T-3536-81
The Dene Nation and The Metis Association of
the Northwest Territories (Plaintiffs)
v.
The Queen (Defendant)
Trial Division, Reed J.—Ottawa, February 1 and
14, 1984.
Judicial review — Equitable remedies — Declarations — S.
11 of Northern Inland Waters Regulations ultra vires —
Illegal delegation of power — Authority to regulate by regula
tion improperly exercised by setting up sub-delegate with
discretionary powers to make decision — Invalid part of s. 11
not reasonably severable — Northern Inland Waters Act,
R.S.C. 1970 (1st Supp.), c. 28, ss. 7, 10(1),(2), 11(2), 15(2),
26(g) — Northern Inland Waters Regulations, C.R.C., c. 1234,
s. 11.
Statutes — Statutory interpretation — S. 11 of Regulations
conferring wide discretionary power on controller — Enabling
words in s. 11 clearly permissive, not mandatory — Persons
seeking permission to use water without licence seeking privi
lege, not having "right" within meaning of Julius v. Bishop of
Oxford — Invalid part of s. 11 of Regulations not reasonably
severable — Northern Inland Waters Regulations, C.R.C., c.
1234, s. 11.
When the Controller of Water Rights for the Northwest
Territories authorized a company to use water without a licence
under section 11 of the Northern Inland Waters Regulations,
the plaintiffs brought an action for a declaration that that
section is ultra vires the Governor in Council. They argue that
(1) section 11 is so broad as to undercut the whole purpose of
the Northern Inland Waters Act; (2) the discretion given the
controller by section 11 is not authorized by paragraph 26(g) of
the Act; (3) at least paragraph 11(b) is ultra vires because it
does not regulate in terms of "quantity" or "rate", as provided
in paragraph 26(g), but in terms of periods of authorized use
without a licence.
The defendant replies that (1) there is no sub-delegation of
legislative powers in section 11; (2) the controller has no
discretion but merely performs an administrative function; (3)
in any event, the offending part of the section is severable.
Held, the declaration should be granted. Parliament intended
two procedures for authorizing water use: one through Water
Boards, the other through regulation in which it was clearly
intended that all the requirements to be met in order to use
water without a licence would be specifically and exhaustively
set out by the Governor in Council in the Regulations. There is
nothing in this Act from which one can infer any intention that
part or all of that power should be conferred on a sub-delegate,
such as the controller, to be exercised in a discretionary fash-
ion. Not enough legislative guidance has been given to escape
the conclusion that an unauthorized sub-delegation has
occurred. It is clear from the wording of section 11 that wide
discretionary power was conferred on the controller.
The whole of section 11 is declared invalid because the
offending part of the section is not reasonably severable. If it
were necessary to do so, it would be held that paragraph 11(b)
is invalid since it deals neither with rate nor quantity, as
required by paragraph 26(g) of the Act, but with time only.
CASES JUDICIALLY CONSIDERED
APPLIED:
Brant Dairy Co. Ltd. et al. v. Milk Commission of
Ontario et al., [1973] S.C.R. 131.
DISTINGUISHED:
King-Emperor v. Benoari Lal Sarma, et al., [1945] A.C.
14 (P.C.); Russell v. Reg. (1882), 7 App. Cas. 829
(P.C.); Transport Ministry v. Alexander, [1978] 1
NZLR 306 (C.A.); Julius v. Bishop of Oxford (1880), 5
App. Cas. 214 (H.L.); Vardy v. Scott et al., [1977] 1
S.C.R. 293; Weatherby v. Minister of Public Works,
[1972] F.C. 952 (T.D.); Labour Relations Board v. The
Queen, [1956] S.C.R. 82; Clarkson Co. Ltd. v. White
(1979), 32 C.B.R. (N.S.) 25 (N.S.C.A.); Padfield v.
Minister of Agriculture, Fisheries and Food, [1968] A.C.
997 (H.L.).
REFERRED TO:
Attorney General of Canada v. Brent, [1956] S.C.R. 318;
Vic Restaurant Inc. v. City of Montreal, [1959] S.C.R.
58; Lamoureux v. City of Beaconsfield, [1978] 1 S.C.R.
134; R. v. Joy Oil Co. Ltd., [1964] 1 O.R. 119 (C.A.);
Bridge v. The Queen, [1953] S.C.R. 8; [1953] 1 D.L.R.
305; Olsen v. City of Camberwell, [1926] V.L.R. 58
(S.C.).
