T-182-88
Teal Cedar Products (1977) Ltd. (Plaintiff)
v.
The Queen, Attorney General of Canada, Secre
tary of State for External Affairs, Minister for
International Trade, Minister for National Reve
nue (Defendants)
INDEXED AS: TEAL CEDAR PRODUCTS (1977) LTD. V. CANADA
Trial Division, Muldoon J.—Vancouver, March
15; Ottawa, April 12, 1988.
Judicial review — Equitable remedies — Injunctions —
Amendment to Export Control List causing closure of forest-
products manufacturer — Interlocutory injunction sought
Governor in Council apparently misled by information in
R.I.A.S. as to employment impact — Effect on employment
contrary to aim of amendments and to enabling legislation —
Whether Order in Council ultra vires serious issue to be tried
— Metropolitan Stores tests for interlocutory injunctions in
constitutional cases applied.
Foreign trade — Short cedar board — Product formerly
exported by plaintiff to U.S.A. without permit — Governor in
Council amending Export Control List — Plaintiff put out of
business, 150 workers losing jobs — Allegation regulation
ultra vires as Governor in Council misled by R.I.A.S. —
Interlocutory injunction granted.
In February 1988, the Governor in Council, acting pursuant
to the Export and Import Permits Act, amended the Export
Control List to include boards as well as blocks and bolts of red
cedar, thereby requiring the plaintiff to obtain an export permit
for its product, short cedar boards. That regulation resulted in
the closure of the plaintiffs business and the loss of over 150
jobs.
This is an application for interlocutory injunctive relief sus
pending the application of the regulation with respect to the
plaintiff pending the outcome of an action for a declaration, an
injunction and damages.
The plaintiff alleged that the Regulatory Impact Analysis
Statement (R.I.A.S.) as to the purpose and effect of the
proposed regulation misled the Governor in Council as to the
devastating impact on the employees' jobs, and since paragraph
3(a.1) of the Act—under the authority of which the regulation
was adopted—was aimed at preserving jobs in Canada, passing
of the regulation was ultra vires the Governor in Council.
The defendants argued that, regardless of the unofficial
impact statement, the regulation was a lawful expression of
governmental policy and a legitimate act of governance. It was
further submitted that the plaintiff had no right to the Court's
aid in suspending the regulation's application.
Held, the application should be allowed.
The issue of whether the Governor in Council has observed
the conditions precedent to the exercise of a power—whether
that body has, herein, failed to observe the provisions of
paragraph 3(a.l) by considering misleading information—is
subject to judicial review and the defendants, except for the
Queen, may be restrained by interlocutory injunction, provided
that there is a serious issue to be tried. That the amendment
invoked paragraph 3(c) of the Act demanded commentary.
That provision was aimed at maintaining an adequate supply of
goods for "defence and other needs". If "other needs" was to be
interpreted ejusdem generis with "defence", why was there no
evidence of any needs relating to defence? In these circum
stances, the issue of whether the regulation was ultra vires
constituted a serious issue to be tried. The decision as to
whether the basis of a regulation is a matter of jurisdiction or
of policy-making is always difficult, but that is a task for the
Trial Judge.
The applicable tests for interlocutory injunctions could be
found in Manitoba (Attorney General) v. Metropolitan Stores
Ltd., [1987] 1 S.C.R. 110, a case dealing with the constitution
al validity of a statute: serious issue to be tried, irreparable
harm, balance of convenience. There was a serious issue to be
tried, although, given the virtually unfettered discretionary
power conferred on the Governor in Council, the result would
be different were the test that of a prima facie case. The
plaintiff would suffer irreparable harm in being driven out of
business. The government would suffer no great inconvenience.
Furthermore, this being an "exemption case", as opposed to a
"suspension case", it will not have any application to a whole
class of forest products manufacturers. Public interest had to be
taken into account in weighing the balance of convenience
when an interlocutory injunction is sought in a constitutional
case. On the one hand, refusal to grant the injunction promises
to be fatal to the plaintiff's enterprise and its employees' jobs.
On the other hand, the temporary exemption of the plaintiff
from the application of the regulation would have little detri
mental effect on the Government and the general public. And
although there was no proof of bad faith, the defendants can be
seen to have pursued and snared the plaintiff by means of their
regulation-making power.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Export and Import Permits Act, R.S.C. 1970, c. E-17, ss.
3 (as am. by S.C. 1974, c. 9, s. I; 1987, c. 15, s. 26), 6.
Export Control List, C.R.C., c. 601, item 2003 (as added
by SOR/86-7l0; SOR/88-140).
CASES JUDICIALLY CONSIDERED
APPLIED:
Attorney General of Canada v. /nuit Tapirisat of Canada
et al., [1980] 2 S.C.R. 735; 115 D.L.R. (3d) I; Manitoba
(Attorney General) v. Metropolitan Stores Ltd., [1987] 1
S.C.R. 110; American Cyanamid Co. v. Ethicon Ltd.,
[1975] A.C. 396; [1975] 1 All E.R. 504 (H.L.); Bhat-
nager v. Canada (Minister of Employment and Immigra
tion), [1988] I F.C. 171 (C.A.).
DISTINGUISHED:
Thorne's Hardware Ltd. et al. v. The Queen et al.,
[1983] I S.C.R. 106.
REFERRED TO:
Morgentaler et al. v. Ackroyd et al. (1983), 42 O.R. (2d)
659 (H.C.); MacMillan Bloedel Ltd. v. Min. of Forests
of B.C. (1984), 51 B.C.L.R. 105 (C.A.); CKOY Ltd. v.
