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Federal Court Reports Carpenter Fishing Corp. v. Canada (T.D.) [1997] 1 F.C. 874 T-554-91 Between: CARPENTER FISHING CORPORATION, DON JOHANNES, KAARINA ETHERIDGE, WHITE HOPE HOLDINGS LTD., SIMPSON FISHING CO. LTD. and NORMAN JOHNSON, Plaintiffs, - and - HER MAJESTY THE QUEEN IN RIGHT OF CANADA, and BERNARD VALCOURT, MINISTER OF FISHERIES AND OCEANS, Defendants, T-974-91 Between: TITAN FISHING LTD., Plaintiff, - and - HER MAJESTY THE QUEEN IN RIGHT OF CANADA and BERNARD VALCOURT, MINISTER OF FISHERIES AND OCEANS, Defendants. REASONS FOR ORDER CAMPBELL J. I OVERVIEW In 1990, the halibut fishery on our West Coast was in trouble and, accordingly, a quota system was established for the commercial fishery. The plaintiffs all agree that to do so was a good idea, but they adamantly object to a restriction placed on their share of the catch and to the process whereby it was established. This case is, therefore, about the relationship between the Government of Canada and halibut licence holders and about their fair and equal treatment. The pacific halibut1 is perhaps not as well known to Canadians as salmon, but, nevertheless, it is a fish which has received a great deal of professional attention. Dr. Peter Pearce in his extensive and detailed work Turning the Tide: A New Policy for Canada's Pacific Fisheries2 describes the halibut fishery as one of the oldest on the Coast with the stocks being amongst the most valuable. The use of this valuable resource has experienced many, but not unique, problems as described this way by Dr. Pearce fourteen years ago:
Dr. Pearce's recommendations are important because they set a standard which definitely had impact on the plans which were subsequently developed. His views are as follows:
This case concerns decisions made by officials of the Department of Oceans and Fisheries, Canada (DFO), and the Minister of Fisheries in 1990 (the Minister) to meet the challenge expressed by Dr. Pearce by implementing a quota system (called the "IVQ" which is a fishing trade term standing for "individual vessel quota") within the halibut fishery. The system went into effect in 1990 following a "consultative" process between DFO and halibut licence holders and remains in effect today. Within the IVQ implemented, there is a condition called the Current Owner Restriction (COR). The plaintiffs' claim is for a declaration that the Current Owner Restriction in the formula for individual vessel quotas is unlawful. If the declaration is granted, the plaintiffs request that the Current Owner Restriction be severed from the formula since such a severance will not impair the effective operation of the quota system or the fishery. In the plaintiff's submission, the result of doing this will be to return to them the quota of which they were wrongly deprived. In the details of the argument, the plaintiffs maintain that the formula for allocation of quota under the IVQ program discriminates against recent entrants to the halibut fishery by denying those recent entrants the same eligibility for catch history calculation as longer term licence holders. They also argue that the discrimination was exacerbated by granting the most recent entrants to the fishery a greater period of eligibility than licence holders who purchased their licences in the period 1986 to 1989. As it was put into effect, the formula for allocation of halibut IVQ is based 30% on the length of the vessel and 70% on the catch history of the licence over a four year period, 1986 through 1989. However, the catch history of the licence is restricted to the current owner unless the licence was acquired after the start of the 1989 halibut fishery, in which case historical performance would be based on the catch history of the immediately preceding owner. The effect of the current owner restriction is to grant a longer period of eligibility to some licence holders, arguably to the detriment of others. There are 435 licence holders and the plaintiffs assert that perhaps 44 of them, including themselves, are so detrimentally affected. The heart of the case concerns the introduction of the COR into the formula adopted, and the heart of this feature concerns what took place during a particular meeting in the consultative process in which the idea of a current owner restriction was first discussed and subsequently adopted. The plaintiffs say that the current owner restriction does not advance the management of the fishery or conservation of fish in any way and was only adopted by DFO because a group alleged to represent a majority of halibut licence holders requested the restriction in the formula, and that the licence holders in the minority, who were prejudiced by the restriction, were given no opportunity whatsoever to contest the restriction. To properly interpret the results of the critical meeting which I have referred to, which took place on May 3, 1990 in Richmond, B.C., it is first necessary to make some findings of fact about the background which led to the meeting. Once this is accomplished, I will judge the meeting, its results, and then the follow-up which occurred. The legal issues will then be determined and solved, and finally a decision made about whether to grant the relief requested. By agreement, the issues to be decided at trial have been split into two parts. The trial days to date have focussed on the issue of whether the decision to implement the Current Owner Restriction is unlawful. If I now decide for the plaintiffs on this issue, then the trial must continue to determine what relief should be granted to them as a result. II BACKGROUND TO THE MEETING OF MAY 3, 1990 A. The DFO plan to implement a quota system (1) Who took the initiative to take action? To solve the problem identified by Dr. Pearce and in accepting his solution, the Minister of Fisheries at the time took immediate action by appointing an advisory committee of halibut fishers to assist in developing a quota system for the 1983 halibut fishing season. The plan did not go ahead because of lack of industry support. However, in 1988, the idea of a quota system was revived as a result of an approach to DFO by halibut licence holders to discuss alternative management strategies for the fishery, including individual quotas. There is no doubt that this approach found fertile ground. The DFO had been sharply criticized by Dr. Pearce in his report for mismanagement of the fishery and an early attempt to answer this criticism by attempting to gather support for a quota system amongst the fishers had failed. Some five years later, however, there was a show of interest by the fishers themselves. It is not difficult to conclude that this was the opportunity that DFO had been waiting for to put a quota system in place. And they took it. An important aspect of this case is the way in which DFO displayed its interest in securing a quota system. On the evidence, it is clear that DFO made the decision to downplay its interest in establishing quotas in the process implemented to draw licence holders on side to this point of view. Proof for these points can be clearly found in three DFO memoranda dated September 26, October 18, and October 20, 1989. The September 26th memorandum is from A.F. Lill, Regional Director, Fisheries Branch to P.S. Chamut, Director-General, Pacific Region suggesting that Mr. Chamut attend at the first informational meeting for halibut licence holders to provide some opening remarks. The following is Mr. Chamut's hand written reply:
In his October 18th response, Mr. Lill said:
More precise on to the position of DFO, are the following comments in the October 20th briefing note in response to Mr. Chamut's request from A. Gibson, Chief, Resource Allocation:
There is nothing wrong with the DFO adopting a strategy to get what it wanted, but the often repeated statements that interest in a quota system was initiated by the licence holders and DFO did not want to force the issue, must be seen as a promotional strategy move. In the period October 1989 to June 1990, DFO led a very elaborate and energetic consultation with licence holders on the implementation of a quota system. There is no doubt that all this effort was not taken to see the initiative fail. I find that DFO wanted a quota system to result from the process and managed the process to see that this result occurred. To understand the decision making process within DFO it is important to recognize that a high degree of responsibility for a successful result was placed in the hands of one middle management official, Mr. Bruce Turris. Mr. Turris holds a Master's degree in economics, and during 1989 worked as an economist in the DFO's Program Planning unit and, in this capacity, acted as the DFO point man throughout the whole process of coming to a Departmental and Ministerial decision to implement a quota system. In fact, he was the only witness called by the defendants. In his pivotal role, Mr. Turris first met with the licence holders in 1988, produced all the paper that went to the licence holders over the signature of Mr. Chamut, organized and ran the consultative meetings, received all responses from licence holders, and indeed drew all the memoranda that went up and down the line between various officials within DFO itself. At trial, Mr. Turris was closely questioned on the degree to which he was personally invested in the outcome of the process. The questioning went to determine whether he would benefit professionally, either in terms of increased salary or promotion, if he was successful in achieving an agreement with the licence holders to implement a quota system. These considerations aside, I find that Mr. Turris' contact with this project was so direct, intensive and prominent, that he was thoroughly professionally committed to get an agreement. Thus, the consultative process with the licence holders began with strong DFO commitment to see a quota system implemented. And even though perhaps the licence holders came to DFO to show interest in 1988, I find that DFO took the initiative to take action to achieve this objective. (2) What was the true nature of the consultative process? For the reasons set out above, even though it had been billed as a consultation, I find that the process entered into between DFO and the licence holders was in fact a support building process for a quota system to which DFO was committed before the process began. I believe this finding is important because it sets the mental approach taken by DFO throughout the process and, in particular, by Mr. Turris in the critical meeting of May 3, 1990. The following is a bare outline of the sequence of events within the consultative process:
(B) The HAC process (1) Was the HAC process democratic? As can be seen in Mr. Lill's October 18, 1989 memorandum to Mr. Chamut as quoted above, before the consultative process got under way, the steps had been decided. They were, if there was a clear indication of strong support for the concept of individual quotas, then DFO should recommend that a committee of licence holders be formed to develop a detailed ITQ proposal and upon the proposal being prepared, then each halibut licence holder should be provided a copy and asked to vote yes or no. This anticipated, very straightforward process was fundamentally altered as it evolved. In December 1989, the decision was taken by DFO to form a "halibut committee which is democratic and provides comprehensive and fair representation" as described under heading (2)(d) above. I find that DFO held out that decision making would be guided by some form of a practical licence holders' representative government. In taking this position, I find that DFO assumed the obligation to see that the basic attribute of the democratic process would be maintained. So, what is the basic attribute? Students of government argue about the proper functioning of representative government. This debate centres on conflicting delegate and representative theories. The conflict has been described from a political science perspective this way:
However, Dawson provides his instructive opinion on the debate as follows:
Whatever the theory, it can be readily seen that the primary ingredient of representative government is accountability. Mr. Turris apparently had an understanding of accountability concept, since he testified on discovery that the democratic process was used to meet past complaints that DFO decisions had been made by listening to self-interests without accountability. Even with this understanding, however, he did absolutely nothing to enforce and reinforce it when it came to the halibut advisory committee. In the letters that were sent out to the individuals selected to act as representatives on HAC there was no mention of any responsibilities of undertaking the role.18 In addition, throughout the process, there was no monitoring of how the representatives viewed their function, and, in particular, no information was gathered on whether they had clear instructions upon which to express views. Indeed, no support was offered to assist in this activity if it occurred. I gathered from Mr. Turris's evidence that the HAC representatives were free to sort out their own obligations to their constituents. I also gathered that DFO had no interest in scrutinizing this relationship obligation and was prepared to accept contentious opinions by HAC representatives as representative of the people that voted to put that person on the committee. Even if one subscribes to the delegate theory, no weight should be placed on such an opinion without knowledge of the support behind it. I say this simply because there was no accountability built into the process. I find that the HAC process was not only not democratic, but also it was highly unreliable in reflecting the views of licence holders. Bruce Turris and his superiors in DFO should have known this. I, therefore, give no weight to the defendant's argument that because the plaintiffs participated in the selection of representatives to HAC that they are bound by the result. In addition, as I will outline below in detail, the critical decision reached in the May 3, 1990 meeting regarding COR was reached with absolutely no advance notice to anyone outside of HAC. Therefore, it is impossible to say that because the plaintiffs willingly participated in the consultative process, including HAC, that they should be taken to have agreed to HAC's opinion regarding COR. The plaintiffs advanced the argument that by following the views expressed by a majority of the HAC representatives this was an unlawful abdication of functions and powers by DFO and the Minister to HAC. As I have said, opinions reached by HAC were the result of a highly managed, and from DFO's point of view, very successful support building process for an outcome that DFO wanted. Accordingly, DFO cannot be said to have followed the requests of HAC, and therefore, the abrogation argument fails. (b) Was the HAC process fair? The successful support building process evolved from discussion, to a strong show of interest in a quota system, to the appointment of HAC, the