COMMENTS
COMMENTAIRES
No Expropriation Without Compensation:
A Comment on Manitoba Fisheries Limited v. The Queen
Neither the obviously just result nor the apparently narrow
ratio decidendi should obscure the serious legal questions hidden
in the unanimous judgment of the Supreme Court of Canada in
Manitoba Fisheries Ltd v. The Queen.’ Is the state bound to re-
compense anyone harmed by legislation? Does either the common
law or the Canadian Bill of Rights2 provide a positive and enforce-
able procedure for a citizen to obtain proper compensation for
property taken from him for public purposes? What constitutes
“property”, and when can it be said to be “taken” from a person?
I. The facts
In 1969 the Parliament of Canada enacted the Freshwater Fish
Marketing Act.3 This legislation created a federal Crown corpora-
tion having the exclusive right to export fish from certain “agree-
ing” provinces. The appellant was a long-established 4 private fish
marketer in Manitoba. A substantial part of its sales were to pur-
chasers outside of that province. Under an agreement entered into
between the Government of Manitoba and the Government of
Canada,’ the new Crown corporation’s monopolistic powers were
made applicable to Manitoba from May 1, 1969. This effectively
terminated all of the appellant’s trade in fish.
The Act had contemplated this type of economic consequence
upon existing fish marketers. On the one hand, section 21 provided
that the Crown corporation could license other persons to carry
on the export trade in fish 0 No licences were ever issued, however,
1 (1978) 88 D.L.R. (3d) 462.
2R.S.C. 1970, App. III.
3 S.C. 1968-69, c. 21; now R.S.C. 1970, c. F-13.
4The company was incorporated in 1926.
5 The agreement was dated June 4, 1969. It is not clear from the judgment
why the plaintiff’s business terminated earlier, on May 1, 1969.
GS. 21(1) granted the Crown corporation a monopoly on, inter alia, the
exportation of fish from an agreeing province. S. 21(2) provided that the
Board [of Directors of the Corporation] might make bylaws to license
persons to carry on some of its functions.
McGILL LAW JOURNAL
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nor were any regulations ever passed by the Governor in Council
exempting any person from the Corporation’s monopoly under
Part III of the Act. On the other hand, section 25(2) (c) of the Act
specifically provided that any agreement entered
into between
Canada and a participating province would provide for:
the undertaking by the province of arrangements for the payment, to
the owner of any plant or equipment used in storing, processing or
otherwise preparing fish for market, of compensation for any such
plant or equipment that will or may be rendered redundant by reason
of any operations authorized to be carried out by the Corporation under
this Part [.]7
In fact, the agreement between the Government of Canada and the
Government of Manitoba did provide for such payments.” The’
Manitoba Government had offered to pay the appellants for certain
of their physical assets which had been made redundant (although
not taken over) by the activities of the Corporation,9 but the ap-
pellants also claimed compensation for the loss of their goodwill.10
When the provincial Government rejected this latter claim, the
appellant sued the federal Crown for the whole value of its pro-
perty.
II. The trial decision
Collier J. clearly held that the appellant’s goodwill constituted
“property”.”- However, he rejected the appellant’s claim on the
ground that the federal Crown had not, through its agent the
Corporation, 12 “taken”
that property from the appellant.8 The
fact that the legislative monopoly granted to the Corporation ef-
fectively permitted it to capture the trade which the plaintiff had
previously enjoyed did not mean that the Crown corporation had
“taken” any property from the plaintiff. 4 His Lordship could find
7R.S.C. 1970, c. F-13 [emphasis added].
8 See para. 5 of the Statement of Facts admitted by the respondent, re-
‘ 3 Supra, note 9, 461 et seq.
14 Ibid., 464.
[1977] 2 F.C. 457, 471 per Collier J.
produced supra, note 1, 463.
9 See the decision at trial:
10 Note that the actual value of the goodwill was not in issue in the case.
The parties had previously agreed that, if the court found for Manitoba
Fisheries, the compensation payable would be settled between
them, re-
course to the court being contemplated only upon failure to settle: ibid., 461.
“Ibid., 459-60, where the trial judge referred to a number of cases from
12 If the Corporation had not been the agent of the federal Crown, then
the federal Crown would not have been liable for the Corporation’s acts.
One wonders whether the Corporation itself would have been liable.
tax law relating to what constitutes goodwill.