Her Majesty The Queen on the relation of Lorne
Mahoney, [1979] 1 S.C.R. 2; (1978), 90 D.L.R. (3d) 1;
In re Public Utilities Act (Milk Board); In re Crowley
(Avalon Dairy Ltd.) (1954), 12 W.W.R. (N.S.) 626
(B.C.S.C.); K. J. Preiswerck Ltd. v. Los Angeles-Seattle
Motor Express Inc. (1957), 22 W.W.R. 93 (B.C.S.C.);
Pacific Salmon Industries Inc. v. The Queen, [1985] 1
F.C. 504 (T.D.); Baird v. The Queen in right of Canada,
[1984] 2 F.C. 160; (1983), 148 D.L.R. (3d) 1 (C.A.);
Attorney General of Canada v. Fishing Vessel Owners'
Association of B.C., [1985] 1 F.C. 791 (C.A.); Attorney
General of Canada v. Gould, [1984] 1 F.C. 1133 (C.A.);
Aerlinte Eireann Teoranta v. Canada, [1987] 3 F.C. 383
(T.D.); C.E. Jamieson & Co. (Dominion) v. Canada
(Attorney General), [1988] 1 F.C. 590; (1987), 12 F.T.R.
167 (T.D.).
COUNSEL:
J. Gary Fitzpatrick for plaintiff.
W. B. Scarth, Q.C. for defendants.
SOLICITORS:
Davis & Company, Vancouver, for plaintiff.
Deputy Attorney General of Canada for
defendants.
The following are the reasons for order ren
dered in English by
MULDOON J.: The plaintiff, a British Columbia
corporation, sues the defendants (two of whom are
more correctly described as the Ministers of Inter
national Trade, and of National Revenue, accord
ing to the Canadian Parliamentary Guide) for the
pronouncement of judicial declarations, interim,
interlocutory and final injunctive relief, damages,
interest and costs. The present proceedings are for
interlocutory injunctive relief.
The plaintiff instituted this action on February
3, 1988; but, because of the amendment by the
Governor in Council of the Export Control List
[C.R.C., c. 601 (as am. by SOR/88-140)], pursu
ant to the Export and Import Permits Act, R.S.C.
1970, c. E-17 and amendments thereto, on Febru-
ary 22, 1988, the plaintiff was obliged to amend its
statement of claim for filing on March 1, 1988.
This is a sad case, for the effect of the regula
tion is to cause the closure of an otherwise viable
Canadian forest-products enterprise and the con
comitant loss of the jobs of over 150 employees.
Such melancholy effect is the plaintiff's reason for
bringing this action. The plaintiff manufactures a
product referred to as short cedar board and, in
the past and until January, 1988, has exported,
without permit, such product to the United States
of America, as is alleged in paragraph 3 of its
statement of claim.
Pursuant to section 3 [as am. by S.C. 1974, c. 9,
s. 1; 1987, c. 15, s. 26] of the Act:
3. The Governor in Council may establish a list of goods, to
be called an Export Control List, including therein any article
the export of which he deems it necessary to control for any of
the following purposes, namely:
(a. l) to ensure that any action taken to promote the further
processing in Canada of a natural resource that is produced
in Canada is not rendered ineffective by reason of the
unrestricted exportation of that natural resource;
(a.2) to limit or keep under surveillance the export of any
raw or processed material that is produced in Canada in
circumstances of surplus supply and depressed prices and
that is not a produce of agriculture;
(b) to implement an intergovernmental arrangement or com
mitment; or
(c) to ensure that there is an adequate supply and distribu
tion of such article in Canada for defence or other needs.
Section 6 provides that the Governor in Council
may revoke, amend, vary or re-establish any such
list.
The plaintiff pleads that on June 26, 1986
[SOR/86-710], the list was amended by adding
thereto "Blocks and bolts of red cedar", and that
directions were issued telling how to obtain an
export permit for "blocks and bolts of red cedar".
According to the plaintiff, a "bolt" is an
unmanufactured section or wedge split from a
short-length log from a cedar tree, which log is
usually about 1.33 metres in length. Cedar logs are
sometimes split into bolts in the forest and then
taken to the mill for manufacturing products
therefrom. A bolt can be cut in two (or three parts
for 44 cm wedges) in order to create "blocks"
which are then a rough product ready to undergo
the process of being cut and converted into finer
manufactured products.
That which the plaintiff was manufacturing
were short cedar boards. This is not a mere seman
tic ploy, for a short cedar board is a manufactured
product machine-cut to length, machine-cut on all
four sides and kiln-dried. It is quite distinct from a
wedge-shaped length of tree trunk which has been
split for ease of handling, such as are bolts and
blocks. The foregoing terms and processes are
clearly and amply demonstrated in a video tape
presentation demonstrating the differences be
tween bolts, blocks and short boards and showing
the manufacturing processes for the production of
such cedar boards and shingles. That tape is
Exhibit "C" to the affidavit of Thomas Darcy
Jones, the plaintiff's president. It is quite clear that
short cedar boards were not included within the
words or meaning of the amendment to the Export
Control List made in June, 1986.
Nevertheless, in January, 1988, the plaintiff was
advised officially that the export of short cedar
boards into the U.S.A. would henceforth require
the obtaining of an export permit. However, after
accepting service of the plaintiff's original state
ment of claim filed on February 3, 1988, together
with an application similar to the present one, for
an injunction, the defendants, around February 12,
countermanded their requirement for permits
which they declined to issue, thus then again
allowing the exportation of short cedar boards.
However, the unregulated exportation of short
cedar boards was short lived. Exhibit "A" to the
filed affidavit of Joan Edith Mulholland is a copy
of Order in Council P.C. 1988-288 [SOR/88-140],
with a schedule annexed, passed on February 22,
1988. It runs as follows:
Whereas the Governor in Council deems it necessary to
control the export of blocks, bolts, blanks, boards and any other
material or product of red cedar suitable for use in the manu
facture of shakes or shingles in order to:
(a) ensure that any action taken to promote the further
processing in Canada of red cedar that is produced in
Canada is not rendered ineffective by reason of the un
restricted exportation of red cedar; and
(b) in order to ensure that there is an adequate supply and
distribution of red cedar materials and products in Canada
for the manufacture of shakes and shingles.
