T-165-85
Donald Alexander Leighton, et al. (Plaintiffs)
v.
The Queen (Defendant)
INDEXED AS: LEIGHTON V. CANADA
Trial Division, Muldoon J.—Vancouver, February
24, 25, 26, 27, 1984-Ottawa, May 18, 1988.
Crown — Practice — Interest — Pre-judgment interest —
Successful plaintiffs in action for refund of unjustified
amounts fixed by Minister under lease — Federal Court Act,
s. 35 prohibiting award of interest against Crown unless pro
vided for in contract or by statute — Common law to same
effect — Situation unchanged by Charter s. 15 — Parliament,
under Constitution Act; 1867 s. 101, having power to limit
Crown's exposure by immunizing Crown from liability to pay
interest.
Constitutional law — Charter of Rights — Equality rights
— Crown immunized at common law and by statute from
payment of interest on court judgments — Situation unaffect
ed by Charter s. 15 — Constitution Act,1867 s. 101 not subject
to Charter s. 15 as both constitutional provisions of same force
— Individuals not guaranteed equality with Crown.
The plaintiffs claimed pre-judgment interest on refunds to be
paid pursuant to the terms of a lease of Indian lands. Section
35 of the Federal Court Act provides that interest shall not be
awarded against the Crown in the absence of a contractual or
statutory provision requiring payment thereof. Section 40 pro
vides that a judgment bears interest from the time of giving the
judgment. The plaintiffs relied upon Zutphen Brothers Con
struction Ltd., wherein the Nova Scotia Supreme Court
[Appeal Division] held that subsection 15(1) of the Charter
overrides the exclusive jurisdiction of the Trial Division in suits
against the Crown, which is provided in subsections 17(1) and
(2) of the Federal Court Act. That Court found that section
101 of the Constitution Act, 1867, whereunder Parliament
could confer exclusive jurisdiction on the Federal Court was
subject to the Charter, section 15. As the Crown could sue the
subject in the Supreme Court, but the subject did not have the
same right to sue the Crown the subject was not equal before
and under the law. Subsections 17(1) and (2) were not saved by
the Charter, section 1. The issue was whether section 35 of the
Federal Court Act was overridden by section 15 of the Charter.
Held, pre-judgment interest cannot be awarded.
The reasoning in Zutphen was wrong on two counts. First,
section 101 of the Constitution Act, 1867, is not subject to
section 15 of the Charter as they are both constitutional
provisions which operate together and have the same force and
effect: Reference Re Bill 30, An Act to amend the Education
Act (Ont.). Secondly, section 15 guarantees equality of every
"individual". The Crown is not an individual.
Section 35 is valid legislation under Parliament's power
under section 101 of the Constitution Act, 1867. As no tort is
involved which would require application of the Crown Liabili
ty Act, section 35 of the Federal Court Act applies and the
Court could not award pre-judgment interest as there was no
provision therefor in the contract.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
An Act to amend The Education Act, S.O. 1986, c. 21.
Bill 30, Education Amendment Act, 1986 (No. 2), 2d
Sess., 33d Leg. Ont., 1986-87.
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.), ss. 2(a), 15, 29.
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
[R.S.C. 1970, Appendix II, No. 5] (as am. by Canada
Act 1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1), s. 101.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss.
17, 35, 40.
CASES JUDICIALLY CONSIDERED
NOT FOLLOWED:
Zutphen Brothers Construction Ltd. v. Dywidag Systems
International, Canada Ltd. (1987), 35 D.L.R. (4th) 433
(N.S.C.A.).
APPLIED:
Reference Re Bill 30, An Act to amend the Education
Act (Ont.), [1987] 1 S.C.R. 1148; R. v. Stoddart (1987),
59 C.R. (3d) 134 (Ont. C.A.); Ominayak v. Norcen
Energy Resources (1987), 83 A.R. 363 (Q.B.); Sheldrick
v. The Queen, [1986] 1 F.C. 244; 25 D.L.R. (4th) 721
(T.D.); Guerin v. R., [1982] 2 F.C. 445 (T.D.); affd
[1984] 2 S.C.R. 335.
COUNSEL:
K. C. Mackenzie for plaintiffs.
Paul F. Partridge for defendant.