19781
COMMENTS – COMMENTAIRES
no intention in the Act to permit the Crown corporation to take
any property from anyone – whatever the natural consequences
of the legislation might be.1” Accordingly, the trial judge held that
neither the rule in A.-G. v. De Keyser’s Royal Hotel, Ltd 6 nor the
Canadian Bill of Rights’7 entitled the plaintiff to recoup its losses
from the Crown. His Lordship did, however, comment stringently
on the obvious unfairness of this result to the unfortunate plaintiff,
who could not enforce the agreement between the two govern-
ments (because of the doctrine of privity of contract), who was
“entrapped in policy differences between two levels of govern-
ment”,’ 8 and who had been “economically erased”. 9
III. The Court of Appeal decision
recognized
the principle from
The Federal Court of Appeal unanimously rejected the plaintiff’s
appeal.20 Urie J. was generally prepared to assume that the trial
judge was correct in holding that the appellant’s goodwill consti-
tuted property.21 He also
the
De Keyser’s Hotel case2 2 that a statute is not
to be cons-
trued as taking away the property of a subject without compensa-
tion (although either Parliament or a provincial Legislature can do
so by using clear words). Urie J., however, focussed on a line of
cases2
3 which he said demonstrated that the Crown’s obligation
to pay only arose where the Crown physically assumed possession
or used the subject’s property. As the trial judge hiad held that the
Crown corporation did not take such possession, the appeal was
rejected on this ground.
Urie J. also held that the appellant had not been “deprived” of its
property, and therefore could not invoke the protection of the
Canadian Bill of Rights.2 4 Referring to the decision of the Privy
15 Ibid., 465-69.
16 [1920] A.C. 508, 542 (H.L.).
17 R.S.C. 1970, App. III, specifically s. 2(e).
Is Supra, note 9, 472. His Lordship noted that the situation had been
treated differently in Alberta.
10 Ibid.
20 [1978] 1 F.C. 485; 78 D.L.R. (3d) 393; 17 N.R. 28 per Urie J., Heald 1. and
MacKay D.J. concurring.
21 Ibid., 487 and 490. Later in his judgment, however, Urie J. appears to
back away from this assumption: see page 496.
2 2 Supra, note 16.
2 France Fenwick & Co. v. The King [1927] 1 K.B. 458; Belfast Corp. v.
24R.S.C. 1970, App. I1.
O.D. Cars Ltd [1960] A.C. 490 (H.L. (N.I.)).
McGILL LAW JOURNAL
[VCol. 24
Council in Government of Malaysia v. Selangor Pilot AssociationZ
his Lordship held that a person could not be “deprived” of his
property unless it had been taken over by someone else. Since the
court had already held that the Crown corporation had not “taken”
the appellant’s property, the appellant could not have been “de-
prived” of it. With respect, however, there are at least three objec-
tions to this reasoning. First, the ordinary meaning -and usage of
is simply not this restrictive. Secondly, the Canadian
“deprived”
Bill of Rights refers to the “… right of the individual to … enjoy-
ment of property, and the right not to be deprived thereof except
by due process of law”.?6 One can clearly be deprived of the enjoy-
ment of one’s property when it is destroyed. If this destruction is
done under federal legislative authority, the Canadian Bill of Rights
requires that it be done in accordance with due process. Surely
it would be no defence for the Crown to argue that the Canadian
Bill of Rights simply does not apply because the Crown did not
acquire the property which had been destroyed. Finally, it is sub-
mitted that the Selangor case really revolves around the issue
whether the independent pilots had any property which was affect-
ed by the legislation there in question.T If there is no property,
obviously no one can be deprived of it (although one could be
in some other way). However, in Manitoba Fisheries,
harmed
both the Trial and Appellate Divisions of the Federal Court agreed
that the company’s goodwill did constitute property. This aspect
of the Selangor case would explain why Urie J., at the end of his
judgment, became uncertain as to exactly what the appellants had
lost:
… the Act here in question did not deprive the appellant of the enjoy-
ment of any property. Unfortunately, implementation of the legislation
had the effect of putting the appellant out of business but that result
did not occur due to any deprivation of property of the appellant by
the respondent. As earlier stated, the Crown did not acquire, possess
or use any property of the appellant, either tangible or intangible, unless
it could be said that the fishermen who supplied the appellant with
their fish or the customers to whom the appellant sold its fish and
fish products had become their [sic] property. Obviously that could not
be so because either the fishermen or the customers could, if they so
25 [1977] 2 W.L.R. 901 (P.C.).
26R.S.C. 1970, App. III, s. l(a) [emphasis added].
27Was the pilots’ goodwill in their business effectively destroyed when
they were forced to take out licences and to become employees of the
Port Authority? If so, was their property taken? It would appear that the
Privy Council did not consider that the pilots lost any property, although
their Lordships did not closely analyze what qualifies as “property”.
