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T-4108-77
Thorne's Hardware Limited, Kent Lines Limited, Canaport Limited and Irving Oil Limited (Plain- tiffs)
v.
The Queen in right of Canada and National Har bours Board (Defendants)
Trial Division, Dubé J.—Montreal, January 8; Ottawa, January 17, 1980.
Maritime law — National Harbours Board — Harbour boundaries extended to include plaintiffs' berth and facilities — Ships at plaintiffs' facilities charged harbour dues, even though not using services provided by the Board — Whether or not Order in Council extending harbour is valid and whether or not by-law concerning harbour dues is applicable — Claim for repayment of harbour dues already paid — National Harbours Board Act, R.S.C. 1970, c. N-8, ss. 7(1),(2), 8, 14 — Harbour of Saint John Boundaries Determined, SOR/77-621 — Tariff of Harbour Dues, SOR/69-111.
Plaintiffs constructed a tanker facility at their berth located on a riparian property east of Saint John Harbour. In 1977, Saint John Harbour was extended to include plaintiffs' berth and facilities and the National Harbours Board began to collect harbour dues pursuant to a port by-law, even though ships at plaintiffs' facilities did not use services provided by the Board. Plaintiffs challenge the validity of the Order in Council and the applicability of the by-law concerning harbour dues, and claim repayment of dues already paid.
Held, the action is allowed. The Order in Council extending the harbour boundaries to include plaintiffs' facilities is intra vires the Governor in Council since, under section 7 of the National Harbours Board Act, the Governor in Council has jurisdiction over Saint John Harbour and may from time to time extend its boundaries. Plaintiffs are riparian owners who have rights of entry and exit and of anchoring at their own berth which cannot be indirectly expropriated by means of extending the boundaries of the adjoining harbour. Section 8 of the Act provides very clearly that nothing in section 7, includ ing extending the boundaries of a harbour, confers on the Board jurisdiction over or control of private property or rights within the boundaries of the harbour in question. The by-law in question applies only to the right of entry to the harbour, a private right with respect to the vessels of plaintiffs so far as their facilities are concerned. Although the Board is not grant ed a general power of taxation under the Act, it may make by-laws pursuant to section 14 for the imposition and collection of tolls on vessels entering the harbours, obviously in order to use them. The Board, however, cannot impose tolls on vessels proceeding to their own berths and using their facilities exclu sively, without receiving any service from the harbour; such vessels are merely exercising a private right which they already enjoy.
ACTION. COUNSEL:
Léopold Langlois, Q.C. and Michel St-Pierre
for plaintiffs.
Paul Plourde for defendants.
SOLICITORS:
Langlois, Drouin & Associés, Quebec City, for plaintiffs.
Deputy Attorney General of Canada for defendants.
The following is the English version of the reasons for judgment rendered by
DuBÉ J.: The first three plaintiffs (hereinafter referred to as "Thorne", "Kent" and "Canaport") are wholly owned subsidiaries of plaintiff Irving Oil Limited ("Irving"). In June 1969 Thorne became owner of a berth located at Mispec Point east of the harbour of Saint John, New Brunswick. In 1971 Canaport purchased part of the berth, in which plaintiffs built anchorage and transhipment facilities for oil tankers operated by Kent, for the purpose of unloading oil cargoes into the tanks of plaintiffs. These tanks are located alongside the berth in question and connected by pipeline to the Irving refinery, located at Courtenay Bay some five miles from Mispec Point.
These harbour facilities cost plaintiffs $43 mil lion, which they paid from their own funds, with out any contribution from the government.
On July 27, 1977, the Governor in Council (P.C. 1977-2115) [SOR/77-621] extended the limits of the Saint John Harbour to include plaintiffs' berth and harbour facilities. Since that date the Nation al Harbours Board ("the Board") has collected harbour dues from the oil tankers in question in accordance with By-law B1 regarding the Harbour Dues Tariff [SOR/69-111]. To date the sum of $128,033.21 has been collected by the Board in harbour dues on vessels anchoring at Mispec Point.