Therefore, Her Excellency the Governor General in Council,
on the recommendation of the Secretary of State for External
Affairs, pursuant to paragraphs 3(a.I) and (c) and section 6 of
the Export and Import Permits Act, is pleased hereby to amend
the Export Control List, C.R.C., c. 601, in accordance with the
schedule hereto.
SCHEDULE
I. Item 2003' of the Export Control List is revoked and the
following substituted therefor:
"2003. Blocks, bolts, blanks, boards and any other ma
terial or product of red cedar suitable for use in the manufac
ture of shakes or shingles.
(All destinations, including the United States)"
Attached to the Order in Council with its
Schedule is a Regulatory Impact Analysis State
ment. It is not part of the Regulation, but provides
to the proposing Minister, if not the entire Cabinet
quorum by whom P.C. 1988-288 was passed, infor
mation as to the purpose and effect of the pro
posed regulation. The deponent, Ms. Mulholland,
enquired by long-distance telephone of a (named)
staff-member, "Export Controls Division, Depart
ment of External Affairs, Ottawa", who prepared
that statement, and he replied "that it is prepared
' SOR/86-710, 1986 Canada Gazette Part II, p. 2862.
by the Regulatory Affairs Branch of the Office of
Privatization and Regulatory Affairs".
Here follow the pertinent portions of the text of
that statement which was fed into the flow of
information made available to the Cabinet and the
public at large:
(This statement is not part of the Regulation.)
Description
Goods requiring export permits for reasons of national secu
rity or domestic policy are listed on the Export Control List
(ECL). In June, 1986, the United States imposed a 35% import
tariff on shakes and shingles. The Canadian Government
responded by placing bolts and blocks of red cedar, which can
be further processed into shingles and shakes, on the export
control list in order to prevent their export to the U.S. This
action was taken to prevent the loss of Canadian jobs in the
shakes and shingles manufacturing industry.
Canadian firms are exploiting a loophole in the ECL by
exporting red cedar blanks, not explicitly identified on the
Export Control List, suitable for the manufacture of shingles
and shakes.
The measure will amend the ECL by adding red cedar
blanks, boards and any other material or product of red cedar
suitable for use in the manufacture of shakes or shingles,
thereby fulfilling the original intent of the regulation. Control
ling the export from Canada of these goods supports the
Canadian and British Columbian Government programs to
promote the further processing of red cedar materials into
shingles and shakes within Canada. Legal authority for this
action is provided by the Export and Import Permits Act.
Alternative Considered
The Export and Import Permits Act is the only vehicle for
the control of wood and wood product exports from Canada.
No change to the existing regulations would result in long term
adverse effects on the shakes and shingles manufacturing indus
try in Canada.
Consistency with Regulatory Policy and Citizens' Code
Early notice of this amendment was not given in the 1988
Regulatory Plan as it could not be foreseen. This measure is
consistent with the policy which placed blocks and bolts of red
cedar on the Export Control List on June 26, 1986.
Anticipated Impact
DRIE in Vancouver estimates that the further establishment
of shakes and shingles manufacturing facilities in the U.S.
using Canadian red cedar, as a result of the existing loophole,
would result in the loss of 10 to 20% of the 12,000 jobs in the
shakes and shingles manufacturing industry. These jobs and the
newly created U.S. industry may be difficult to re-transfer to
Canada when the 35% duty on shakes and shingles is eventually
removed. As a result of the amendment to the Export Control
List, all semi-processed materials of red cedar will require an
export permit, which would normally be refused for the reasons
stated above.
Paperburden and Small Business Impact
There is no practical change in the paperburden or small
business impact since the original intent of the legislation will
be fulfilled by this amendment to the ECL.
Consultation
DRIE in Vancouver supports the amendment to the ECL.
DRIE estimated that, without the amendment, employment in
the industry would be reduced, prices for shakes and shingles
would be depressed, Canadian raw material prices would rise,
and smaller firms would be forced out of business. The Provin
cial Government of British Columbia supports this amendment.
Compliance
Paragraphs 3(a.l) and 3(c) and section 6 of the Export and
Import Permits Act (EIPA) provide for the inclusion of these
products on the Export Control List. Section 19 of the EIPA
provides for penalties.
For further information, contact:
[named], Director
Export Controls Division
Special Trade Relations Bureau
Department of External Affairs
... Ottawa ...
Whoever researched and prepared this impact
analysis statement clearly did not consult that
formerly viable private Canadian enterprise, the
plaintiff, or did not care much what happened to
its business or its employees' jobs. For support for,
if not absolute proof of, the foregoing assertion,
one needs only to review the affidavits and their
exhibits filed in these proceedings. A notable
demonstration is provided by Exhibit "C" to Mr.
Jones' filed affidavit sworn January 12, 1988.
As the video tape shows, the great saw, which
makes the first cut from a cedar block in order to
produce an untrimmed board, can be quickly and
easily adjusted to produce not a parallel sided,
untrimmed board, but rather a wedge-shaped,
untrimmed shingle. Assuming that no significant
step in production is eliminated from the recorded
demonstration, it appears that what might have
become a short board can be made to produce two
shingles by a diagonal saw cut over the length of
the thickness of a board producing two wedge-
shaped shingles. If laid one over the other with the
butt end of the one placed at the sharp end of the
other they appear indeed to be a board, less only
the wood actually removed along the complemen
tary diagonal planes by the relatively slim cutting
edge of the saw blade.