COUNSEL:
Ronald L. Doering for plaintiffs.
Luther Chambers and Michael Ciavaglia for
defendant.
SOLICITORS:
Kelly, Doering & Morrow, Ottawa, for
plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
REED J.: This is an action brought by the plain
tiffs for a declaration that section 11 of the Regu
lations respecting Inland Water Resources in the
Yukon Territory and Northwest Territories, SOR/
72-382 as amended by SOR/74-60 and SOR/75-
421 [Northern Inland Waters Regulations,
C.R.C., c. 1234] is ultra vires the Governor in
Council.
These Regulations were promulgated under the
Northern Inland Waters Act, R.S.C. 1970 (1st
Supp.), c. 28.
Pursuant to section 11 of the Regulations,
authorizations to use water without a licence Nos.
N-3A6-0791 and N-3A3-0093 were issued to Esso
Resources Canada Limited. The parties agreed
that if section 11 was invalid, these authorizations
were also invalid. No argument having been made
on this point I make no finding with respect to it.
Subject to certain exceptions, the Northern
Inland Waters Act prohibits the alteration of the
flow, storage, or other use of water within a water
management area except pursuant to a licence
issued by a board or when authorized by
regulations.
The relevant regulation-making authority for
the latter is found in paragraph 26(g) of the Act:
26. The Governor in Council may make regulations
(g) authorizing the use without a licence of waters within a
water management area
(i) for a use, uses or class of uses specified in the
regulations,
(ii) in a quantity or at a rate not in excess of a quantity or
rate specified in the regulations, or
(iii) for a use, uses or class of uses specified in the
regulations and in a quantity or at a rate not in excess of a
quantity or rate specified therein;
Section 11 of Regulations SOR/72-382, as amend
ed by SOR/74-60 and SOR/75-421, promulgated
pursuant to that authority provides:
11. Water may be used without a licence having been issued
if the controller has stated in writing that he is satisfied that the
proposed use would meet the applicable requirement of subsec-
tion 10(1) of the Act if an application described in that section
for that use were made and
(a) the proposed use is
(i) for municipal purposes by an unincorporated settle
ment, or
(ii) for water engineering purposes;
(b) the proposed use will continue for a period of less than
270 days; or
(c) the quantity proposed to be used is less than 50,000
gallons per day.
The plaintiffs' statement of claim originally
sought a declaration not only that section 11 and
the authorizations issued thereunder were invalid
but also that the creation of the office of the
controller was invalid. This last contention was
dropped at trial.
Counsel for the plaintiffs based his argument
mainly on three grounds: (1) section 11 of the
Regulations is invalid because its scope and
breadth is such as to undercut the whole purpose
of the statute; (2) the discretion given to the
controller by section 11 is not authorized by para
graph 26(g); and (3) at the very least paragraph
(b) of section 11 is ultra vires because it is not a
regulation respecting the "quantity" or "rate" of
water used, as provided in paragraph 26(g), but
prescribes only a time period during which an
authorization will run.
The defendant argued that: (1) there is no sub-
delegation of legislative powers in section 11; (2)
the controller has no discretion but merely per
forms an administrative function; and (3) in any
event, offending parts of the regulation, if there
are any, can be severed to allow the rest of the
section to. stand.
It is useful to begin with a description of the
general scheme of the Act. Section 7 provides for
the establishment of two boards: the Yukon Terri
tory Water Board and the Northwest Territories
Water Board. Each is to consist of no less than
three but no more than nine members. The mem
bership of each board is to include at least one
nominee from the departments of the Government
of Canada which are most directly concerned with
water management in the two territories and at
least three persons chosen by the respective Com
missioners in Council of the territories.
Section 10 authorizes the boards, with the
approval of the Minister and when they are satis
fied that certain conditions have been met, to issue
licences authorizing the use of water within a
water management area. The boards are empow
ered by subsection 10(2) to attach conditions to
the licences respecting the quantity and types of
waste that may be deposited in the waters. Subsec
tion 11(2) requires the boards to obtain, from an
applicant for a licence, information and studies
concerning the proposed use of the water. Subsec
tion 15(2) requires the boards to hold a public
hearing in connection with each application for a
licence, unless no public interest is shown in such a
hearing.
Appeals lie, on questions of law and jurisdiction,
to the Federal Court from decisions of the boards.
