" to avoid the unedifying distinction which is frequently drawn between "servants of the Crown" and "agents of the legislature" where it is said the former is immune from injunctions or any form of mandato ry order, whereas the latter is not. The real distinc tion, it appears to me, is based on the nature of the functions which the government official happens to be performing at any given time. If those functions are lawfully authorized, then injunctions are not available to prohibit their performance: see Lodge v. Minister of Employment and Immigration, [1979] 1 F.C. 775; 94 D.L.R. (3d) 326 (C.A.). If on the other hand, they are not lawfully author ized, they are susceptible to being enjoined. Fur ther, if the function is authorized and non-discre tionary, whereby a duty is owed to an identifiable person, that person is entitled to seek a mandatory order for its performance. In the present motion for an interlocutory injunction, the essential alle gation is that the defendants are acting without lawful authority because section 7 of the Govern ment Airport Concession Operations Regulations (GAcoR) does not prohibit mere delivery at an airport of pre-purchased goods. If that could be established and other conditions were appropriate, an interlocutory injunction would be available to the plaintiffs against some or all of the individual defendants, although not against Her Majesty.
I shall then deal with the particular remedies sought.
Injunctions
This appears to be an appropriate case for using the tests set out in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.). There are no special circumstances here for rendering that approach inappropriate. Using the American Cyanamid criteria I need not, at the outset, consid er at length the strength of the plaintiffs' case. Suffice it to say that I think the point raised by the plaintiffs as to the proper interpretation of section 7 of the GACOR is one of substance and is not frivolous or vexatious. This is not to say that I find it compelling, but I need not for these purposes weigh it further.
As to the adequacy of damages, I am inclined to think that the plaintiffs will have an adequate remedy in damages if they do not obtain an inter locutory injunction but are able, at trial, to estab lish the right which they allege to carry on delivery activities at the airport. They may, of course, fail in their claim for damages if it can be shown that they have no such right, or if it can be shown that they were barred from operations at the airport because they were carrying on activities going beyond the "delivery of pre-purchased products" which they allege. The plaintiffs are prepared to give an undertaking to pay any damages which may ensue from the issue of the interlocutory injunction, should it later be shown to have been wrongly issued, but I am not satisfied that this would adequately remedy any harm that might flow from the issue of the injunction. One of the primary interests which would be affected, were I to issue the injunction, would be that of members of the travelling public and those who lawfully accompany them at the terminal. The affidavits filed by the defendants indicate that substantial obstructions at the terminal, both with respect to circulation of passengers and of traffic, have been caused by the activities of the plaintiffs. The safety and convenience of lawful visitors and users of the airport, while they are the responsibility of the defendants, are not interests whose loss, for the considerable period that would be involved until final judgment, could or would be compensated by damages collectible pursuant to the undertaking. I should note that substantial monetary losses during this period could also very well be suffered by the various concessionaires with whom the Crown has agreements involving use of airport
premises. The plaintiffs did agree that the under taking could cover potential losses which the Crown might suffer as a result of claims brought against it by these concessionaires who are paying very substantial rentals in return for the use of space and the exclusive right to sell certain prod ucts at the terminal. It is, at best, uncertain to what extent such losses could be recovered by them from the Crown and therefore the value of the undertaking with respect to what could be very real economic losses caused to concessionaires by the interlocutory injunction is somewhat doubtful. Therefore, I have concluded that if the plaintiffs do indeed have a good cause of action, they can be adequately compensated by damages whereas the undertaking they are prepared to give would not adequately remedy the injury that could flow from the issue of an interlocutory injunction.
