T-2114-74
Dame Madeleine Laurent, the wife of Paul
Algrain (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Addy J.—Montreal, November 25,
1975; Ottawa, December 1, 1975.
Crown—Jurisdiction—Plaintiff's property seized during
World War II under War Measures Act—Claiming $41,000 as
true value—Whether War Measures Act ultra vires—Whether
Custodian of enemy property agent of Crown—War Measures
Act, R.S.C. 1927, c. 206—Regulations Respecting Trading
with the Enemy (1939)—British North America Act, 1867, ss.
91(7), 92(13).
Plaintiff, a Canadian citizen, was obliged to remain in enemy
territory during the Second World War, and property which
she owned in Canada was sold for $6,000 by the Custodian of
enemy property. She now claims $41,000 as its true value,
alleging that the War Measures Act is ultra vires the Parlia
ment of Canada. Defendant counters by arguing that the
Custodian of enemy property is neither agent nor representative
of the Crown, and that the action is unfounded in law.
Held, the Act is not ultra vires. The powers in section 92(13)
of the British North America Act, 1867 are subordinate to
federal jurisdiction to the extent that it is reasonably required
in order to allow the legitimate exercise of a federal power. As
the country was at war, no one could reasonably question the
necessity of legislating to ensure that property held in Canada
by the enemy or persons directly under his control be protected,
and to prevent the enemy from benefiting from its sale. Second
ly, following the Nakashima case ([1947] Ex.C.R. 486), the
Custodian is not a servant or agent of the Crown. Any cause of
action would be against him alone. The property was, however,
sold at a ridiculously low price; the principle that burdens borne
for the good of the nation should not be allowed to fall on
particular individuals should be applied by the Federal Govern
ment, not only in cases of wartime expropriation, or where
compensation is authorized by statute, but also where it would
be reasonable and fair to require it respecting a loss inflicted by
the state where compensation provisions do not exist.
Nakashima v. The King [1947] Ex.C.R. 486, followed.
Iwasaki v. The Queen [1969] 1 Ex.C.R. 281 and Attor-
ney-General v. De Keyser's Royal Hotel [1920] A.C. 508,
applied.
ACTION.
COUNSEL:
P. Ferland for plaintiff.
J. C. Ruelland for defendant.
SOLICITORS:
Pothier Ferland, Montreal, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
ADDY J.: The parties are in agreement as to the
facts, which were established without oral evi
dence, by reading into the record, on consent, two
statements of fact and two additional exhibits.
The plaintiff, a Canadian by birth, married a
Belgian citizen and moved to Belgium with him in
1939. At that time, she was the owner of a piece of
land located on la Canardière Road, St. Roch
Parish, north of Quebec City. Because of the
invasion of Belgium by the enemy, she was obliged
to remain there throughout the Second World
War.
In 1940, pursuant to the War Measures Act', by
Order in Council P.C. 1936, the Regulations
Respecting Trading with the Enemy (1939) were
declared applicable to the territories of Belgium,
the Netherlands and Luxembourg, effective May
10, 1940.
In February 1942, the Custodian of enemy prop
erty registered an order for custody of the plain
tiff's property and in 1944 sold it by private sale
for $6,000.
Following a claim for compensation by the
plaintiff, the defendant itself had the property
assessed by three independent expects who set the
value at $40,000, $49,490 and $65,044 respective
ly. Subsequently, it had the property assessed by
one of its own officials, who assessed the value at
$6,000. The plaintiff is claiming the sum of
$41,000 as representing the true value of the prop
erty at the time of sale.
Counsel for the plaintiff maintains that, in view
of the exclusive powers granted to each provincial
1 R.S.C. 1927, c. 206.
legislature by section 92(13) of the British North
America Act, 1867, to legislate the field of prop
erty and civil rights, the War Measures Act is
ultra vires the Canadian Parliament. I cannot
accept this view. It has been held repeatedly by
courts of superior jurisdiction, including the Privy
Council and the Supreme Court of Canada, that
whenever, in order to exercise one of the powers
specifically granted to the Canadian Parliament by
section 91 of this Act—in this case the power to
legislate for the defence of the country, pursuant
to subsection (7) of the said section—it becomes
necessary to infringe upon head (13) of section 92
the jurisdiction of the Federal Government must
take precedence and those powers conferred on the
provinces by section 92(13) are subordinate to
federal jurisdiction to the extent that is reasonably
required in order to allow the legitimate exercise
of the federal power.
In the case at bar, the country was at war and
no one could reasonably question the necessity and
importance of legislating in order to ensure that
property held in this country by the enemy or by
persons under the direct control of the enemy be
protected and also to prevent the enemy from
benefiting from the sale of such property.
Counsel for the defendant, in support of his
case, raises a fundamental objection to the validity
of the claim, alleging that the Custodian of war
property is neither an agent nor a representative of
Her Majesty, whose acts can render her liable and,
therefore, that the action is without foundation at
law.