After viewing the video tape screening, the
Court observed that what was shown on the screen
appeared to contradict that which is asserted in
paragraph 8 of Mr. Jones' filed affidavit, and in
paragraph 11 of the filed affidavit of Frank Wil-
liam White, that is: "there is no less labour
involved in producing short cedar boards than
there is in producing shingles". That observation
was founded on the fact that Mr. Jones, who
performs the role of sawyer in the video presenta
tion, executed the identical trimming cuts on each
shingle as he did on each short board. There being,
in the absence of error or defective stock, half the
number of boards compared with the number of
shingles, it would seem that the production of
boards would ultimately require half the number
of sawyers required to produce shingles from any
given quantity of cedar blocks.
Both deponents, Jones and White, sought and
were granted leave, with the defendants' counsel's
consent, to formulate and file each a "second
supplemental affidavit" sworn on March 15, 1988,
in order to clarify the apparent contradiction. Here
are the pertinent passages in Mr. Jones' second
supplemental affidavit:
4. In the videotape, Exhibit "C" to my Affidavit of January
12, 1988, I performed the tasks of cutting short cedar boards
and shingles. It is also stated in my Affidavit that there is no
less labour involved in producing short cedar boards than there
is in producing shingles. It has been brought to my attention
that in the videotape I was trimming only one shingle at a time.
In response I say as follows:
(a) I am President of the Company and have not operated
the saws for a number of years.
(b) 90% to 95% of the time the regular sawyers would trim
two shingles at a time. This is possible because the
shingles are thinner individually than the boards. Two
shingles are approximately the same depth as a short
cedar board. Also the carriage for the wood runs faster
when shingles are being cut. The carriage is slower for
boards because boards are thicker and if you run too
fast this will cause burn marks on the board and the saw
will wander.
(c) There is an incentive for the sawyer to cut two at a time
because he is paid on a guarantee of $127 per day, but
he also receives a piece rate on productions and a good
sawyer will usually on average be paid $175 per day and
can go up to over $200.
(d) Also a good sawyer's pace is dictated by the saw which
will usually cut two pieces while the sawyer is trimming
the other two together.
Thus, it appears from the sworn depositions of two
apparently most knowledgeable persons, in which
they state their specific facts and reasons, that the
video presentation—when so factually explained—
does not after all operate as a true contradiction of
the sworn assertions that "there is no less labour
involved in producing short cedar boards than
there is in producing shingles". In regard to those
demonstrably verified assertions, it appears that
the Regulatory Impact Analysis Statement takes
no account of the plaintiff's plight or that of other
similarly situated enterprises and their employees.
The defendants filed, in support of their resist
ance against the plaintiff's motion for an injunc
tion, the affidavit of Eugene W. Smith, a federal
public servant presently employed, since 1983, as
Senior Industrial Development Officer in the
Department of Regional Industrial Expansion
(DRIE) in Vancouver, the same entity mentioned
in the Regulatory impact analysis statement. This
deponent recounts that, since 1951 when he
obtained a degree in forestry from U.B.C., he has
"been continuously employed . .. in the forest
industry in British Columbia and the State of
Washington, ... [U.S.A.] ... in marketing and
manufacturing of forest products, including shakes
and shingles ...". Among his duties is "responsi-
bility for promoting trade ... and industrial de
velopment in the forest industry in British
Columbia" being, as he deposes, "the `principal
contact' between said department and representa
tives of the forest industry ... in all matters
affecting the promotion of industrial activities in
said industry". This deponent has read Mr. Jones'
affidavit of January 12, 1988, and has viewed the
presentation recorded on the video tape, Exhibit
"C" thereto.
The more one reads Mr. Smith's affidavit, the
more one wonders whether he deposes to a clear
straightforward message poorly expressed, or the
smooth expression of confused and contradictory
thoughts. For example, he asserts that the U.S.A.'s
35% import tariff on shakes and shingles manufac
tured in Canada is to make the raw material for
such manufacture worth more in the United States
than in Canada. This appears to confuse the issue,
as does the balance of paragraph 4 of his affidavit.
The true fact in this case is that the plaintiff does
not export the raw material—bolts and blocks—to
the United States; it uses that raw material in
Canada, manufacturing from that raw material
manufactured products—short cedar boards—
which, until the defendants' intervention, it used to
export freely into the U.S.A.
Mr. Smith goes on to aver that, as a result of his
discussions with representatives of the forest indus
try about the adequacy of supply of cedar suitable
for making shakes and shingles, he verily believes
"that the supply of cedar at the present time is
inadequate to meet the demands of industry for
product". He does not provide the source of his
information and that failure is fatal to according
any weight to his assertion. This assertion is flatly
contradicted in general by the filed supplemental
affidavit of Mr. Jones, sworn on February 29,
1988, and that of Mr. White, sworn on March 10,
1988; and it is contradicted in particular regard to
the plaintiff's case in the filed affidavit of Michael
Neil Dorais, sworn on March 10, 1988. However
still running on in paragraph 6 of his affidavit
about the "uncontrolled export of raw material",
Mr. Smith makes a further dire prediction of
shortfall to meet demand in Canada. Mr. Smith
goes on to swear that, in face of the earlier men
tioned inadequate supply of cedar to meet the
demands of industry for product, the Government
of Canada is forging ahead with a five-year de
velopment program to promote an increased
demand in the U.S.A. for red cedar products that
is shakes and shingles.
Mr. Smith deposes that "One of the specific
objectives of [the] said programme is to promote
the further processing of red cedar materials into
shakes and shingles"—but not short boards, evi-
dently—"manufactured in Canada, thereby creat
ing or recovering approximately 1,400 direct
manufacturing jobs in British Columbia".