Plaintiffs challenge the validity of the Order in Council and the applicability to them of By-law
BI, and claim repayment of the aforementioned sum.
Section 7 of the National Harbours Board Act, R.S.C. 1970, c. N-8, confers on the Board jurisdic tion over certain Canadian harbours, including that of Saint John, and authorizes the Governor in Council from time to time to determine the bound aries of national harbours by order. Section 7 reads as follows:
7. (1) The Board, for the purpose of and as provided for in this Act, has jurisdiction over the following harbours: Halifax, Saint John, Chicoutimi, Quebec, Trois-Rivières, Montreal and Vancouver, and likewise has administration, management and control of
(a) all works and property that on the 1st day of October 1936 were administered, managed and controlled by any of the Corporations;
(b) all other harbours and works and property of Canada that the Governor in Council may transfer to the Board for administration, management and control.
(2) The boundaries of the harbours of Halifax, Saint John, Chicoutimi, Quebec, Trois-Rivières, Montreal and Vancouver are as described in the schedule, or as may be determined from time to time by order of the Governor in Council and any such order shall be published in the Canada Gazette.
Learned counsel for the plaintiffs alleged that the Order in Council is void, unlawful, unjust, discriminatory and ultra vires the powers of the Governor in Council, in that it was adopted for improper reasons, namely to allow the Board to collect dues on oil tankers of plaintiffs without offering services in return.
It appears from reading the documents entered in evidence that one of the very important factors prompting extension of the Saint John Harbour was undoubtedly the increase in revenue from this harbour. On the other hand, it also appears that other very valid reasons existed in favour of exten sion of the harbour, in particular the rationaliza tion of shipping activities in the entire area of the harbour. Indeed, the expansion took in not only Mispec Point in the east but the Lorneville de velopments west of the harbour as well.
Order P.C. 1977-2115 is thus intra vires the powers of the Governor in Council, since under section 7 cited above he has jurisdiction over Saint John Harbour and may from time to time extend the boundaries thereof. In the circumstances, its validity cannot be disputed on the ground of bad
faith on the part of the Governor in Council.'
However, it does not necessarily follow that the Board can collect harbour dues with respect to private facilities already existing within the new harbour boundaries.
For the purposes of section 7, therefore, the Board has jurisdiction over all works and property which in 1936 were administered by any of the corporations constituted to administer the har bours and other works and property of Canada which the Governor in Council may transfer to the Board. On the other hand, section 8 provides that nothing in section 7 shall be deemed to give the Board jurisdiction over or control of private prop erty or rights within the boundaries of any harbour under the jurisdiction of the Board.
Under section 14 the Governor in Council may make by-laws, not inconsistent with the provisions of the Act, for the control of the several harbours and works, including paragraph (e), which reads as follows:
14. (1) ...
(e) the imposition and collection of tolls on vessels or aircraft entering, using or leaving any of the harbours; on passengers; on cargoes; on goods or cargoes of any kind brought into or taken from any of the harbours or any property under the administration of the Board, or landed, shipped, transhipped or stored at any of the harbours or on any property under the administration of the Board or moved across property under the administration of the Board; for the use of any property under the administration of the Board or for any service performed by the Board; and the stipulation of the terms and conditions (including any affecting the civil liability of the Board in the event of negligence on the part of any officer or employee of the Board) upon which such use may be made or service performed;
Section 5 of By-law B1 cited above, dated March 11, 1969, reads as follows:
5. (1) The harbour dues as set out in the Schedule are payable in respect of each vessel that enters or operates within a harbour.
(2) The harbour dues prescribed by this By-law are due from the owner as soon as they are incurred and shall be paid to the Board at its office at the harbour at which they are incurred.
Plaintiffs alleged that By-law B1 is not appli cable to their facilities, in that the Board does not
' See Attorney-General for Canada v. Hallet & Carey Ld. [1952] A.C.427.
have jurisdiction over their private property and performs no service for them, which constitutes disguised taxation, ultra vires the powers of the Board.