1978]
COMMENTS — COMMENTAIRES
they wished. They were not the
desired, do business with anyone
exclusive property of the appellant or anyone else, as the admittedly
highly competitive nature of the business indicates. What the appellant
lost was not property but was its right to carry on the business in
which it had been engaged, without a licence. If that loss included what-
ever goodwill the appellant had, it was not taken by the Corporation s2 8
The question remains whether or not the goodwill constituted
“property”. If so, the appellant had clearly been deprived of it. The
legislation (and not the economic skills of the Corporation) had des-
troyed all existing competition. The Crown corporation’s statutory
monopoly thus allowed it to render this property worthless, and in
effect to appropriate this property for its own benefit.
IV. The Supreme Court of Canada decision
The Supreme Court of Canada, obviously sensitive to the in-
justice suffered by the appellant, unanimously reversed the two
lower courts.29 Ritchie J. almost immediately pinpointed the weak
link in Urie J.’s judgment by expressing “great difficulty” 30
in
following the latter’s reasoning in the passage quoted above31
Pointing out that both the trial judge and Urie J. himself had clear-
ly held that the appellant’s goodwill was property, Ritchie J.
agreed:
In my opinion, … goodwill, although intangible in character is a part
of the property of a business just as much as the premises, machinery
in the production of the product whose
and equipment employed
quality engenders that goodwill.32
Before turning to the more difficult question whether the Crown
corporation had “taken” the appellant’s goodwill, his Lordship
noted that although the legislation did not specifically require the
Crown corporation to pay for any property taken (or destroyed)
by it, neither did it unequivocally exempt the Corporation from
paying for any property it took33 Thus the rule in the De Keyser’s
Hotel case must clearly apply: the statute must, if possible, be
construed so as not to take property away from the subject with-
out compensation. The Court therefore held that if the Crown
corporation had taken the appellant’s goodwill, it was obligated
28 Supra, note 20, 495-96 [emphasis added].
‘2Supra, note 1, per Ritchie J., Spence, Pigeon, Dickson, Beetz, Estey
and Pratte JJ. concurring. Laskin C.J.C. and Martland J. did not sit.
30 Ibid., 465.
31 Supra, note 28.
3 Supra, note 1, 466-67.
3 Ibid., 467.
McGILL LAW JOURNAL
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to pay compensation 4 This apparent non sequitur is the key to
the Court’s reasoning.
Did the Crown corporation “take” the appellant’s goodwill?
Ritchie J. seems to assume this:
Once it is accepted that the loss of the goodwill of the appellant’s
business which was brought about by the Act and by the setting up of
the Corporation was a loss of property and that the same goodwill was
by statutory compulsion acquired by the federal authority [, it] seems
to’ me to follow that the appellant was deprived of property which
was acquired by the Crown3 5
His Lordship then examined the authorities which had been cited
by the Crown against this proposition. On the one hand, he noted
that the decision in Ulster Transport Authority v. James Brown &
Sons Ltd36 specifically held that the redirection, by virtue of a
statutory provision, of a definite portion of the respondents’ business
to the appellants, without compensation, did amount to a “taking”
of the respondents’ property. Thus this case reinforced Manitoba
Fisheries’ position. On the other hand, Ritchie J. distinguished on
their facts the decisions in France Fenwick & Co. v. The King3 7
and Government of Malaysia v. Selangor Pilot Association,8
in
both of which compensation was denied. With respect to Fenwick,
his Lordship said:
With the greatest respect, it is in my view difficult
to equate the
circumstances of that case in any way with those with which we are
[here] concerned. It is indeed difficult to find any analogy between
the effect of an order made under Government regulation to delay
the unloading of a ship’s cargo [in Fenwick] and the creation by Par-
liament of a Government corporation for
the express purpose of
monopolizing the whole of the business of the appellant and others
like it [in the present case]. 3
Similarly, his Lordship dealt with the Selangor Pilot case as follows:
In the Malaysian case the licences of the pilots were not disturbed
except to the extent that they were required to be employed by the
Port Authority which offered them employment. These conditions are
in sharp contrast with those [in the present case]….
With all respect I am of opinion that the factual differences existing
between the Malaysian case and the present one are so fundamental
as to make the opinion of the Privy Council inapplicable to the present
circumstances. 40
34 Ibid., 468.
a5Ibid. [emphasis added].
36 [1953] N.I. 79 (C.A.).