The last two paragraphs of Mr. Smith's affida
vit filed on behalf of the defendants are worth
reciting here in full, even although he escalates the
basis of these paragraphs from fact-based belief to
opinion:
8. In my opinion said market development programme would
be rendered ineffective if the export of red cedar boards is not
restricted because the need for skilled shingle packers in British
Columbia would be eliminated and fewer total workers would
be required by the industry to produce cedar boards for export
than to produce shingles. This requirement for fewer workers
results from the fact that because of safety controls restricting
the speed with which shingle machines can cut, two shingles
can be produced for export to the United States in the form of
a short board for the same amount of labour as would be
required to make one shingle. Productivity of shingle machines
almost doubles when short boards are exported. In my opinion
an industry wide loss of employment in British Columbia of up
to 20 percent, caused by the transfer of the resaw and packing
operation to the United States, would result from the unre
stricted export of short cedar boards.
9. In my opinion the unrestricted export of short cedar boards
to the United States would force many small shake and shingle
operators out of business, which could result in the permanent
transfer of the resaw and packing phase of the industry to the
United States.
The last quoted paragraphs, finally engaging the
matters in issue, stand in direct contradiction of
the plaintiffs evidence, including the video tape. It
ought to be noted that neither side's depositions
were tested by any cross-examination of the
respective deponents before the hearing of the
plaintiffs motion. Such above noted direct contra
diction will be part of the very matter to be
resolved at the trial of this action. It will be a
difficult task for the Trial Judge to resolve, and
make findings of fact from, conflicting economic
and employment prognostications, if the parties do
not upgrade the quality (not necessarily the quan
tity) of their respective evidence.
One other matter demands commentary. P.C.
1988-288 proclaims itself to be based in part on
paragraph 3(c) of the Export and Import Permits
Act. That is the provision which aims to maintain
an adequate supply of articles in Canada for
defence or other needs. It "other needs" is to be
interpreted as ejusdem generis with "defence
needs", that is to say other needs relating to the
supply of the kind of material and other articles
which may be forbidden to be exported under
paragraph 3(a), or to a state of wartime or other
national emergency, then one is left to wonder why
short cedar boards are banned from export at this
time. Both the Regulatory Impact Analysis State
ment and Mr. Smith's affidavit are silent about
any purported needs relating to national defence.
In regard to the former, one wonders, then, wheth
er the Governor in Council was misled in formulat
ing the Order in Council, or whether reference to
paragraph 3(c) was just deliberately thrown in for
good measure.
It ought also to be noted that the assertion in the
Regulatory Impact Analysis Statement to the
effect that "The Provincial Government of British
Columbia supports this amendment", is intended
to be rendered somewhat questionable by the
assertions expressed in the affidavit of one of the
plaintiff's solicitors, Robert Edward Marriott,
sworn on March 11, 1988. It discloses that Mr.
Marriott made some oblique enquiries of the
British Columbia Timber Export Advisory Com
mittee who would be expected to know of such
support, but without positive response. He also
wrote to the public servant in Ottawa whose name
is given for enquiries on the impact statement, but
without reply. One wonders why he did not com
municate directly with (a) the Premier's Office,
(b) the appropriate minister in the Government of
British Columbia, (c) the Clerk of the Council, or
(d) all of the foregoing. If the matter be relevant,
perhaps definite word will be forthcoming for
proof at the trial. It is far from certain that the
Governor in Council was misled on this assertion
of support for the amendment.
The statement of employment prospects may
have been misleading, too, but that is a relevant
matter which is justiciable in this litigation, albeit
with difficulty, depending on the quality of the
evidence.
This proceeding brings into stark juxtaposition
the right and obligation of the government to
formulate policy, in the absence of caprice or
malice, for what it perceives to be the greater
general good even if the enforcement of the policy
be fatal to a particular interest such as the plain
tiff, and the plaintiff's interest in persuing an
otherwise legitimate business enterprise, not the
least aspect of which has been the gainful employ
ment of around 150 workers.
In a nutshell, the plaintiff alleges that the Gov
ernor in Council was misled about the regulation's
devastating impact on the jobs of its employees,
and since paragraph 3(a.1) of the Act is aimed at
preserving jobs in Canada, then the passing of P.C.
1988-288 was ultra vires of the Governor in Coun
cil. It claims the right to the Court's aid in enjoin
ing the government from enforcing the Export
Control List's impugned item 2003 against it until
the outcome of this litigation be adjudged.
The defendant's counsel argues, in a nutshell:
that, regardless of the unofficial impact statement,
P.C. 1988-288 is a lawful expression of govern
mental policy, and a legitimate act of governance,
in close accord with the statutory powers conferred
on the Governor in Council; and that the plaintiff
has no right to the Court's aid in suspending the
regulation's application in regard to the plaintiff,
pending the outcome of this litigation.
There is much jurisprudence on both sides of
this dispute.
Since at least the time of the decision of the
Supreme Court of Canada in Attorney General of
Canada v. Inuit Tapirisat of Canada et al., [1980]
2 S.C.R. 735; 115 D.L.R. (3d) 1, if not long
before, it cannot be said to be unthinkable that
decisions of the Governor in Council could be anc
are subject to judicial review. Mr. Justice Este)
who expressed the Supreme Court's judgment i5
reported at pages 748 S.C.R.; 11 D.L.R., thus:
Let it be said at the outset that the mere fact that a statutory
power is vested in the Governor in Council does not mean that
it is beyond review. If that body has failed to observe a
condition precedent to the exercise of that power, the court car
declare that such purported exercise is a nullity.