The prominent characteristic of the impugned
regulation which immediately strikes one is the
fact that a controller, whose existence is nowhere
contemplated in the Act, is authorized to grant
authorizations for the use of water without a
licence when the proposed use meets "the appli
cable requirement of subsection 10(1) of the
Act".' That is, the controller is required by the
Regulations to exercise a decision-making function
similar to that of the territorial water boards.
' 10. (1) Where an applicant for a licence satisfies the
appropriate board that,
(a) in the case of an application made pursuant to subsection
39(2),
(i) the application is for a licence to use a quantity of
water within a water management area substantially
equivalent to the quantity the applicant was using or was
entitled to use within the area immediately prior to the
establishment of the area and for the purposes for which
he was then using it or was then entitled to use it, and
(ii) any waste produced by the undertaking in association
with the operation of which such water is used will be
treated and disposed of in a manner that is appropriate for
the maintenance of water quality standards prescribed
pursuant to paragraph 26(e), and
(b) in the case of any other application,
(i) the proposed use of waters by the applicant will not
adversely affect the use of waters within the water man
agement area to which the application relates by any
It is to be noted, in this regard, that the boards
may only issue licences after the holding of public
hearings (subsection 15(2)) and with the approval
of the Minister (subsection 10(1)). There are no
such requirements for the exercise of the control
ler's decision-making power.
The Crown argued that section 11 did not con
stitute any unauthorized sub-delegation because
there was no sub-delegation of legislative author
ity: merely the incorporation by reference into the
Regulations of the statutory requirements of sub
section 10(1).
I agree that the controller was not authorized to
act legislatively e.g., by making regulations or
rules. What occurred instead was the transforma
tion by regulation of a legislative power into an
administrative or a quasi-judicial 'power, and the
conferral of that power on the controller.
Parliament clearly intended two procedures for
authorizing water uses: one through the Yukon
and Northwest Territories Water Boards, exercis
ing the quasi-judicial and discretionary powers
which such bodies characteristically exercise. The
other through regulation in which it was clearly
intended that all the requirements to be met in
licensee who is entitled to precedence over the applicant
pursuant to section 22 or by any applicant who, if a licence
were issued to him, would be entitled to precedence over
the applicant pursuant to that section,
(ii) appropriate compensation has been or will be paid by
the applicant to licensees authorized to use waters within
the water management area to which the application
relates for a use that, in relation to that water manage
ment area, is of lower priority than the proposed use by the
applicant and who will be adversely affected by such
proposed use,
(iii) any waste that will be produced by the undertaking in
association with the operation of which such waters will be
used will be treated and disposed of in a manner that is
appropriate for the maintenance of water quality standards
prescribed pursuant to paragraph 26(e), and
(iv) the financial responsibility of the applicant is adequate
for the undertaking in association with the operation of
which such waters will be used,
the board may, with the approval of the Minister, issue a
licence to the applicant, for a term not exceeding twenty-five
years, authorizing him, upon payment of water use fees
prescribed pursuant to paragraph 28(a) at the times and in
the manner prescribed by the regulations, to use waters, in
association with the operation of a particular undertaking
described in the licence (hereinafter referred to as the
"appurtenant undertaking") and in a quantity and at a rate
not exceeding that specified in the licence.
order to use water without a licence would be
specifically and exhaustively set out by the Gover
nor in Council in the Regulations. There is nothing
in the Act from which one can infer any intention
that part or all of that power should be conferred
on a sub-delegate to be exercised in a discretionary
fashion. The principle enunciated in Brant Dairy
Co. Ltd. et al. v. Milk Commission of Ontario et
al., [1973] S.C.R. 131 is very much in point: when
authority is conferred on an entity to regulate
regulation, the power must be so exercised and not
exercised by setting up some sub-delegate with
discretionary powers to make the decision. See also
Attorney General of Canada v. Brent, [1956]
S.C.R. 318.
In this case there has not been a wholesale
delegation as in the Brant and Brent cases (supra);
some legislative guidance is given. The proposed
use must be for municipal or water engineering
purposes; the quantity must be less than 50,000
gallons a day; and the requirements of subsection
10(1) must be met. However, not enough legisla
tive guidance has been given to escape the conclu
sion that an unauthorized sub-delegation has
occurred. Subsection 10(1) does not provide a
sufficiently complete code of requirement. Instead
it sets up parameters within which discretionary
judgments must be made.