taking of a licence holders approval vote, and finally the approval of the Minister. The plaintiffs did not voice any objection to the general consultative process or its results up to the point in time that HAC went into operation. Indeed, there was nothing for them to complain about since they supported the idea of a quota system and, therefore, supported the process as a way of achieving it. They do, however, point to now known irregularities in the formation of the halibut advisory committee, the way it operated, and to the reliance placed on the HAC experience by DFO to say that the HAC element of the process was unfair. The evidence also raises the question of the advisability of attempting to achieve industry change by a "democratic" HAC process. That is, how fair was it of DFO to reflect reliance on a seriously flawed process in making important decisions? Regarding reaching decisions on IVQ and COR, the defendants suggest that the vote of all licence holders corrects any defects in the consultative process. It seems to me that for this conclusion to be reached, each of IVQ and COR would need a separate vote. Since this did not occur, I find that no defect was cured and an unfairness resulted.19 As to irregularities in the formation of HAC, I can see why the plaintiffs complained. As outlined above, licence holders were given the option of electing a representative to HAC from a list of 12 named organizations or of electing an individual who was not associated with any established organization. Published procedures for the election of HAC provided that before an individual could be elected, he or she was required to obtain the votes of at least 20 halibut licence holders. The ballot form for electing a representative to HAC had to be mailed to DFO by December 15, 1989 and any elected individual not associated with one of the named organizations had to supply DFO with the list of 20 signatures by the 2nd day of January, 1990. It is not contested that DFO unilaterally changed the number of votes necessary for an individual to be elected to HAC and extended the deadline for voting without notice to the licence holders who were called upon to elect representatives to HAC. In the result, less than 20 votes were required by DFO for eligibility and DFO continued to accept votes for an undetermined period after the deadline. In addition, DFO unilaterally named other representatives to HAC who received no votes on the premise that a wider industry presence was required on HAC. DFO also gave two of the elected organizations which received 37 and 40 votes respectively an additional delegate on HAC but did not give individuals with a large number of votes any greater number of votes. DFO refused a seat on HAC to a few licence holders who sought input on IVQ but did not have the requisite votes. Mr. Turris's answer to these irregularities was that HAC was a DFO advisory committee and he saw no need to advise on the changes in composition. It seems, however, that the rules were simply broken because it was considered necessary to do so to reach the planned objective of industry support. While this decision might have been strategically sound, it was certainly offensive and unfair to those who expected the rules to be followed. III THE MEETING OF MAY 3, 1990 The current owner restriction, as it was finally put into effect, arose from the discussion at the May 3rd meeting of the halibut advisory committee. It is this element of the formula which brings this case to court, and in this regard, the purpose for which this element was adopted is of major importance. Fortunately the meeting of May 3, 1990 was audio-taped, and the tapes and their transcription were entered in evidence through Mr. Phil Parish, a HAC representative.20 Against objections by DFO and other HAC members, Mr. Parish testified he did the taping so that he might inform those that he represented about what transpired in the meetings. I think it is fair to say that Mr. Parish disagreed with the results of the HAC process, and gave some detailed evidence of his concerns. The end result of the January 1990 HAC meeting in Sidney was the adoption by the committee of the 70/30 formula. However, Mr. Parish was not pleased with this result or the process whereby it was reached. In his thoroughly credible testimony he told how HAC representatives were advocating for one position or another during the January meeting, and thus although numerous proposals were discussed, there was really only one on the table for discussion, and that was 70/30. It happens that Mr. Parish favoured an "equal shares" formula, calculated by dividing the total allowable catch by the total number of licence holders. Mr. Parish testified that Bruce Turris advised the HAC members which formulas would be on the table and which would be taken off. He said that "equal shares" was taken off by Mr. Turris because it was considered not to be fair since it did not consider the capacity of the vessel or the capacity of the person fishing the licence to catch halibut. Regardless of the merits of these views, as a consequence of Mr.Turris' actions, Mr. Parish felt that there had not been an open discussion on the formula and thus did not feel that the process was democratic. Further, regarding Mr. Turris' role in the May 1990 HAC meeting, Mr. Parish testified that he understood that Mr. Turris would be the facilitator of the HAC to develop a plan. But as far as Mr. Parish was concerned, Mr. Turris turned out to be "a facilitator with an agenda". In this respect he complained that the concept of COR being added to the 70/30 formula was never presented on the agenda, that the idea came up on the last day of the meetings which was May 3rd, indeed at the tail end of the morning when only one and a half to two hours was spent on it. As a result, he said that there was no notice the topic would come up, no time for consultation with licence holders not at the meeting, and really no time to even understand the implications of the COR feature before it was adopted by those present by a vote of 12 in favour, 3 against, with 2 abstentions. The implication behind Mr. Parish's evidence is that Bruce Turris wanted a 70/30 formula and Bruce Turris wanted COR, so pressure was generated within the meetings to see that these results occurred. Regarding COR, the following analysis of the evidence on the tapes of the May 3rd meeting proves this to be true. (A) The Current Owner Restriction (COR) as a limit on appeals (1) Why was the appeal process raised? It was understood that an appeal process would accompany the IVQ and from the outset of the consultation this was a point of concern with licence holders. However, the manner in which the issue of the appeal process was raised leaves the impression that DFO wanted to distance itself from the topic but did want it discussed and resolved. In his evidence, Bruce Turris stated that he raised the issue on a request to do so by HAC representative Mike Bazilli. At the meeting, here is how Mr. Turris did it:
(2) What was the concern about the appeal process? The contention about the appeal process was based in a concern held by Mr. Bazilli, and perhaps other licence holders, that they would have their quota reduced by the successful appeals of licence holders who were detrimentally affected in the switch over from a "shotgun fishery" to a fishery controlled by a quota system. This would arise because, under the quota system, a total allowable catch is set by DFO for a given year and each licence holder's proportion of the catch is determined by the IVQ formula. Thus, if a successful appeal increases a licence holder's quota from that which was stipulated by the formula, the licence holder's increased quota or percentage of the total allowable catch has to come from somewhere. It comes from other licence holders. Thus, it is not difficult to see that an individual licence holder's respect for the appeal process depends on the degree to which that licence holder is willing to share his or her quota with licence holders who are found to have suffered. Mr. Bazilli's primary worry appeared to be that, if during 1986 to 1989 a licence holder sold a licence which under the formula is considered a "good" licence because under the 70/30 formula it provides a high quota, and then bought a "bad" licence because the quota is smaller than the one sold, he did not want the licence holder's quota increased by a sympathetic appeal recommendation for the Minister's approval. (3) How did COR arise? The concept of a current owner restriction was not initially raised as a discrete agenda item but was an idea constructed during the ensuing debate on the detriments of the appeal process. Consequently there could be no advance notice about the idea being raised. The options suggested to deal with the appeal problem ranged from limiting the latitude within which an appeal board could make recommendations to introducing a restriction into the formula itself which would have the same effect. A critical feature of the search for a way to restrict the impact of appeals on quotas set under the IVQ formula was the willingness of both Mr. Turris and Mr. Bazilli to see people get hurt. As evidence supporting this conclusion, these are statements made by Mr. Turris and Mr. Bazilli near the beginning of the meeting before COR was discussed:
And these are supporting statements made near the end of the meeting after COR was discussed:
Understanding this mindset of these critical players in the May 3rd meeting goes a long way to explaining how the COR could arise and be adopted with the knowledge that some licence holders would suffer.26 (4) How was COR explained? Ironically, Mike Bazilli supports his position in favour of COR by speaking on terms of fairness. But his intention is clear from the following statements:
I have no doubt that, for Mr. Bazilli, fairness was a euphemism for self interest and there is no question that Bruce Turris understood the implications of the proposal. This can be seen from the following exchange:
The premise that Mike Bazilli was trying to promote is clearly expressed in this statement of his:
Of course, the "people" that Mike Bazilli is talking about are himself and anyone else in his position as a long term licence holder. Thus, the idea that it is fairer to favour those that have been in the industry longer is legitimized by the labelling of new entrants to the fishery as "windfall purchasers" just because they happen to have acquired licences with the potential for a favourable quota under IVQ. In addition, the concept was introduced that favouring some licence holders over others is part of doing business in the fishing industry. On these points it is important to note that the May 3, 1990 discussion occurred after the events which would establish a licence holder's quota. That is, the fishing that took place between 1986 and 1989, and the transferring of licences within that period were already completed when the decisions about the impact of these events were being made. Obviously, when the events were occurring no one knew how they would be viewed within a quota system, so it is impossible to say that they were part of any business decision. A complaint about this apparent inequity raised early in the meeting by a HAC representative was dealt with this way:
This is Mr. Bazilli's frankest statement about his interest in COR:
(5) What objections were raised to COR and how were they handled? During the course of the May 3rd meeting, strong objections were raised to the process whereby COR was to be adopted and also about the proposal itself. In the following example, it is very clear that Bruce Turris did not want to delay HAC's endorsement of COR even though he did not have the information requested by HAC member Richard Roussin:
In this exchange, HAC member Art Sterrit voices a strong objection to proceeding to adopt COR because of the lack of information about the impact of doing so:
On the issue of knowledge of impact, Bruce Turris admitted just before the vote was taken that there had been "an awful lot" of transfers in the preceding five year period and that COR would affect most of those transfers.34 Finally, after the objections are voiced, rather than to delay discussion and decision on COR, Bruce Turris leaves the issue open for a vote to be taken:
(6) Was COR accepted by the plaintiffs as a result of the votes cast by the members of HAC ? Just prior to the vote being taken Bruce Turris made the following comment:
Hard to explain or not, Bruce Turris did his best in asking for a vote on the following motion:
Yes, this cobbled together description is confusing, and accordingly, I wonder what everyone thought he said. But, as did Mr. Turris, I must assume that those who voted knew what they were voting about. The results of the vote were 12 in favour, 3 opposed, 2 abstentions and 1 absent. It is agreed that when the votes of the HAC representatives are weighted, those in favour of COR represented 215 licence holders, those opposed represented 66 licence holders, the abstentions represented 43 licence holders and the absent members represented 19 licence holders. That is, on the way HAC was set up, one interpretation of the results would be that approximately 63% of licence holders voted in favour. Not surprisingly, Egil Elvin voted against. Richard Roussin, who raised the objections quoted above, in the end, voted in favour. But, Art Sterrit, who was the most adamant objector, maintained his objection, and voted no. In addition to the 20 licence holders that voted to put him on HAC, he also voted for 12 licence holders who were members of the Native Brotherhood. Thus, his voice represented about 10% of licence holders. From what he said at the meeting, he was very much aware to the views of the Aboriginal licence holders he represented. Nothing in the transcript of the meeting allows a similar conclusion to be drawn about how well the other HAC representatives reflected the views of those that put them there. Ironically, the votes cast on behalf of the plaintiffs were either in favour or abstentions. But the evidence of each of the plaintiffs proves to my satisfaction that their support for IVQ and the HAC process did not include authorizing a vote in favour of COR. As can be seen from the above excerpts of what was said at the meeting, the plaintiffs had no notice that COR would be raised on May 3rd, and because of the way the concept was developed then and there that day, there was no time for any of the HAC representatives to consult with licence holders about it even if they were inclined to do so. In fact, Carpenter Fishing Corporation and White Hope Holdings Ltd.'s representative at the meeting was Mike Bazilli. How could the self interest he maintained in promoting the motion and the vote for COR be said to be representative of consent by these plaintiffs. Well, of course, it could not, and I find the same goes for the other plaintiffs as well. (7) In the end, what was the purpose of COR? On examination for discovery, and conforming with the evidence of the May 3rd meeting, Mr. Turris had no difficulty making admissions that DFO did not have a purpose for introducing COR:
At trial, however, Mr. Turris testified that, before COR was discussed by the Halibut Advisory Committee on May 3rd, DFO had decided that in establishing the quota formula a licence holder's catch history should be earned and not inherited. That is, in his words, "those that participated more should get more". Because of the distinct difference between the evidence on discovery and at trial, the plaintiffs have called Bruce Turris's credibility into question. To explain the discrepancy, Mr. Turris testified that his trial evidence should be accepted over his discovery evidence because when he answered on discovery he had not properly briefed himself in that he had not read all the documents on the file to refresh his memory but had spent two months doing so in preparation for trial. On behalf of the plaintiffs, Mr. Smith's assessment of this explanation is that Mr. Turris has deliberately changed his answer at trial because he thinks it will help the case to say that DFO had a legitimate purpose for implementing COR. I find that because of Mr. Turris's intensive and central position in the development of the IVQ, and because of the strong leadership position that he played in the May 3rd meeting, it is difficult to imagine how his answers on discovery would be so significantly altered by reading the file. Moreover, in the documentary evidence at trial there is no mention of a policy being adopted by DFO before the HAC meetings in favour of earned as opposed to inherited quota. The following admission substantiates that this issue was never raised with the licence holders:
In addition, the way that Bruce Turris introduced the concern about appeals is evidence that he had not considered the concept of a current owner restriction prior to the discussion which he prompted. On this point, it is very obvious from the tape that, at the beginning of the meeting, he was most confused about how to limit the impact of the appeal process:
It is also very obvious from the tape that when Mr. Bazilli started to formulate how the restriction concept would operate, that while he had the germ of the idea already in his head when the meeting began, he made up the details as the meeting went along. Bruce Turris, once having raised the appeal problem, probed Mike Bazilli for more details on his idea, and as Mike Bazilli thought it out, Bruce Turris became more and more committed to the idea. Accordingly, I find Mr. Smith's assessment is accurate. Further on the question of Mr. Turris's credibility, in an article entitled "Canada's Pacific Halibut Fishery: A Case Study of an Individual Quota Fishery" which he wrote for a management trade journal some time after the quota system went into effect, there appears the following paragraph:
When confronted with this clearly disparaging remark in cross-examination by Mr. Smith, Mr. Turris denied that he thought fishermen were greedy. He attempted to explain away the obvious lack of respect the statement displays by saying that the system promotes them to act that way. These instances of unwillingness to face the obvious meaning of his own words in an apparent attempt to protect himself from criticism have caused me to doubt the reliability of the evidence Mr. Turris has offered in defense of the Minister's, DFO's and his own position. Accordingly, when offered for this purpose, I give it little weight. However, since Mr. Turris's evidence on discovery conforms with the tape of the May 3rd meeting, I find his discovery admission to be accurate that the purpose for COR was not DFO's purpose. But, because of the evidence provided by the transcript of May 3rd, I do not accept Mr. Turris's statement on discovery that COR was simply put into the quota formula because it was part of the package that HAC recommended. Once the concept of a current owner restriction was raised by Mike Bazilli, Bruce Turris adopted it as his own, pressed it to a vote, and as described below, incorporated it in the quota formula. That is, I find COR was adopted because Bruce Turris concluded that to get HAC approval for the quota system it was necessary to support Mike Bazilli and his ideas. On the whole of the evidence, I am satisfied on a balance of probabilities that the purpose of COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli. (8)Is COR part of IVQ? Since the intended purpose of COR was to discriminate against new entrants to the halibut fishery, it was not developed as an integral part of the overall formula. Bruce Turris admitted as much in the following very clear statement:
Therefore, I find the Current Owner Restriction is not part of IVQ. IV THE FOLLOW UP TO THE MAY 3, 1990 MEETING (A) The approval process for COR (1) Was COR approved by the licence holders? On June 4, 1990, a detailed proposal for introducing a quota system was sent to all licence holders together with a ballot which they could use to vote for or against it. The proposal provided background information for the initiative, explained the consultative process, described the proposed 70/30 allocation formula, and included a description of how COR would operate, but in a certain way. The current owner restriction was not described as such but was explained under the heading "70% of IVQ Allocation by Historical Performance" by using fact examples of how it would affect "Joe Fisherman" depending on when he or she acquired the licence. This description conformed with a statement in an attached appendix as follows:
There was, however, no mention in the proposal about the rationale for including COR, and accordingly it was not linked to the concerns about appeals, inherited versus earned quotas, or benefits to be bestowed on certain licence holders at the expense of others. From the description, therefore, it is impossible to gather the true importance of the provision. The ballot asked the following question:
It was, therefore, impossible for licence holders to accept or reject the COR provision in isolation to the whole proposal. In addition, in the proposal the question was put as an all or nothing proposition:
Thus, on the question of whether the process was fair as discussed above, I find that the way the question was put was manifestly unfair to those that would be hurt by the provision because they had no meaningful chance to object. This finding is a complete answer to the defendant's argument that since some of the plaintiffs voted "yes" for the IVQ, that they were estopped from complaining about COR. Because of the way the question was put, I find that any "yes" votes, including those cast by the plaintiffs, can only be interpreted as support for the IVQ and not necessarily COR. Therefore, I consider COR not to have been approved by licence holders, and so should have Mr. Turris. (2) In fact, was COR approved by the Minister of Fisheries and Oceans? The Minister placed the new quota system into effect by signing his concurrence to a recommendation drawn by the Deputy Minister dated September 27, 1990. The memorandum, of which the recommendation formed a part, included an attachment entitled "Facts About the Halibut IQV [sic] Initiative" which described the quota formula as follows:
Two things are very apparent on the face of the Deputy Minister's recommendation memorandum. First, the extent of the support for the proposal was somewhat imprecise since 70% of those that responded on the vote to the proposal turns out to be only 47% of all licence holders. And second, there is absolutely no mention of any current owner restriction in the documents that the minister signed. Indeed, on the evidence at trial, I find that on a balance of probabilities the Minister was never told about the current owner restriction, let alone how it came to be, and any objection to it before signing his concurrence. Thus, I find that COR was not approved by the Minister of Oceans and Fisheries. The fact that the quota system has been extended beyond the initial two year trial period does not change this fact or cure any defect which arises from it. (3) Was COR accepted by the plaintiffs by accepting the IVQ? The IVQ program, including COR, was put into effect as terms of a contract between the Minister of Fisheries and individual licence holders, the signing of which was a licensing condition. Each of the plaintiffs signed the contract in order to continue fishing their licences. I find this fact is irrelevant to whether they can be successful in their arguments in this case, since what else could they do? Give up their licences under protest, stop fishing, and sue? Not likely. The defendants have made much of the fact that the plaintiffs have no complaint because an appeal process was built into the IVQ system adopted by each licence holder, including them. It is very obvious from the description of what happened on May 3rd as provided above that the appeal process was not intended to provide fully equitable solutions or relief from any prejudice suffered because of COR. In fact, the terms of reference sent to each member selected to serve on the appeal board had the following provision: The PRHQRB's [Pacific Region Halibut Quota Review Board's] terms of reference does not include considering changes to the halibut IVQ allocation formula or the halibut IVQ proposal. Rather, the Board is to consider individual circumstances, assess to the best of their ability whether or not an individual halibut licence holder has been unfairly treated by the implementation of the halibut IVQ program, and recommend to the Minister whether or not the quota should be increased, and if so, then by how much.46 Thus, I find that whether or not any licence holder, including the plaintiffs, used the appeal process and might have been somewhat successful in having the quota raised is irrelevant to this action, since the complaint is not with the appeal process, but with COR which was specifically excluded from its jurisdiction. (B) The decision to implement COR? (1) In fact, whose decision was it? After the idea was raised by Mike Bazilli on May 3rd, Bruce Turris adopted it with enthusiasm and forced it to a vote against strong objection. As the DFO official responsible to see the quota system put into effect, he put it into effect, including COR, as I have described. That is, it is not as if DFO was standing by waiting for the results of the HAC process. The results were highly managed by Bruce Turris. Indeed, the results regarding COR were what he wanted, and therefore, the decision to include COR should not be seen as a HAC decision but as a HAC endorsement of Bruce Turris's decision. Therefore, the plaintiffs' argument that there was an abrogation of authority to HAC fails on the facts. Whatever any of Bruce Turris's superiors knew about the current owner restriction and its impact, he was in no way deterred from implementing it. From this I infer that he was fully supported. Therefore, I find that the implementation of COR was an authorized decision of the administration of DFO. V THE LEGAL ISSUES Because of a defect or error in jurisdiction, the plaintiffs claim a declaration that the Current Owner Restriction as implemented is unlawful. Jones and DeVillars47 provide this very useful overview of the legal issues involved in deciding this claim:
(A) Was there a defect in jurisdiction "in the narrow sense"? (1) Was the administration of DFO authorized to implement COR? Having found as a fact that the implementation of the Current Owner Restriction was an authorized decision of the administration of DFO, the legal issue arises as to whether it had authority to make it. In the course of the support building process, there was a consistent message provided as to who would be the decision maker. For example, in the discussion paper sent with the early support building mailing to licence holders on September 11, 1989, the following statement appears in the first paragraph:
And in the program proposal which was included with the letter of June 4, 1990 asking each licence holder to vote on acceptance or rejection, the following introductory paragraph appeared:
On the representations made, there is no question that licence holders had every right to believe that the Minister would make the decision to implement COR. As a matter of good faith, therefore, the decision to implement COR was the Minister's to make and since he did not make it, the administration should not have made it. But apart from whether the administration should have breached the faith, could it do so as a matter of law? An early end to this analysis would come if I were to decide that because the Minister himself did not make the decision to implement COR, then the decision was made by the administration without jurisdiction in the narrow sense. I was not strongly urged to make this finding by Mr. Smith for the plaintiffs, I think because it provides too simple an answer to a very complex legal problem. Mr. Partridge, on behalf of the defendants, urged me to accept the position that the decision made by the administration was authorized as if it were a decision of the Minister on the basis of implied authority. This argument went substantially unanswered by the plaintiffs. To make the point, the defendants rely on the authority of the Supreme Court of Canada in Regina v. Harrison (1976) 66 D.L.R. (3d) 660, where at 665 Dickson J. said:
On the basis of this authority I find that, in law, the administration of DFO could make the decision to implement the Current Owner Restriction on behalf of the Minister. Thus, from this point, I will consider the decision to be that of the Minister. (2)What was the Minister's jurisdiction to impose a quota system? The Minister chose not to implement the quota system by way of regulation but simply imposed it as a condition of licence. The plaintiffs admit that the Minister had power to do this, regardless of the apparent delegation to the Governor in Council under the then applicable s.43 of the Fisheries Act (the Act)50, the pertinent portions of which read as follows:
But in so doing, I find that the Minister still required to operate within the limits of his jurisdiction. (3) What were the limits of the Minister's jurisdiction to impose a condition of licence? The discretion granted to the Minister is not unlimited. Almost forty years ago in Roncarelli v. Duplessis, [1959] S.C.R. 122, the Supreme Court of Canada affirmed the right of the Courts to limit the exercise of ministerial discretion to the purpose and objects of the statute granting the discretion. Rand J. set out the scope of absolute discretion at 140 as follows:
A more recent application of the "purposes" and "objects" aspect of Roncarelli is Multi-Malls Inc. v. Minister of Transportation (1976), 73 D.L.R. (3d) 18 (O.C.A.) In Multi-Malls, the Ontario Minister of Transportation and Communications bowed under political pressure to stop the development of a shopping centre by refusing to issue necessary road access and entrance permits. The Ontario Court of Appeal set aside the Minister's decision and referred the matter back for reconsideration on proper principles. In the judgment leading to this result, Lacourciere, J.A. cited Roncarelli and at 32 said:
In addition, the Ontario Court (General Division) applied Roncarelli in Re Doctors Hospital and Minister of Health (1976), 68 D.L.R. (3d) 220 where Orders in Council were declared invalid which revoked approval for a number of hospitals on the basis that it was necessary to reduce expenditures. Addressing the challenge by the hospitals to the validity of the orders, Cory J. (as he then was) at 231 said:
These decisions allow me to find in the case at bar that the Minister, when exercising statutory discretion, must act within the purposes, objects and policy of the Act. Therefore, I find that these features within which the Minister might have exercised his discretion to impose the Current Owner Restriction as a condition of licence were found within s.43(a) and (b) of the Act. Thus, the allowed purposes, objects and policy were only for the proper management and control of the sea-coast and inland fisheries and respecting the conservation and protection of fish. (4) Does COR fall within the allowed purposes, objects and policy? I have found that the purpose of COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli. It is clear to me that s.43 of the Act was not designed or intended to be used as a means of attaining this result. The answer on this issue is no. Accordingly, I find there was a defect in jurisdiction "in the narrow sense". (B) Did the Minister make an error which caused him to leave or exceed his jurisdiction? Even if it can be said that there was no defect of jurisdiction in the narrow sense, then the question arises as to whether, on the considerations suggested by Jones and DeVillars, the Minister breached natural justice or acted in a discriminatory manner, with improper motive. A finding that either of these events occurred will result in a declaration that the implementation of the Current Owner Restriction is unlawful. (1) Was there a breach of natural justice? (a) Were the plaintiffs entitled to procedural fairness? In Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police [1979] 1 S.C.R. 311 at 324-325, Chief Justice Laskin recognized that the common law duty of fairness applies to administrative decision making:
In Cardinal and Oswald [1985] 2 S.C.R. 643, the Supreme Court clarified the extent of the duty owed where at 653 Le Dain J. stated:
Thus, administrative decisions which are legislative in nature are excluded from the duty of fairness. The definition of a legislative decision is found within the following passage written by Mr. Justice Estey in Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735 at 758 to 759:
On this definition, the imposition of the Current Owner Restriction upon halibut licence holders by way of a condition on the licence to fish is not an administrative decision which is legislative in nature. Therefore, the plaintiffs were entitled to procedural fairness. (b) To which specific procedural fairness rights were the plaintiffs entitled? Mr. Justice Le Dain in Cardinal and Oswald at 664 confirmed that the specific procedural rights that will discharge the duty of fairness depend on the context of the case:
To answer the above question, Mr. Justice Dickson in Homex Realty & Development Company Ltd. v. Wyoming, [1980] 2 S.C.R. 1011 at 1051 provides the guidance that it is first necessary to decide where on the spectrum a particular case lies:
In Homex, a village council and a land developer were embroiled in a dispute, and without notice to the developer, the council passed a by-law which seriously affected the developer's rights in the subject matter of the dispute. Upon deciding where on the spectrum the case lay, at 1052-1053 Dickson J. then stipulated which procedural safeguards should have been provided:
In the case at bar, there was no notice to any licence holder that a Current Owner Restriction would be on the agenda for the May 3rd meeting when the decision was made by Bruce Turris to implement COR. And thereafter, before COR was implemented, there was no opportunity provided for licence holders to object to it separate from the whole of the IVQ proposal and, specifically, no provision was made for the plaintiffs to object to any adverse effect COR had upon them. The HAC process was so flawed that it cannot be considered a means of providing procedural fairness to the plaintiffs or other licence holders adversely affected by COR, and the appeal process specifically excluded the impact of COR as a consideration. On these facts, at a minimum, under what duty was the Minister? In my opinion, at the very least, the Minister had a duty to provide those adversely affected by the Current Owner Restriction proposal the right to be heard, either through hearings or written submissions before it was implemented. Because the plaintiffs did not have the opportunity to exercise this procedural fairness right, I find that there was a breach of natural justice. (2) Did the Minister act for an improper motive? As found, the Current Owner Restriction is discriminatory. The defendants argue that even if COR is discriminatory, the Minister did not make an error which caused him to leave or exceed his jurisdiction. In this respect, the defendants argue that the test for such an error is that cited in Lacewood Development Co v. Halifax (1975) 58 D.L.R. (3d) 383 (N.S.C.A.) where McKeigan C.J. states at 395 to 396:
On this authority, I find that to meet the test for wrongful discrimination an act must discriminate in fact, and this discrimination must be carried out with the motive of favouring or hurting one individual and without regard to the public interest. If these latter two features are present, the motive can be termed improper. In order to extend the test further, however, the defendants have asked me to consider Lacewood in context with an earlier decision of the Supreme Court of Canada which it follows, being Township of Scarborough v. Bondi, (1959) 18 D.L.R. (2d) 161. At page 394 of Lacewood, McKeigan C.J. makes the following observation:
As a result of this observation, I have been urged to interpret McKeigan C.J.'s words "improper motive" in his two-part test as meaning "bad faith". McKeigan J.A.'s observation is a restatement of the following sentence in Bondi found at page 260 of that case:
I believe that the correct interpretation of this sentence from Bondi is that in judging the decision of a municipal council it is necessary to see if one or other of two options exist; good faith in the public interest, or the promotion of some private interest. Thus, I think that McKeigan C.J.'s observation is a misinterpretation of the sentence in Bondi and I do not find, therefore, that his words can be given the weight the defendants have asked me to place on them. I am, however, willing to judge the Current Owner Restriction according to both the two-part test provided by McKeigan C.J. in Lacewood, and the options test from Bondi. As I have found, the purpose for implementing COR was to discriminate against some licence holders in order to benefit, and thus gain the support of, those who held the self interest reflected by Mike Bazilli. On the Bondi test, there is no doubt that the decision was made to promote a private interest. On the Lacewood test, there is no question that the decision is discrimination in fact. There is also no question that the motive for making the decision was to favour old and hurt new entrants to the fishery. The only question that remains is whether doing so was without regard to the public interest. I suppose