SOLICITORS:
Guild, Yule, Lane, Sullivan, Mackenzie &
Holmes, Vancouver, for plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
MULDOON J.: The parties by their solicitors
have agreed upon a form of judgment herein, as
the Court invited them to do in the original rea
sons for judgment issued on October 21, 1987.
They could not, however, agree upon the ques
tion of whether or not each successful plaintiff
would be entitled to pre-judgment interest. It is no
small matter for the various plaintiffs because it
has been a long while since, in accordance with the
terms of the lease, they paid the extra unjustified
amounts fixed by the Minister, for which they will
now be entitled to refunds. The plaintiffs claim
interest on those sums. Hence, these second
reasons.
Two provisions of the Federal Court Act, R.S.C.
1970 (2nd Supp.), c. 10, bear closely on the resolu
tion of the question. They are:
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.
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.
In 1981, in his reasons for judgment in Guerin v.
R., [1982] 2 F.C. 445, Mr. Justice Collier of this
Court wrote the following pertinent passages
found on pages 448 and 449:
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. (McNamara Construc
tion (Western) Ltd. v. The Queen [1977] 2 S.C.R. 654 at p.
658.)
Even if the plaintiffs' submission as to section 35 were sound,
they are confronted with the Canadian 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 it. (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 . )
Counsel for the plaintiffs contended there was no such rule;
the Supreme Court of Canada decisions were either incorrectly
decided or distinguishable.
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.
Mr. Justice Collier's judgment was entirely
upheld by the Supreme Court of Canada, ([ 1984]
2 S.C.R. 335) which was unanimous in the result.
Three of the eight judges who participated in the
Supreme Court's judgment, speaking through
Madam Justice Wilson, specifically and directly
(at page 364) approved of the denial of pre-judg
ment interest effected by Collier J. A fourth judge,
Estey J., agreed (at page 391) with the disposition
of the facts and issues stated by Wilson J. The
other four judges whose opinion was expressed by
Mr. Justice Dickson (the present Chief Justice)
found, as reported on page 391, that Mr. Justice
Collier's judgment "discloses no error in princi
ple". It was thereupon reinstated without varia
tion.
The only matter of law which could now dilute
the validity of Mr. Justice Collier's disposition
relating to interest, according to the plaintiffs'
counsel, is the intervening emplacement, in 1982,
of the equality rights provision in the Canadian
Charter of Rights and Freedoms [being Part I of
the Constitution Act, 1982, Schedule B, Canada
Act 1982, 1982, c. 11 (U.K.)]. That provision is
section 15, which came into force on April 17,
1985. Subsection 15(1) runs as follows:
15. (1) Every individual is equal before and under the law
and has the right to the equal protection and equal benefit of
the law without discrimination and, in particular, [in ways
which are not relevant here.]
At first impression, it would seem that the plain
tiffs can derive precious little comfort from subsec
tion 15(1) in their quest for pre-judgment interest.
In January, 1987, however, the Appeal Division
of the Supreme Court of Nova Scotia, unanimous
ly speaking through the reasons of Mr. Justice
Jones, held that subsection 15(1) of the Charter
overrides the exclusive jurisdiction of the Trial
Division in suits against the Crown, which is pro
vided in subsections 17(1) and (2) of the Federal
Court Act, above cited. That decision of 1987 is
cited as Zutphen Brothers Construction Ltd. v.
Dywidag Systems International, Canada Ltd.
(1987), 35 D.L.R. (4th) 433 (N.S.C.A.) (herein-
after: Zutphen.) The relevant reasoning of Jones
J.A. is encapsulated in the headnote, at page 434,
which, for present purposes, it will be convenient
to quote.
Before the enactment of the Charter it was not questioned
that Parliament under s. 101 of the British North America Act,
1867 (now the Constitution Act, 1867) could create a Federal
Court and confer jurisdiction on it to try actions against the
federal Crown. However, s. 101 is subject to s. 15 of the
Charter and while Parliament may confer exclusive jurisdiction
on the Federal Court it must now do so in a manner which does
not offend the equality provisions of s. 15. The effect of s. 17 of
the Federal Court Act in conferring exclusive jurisdiction on
the Federal Court is to place the subject in a different position
from the Crown as a litigant. While the Crown can sue the
subject in the Supreme Court, the subject does not have the
same right to sue the Crown. It follows that the subject is not
equal before and under the law and does not have the equal
protection and benefit of the law without discrimination. Sub
sections (1) and (2) of s. 17 of the Federal Court Act are
inconsistent with the provisions of s. 15(1) of the Charter in so
far as those provisions purport to confer exclusive jurisdiction
on the Federal Court for actions listed in s. 17(2) of the Act or
for negligence. There is no violation of the Charter in so far as
those provisions simply confer jurisdiction on the Federal
Court. These provisions are not saved by s. 1 of the Charter.
