Judgments

Decision Information

Decision Content

T-4656-75
Delbert Guerin, Joseph Becker, Eddie Campbell, Mary Charles, Gertrude Guerin and Gail Sparrow suing on their own behalf and on behalf of all other members of the Musqueam Indian Band (Plain- tiffs)
v.
The Queen (Defendant)
Trial Division, Collier J.—Vancouver, August 4 and 11, 1981.
Practice — Interest — Whether plaintiffs are entitled to interest on the damages assessed from the date of the breach of trust to the day before judgment — Whether the post-judg ment rate of interest should be increased — Whether costs and disbursements should be taxed on a solicitor and client basis — Motion dismissed — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss. 35, 40 — Exchequer Court Act, R.S.C. 1970, c. E-11, s. 47 — Lord Tenterden's Act, 1833 (3 & 4 Wm. IV), c. 42, s. 28 — Crown Liability Act, R.S.C. 1970, c. C-38, s. 3(1)(b) — Indian Act, R.S.C. 1970, c. I-6, s. 61(2) — Interest Act, R.S.C. 1970, c. I-18, ss. 3, 13 — Federal Court Rule 344(1),(7), Tariff B.
Plaintiffs move for interest on the judgment and costs. The first question is whether the plaintiffs were entitled to interest on the damage award from, the effective date of the breach of trust to the day before the effective date of the formal judg ment. The plaintiffs submitted that since the Federal Court Act only came into existence in 1971, section 47 of the Exchequer Court Act applies. Section 47 restricted the Court's power to grant interest only in cases involving breach of contract. The plaintiffs contended that therefore they had a vested right to interest; that section 35 of the Federal Court Act was substan tive legislation which purported to take away that vested right and therefore it could not be given retrospective effect unless that intention was apparent from the amending legislation. Alternatively the plaintiffs contended that Lord Tenterden's Act, paragraph 3(1)(b) of the Crown Liability Act and the Indian Act allowed interest to be awarded. Paragraph 3(1)(b) provides that the Crown is liable in tort for damages in respect of a breach of duty attaching to the ownership, occupation, possession or control of property. The plaintiffs submit that their claim arose out of a breach of duty attaching to owner ship, possession or control of the reserve. Subsection 61(2) of the Indian Act provides that interest on monies held in the Consolidated Revenue Fund shall be allowed at a rate to be fixed from time to time by the Governor in Council. It was argued that the Crown "has been deemed to have borrowed the amount of the award from the plaintiffs so that the award is `Indian monies' which have been held in the Consolidated Revenue Fund". The plaintiffs then argued that the trust became a contract arising out of the surrender document between the Band and the Crown. The second question is whether the post-judgment interest rate of five per cent should be increased. Section 40 of the Federal Court Act provides that
unless otherwise ordered, a judgment bears interest from the time of giving the judgment at the rate prescribed by section 3 of the Interest Act. The plaintiffs submitted that section 40 permits the Court to vary the rate of interest provided in the Interest Act. The final question is whether the costs and disbursements should be taxed on a solicitor and client basis because of the volume of work required and the difficulty and importance of the case. Rule 344 provides that the Court may direct a payment of a fixed or lump sum in lieu of costs and that the Court may make a special direction to increase or decrease tariff costs.
Held, the motion is dismissed. Section 35 of the Federal Court Act is a provision defining the jurisdiction of the Court in respect of what interest, if any, may be awarded against the Crown. Even if the plaintiffs' submission as to section 35 were sound, they are confronted with the Canadian common law principle that "interest may not be allowed against the Crown, unless there is a statute or a contract providing for it". Lord Tenterden's Act is not in force in Canada as a federal statute. Paragraph 3(1)(b) of the Crown Liability Act deals with tort, not trust or breach of trust. It has reference to the tort liability of the Crown arising out of occupiers' liability law. Subsection 61(2) of the Indian Act has reference to monies actually held in the Consolidated Revenue Fund. It has no application to this case. A trust is not a contract in the legal sense. There is neither evidence nor law to support the plaintiffs' contention that an implied contract arose when the trust was created. With respect to post-judgment interest, the only discretion given to the Court is to vary the time at which post-judgment interest would otherwise run. Finally, the length, complexity and dif ficulty of a case are not sufficient to warrant a special direction as to costs.
Smerchanski v. Minister of National Revenue [1979] 1 F.C. 801, followed. R. v. Carroll [1948] S.C.R. 126, followed. McNamara Construction (Western) Ltd. v. The Queen [1977] 2 S.C.R. 654, applied. Upper Canada Col lege v. Smith (1921) 61 S.C.R. 413, referred to. Dixie v. Royal Columbian Hospital [1941] 2 D.L.R. 138, referred to. MacMillan Bloedel (Saskatchewan) Ltd. v. Consol - board Inc., unreported, A-266-78, judgment dated May 29, 1981, referred to. R. v. Nord-Deutsche Versicherungs- Gesellschaft [1971] S.C.R. 849, distinguished.