37 Supra, note 23.
38 Supra, note 25.
39 Supra, note 1, 470.
40 Ibid., 471.
1978]
COMMENTS – COMMENTAIRES
The Supreme Court held that the Crown had, in fact, taken the
appellant’s property and was bound to pay for it. Indeed, Ritchie
J. noted that it had clearly been the intention of Parliament to
provide compensation to those harmed by the implementation of
the marketing legislation, as section 25 expressly contemplated that
the agreements bringing the Act into force in the various provin-
ces would contain an undertaking by each province to make good
any loss. 41 The federal Government had subsequently offered to
reimburse the provinces for up to 50 per cent of the payments
made by them under the agreements.42 Nevertheless, the Govern-
ment of Manitoba refused to pay the appellant’s claim. Perhaps
unfortunately, the provincial Government could not be sued in this
case because it had not taken the appellant’s property, and because
the appellant was not privy to the agreement between the two
governments providing for compensation. Obviously seeking to do
justice, and to extricate the appellant from its “entrapment in
policy differences between two levels of government”, 43 the Supre-
me Court rendered judgment against the federal Crown, with costs
throughout.
V. Comment
Despite the obviously just result, one is left wondering precisely
what legal basis the Supreme Court of Canada used to uphold the
legal principle entitling
appellant’s claim. There is no general
anyone who is harmed by another’s action to be compensated
therefor; not all damna are injuria. There is likewise no general
legal principle which requires Parliament or a Legislature to pro-
vide for fair compensation to everyone who is harmed by new
legislation. Indeed, Parliament or a Legislature can clearly pro-
vide for the expropriation of property without any compensation
at all. With respect, neither the rule in the De Keyser’s Hotel case 44
nor the Canadian Bill of Rights45 provides a substantive right to
fair compensation for property taken from a subject. Both are
mere rules of construction: if a statute does not unambiguously
require expropriation without compensation, then expropriation
41Ibid., 471-72. The Canada-Manitoba agreement did contain such a clause:
see supra, notes 5 and 8 and accompanying text. The mode of valuation of
the appellant’s business approved by the federal Government would have
taken account of goodwill.
42 Ibid., 472.
43 Supra, note 18.
44 Supra, note 16.
45R.S.C. 1970, App. III.
McGILL LAW JOURNAL
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without compensation is not to be inferred. Neither of these rules
can have any application where there is no ambiguity in the sta-
tute. In that case, the only question would be whether the statute
did in fact authorize property to be “taken”. It might, in these
circumstances, be possible to argue that one could apply these
rules of construction so as to construe the statute as providing
that actual title to the property in question would remain with
the original owner. However, such rules of construction cannot
apply so as to found a substantive right to compensation.
The situation might be different if the taking of the property
purported to be by virtue of the royal prerogative, rather than
under statute. There might well be a general duty on the Crown to
pay for any property over which it exercised its prerogative powers.
While a subject could previously gain recompense for his property
by taking a petition of right, he can now (apparently) sue the
federal Crown in the Federal Court.46 Indeed, much of the De
Keyser’s Hotel case deals with the precise circumstances in which the
Crown could seize property under its prerogative, the obligations of
the Crown to pay compensation, and the procedure to be used. Never-
theless, the House of Lords held that the power under which the pro-
perty was taken in that case was statutory and not prerogative, and
that the statute and regulations clearly provided for compensation.
Surely the owners of the hotel would have lost their case if the
statute had expressly provided that no compensation was to be
paid in those circumstances.
Obviously Parliament should consider, before it enacts legisla-
tion, whether those who will be affected should be compensated,
and should make clear (and enforceable) provision therefor. But if
Parliament is not this careful, what sorts of harm or loss will the
courts say entitle a person to compensation from the Crown?
What damna will the courts treat as injuria? Will the line be drawn
at the taking of property –
as in this case? What precisely is “pro-
perty” and when is it “taken”? Unfortunately, the Supreme Court
has not given us any guidelines on these perplexing questions –
even
if it did undoubtedly do justice in this case.
David Phillip Jones*
46 But see the remarks by Urie J., supra, note 20, 492, rejecting the ap-
pellant’s argument that the Exchequer Court Act, R.S.C. 1970, c. E-11 (now
replaced by the Federal Court Act, S.C. 1970-71-72, c. 1 and R.S.C. 1970, 2d
Supp., c. 10) itself gave a direct cause of action against the Crown for com-
pensation in these circumstances.
the Alberta, Northwest Territories and Yukon Bars; and of the
*Of
Faculty of Law at the University of Alberta, Edmonton.