So it is, that the defendants herein, except for Her
Majesty the Queen, are not immune from being
temporarily restrained by means of an interlocuto
ry injunction if it appears that they failed to
observe the provisions of paragraph 3(a.1) of the
Act by considering misleading information. That is
a serious question to be tried. If, then, passing the
Order in Council were beyond the powers of the
Governor in Council, in the circumstances here, is
that too a serious issue to be tried? It is, indeed.
On the other hand, the defendants invoke the
decision of the Supreme Court of Canada
expressed by Mr. Justice Dickson, now Chief Jus
tice of Canada, in Thorne's Hardware Ltd. et al. v.
The Queen et al., [1983] 1 S.C.R. 106, at page
115 where this passage is found:
I have referred to these several pieces of evidence, not for the
purpose of canvassing the considerations which may have moti
vated the Governor in Council in passing the Order in Council
but to show that the issue of harbour extension was one of
economic policy and politics; and not one of jurisdiction or
jurisprudence. The Governor in Council quite obviously
believed that he had reasonable grounds for passing Order in
Council P.C. 1977-2115 extending the boundaries of Saint
John Harbour and we cannot enquire into the validity of those
beliefs in order to determine the validity of the Order in
Council. [Emphasis not in original text.]
The above statement was made, of course, on
appeal after a trial of the action on the very issue
of whether or not passing P.C. 1977-2115 [SOR/
77-621] were intra vires or ultra vires of the
Governor in Council. On the present pre-trial
motion, the Court is not to purport to make a final
decision on this ultimate issue. Indeed it would be
assuming the gift of clairvoyance at this stage to
foretell how that issue will ultimately be resolved.
The issue remains an open question in these
proceedings.
Ordinarily, the Court will refuse to purport to
dictate policy to policy makers, as in: MacMillan
Bloedel Ltd. v. Min. of Forests of B.C. (1984), 51
B.C.L.R. 105 (C.A.) leave to appeal refused
[1984] 1 S.C.R. x. It is sometimes, as here, a fine
line between the basis on which the perception of
the vires of regulation-making abuts that of
regulatory policy-making. The locating of that fine
line here will be the Trial Judge's task.
Authorities cited by the plaintiffs counsel are:
CKOY Ltd. v. Her Majesty The Queen on the
relation of Lorne Mahoney, [1979] 1 S.C.R. 2;
(1978), 90 D.L.R.(3d) 1; In re Public Utilities Act
(Milk Board); In re Crowley (Avalon Dairy Ltd.)
(1954), 12 W.W.R. (N.S.) 626 (B.C.S.C.);
American Cyanamid Co. v. Ethicon Ltd., [1975]
A.C. 396; [1975] 1 All E.R. 504 (H.L.); K. J.
Preiswerck Ltd. v. Los Angeles-Seattle Motor
Express Inc. (1957), 22 W.W.R. 93 (B.C.S.C.);
Pacific Salmon Industries Inc. v. The Queen,
[1985] 1 F.C. 504 (T.D.); and Baird v. The Queen
in right of Canada, [1984] 2 F.C. 160; (1983), 148
D.L.R. (3d) 1 (C.A.). For the defendants, were
cited: Thorne's Hardware Ltd. et al. v. The Queen
et al. [above]; Attorney General of Canada v.
Fishing Vessel Owners' Association of B.C.,
[1985] 1 F.C. 791 (C.A.); Attorney General of
Canada v. Gould, [1984] 1 F.C. 1133 (C.A.); and
Manitoba (Attorney General) v. Metropolitan
Stores Ltd., [1987] 1 S.C.R. 110.
In the circumstances, the most recent, most
authoritative and most similar case is the Met
ropolitan Stores judgment written by Mr. Justice
Beetz for the unanimous Supreme Court of
Canada. It had to do with the question of whether
or not to stay the proceedings of the Manitoba
Labour Relations Board in the formulation and
imposition of a first collective agreement, pending
the outcome of litigation to determine the constitu
tional validity of the very law of first collective
agreement. The Queen's Bench Judge declined to
stay the Board's proceedings, but the Court of
Appeal, perceiving that the litigation could be
more protracted than could have been foreseen by
the Queen's Bench Judge, unanimously decided to
exercise its discretionary power to grant the stay of
the Labour Board's proceedings.
The scene having been set, the reasons for dispo
sition of two of the four identified issues were
introduced by Beetz J. in this manner recorded at
page 121:
The second and fourth issues essentially address the same
question: in a case where the constitutionality of a legislative
provision is challenged, what principles govern the exercise by a
Superior Court judge of his discretionary power to order a stay
of proceedings until it has been determined whether the
impugned provision is constitutional? This issue arises not only
in Charter cases but also in other constitutional cases and I
propose to review some cases dealing with the distribution of
powers between Parliament and the legislatures and some
administrative law decisions having to do with the vires of
delegated legislation: as I read those cases, there is no essential
difference between this type of cases and the Charter cases in
so far as the principles governing the grant of interlocutory
injunctive relief are concerned.
The above quoted considerations are certainly
appropriate to the case at bar here. Mr. Justice
Beetz is reported, at page 126, as entering upon
those considerations with a brief and scholarly
review of the pertinent history under the topic of
"The Usual Conditions for the Granting of a
Stay". He notes (page 127) that: "A stay of
proceedings and an interlocutory injunction are
remedies of the same nature. In the absence of a
different test prescribed by statute, they have suf
ficient characteristics in common to be governed
by the same rules and the courts have rightly
tended to apply to the granting of interlocutory
stay [sic] the principles which they follow with
respect to interlocutory injunctions: [jurisprudence
cited]." The characteristics of the present case are
such that they are logically and easily subsumed
into the category of constitutional cases, even
though this case evinces no question of federal-pro
vincial distribution of legislative powers nor yet, at
first blush, any Charter [Canadian Charter of
Rights and Freedoms, being Part I of the Consti
tution Act, 1982, Schedule B, Canada Act 1982,
1982, c. 11 (U.K.)] question.