While the foregoing may be sufficient to deter mine the matter, looking at the matter more broadly it seems to me that on the balance of convenience, the injunction should not be issued. The defendants, under the Aeronautics Act, R.S.C. 1970, c. A-3, have the responsibility to the public for the general management of the Vancou- ver airport. It has been held by the Federal Court of Appeal that this obligation creates a public duty but does not give rise to an individual right of action: see Canadian Pacific Air Lines, Ltd. v. R., [1979] 1 F.C. 39; (1978), 87 D.L.R. (3d) 511 (C.A.). On the material presented to me to date, I am of the view that this public duty includes the operation of airport terminals in the interests of safety and convenience of the travelling public and the minimization of costs to the taxpayer. The latter can be furthered through provident arrange ments with concessionaires. Set against these in terests are the very particular interests of the plaintiffs being asserted here to use public prop erty gratuitously in furtherance of private gain. The plaintiffs, by their own admissions, have no authority from the Minister under section 7 of the Regulations to carry on the activities they have chosen to perform in the terminal at the Vancou- ver airport. They have not demonstrated to me any specific right that they have to carry on such activities, nor is it obvious to me that they have any implied authority to do so, given the general purpose of an airport terminal which is to load and
unload passengers. There is certain evidence that their activities, until they ceased them last summer after receiving the warnings, could cause conges tion and inconvenience to other users of the termi nal. In these circumstances, I think the balance of convenience is in favour of allowing the defendants to continue their system of regulation on behalf of the majority of travellers not in need of the plain tiffs' services and requiring these five plaintiffs to establish, if they can, after a full hearing, the rights which they say they have to make deliveries at the Vancouver terminal.
There are other reasons for the exercise of dis cretion against the granting of the injunction. It is by no means clear to me that the remedy being sought here, namely an injunction to prevent inter ference with "delivery", will really resolve the question of whether the plaintiffs' actual activities are prohibited by section 7 of the GACOR. It may be, as indicated in some of the evidence filed by the defendants, that what the plaintiffs are doing goes beyond mere "delivery". In such case this motion, and indeed the action itself, is dealing with a hypothetical question which may not effectively settle the issue of whether the plaintiffs can carry on their activities at the Vancouver airport. A prosecution brought against one or more of the plaintiffs with respect to what they are actually doing could more effectively settle that question, and this is another reason for declining to decide a hypothetical question on the basis of a few affida vits on which there has been no cross-examination. Further, there is no evidence to suggest that the plaintiffs have ever requested permission from the defendants, as contemplated by section 7, with respect to the activities they are carrying on at the airport. Had they done so, there is at least the possibility that an arrangement satisfactory to both sides could have been worked out. Their failure to exhaust this avenue also militates against exercising discretion in their favour.
Prohibition
As noted earlier, the plaintiffs request a writ of prohibition to prohibit implementation by the
defendants of section 7 of the GACOR as against the plaintiffs "with respect to the delivery of pre- purchased products to the airport". The official action to be prohibited would appear to be of an administrative nature, involving presumably the investigation of possible contraventions of section 7 and the prosecution of charges thereunder where warranted.
The question was raised by the defendants as to whether prohibition would lie with respect to such functions. I am prepared to find that it would, on the same basis that I held in Le groupe des éleveurs de volailles de l'est de l'Ontario v. Canadian Chicken Marketing Agency (supra, at pages 314-315) that certiorari would lie with respect to the validity of delegated legislation. The availability of certiorari or prohibition in such cases depends on there being a ground alleged which is appropriate for adjudication. Such a ground is alleged here because the contention is that to apply section 7 to the plaintiffs would be beyond the authority of the defendants since the act of "delivery" of pre-purchased goods at the airport is not within the scope of section 7.
The authorities are clear, however, that where a defect is not patent, the Court has a discretion as to whether to grant prohibition. One of the bases for the exercise of that discretion is the existence of alternative remedies. See generally de Smith's Judicial Review of Administrative Action (4th edition, 1980) at pages 416-428. For the reasons stated above, I have serious doubts that this is the best way of resolving the question of the legality of what the plaintiffs are actually doing, on the basis of the few affidavits upon which there has been no cross-examination and on the basis that the only issue is "delivery" which may not, in fact, repre sent accurately what the plaintiffs are in fact doing or need to do to carry on their business of selling Canadian products to tour groups. I will therefore dismiss this aspect of the motion as well.
ORDER
The application is dismissed with costs.
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