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.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.