In their defence, defendants alleged that the Board offers services to plaintiffs, including the services of a harbour master, aid in navigation, control of shipping traffic, safety and pollution control. In their reply, plaintiffs denied these alle gations and further stated that the services of the harbour master already existed, and that the other aforesaid services were not offered by defendants but rather by the Department of Transport, and were services provided free of charge to any ship- owner operating in Canadian waters.
At the opening of the hearing, counsel for the defendants admitted that the services of a harbour master existed already, and that the services of aid to navigation and control of shipping traffic were offered by the Department of Transport rather than by the Board. He further stated that the services of a harbour master, shipping safety and pollution control were offered to users of the Saint John Harbour, including plaintiffs.
Plaintiffs are riparian owners by virtue of their property titles. They have rights of entry and exit, and the right of anchoring at their own berth. 2 In my opinion, this fundamental right cannot be in directly expropriated by means of extending the boundaries of an adjoining harbour. Section 8 of the Act provides very clearly that nothing in sec tion 7, including extending the boundaries of a harbour, confers on the Board jurisdiction over or control of private property or rights within the boundaries of the harbour in question.
Of course, the Board retains its right to impose on plaintiffs tariffs for services rendered, such as charges for berthage, buoyage and anchorage, and for water and electricity services at the public wharf, charges provided for by other by-laws; but By-law B1, which is in question here, applies only to the right of entry to the harbour, a private right with respect to the vessels of plaintiffs so far as their own facilities are concerned.
2 See North Shore Railway Co. v. Pion (1889) 14 App. Cas. 612, P.C., and City of Montreal v. Harbour Commissioners of Montreal [ 1926] A.C. 299.
In my opinion, the Act does not confer a general power of taxation on the Board. 3 Under section 14 the Board may make by-laws, not inconsistent with the provisions of the Act, for the imposition and collection of tolls on vessels entering the harbours, obviously in order to use them. In my view, the Board cannot impose tolls on vessels proceeding to their own berths and using their own facilities exclusively, without receiving any service from the harbour; such vessels are merely exercising a pri vate right which they already enjoy.
The general structure of the Act, as reflected in sections 24, 25, 26, 27 and 31, indicates clearly that separate accounts must be kept for each harbour under the jurisdiction of the Board, and that revenues derived therefrom must be assigned exclusively to the use of each of these harbours. In other words, the Board cannot become a means of collecting tolls to assist in defraying the expenses incurred by the Department of Transport, or by other federal agencies responsible for shipping safety or the general control of navigation. The right which the Board has to collect tolls is in keeping with its purpose as a service corporation, and enables it to require dues for services rendered to users. 4 The entry of plaintiffs' oil tankers into their own berths is not a service provided by the Board.
Quite apart from the legal technicalities, I think it is inequitable for the Board to be able to demand dues for entry into the harbour from vessels pro ceeding to their own facilities, which were already in place before the harbour boundaries were extended, and to do so in the same way as from other vessels using harbour facilities constructed at the taxpayer's expense.
The action of plaintiffs is accordingly allowed, and the Court finds that By-law B1 regarding the Harbour Dues Tariff does not apply to the oil
3 See McQuillan, The Law of Municipal Corporations, vol. 16, 1979; Reference respecting the Agricultural Products Mar keting Act [1978] 2 S.C.R. 1198; Peter W. Hogg, Constitu tional Law of Canada, Carswell, 1977, p. 408; Lyon v. Fish- mongers' Co. (1875-76) 1 App. Cas. 662.
4 See Port Credit Harbour Company v. Jones 5 U.C.Q.B. 144; Simpson v. Attorney-General [1904] A.C. 476, H.L.; The King v. National Fish Company, Ltd. [1931] Ex.C.R. 75.
tankers of plaintiffs anchored at the latter's facili ties at Mispec Point, within the present boundaries of the Saint John Harbour. It is further held that defendants are not owed any amount in this regard, and the Board is ordered to repay plaintiffs the sum of $128,033.21 (without interest) with costs.
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