The onus of satisfying the requirements under s. 1 is on the
Crown. It has not shown the necessity of conferring exclusive
jurisdiction on the Federal Court under s. 17(1) and (2). The
authors who have written on the Federal Court all agree that
there is no need for those provisions and indeed that they result
in great inconvenience and expense. It cannot be said that these
provisions relate "to concerns which are pressing and substan
tial". Having failed on the first test for determining whether
the provisions constitute reasonable limits under s. 1 of the
Charter set forth in R. v. Oakes it is unnecessary to consider
the remaining tests.
With the utmost respect which is due to the
learned judges of appeal in Nova Scotia, it is noted
that their reasoning in Zutphen exhibits two flaws
which negate the validity of their conclusion. In
the first place, section 101 of the Constitution Act,
1867 [30 & 31 Vict., c. 3 (U.K.) [R.S.C. 1970,
Appendix II, No. 5] (as am. by Canada Act 1982,
1982, c. 11 (U.K.), Schedule to the Constitution
Act, 1982, Item 1)], is not subject to subsection
15(1) of the Charter for they are both constitu
tional provisions which operate together on the
same plane of constitutional force and effect.
Secondly, it cannot be lawfully held that the
"individual" whose equality is guaranteed by sub
section 15(1) of the Charter is guaranteed equality
with the Crown, or enjoys legal rights on the same
constitutional plane as the Crown.
The first proposition resides in the judgment of
the Supreme Court of Canada in Reference Re
Bill 30, An Act to amend the Education Act
(Ont.), [1987] 1 S.C.R. 1148. That case involved a
reference by the Lieutenant Governor in Council
of Ontario respecting Bill 30 [Education Amend
ment Act, 1986 (No. 2), 2d Sess., 33d Leg. Ont.,
1986-87], An Act to amend The Education Act
[S.O. 1986, c. 21] to provide full funding for
Roman Catholic separate high schools. The oppo
nents of the amendments contended that those
amendments infringe the equality guaranteed in
subsection 15(1) of the Charter, and that the new
provisions for public funding violate freedom of
religion guaranteed by paragraph 2(a) thereof,
despite the provisions of section 29. This latter
section of the Charter provides:
29. Nothing in this Charter abrogates or derogates from any
rights or privileges guaranteed by or under the Constitution of
Canada in respect of denominational, separate or dissentient
schools.
Here are certain pertinent passages from the
Supreme Court's various reasons for judgment in
that Education Act reference. Madam Justice
Wilson, with whom Chief Justice Dickson and
Messrs. Justices McIntyre and La Forest con
curred, is reported at pages 1197 and 1198, thus:
This does not mean, however, that such rights or privileges
are vulnerable to, attack under ss. 2(a) and 15 of the Charter. I
have indicated that the rights or privileges protected by s. 93(1)
are immune from Charter review under s. 29 of the Charter. I
think this is clear. What is less clear is whether s. 29 of the
Charter was required in order to achieve that result. In my
view, it was not. I believe it was put there simply to emphasize
that the special treatment guaranteed by the constitution to
denominational, separate or dissentient schools, even if it sits
uncomfortably with the concept of equality embodied in the
Charter because not available to other schools, is nevertheless
not impaired by the Charter. It was never intended, in my
opinion, that the Charter could be used to invalidate other
provisions of the Constitution, particularly a provision such as
s. 93 which represented a fundamental part of the Confedera
tion compromise. Section 29, in my view, is present in the
Charter only for greater certainty, at least in so far as the
Province of Ontario is concerned.
To put it another way, s. 29 is there to render immune from
Charter review rights or privileges which would otherwise, i.e.,
but for s. 29 be subject to such review. The question then
becomes: does s. 29 protect rights or privileges conferred by
legislation passed under the province's plenary power in rela
tion to education under the opening words of s. 93? In my view,
it does although again I do not believe it is required for this
purpose. [Emphasis not in original text.]