it can be said that, with regard to the public interest, the ends of getting the IVQ formula implemented, including the Current Owner Restriction, justify the means of promoting a private interest through a discriminatory decision. But, in my opinion, this argument does not reflect the values that most Canadians expect of the Government of Canada. As a representative of the Government of Canada, Mr. Turris was conducting the quota system initiative to act in the best interests of not only the fishery but also the licence holders as those most affected. From this standpoint, I would expect that he would be cautious to ensure that the greatest care possible be taken to protect licence holders' interests in the radical change contemplated. I would think that if one licence holder was aggrieved by this change that this should be cause for great concern. From this point of view, I would expect Bruce Turris to have shunned any suggestion that would benefit some licence holders to the detriment of others, particularly when the benefit derived would be based in pure self interest, or greed, to uncut the language. He did not do this, but rather turned from facilitator of the ideas of licence holders to an advocate for a certain group who would personally benefit by the COR decision reached. As I have said, Bruce Turris should have known that the "democratic process" which he designed was unreliable. Thus, he should have been extremely careful in agreeing to, much less advocating for, something which was so much in the self interest of the few at the table on May 3rd when so many were outside with absolutely no knowledge of what was being decided. Bruce Turris should have listened to the strong statements of concern made by Art Sterrit, who spoke not only on behalf of Aboriginal fishers, but really also on behalf of the then unidentified 44 licence holders who would be detrimentally affected by the decision. This objection alone should have caused him to pause to reflect, to get the information and statistics requested, to have adjourned the meeting then in its eleventh hour, to have consulted his superiors and possibly the Minister on the precise details of COR before anything was done, and then to have reconvened HAC after this careful analysis and expressed the concerns of DFO, if there were any. But most of all, he should have consulted with those licence holders who would be detrimentally affected and given their opinions on the subject much greater weight than those of Mr. Bazilli and others who adopted his opinion. The decision to implement the Current Owner Restriction should not have been made as it was because it was remarkably unfair and unequal to do so. I find the paramount public interest in this case to be enforced is the principle that public officials must be scrupulously fair and equal in their decision making. Against this standard, unfortunately, the decision to implement COR was very unprincipled. On the whole of the evidence, therefore, I am left with no doubt that the decision was made without regard to the public interest. I, therefore, find that the Current Owner Restriction fails both the Lacewood and Bondi tests. Accordingly, I find that in implementing COR, the Minister acted for an improper motive. As a result, he left or exceeded his jurisdiction. VI CONCLUSION (A) What relief should be granted? As found, the Minister made one jurisdictional error in the narrow sense and two which caused him to leave or exceed his jurisdiction. As a result, I have no hesitation in granting the primary relief claimed by the plaintiffs, being a declaration that the Minister's decision in 1990 to implement the Current Owner Restriction is unlawful, and I so declare. As a result, on the basis of Lord Reid's decision in Amisminic Ltd. v. Foreign Compensation Commission as quoted by Jones and DeVillars above, I declare the decision to implement the Current Owner Restriction is a nullity. It is important to note that the powers of the Minister under s.43 of the Act were made specific by regulation in February, 199351, and now the Minister's authority is limited by s.22(1) of that regulation which reads:
The quota system, including the Current Owner Restriction has been continued since 1990 under a succession of Ministers acting under both s.43 of the Act and s.22(1) of the current regulations. Because the wording of the two provisions is virtually identical, I find that the limits of the Minister's jurisdiction are the same under each authority. Thus, since the 1990 decision to implement the Current Owner Restriction is unlawful, and is therefore a nullity, I declare that each similar decision made up to the present day is also unlawful and is also a nullity. As set out in the Overview above, by agreement, the issues to be decided at trial have been split into two parts. The trial days to date have focussed on the issue of whether the decision to implement the Current Owner Restriction is unlawful. Since I have decided for the plaintiffs on this issue, the trial must continue in order to determine what further relief should be granted to them as a result. I request both Mr. Smith and Mr. Partridge to work with the Registrar to allow me to set a mutually agreeable date for the continuation of the trial. (Sgd.) "Douglas Campbell" Judge November 14, 1996 Vancouver, British Columbia __________________ 1 The Pacific Halibut (Hippoglossus stenolepis from the Greek hippos, glossus, steno and lepis meaning respectively, horse, tongue, narrow and scale) is quite a fish. The maximum recorded size is 267 cm. (105 inches), and 225 kg. (495 pounds), and it is found from Santa Rosa Island in Southern California, to St. Lawrence Island and throughout the Bering Sea and south to Northern Japan. For the average person, the following description is enough to cause an immediate loss of interest in halibut fishing: 2 The Commission on Pacific Fisheries Policy Final Report, Dr. Peter H. Pearce, Commissioner, Vancouver, September, 1982, extensively reproduced in Brief of Documents, Vol.2, 155. 5 Brief of Documents, Vol.2, 157. 6 Brief of Documents, Vol.2, 157. 7 Brief of Documents, Vol.2, 158. 8 Brief of Documents, Vol.2, 111, 112. 9 Brief of Documents, Vol.2, 113, 114. 10 Brief of Documents, Vol.2, 115, 116. 11 Brief of Documents, Vol.2, 117. 12 Brief of Documents, Vol.2, 117. 13 Brief of Documents, Vol.2, 121. 14 Brief of Documents, Vol.2, 123. 15 Brief of Documents, Vol.2, 166. 16 Dawson, The Government of Canada, University of Toronto Press, 1964, p.346. 17 The Government of Canada, p.348. 18 See Brief of Documents, Vol.2, 118 for examples. 19 This issue, the way HAC operated and the reliance placed on the HAC experience is analyzed in greater depth in Section IV below. 20 Both the plaintiffs and defendants filed transcripts. For the purposes here I will quote from the defendant's since it provides more detail of difficult to hear portions of the tapes. 26 In fact, there is credible evidence to establish that after the May 3rd vote, Bruce Turris knew that COR had in fact caused harm. 37 Read-in from Bruce Turris' Discovery Transcript of April, 12, 1995. 38 Read-in from Bruce Turris' Discovery Transcript of April, 12, 1995. 42 Brief of Documents, Vol.2, 122. 43 Brief of Documents, Vol.2, 122. 44 Brief of Documents, Vol.2, 122. 45 Brief of Documents, Vol.2, 166, 167. 46 As an example, Brief of Documents, Vol.2, 174. 47 Jones and DeVillars, Principles of Administrative Law (Toronto: Carswell, 1994), p.94-95. 48 Brief of Documents, Vol.2, 112. |
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