In so far as the Supreme Court of Canada in the
Metropolitan Stores case approves the test (page
128) of "a serious question to be tried as opposed
to a frivolous or vexatious claim" for "a constitu
tional case where . .. the public interest is taken
into consideration in the balance of convenience",
it is apparent from what has already been reviewed
herein that this present case passes that test.
It must be acknowledged that the result would
be different if the test were that of a prima facie
case. The plaintiff does not challenge Parliament's
power to enact section 3 of the Act, but one must
still consider whether the actual emplacement of
the new item 2003 in the Export Control List be a
lawful or otherwise proper exercise of the powers
conferred on the Governor in Council. That discre
tionary power appears to be broad, profound and
virtually unfettered. It would appear that the
amendment emplacing the new item 2003 is prima
facie valid. So the Court found in recent cases of
similar attacks on disparate regulations: Aerlinte
Eireann Teoranta v. Canada, [1987] 3 F.C. 383
(T.D.); and C.E. Jamieson & Co. (Dominion) v.
Canada (Attorney General), [1988] 1 F.C. 590;
(1987), 12 F.T.R. 167 (T.D.). Here, the plaintiff
avers it has evidence and argument in law to show
that without the demonstrable misinformation
which apparently misled the Governor in Council,
there was no statutory basis for promulgating item
2003, which has been deadly to the plaintiffs
business, and, the defendants tender their contra
dictory affidavit. The cases immediately above
cited were trials. This is an interlocutory proceed
ing, which does raise a serious, but narrow ques
tion for trial, although not a broad prima facie
case. So, it narrowly passes the test.
The second test is that of whether there will be
irreparable harm to the applicant if the injunction
be not granted. In some commercial litigation,
such as intellectual property disputes, where the
parties may be of roughly similar viability, stabili
ty and resources, but none has limitless resources,
this "irreparable harm" test can cut both ways,
and may even be subsumed under the rubric of
"balance of convenience". Not so, here. Clearly,
here, the "irreparable harm" test does not evoke
considerations of the fall of the government of the
day, nor yet of the crippling of federal governmen
tal authority or continuity. Because this case is
what Beetz J. describes as an "exemption case", it
will not have any application to a whole class of
forest products manufacturers. The only imposi
tion of irreparable harm in these circumstances
lands squarely upon the plaintiff, which is driven
out of business by enforcement of the impugned
item of the Export Control List and lack of an
appropriate export permit, with the concurrent and
disastrous loss of more than 150 employees' jobs.
No fine or subtle weighing is needed. Unquestion
ably, the plaintiff has demonstrated that its plight
passes and surpasses the test of irreparable harm.
Next, one must consider the third test being that
of balance of convenience, or inconvenience, as did
Beetz J. in the Metropolitan Stores case, reported
starting on page 129. When as there, and here, an
interlocutory injunction is sought in a constitution
al case, a special factor is the public interest. In
this regard the judgment written by Mr. Justice
Beetz indicates (at page 129) that "the courts
consider that they ought not to be restricted to the
application of traditional criteria which govern the
granting or refusal of interlocutory injunctive
relief in ordinary private or civil law cases."
Adopting Lord Diplock's dictum in the American
Cyanamid case, supra, at pages 407 A.C.; 510 All
E.R., to the effect that the difficult questions of
law ought to be left to the Trial Judge, Beetz J. is
further reported, at page 130, thus:
The American Cyanamid case was a complicated civil case
but Lord Diplock's dictum, just quoted, should a fortiori be
followed for several reasons in a Charter case and in other
constitutional cases when the validity of a law is challenged.
First, the extent and exact meaning of the rights guaranteed
by the Charter are often far from clear and the interlocutory
procedure rarely enables a motion judge to ascertain these
crucial questions. Constitutional adjudication is particularly
unsuited to the expeditious and informal proceedings of a
weekly court where there are little or no pleadings and submis
sions in writing, and where the Attorney General of Canada or
of the Province may not yet have been notified as is usually
required by law; see Home Oil Distributors Ltd. v. Attorney-
General for British Columbia, [1939] 1 D.L.R. 573, at p. 577;
Weisfeld v. R. (1985), 16 C.R.R. 24, and, for an extreme
example, Turmel v. Canadian Radio-Television and Telecom
munications Commission (1985), 16 C.R.R. 9.
Under the rubric of "The Consequences of
Granting a Stay in Constitutional Cases" begin
ning on page 133, Beetz J. is further reported on
pages 134 and 135, as holding:
... the granting of a stay requested by the private litigants or
by one of them is usually aimed at the public authority, law
enforcement agency, administrative board, public official or
minister responsible for the implementation or administration
of the impugned legislation and generally works in one of two
ways. Either the law enforcement agency is enjoined from
enforcing the impugned provisions in all respects until the
question of their validity has been finally determined, or the
law enforcement agency is enjoined from enforcing the
impugned provisions with respect to the specific litigant or
litigants who request the granting of a stay. In the first branch
of the alternative, the operation of the impugned provisions is
temporarily suspended for all practical purposes. Instances of
this type can perhaps be referred to as suspension cases. In the
second branch of the alternative, the litigant who is granted a
stay is in fact exempted from the impugned legislation which,
in the meanwhile, continues to operate with respect to others.
Instances of this other type, I will call exemption cases.