In my view, Parliament intended that the Regu
lations themselves would set out fully all the
requirements necessary for authorization. On
reading paragraph 26(g) of the Act, it is clear that
the authorization was to occur in the Regulations
not by decision of a sub-delegate having discretion
ary powers. I am not even convinced that Parlia
ment contemplated the establishment of an officer,
such as the controller, to grant authorizations to
use water without a licence. Although, on this
point the law is clearly as counsel for the defend
ant submitted: a delegate legislator may sub-dele
gate to another body administrative power if
necessary to do so in order to implement the
scheme or the standards established. The decisions
in Vic Restaurant Inc. v. City of Montreal, [1959]
S.C.R. 58; Lamoureux v. City of Beaconsfield,
[1978] 1 S.C.R. 134 and R. v. Joy Oil Co. Ltd.,
[1964] 1 O.R. 119 (C.A.), were cited to me for
this proposition.
Counsel also cited the decison in King-Emperor
v. Benoari Lal Sarma, et al., [1945] A.C. 14
(P.C.). In that case the Governor-General of India
was given statutory power to set up special crimi
nal courts to operate in conditions of emergency.
The Governor-General passed such an ordinance
but gave provincial governments power therein to
decide whether there was a local emergency upon
which the legislation would come into force in that
province. The Privy Council held that this was not
an unlawful delegation of legislative power but a
lawful delegation of an administrative power. I do
not think this case is relevant to questions of
sub-delegation in the ordinary case. This was a
constitutional case where the delegation was con
ferred on the Governor-General by the Govern
ment of India Act, 1935 [25 & 26 Geo. 5, c. 42].
But, in any event, the ratio of that case was that
there was no sub-delegation since the only author
ity given to local governments was to determine
the event which would trigger the coming into
force of the legislation. The Privy Council decision
in Russell v. Reg. (1882), 7 App. Cas. 829 was
cited as a precedent [in the King-Emperor case, at
pages 24-25]:
In that case the Canadian Temperance Act, 1878, was chal
lenged on the ground that it was ultra vires the Parliament of
Canada. The Temperance Act was to be brought into force in
any county or city, if on a vote of a majority of the electors of
that county or city favouring such course, the Governor-Gener
al by Order in Council declared the relative part of the Act to
be in force. It was held by the Privy Council that this provision
did not amount to a delegation of legislative power to a
majority of the voters in a city or county. Their Lordships said
"The short answer to this objection is that the Act does not
delegate any legislative powers whatever. It contains within
itself the whole legislation in the matters with which it deals.
The provision that certain parts of the Act shall come into
operation only in the petition of a majority of electors does not
confer on these persons power to legislate. Parliament itself
enacts the condition and everything which is to follow upon the
condition being fulfilled."
Section 11 of the Northern Inland Waters
Regulations does not contain within itself the
whole set of rules on the matter with which it
deals. Wide discretionary authority is conferred on
the controller; his power is not merely that of
determining the event on which the section will
come into force.
Counsel for the defendant tried valiantly to
demonstrate that the controller exercised only an
administrative function and had no discretionary
authority with respect to the granting of authori
zations. He contended that the controller was
under a duty to act when the conditions set out in
subsection 10(1) of the Act and section 11 of the
Regulations were met. In the absence of consent
being given in such a case he argued that man-
damus could be brought to compel the controller
to grant authorizations.
It is abundantly clear, however, that the con
troller does not play so small a part. Section 11 of
the Regulations require him to be satisfied that the
applicable requirements of subsection 10(1) are
met. Also he must decide which of the require
ments of subsection 10(1) are applicable. The
controller is required under subparagraphs
10(1)(a)(ii) and 10(1)(b)(iii) to satisfy himself
that an applicant will dispose of the waste created
by his use of water "in a manner that is appropri
ate for the maintenance of water quality stand
ards". The controller must satisfy himself under
subparagraph 10(1) (b) (iv) that the applicant is
financially responsible. Other aspects of the discre
tionary power of judgment he must exercise are
found in subsection 10(1).
I would not dispute the law as set out by counsel
for the defendant: the legal concept of discretion
implies a power to make a choice between alterna
tive courses of action; if only one course of action
can be taken by a delegate there is a duty to act;
before mandamus can issue there must be a duty
upon the person or body against whom the order is
sought; and, words which in their ordinary gram
matical meaning seem to confer a discretionary
power may from their context leave no such discre
tion but be mandatory in nature. De Smith's'Judi-
cial Review of Administrative Action, 4th ed.,
page 278; Vardy v. Scott et al., [1977] 1 S.C.R.