MOTION. COUNSEL:
M. R. V. Storrow, S. R. Schachter and J. Reynolds for plaintiffs.
Ian Binnie, Q.C. and Cindy Roth for defendant.
SOLICITORS:
Davis & Company, Vancouver, for plaintiffs.
Deputy Attorney General of Canada for defendant.
The following are the supplementary reasons for judgment rendered in English by
COLLIER J.: In the reasons for judgment in this action [page 385 supra], I directed the plaintiffs to bring on a motion for judgment. The motion was to include consideration of questions of interest on the damages assessed, and of any matters or sub missions pertaining to costs.
The motion was heard on August 4, 1981.
The plaintiffs contended they were entitled to interest on the damage award from at least Janu- ary 22, 1958 to July 12, 1981. The first date is the date of the golf club lease. It was said to be the effective date of the breach of trust and the com mencement of the loss suffered, as a result, by the Band. The second date is the day before the effec tive date of the formal judgment. This claim for interest was, in argument, referred to as pre-judg ment interest. I shall use that term.
The plaintiffs further submitted the post-judg ment interest rate of 5%, as set out in the Interest Act', be increased to coincide with present day interest rates.
In respect of costs, the plaintiffs sought a direc tion that their costs and disbursements, recover able from the defendant, be taxed on a full solici tor and client basis.
At the end of argument, I dismissed all of the plaintiffs' motions. I did, however, make some directions in respect of relatively minor matters: the applicable costs tariff and the taxation of expert witness charges.
I said I would put my brief oral reasons in slightly expanded written form. These are those reasons.
' R.S.C. 1970, c. 1-18, s. 13.
Prejudgment interest
Section 35 of the Federal Court Act e provides:
35. In adjudicating upon any claim against the Crown, the Court shall not allow interest on any sum of money that the Court considers to be due to the claimant, in the absence of any contract stipulating for payment of such interest or of a statute providing in such a case for the payment of interest by the Crown.
The plaintiffs argued the Federal Court Act, and section 35, came into force effective June 1, 1971; under the Exchequer Court Act 3 , which was repealed effective June 1, 1971, the plaintiffs had, as of January 22, 1958, a vested right to pre-judg ment interest in respect of their cause of action for breach of trust; the predecessor provision to sec tion 35, (section 47 of the Exchequer Court Act), restricted the Exchequer Court's power to grant interest against the Crown only in cases involving breach of contract; there was, therefore, a vested right in the plaintiffs in this case; section 35 was substantive, not procedural legislation; it purport ed to take away that vested right; legislation of that kind cannot be given retrospective effect unless that intention is clearly apparent from the "amending" legislation itself.
I do not accept that submission.
I agree with the contention of the defendant: section 35 of the Federal Court Act is a provision defining the jurisdiction of this Court in respect of what interest, if any, may be awarded against the Crown. The cases relied on by the plaintiffs, such as Upper Canada College v. Smith 4 and Dixie v. Royal Columbian Hospitals are not applicable.
The plaintiffs brought their action in this Court. It is true they had no other choice of forum. But this is a statutory Court. Its jurisdiction, in respect of the subject-matter of claims, and over persons, and its jurisdiction in respect of the remedies and other relief it can grant, must be found in existing federal statute or federal common law 6 .
2 R.S.C. 1970 (2nd Supp.), c. 10.
3 R.S.C. 1970, c. E-11.
4 (1921) 61 S.C.R. 413.
5 [1941] 2 D.L.R. 138.
6 McNamara Construction (Western) Ltd. v. The Queen [1977] 2 S.C.R. 654 at p. 658.
Here the jurisdiction of the Court, in respect of interest, is specifically spelled out, and limited, by section 35.
Even if the plaintiffs' submission as to section 35 were sound, they are confronted with the Canadi- an common law principle as laid down by the Supreme Court of Canada:
It is settled jurisprudence that interest may not be allowed against the Crown, unless there is a statute or a contract providing for 4. 7
Counsel for the plaintiffs contended there was no such rule; the Supreme Court of Canada deci sions were either incorrectly decided or distin guishable.
The principle laid down by the Supreme Court of Canada, whether it be correct or incorrect, is clear. As a Trial Judge I am bound to follow the decisions of the Supreme Court.