There are two decisions dealing with the ques
tion at bar. They are: Nakashima v. The King 2 , a
decision of Thorson J. as President of the then
Exchequer Court and also Iwasaki v. The Queen',
a decision of Sheppard J., acting as deputy judge
of the Exchequer Court.
In the first case, it appears that the petitioners
in the three actions were requesting that the Court
pronounce declaratory judgments relating to cer
tain powers of the Custodian provided for in the
Regulations and were also seeking an injunction
and a mandamus to prevent sale of the properties.
2 [1947] Ex.C.R. 486.
3 [1969] 1 Ex.C.R. 281.
It is obvious that no court may grant a mandamus
or an injunction against the Crown, but before
examining the petitions for declaratory relief,
Thorson J. had to deal with the question of the
Crown's liability for acts of the Custodian, in view
of the objection of His Majesty's counsel that the
action could not lie against him and that if there
were grounds for legal action, it was only the
Custodian who could be sued. Thorson J. made a
very detailed analysis of the problem and conclud
ed that the Custodian was not an agent or a person
representing the Crown.
In the second case, the validity of certain titles
based on sales by the Custodian was brought into
question; the claim was dismissed mainly because
the petitioner did not include the title holders as
parties to the action. However, at pages 290 and
291 of this decision, Sheppard J. concurs with the
decision of Thorson J. in Nakashima (supra).
By way of parenthesis only, I would like to point
out that I do not necessarily agree with the conclu
sion of Sheppard J. who, after detailing certain
duties of the Custodian in P.C. 3959, states at the
end of the last paragraph of page 290 of the
report:
Those powers, and particularly the discretionary powers of the
Custodian are inconsistent with any trust. [The underlining is
mine.]
Absolute discretionary power to sell and deal with
property and to pay expenses incurred can easily
be reconciled with the existence of a "trust" (as
recognized at common law) relating to the net
proceeds from the sale and possibly relating also to
the property itself in cases where the Custodian
has not disposed of it before the former owner,
being a Canadian who has had the misfortune of
having been in a foreign land at a time when it was
invaded by the enemy, returns to his country after
hostilities have ceased to claim his property.
In the report of the Nakashima case, from the
last paragraph at page 491 to page 495 inclusive,
after a detailed analysis of the case law relating to
the various tests by which one might determine the
existence or absence of an agency or delegation by
the Crown of any person, commission or company,
Thorson J. considered several sections of the Regu
lations Respecting Trading with the Enemy where
the nature and powers of the Custodian are dealt
with. There is no need for me to reproduce these
pages. Suffice it to say that I concur with this
analysis, which is, moreover, very complete and
that I agree with the conclusions of Thorson J.
when he says at page 495:
These references to the regulations sufficiently show the in
dependence with which the law has endowed the Custodian. It
is true that he is subject to control by the Governor in Council,
but such control is not executive but of a legislative nature of
the same kind as that which Parliament itself might exercise,
which is a very different thing from the control which the
Crown, meaning thereby His Majesty acting on advice in his
executive capacity, exercises over its servants. If the Custodian
is not the servant or agent of the Crown, it must follow that a
petition of right cannot lie against it in respect of his acts and it
was so held by this Court in Ritcher v. The King [1943]
Ex.C.R. 64.
and also at page 498 when he says:
Under the circumstances, since the Custodian is not the
servant or agent of the Crown and no cause of action against
the Crown appears I must hold that the proceedings by way of
petition of right were erroneously taken.
His comment on page 496 of the decision
applies to this case as well and I quote:
If the suppliants have any cause of action it could only be
against the Custodian; as to which, the Court expresses no
opinion in the absence of the Custodian, who is not a party to
these proceedings.
The action must accordingly be dismissed on
this ground.
However, I cannot refrain from commenting on
the fact that, according to evidence adduced at
trial, it appears that, at the time of the sale, the
property was worth at least $40,000 and that it
was sold by the Custodian at a ridiculously low
price by private sale with no evidence of previous
advertisement having been made. Under the cir
cumstances, I cannot understand why ex gratia
compensation was not paid to the plaintiff by the
defendant. As Lord Moulton stated at page 553 of
Attorney-General v. De Keyser's Royal Hotel,
Limited 4 :
... in the last three centuries ... the feeling that it was
equitable that burdens borne for the good of the natioi should
be distributed over the whole nation and should not be allowed
to fall on particular individuals has grown to be a national
sentiment.
4 [1920] A.C. 508.
In my opinion, this principle is applicable and
should be applied by the Federal Government not
only in cases where property is expropriated for
war purposes or where compensation is authorized
by a specific statute, but also in those cases where
it would be fair and reasonable to reimburse the
citizen for a loss inflicted upon him by the state
and no provision for compensation exists in any
statute.
Under the circumstances, I shall award no costs
to the defendant. .
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.