293; Weatherby v. Minister of Public Works,
[1972] F.C. 952 (T.D.); Julius v. Bishop of
Oxford (1880), 5 App. Cas. 214 (H.L.); Labour
Relations Board v. The Queen, [1956] S.C.R. 82,
at pages 86-87; Clarkson Co. Ltd. v. White
(1979), 32 C.B.R. (N.S.) 25 (N.S.C.A.), at pages
29-30 and Padfield v. Minister of Agriculture,
Fisheries and Food, [1968] A.C. 997 (H.L.), at
pages 1032-1033.
Particular emphasis was placed on the Julius
case (supra) at page 244 for the proposition that
words which in their normal sense carry a permis
sive connotation or are enabling in character will
be interpreted as mandatory and as imposing a
duty when "the object of the power is to effectuate
a legal right".
I do not think the principle of the Julius case
applies in this case. The words being discussed in
that case were "may" and "it shall be lawful [for x
to do y] "; these do not carry the same judgmental
requirement as the words "if ... he is satisfied".
The Julius case would seem merely to stand for a
rebuttal of the presumption that enabling words
are permissive, not for a requirement that enabling
words must be interpreted as mandatory when
they "effectuate a legal right". It will always
remain a question of interpretation from the con
text of the given statutory provision. I do not find
in the context of section 11 anything to indicate
that the words "is satisfied" were intended to
impose a duty on the controller to exercise his
decision-making powers without element of discre
tion in such a way as to make him subject to
mandamus. He may have a duty to consider an
application for an authorization, but that is a
different matter. In addition the rights here in
question would not seem to be of the same charac
ter as those contemplated by Lord Blackburn when
he used the phrase "to effectuate a legal right".
The examples he gives, at page 244, are as follows:
The personal liberty of the person arrested by the sheriff, the
rights of the creditors of the bankrupt to their debts, the rights
of the plaintiff who had recovered judgment to his costs, the
right of the constable out of pocket to be paid by the parish, the
right of the creditor ... to be paid....
And the rights in the other cases cited to me by
counsel on this point, all involved the right to
require a decision-making body to at least consider
a person's application or claim but none involved
dictating to a body given the power to satisfy itself
of certain facts the decision it must make. Persons
seeking permission from the controller to use water
without a licence do not have a "right" in the sense
of Lord Blackburn's decision in the Julius case.
They are seeking a privilege.
It remains to deal with the contention that the
offending parts of the impugned Regulations could
be severed. Counsel cited Bridge v. The Queen,
[1953] S.C.R. 8; [1953] 1 D.L.R. 305; Transport
Ministry v. Alexander, [1978] 1 NZLR 306
(C.A.) and Olsen v. City of Camberwell, [1926]
V.L.R. 58 (S.C.).
The principle of severability might be applied to
an invalid regulation if the part invalid was not
fundamental to the structure of the regulation as a
whole; see: Transport Ministry case (supra). For
example, if paragraph (b) was the only invalid part
of section 11, the rest of the section might be
allowed to stand. However, if the section is more
fundamentally defective as is the case here, severa-
bility cannot apply.
. Put another way, if severance would require a
rewriting or a remaking of the invalid section then
the whole must fall. The invalid part is not reason
ably severable. Reference can be made to the tests
developed in the application of the doctrine of
severability to cases of constitutional ultra vires.
Counsel suggested that the requirement for the
controller's written statement that he is satisfied
that the conditions of subsection 10(1) have been
met might be severed from the regulation to allow
the rest to stand. I do not think this is possible. It
would constitute a fundamental rewriting of the
regulation and cast it in a form that the Governor
in Council never intended. What is more, what
would be left would be inoperable since all the
discretionary requirements of subsection 10(1)
would remain but there would be no decision-mak
er to apply them. Would the courts have to decide
whether a user of water was financially respon
sible, whether appropriate compensation to other
users had been or would be made, whether the user
was disposing of waste in a manner appropriate for
the maintenance of water quality standards? To
pose these questions indicates the inapplicability of
severance in this case.
In the view I take of this case it is not necessary
for me to decide on the argument of plaintiffs
respecting paragraph (b) of section 11. Neverthe
less, if I needed to do so I would hold that para
graph to be invalid; it deals neither with rate nor
quantity as required by paragraph 26(g) of the
Act, but with time only.
For these reasons I have granted the declaration
sought by the plaintiffs.
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.