Further in the Education Act reference, Mr. Jus
tice Estey, with whom Mr. Justice Beetz con
curred, is reported, at page 1207 in these words:
I therefore would conclude that s. 93(3) does indeed
introduce a recognition of a legislative power granted in the
opening words of s. 93 and surviving the operations of s. 93(1).
This legislative power in the province is not subject to regula
tion by other parts of the Constitution in any way which would
be tantamount to its repeal. The Charter would not be available
to disallow the implementation of s. 93(1), or legislation for the
protection of the rights embedded by s. 93(1), or legislation
contemplated in s. 93(3).
This conclusion, that Bill 30 finds its validity in the exercise
of provincial power under s. 93 and that the exercise of this
power cannot be abolished or truncated by the Charter, is
sufficient to dispose of this appeal.
Finally, Mr. Justice Lamer, at page 1209, wrote:
I have had the benefit of reading the reasons for judgment
prepared in this appeal by my colleagues, Wilson and Estey JJ.
I agree with them that this appeal should be dismissed. How
ever, I would dismiss the appeal only on the basis of the
opening words of s. 93 and s. 93(3) of the Constitution Act,
1867, for the reasons given by Wilson J. I also agree with
Wilson J. as to the effect of the Canadian Charter of Rights
and Freedoms on s. 93 of the Constitution Act, 1867.
Thus, the Supreme Court of Canada in the
Education Act reference gives no basis for sup-
porting the thesis of the Zutphen decision, in
regard to which leave to appeal has been accorded
[June 29, 1987]. All of the nine judges, in effect,
held that the putatively discriminatory law enacted
pursuant to provincial power prescribed in the
Constitution Act, 1867 is immune from review
under the Charter and does not even need that
protective provision emplaced in the Charter in
order to stand valid. It goes without saying, of
course, that even if enacted in apparent accord
with the distribution of constitutional powers, ordi
nary legislation whether in the provincial domain,
for example, of real property, or in the federal
domain, for example, of criminal law, is always
subject to judicial scrutiny in regard to its accord
with, or violation of, rights and freedoms guaran
teed in and by the Charter. More of this later.
The second proposition concerning the flaws of
reasoning in the Zutphen case, asserts that subsec
tion 15(1) of the Charter guarantees the equality
only of individuals in relation only to each other
and not vis-Ã -vis the Crown. In July, 1987, the
Ontario Court of Appeal, unanimously speaking
through Mr. Justice Tarnopolsky in R. v. Stoddart
(1987), 59 C.R. (3d) 134, considered the same
proposition about equality and rejected the thesis
enunciated in Zutphen, as reported at pages 142
through 147. At page 145, Tarnopolsky J.A. stated
decisively: "The Crown is not an "individual" with
whom a comparison can be made to determine a s.
15 (1) violation." At page 146, he is reported as
holding: "If I am wrong in this conclusion then,
because of their very different roles, as just
outlined, I would hold that an accused and the
Crown are not similarly situated with respect to
the purpose of the law." These brief extracts
should not deter a reader from fuller, more
detailed and leisurely appreciation of the Stoddart
judgment. Later yet, in October, 1987, Chief Jus
tice Moore, of the Alberta Queen's Bench, in the
case of Ominayak v. Norcen Energy Resources
(1987), 83 A.R. 363, considered whether to accord
leave to amend the statement of claim in order to
add Her Majesty the Queen in Right of Canada as
a party. The proceeding before Chief Justice
Moore is closely similar to that which was
adjudicated by the Nova Scotia Court of Appeal
in Zutphen. In both specifically referring to that
case and rejecting its conclusion, Moore C.J.Q.B.
wrote the following necessarily selected passages
[at pages 369-370]:
I am satisfied the applicants cannot seek relief against the
Federal Crown in this Court despite the finding of the Nova
Scotia Court of Appeal in Zutphen Bros. Construction v.
Dywidag Systems Int'l (1987), 76 N.S.R. (2d) 398; 189 A.P.R.
398; 35 D.L.R. (4th) 433 (N.S.S.C.A.D.). In this case the
Nova Scotia Court of Appeal allowed an application to join the
Crown in right of Canada as a third party.
The Nova Scotia Court of Appeal held that sections 17(1)
and (2) of the Federal Court Act, R.S.C. 1970, 2nd Supp., c.
10, and section 7(1) of the Crown Liability Act, R.S.C. 1970 c.