The plaintiffs relied heavily on The Queen v. Nord-Deutsche Versicherungs-Gesellschaftg. That case is, in my opinion, distinguishable on its facts. It was found, in the circumstances of that particular case, provisions of the Crown Liability Act furnished a statutory foundation for the awarding of interest against the federal Crown.
The plaintiffs went on to contend, before me, if section 35 of the Federal Court Act, or the Supreme Court principle, applied, then there were relevant statutory provisions for the allowing of interest in this case. The statutes relied on were: Lord Tenterden's Act, 9 Crown Liability Act, 10 Indian Act."
7 The King v. Carroll [1948] S.C.R. 126, per Taschereau J. at p. 132, where earlier decisions of the Supreme Court of Canada were cited: The King v. Roger Miller & Sons Ltd. [1930] S.C.R. 293, Hochelaga Shipping & Towing Co. Ltd. v. The King [1944] S.C.R. 138, The King v. Racette [1948] S.C.R. 28.
8 [1971] S.C.R. 849. The trial judgment is reported at [1969] 1 Ex.C.R. 117.
9 1833 (3 & 4 Wm. IV), c. 42, s. 28.
10 R.S.C. 1970, c. C-38.
1 R.S.C. 1970, c. I-6, subs. 61(2).
Lord Tenterden's Act is not in force in Canada, as a federal statute. It has been held to be part of the law of British Columbia. But that does not mean it can somehow apply in respect of a claim or action brought by a British Columbia litigant against the federal Crown.
The plaintiffs rely on paragraph 3(1)(b) of the Crown Liability Act, as providing a statutory basis for the awarding of interest. Subsection 3(1) was relied upon by the Trial Judge in the Nord- Deutsche case. His reasons, in respect of interest, were approved by the Supreme Court of Canada.
I set out subsection 3(1):
3. (1) The Crown is liable in tort for the damages for which, if it were a private person of full age and capacity, it would be liable
(a) in respect of a tort committed by a servant of the Crown, or
(b) in respect of a breach of duty attaching to the ownership, occupation, possession or control of property.
Counsel for the plaintiffs contended paragraph (b) applied to the plaintiffs' case; their claim arose out of a breach of duty attaching to the ownership, possession or control of 162 acres of the reserve.
The paragraph of the statute cannot, in my view, be interpreted in that way. The matter dealt with is tort, not trust or breach of trust. Paragraph (b), to my mind, has reference to the tort liability of the Crown arising out of what is commonly termed occupiers' or owners' liability law.
The final statutory basis for allowing interest is found, it is said, in subsection 61(2) of the Indian Act:
61... .
(2) Interest upon Indian moneys held in the Consolidated Revenue Fund shall be allowed at a rate to be fixed from time to time by the Governor in Council.
It was argued the Crown "has been deemed to have borrowed the amount of the award from the plaintiffs so that the award is `Indian monies' which have been held in the Consolidated Revenue Fund".
I do not accept this notional argument as some how authorizing the allowance of interest in the
circumstances of this case. Subsection 61(2) has reference to monies actually held in the Con solidated Revenue Fund. It has, in my opinion, no application to this case.
The plaintiffs then argued the trust which Ij found to have been created, somehow, for the purpose of allowing interest, became a contract. The submission was put this way: "One of the terms of the contract implied by law is that, if the Crown breached its duty as a trustee causing loss to the beneficiaries, it would compensate them by way of interest." This was the first time it had ever been alleged, or argued, by the plaintiffs there was some kind of contract, arising out of the surrender document, between the Band and the Crown.
A trust is not, generally speaking, a contract in the legal sense. Nor is breach of trust a breach of contract, again in a legal sense. There is neither evidence nor law to support the plaintiffs' conten tion an implied contract to pay interest arose when the trust in this case was created.
The various contentions fail. The plaintiffs have not made out, in my view, any case for the allow ing of pre-judgment interest.
Post-judgment interest
In respect of post-judgment interest, certain statutory provisions are relevant.
Section 40 of the Federal Court Act 12 provides:
40. Unless otherwise ordered by the Court, a judgment, including a judgment against the Crown, bears interest from the time of giving the judgment at the rate prescribed by section 3 of the Interest Act.
Sections 3 and 13 of the Interest Act" provide:
3. Except as to liabilities existing immediately before the 7th day of July 1900, whenever any interest is payable by the agreement of parties or by law, and no rate is fixed by such agreement or by law, the rate of interest shall be five per cent per annum.
12 Earlier cited.
13 R.S.C. 1970, c. I-18.
13. Every judgment debt shall bear interest at the rate of five per cent per annum until it is satisfied.
The plaintiffs argue section 40 of the Federal Court Act permits this Court to vary the rate of interest as provided in the relevant sections of the Interest Act. I do not accept that submission. Section 40 cannot, as I see it, be interpreted that way. The only discretion given to the Court is to vary the time at which post-judgment interest would otherwise run. There is no power to vary the rate.