Whether or not they are ultimately held to be constitutional,
the laws which litigants seek to suspend or from which they
seek to be exempted by way of interlocutory injunctive relief
have been enacted by democratically-elected legislatures and
are generally passed for the common good, for instance: the
providing and financing of public services such as educational
services, or of public utilities such as electricity, the protection
of public health, natural resources and the environment, the
repression of what is considered to be criminal activity, the
controlling of economic activity such as the containing of
inflation, the regulation of labour relations, etc. It seems axi
omatic that the granting of interlocutory injunctive relief in
most suspension cases and, up to a point, as will be seen later,
in quite a few exemption cases, is susceptible temporarily to
frustrate the pursuit of the common good.
In the case at bar, weighing the counterpoised
inconveniences of the parties and including the
public interest or the common good on the defen
dants' side, yields a clear result. The plaintiff's
"inconvenience" here is an irreparable harm which
promises to be positively fatal to its enterprise and
its employees' job. If that were not so, then the
plaintiff would simply and unquestionably have to
endure the law—(regulation)—while contesting its
validity. However the regulation puts the plaintiff
out of business. On the other hand, if the plaintiff
be temporarily exempt from the application of
item 2003 of the Export Control List—until reso
lution of the litigation—the detriment to the Gov
ernment of Canada and the general public which it
serves, will be negligible and probably impercept
ible. None of the defendants contended that
renewed exportation of cedar boards by the plain
tiff alone, and only until the disposition of the
issue in litigation, would have any counter-produc
tive macro-effect on the forest products industry,
the shakes and shingles trade, the economy of
British Columbia or of Canada or any noticeable
effect at all. The defendants are concerned about
macro-economics in these regards, as indicated by
the affidavit filed on their behalf and the Regula
tory Impact Analysis Statement. It is not even a
worrisome concern that the above-mentioned
industries, trade or economies would be altered in
any noticeable way by the micro-effect of the
plaintiffs being permitted to export short cedar
boards.
In the Metropolitan Stores case, Mr. Justice
Beetz gave examples of courts upholding the
impugned law or regulation on the accepted theory
that its promulgator or enforcer, being, or acting
under the authority of, popularly elected legisla
tures inevitably legislates or enforces in the public
interest, for the public good. Even if that were
true, a promulgator or enforcer could still trample
on individual or group rights. Moreover in this
case, although there is no proof thus far of bad
faith, the defendants can be seen to have pursued
and snared the plaintiff by means of their regula-
tion-making powers. In the beginning, the plaintiff
was lawfully conducting its employment-generat
ing business when its exportation of short cedar
boards was apparently unlawfully obstructed by
one or more of the defendants' minions. The plain
tiff then started this lawsuit and the defendants, no
doubt realizing or having been advised that they
were in the wrong, countermanded their orders to
obstruct. Ten days later and as if in lieu of lodging
a statement of defence, the defendants promulgat
ed the item, 2003, of the Export Control List,
whereby the plaintiffs employment-generating
enterprise could be, and was, put out of business.
The defendants enjoy that marvellous advantage
of being able to make and amend the law precisely
in order to thwart the plaintiff's enterprise and its
legal recourse in response thereto. Without the
interlocutory injunction, the plaintiff might not
have the resources to litigate this case.
Now, if a new public interest or common good
has arisen since the time at which the defendants
caused the plaintiff's exportation of short cedar
boards to be unlawfully obstructed, then the public
can hardly have had time to become aware of it.
This is quintessentially not a case where an appli
cant contravenes the existing law, (as was the
example given by Linden J. in Morgentaler et al.
v. Ackroyd et al. (1983), 42 O.R. (2d) 659
(H.C.)), and at the same time seeks to have its
enforcement enjoined. Here, the promulgator has
made a new law to snare a lawful entrepreneur
and employer. Here, this plaintiff, faced with a
will-o'-the-wisp where the constitutionally impera
tive rule of law ought to be, is uniquely entitled to
have the status quo ante crystallized for it and its
employees, until its serious issues have been tried
and finally adjudged.
This is admittedly a borderline case for, obvious
ly, national governance by the federal Government
must not be too easily halted. Even so, there is no
doubt of the side of that border on which this case
for an interlocutory injunction lives. In the role of
a delegated regulation-maker, even the Governor
in Council may perform in such a way, may
appear to take such advice as well as such inordi
nate advantage for the Government's purposes as
will, until final adjudication, render the Govern-
ment susceptible to an interlocutory injunction.
This is such a case, an exemption case, to be sure.
How can one measure damages in such a case of
public law, as distinct from commercial conten
tion? The plaintiff has offered to secure the
defendants against the damages which they could
incur as a result of the interlocutory injunction.
Neither the defendants nor the public will incur
any damages. If the plaintiff can get back into
profitable production and recall its employees,
everyone will gain.
The plaintiff is entitled to the interlocutory
injunction which it seeks, prohibiting the defen
dants apart from Her Majesty from interfering
with the exportation of the plaintiff's short cedar
boards until the result of the trial of this action be
adjudged, or further order of the Court. In order
to keep such injunction within the bounds of an
exemption case, the plaintiff must have an appro
priate export permit, which the defendants are
mandatorily enjoined and ordered to give him for
the duration of the litigation.
Unless the plaintiff, with the defendants' co
operation, moves along to trial with all due speed
and resolute deliberation, the defendants, of
course, may peremptorily seek an order to dissolve
this injunction. If need be, the plaintiff may, of
course, move to enforce the Court's order in the
unlikely event of recalcitrant or non compliance.
In light of the recent decision in Bhatnager [Bhat-
nager v. Canada (Minister of Employment and
Immigration), [1988], 1 F.C. 171 (C.A.)] it goes
without saying that counsel ought to communicate
the terms of the interlocutory injunction to the
defendants.
In awarding the plaintiff its costs of and inci
dental to this application in any event of the cause,
the Court makes no unfavourable criticism what
ever of the conduct of the defendants' learned
counsel. His conduct was the quintessence of
reasonable and co-operative, but nevertheless
effective adversarial professional competence.
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.