38, was [sic] inconsistent with section 15 of the Charter.
I am of the view the word "individual" in section 15 of the
Charter does not include the Crown and the meaning of the
word as used in section 15 has been misinterpreted by the Nova
Scotia Court of Appeal.
Section 101 of the Constitution Act 1867 gives the Parlia
ment of Canada power to establish additional Courts for the
better administration of the laws of Canada. Parliament estab
lished the Federal Court and gave it exclusive original jurisdic
tion to hear and determine claims for damages, and to deal
with claims where a party seeks relief against the Federal
Crown. In my view Section 15 cannot be made paramount over
section 101 of the Constitution Act.
I simply do not agree that I should exercise my discretion under
the Alberta rule 38(3) to add the Federal Crown as a party
defendant.
The Ominayak decision will reward a careful
reader with much more learning than is recited
above.
Does section 35, if not also section 40 of the
Federal Court Act entirely overleap the constitu
tional challenge levied by invocation of the Chart
er? Yes, if one considers that in defining the
exposure to liability, if any, of the Crown and the
forum for determining the extent of such exposure,
if any, one accepts—as has long been accepted—
that Parliament may for the purposes of "the
better administration of the laws of Canada" [sec-
tion 101] limit the Crown's exposure by immuniz
ing the Crown in right of Canada from liability to
pay interest to claimants as is effected in section
35 of the Act.
So it was held by Mr. Justice Strayer, of this
Court, in Sheldrick v. The Queen, [ 1986] 1 F.C.
244; 25 D.L.R. (4th) 721, where at pages 254
F.C.; 729 D.L.R. he is reported as holding:
By virtue of sections 35 and 40 of the Federal Court Act,
[R.S.C. 1970 (2nd Supp.), c. 10]I am precluded from award
ing pre-judgment interest against the Crown unless such inter
est is stipulated by contract or provided for by statute. See, e.g.,
Eaton v. The Queen, [1972] F.C. 185 (T.D.); and Corpex
(1977) Inc. v. The Queen in right of Canada, (Motion and
re-hearing), [1982] 2 S.C.R. 674. While by virtue of section 3
of the Crown Liability Act [R.S.C. 1970, c. C-38], pre-judg
ment interest may be awarded against the federal Crown in tort
actions where such interest would be payable pursuant to the
law of the province applicable to the tort in question, there is no
such general authority with respect to actions for contract such
as the present one. Counsel for the plaintiff was unable to
direct me to any contractual stipulation or statutory authority
providing for the payment of pre-judgment interest in the
circumstances of the present case. While by virtue of section 40
of the Federal Court Act, it would be open to me to increase
the rate of post-judgment interest beyond that prescribed in the
Interest Act [R.S.C. 1970, c. I-18], counsel for the plaintiff did
not make any specific request for this nor did I have the
opportunity to hear submissions pro and con as to what a
proper rate would be. I shall therefore make no special award
in this respect.
This dispute is referred to this Court in order to
resolve the parties' opposing contentions about the
payments to be made pursuant to a contract, the
lease of the Indian lands to the plaintiffs. There is
no tort involved, as the original reasons for judg
ment herein disclose. If, in opposite circumstances,
the Crown could claim pre-judgment interest from
the tenants, which in terms of the parties' contract
is not absolutely certain, then it is apparent that
the parties ought to amend their contract in a
spirit of parity. This Court cannot compel them to
do that and, of course, the Crown may always have
the unequal benefit of its refuge in section 35 of
the Act. In any event, pre-judgment interest
cannot be awarded here, unfortunately for the
otherwise successful plaintiffs.
Costs however have been and are still awarded.
The provision for costs in the final judgment may
be expressed thus:
... the remaining plaintiffs whose actions have not been dis
missed shall as if one plaintiff have full costs, being actual
disbursements with double fees, to be paid by the defendant on
a party and party basis forthwith after taxation thereof.
It would appear that the parties will now most
probably agree upon the form in which the judg
ment is to be expressed. The draft already present
ed contains awards of interest which cannot be
allowed. Accordingly, and so as to help insure the
avoidance of errors, the parties' solicitors are still
directed to approach the task of preparing a draft
judgment in order to implement the Court's deci
sion as they have been proceeding in compliance
with the last paragraph of the Court's reasons
dated October 21, 1987.
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.