The judgment in favour of the plaintiffs in this case will bear the statutory rate of interest from the date of pronouncement: July 13, 1981.
Costs
The normal rule in this Court is the successful party is entitled to costs. In the usual situation, those costs are on a party and party basis, and in accordance with the amounts set out in Tariff B.
Rule 344(1) provides the Court may direct a payment of a fixed or lump sum in lieu of taxed costs.
Rule 344(7) provides the Court may make a special direction concerning costs, including a direction contemplated by Tariff B.
Section 3 of Tariff B provides:
3. No amounts other than those set out above shall be allowed on a party and party taxation, but any of the above amounts may be increased or decreased by direction of the Court in the judgment for costs or under Rule 344(7).
The plaintiffs request a direction the costs be taxed on the basis of the plaintiffs being complete ly reimbursed for all their legal fees and disburse ments. To put it another way, they seek a direction ,their costs be taxed against the defendant on a full solicitor and client basis.
A number of considerations were advanced as to why the costs in this case should be increased as requested. I do not intend to set them out. Some of the points put forward had to do with the volume of work required and the difficulty and importance of this case.
In Smerchanski v. M.N.R. 14 , Jackett C.J. said this:
Finally, 1 should say on this point that the material submit ted in support of this application does not, in my opinion, provide a reasonably arguable case for an exercise of judicial discretion increasing the fees for services of solicitors and counsel in connection with this appeal. Such a direction must be based on relevant considerations and must not be made on an arbitrary basis. All that has been established here is that the respondent incurred a very large solicitor and client bill in connection with the appeal, which would have been relevant if costs had been awarded on a solicitor and client basis but is not ordinarily relevant to the determination of costs on a party and party basis. Nothing has been put forward to suggest that there was anything in the conduct of the appeal to warrant any increase in the party and party tariff. While there is no principle with reference to the basis for ordinary party and party costs that is apparent to me from a study of the relevant Rules, it does seem to be clear that party and party costs are not designed to constitute full compensation to the successful party for his solicitor and client costs. (This must certainly be so in a case such as this where the successful party has chosen to instruct counsel whose base of operations is elsewhere than the appropriate place for the hearing of the appeal.)
Reference was made to some four or five decisions of the Trial Division where Tariff B items were increased apparently "having regard particularly to the great volume of work done in preparation ...". I have difficulty in accepting volume of work in preparation considered alone, or in conjunction with such factors as the difficulty or importance of the case, as constitut ing a basis for exercising the judicial discretion to increase Tariff B costs items. It must be obvious that such items are so low in relation to what is involved in a very substantial propor tion of the matters that come before the Court that they are not designed to provide complete compensation to the successful party for the costs incurred by him in the litigation. (Indeed, what is sought in this case is an increase that would still leave the successful party largely uncompensated for solicitor and client costs.) If Federal Court party and party costs are not designed to provide full reimbursement, as it seems to me, what is intended is that they be made up of the completely arbitrary amounts fixed by or in accordance with the rules subject to variations (where authorized) based on factors arising out of the conduct of the particular proceeding. As it seems to me, the vague basis put forward on behalf of the respondent would put the Court in the position, in a very substantial proportion of proceedings, of weighing imponderable factors, or factors that are not capable of determination, with a view to making an allowance of an undefined portion of solicitor and client costs. In my view, such an approach is not acceptable as a basis for exercising a judicial discretion under Tariff B and would open the way for an unseemly complication of our practice.
I refer also to MacMillan Bloedel (Saskatche- wan) Ltd. v. Consolboard Inc. 15 where the Federal
14 [1979] 1 F.C. 801 at pp. 805-806.
15 Unreported, A-266-78, judgment dated May 29, 1981.
Court of Appeal followed the Smerchanski princi ples and refused to make a direction increasing costs. Both the Smerchanski and Consolboard cases, at trial and appeal, were lengthy, complicat ed and difficult. So was this case. But those factors are not sufficient, in my mind, to warrant a special direction as to costs. Undoubtedly the tariffs in the Federal Court, which were set in 1971, are, because of the tremendous increase in inflation and cost of living in the last 10 years, very low. The remedy is, in my view, to increase the tariffs, not to make arbitrary increases in individual cases to try and compensate for past economic and inflationary increases.
There will, however, be two directions in respect of costs:
1. All the steps in this action shall be classified as Class III steps.
2. The payments made by the parties to expert witnesses shall be taxed having regard to the provisions of paragraph 4(2) of Tariff A.
 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.