T-2383-89
Comeau's Sea Foods Limited (Plaintiff)
v.
Her Majesty the Queen as represented by the
Minister of Fisheries and Oceans (Defendant)
INDEXED AS: COMEAU'S SEA FOODS LTD. V. CANADA
(MINISTER OF FISHERIES AND OCEANS) (T.D.)
Trial Division, Strayer J.—Halifax, February 18;
Ottawa, May 5, 1992.
Crown — Torts — Action for damages arising from defend
ant's failure to issue authorized offshore lobster fishery
licences, although aware plaintiff expending money on conver
sion of vessel to use licences — Fisheries Act, s. 7 giving Min
ister absolute discretion to issue or authorize to be issued fish
ing licences — Authorization of issue of licences exhausted
Minister's discretion — Purported withdrawal of licence ultra
vires — Decision licences previously authorized not to be
issued negligent act — Minister owed duty of care to plaintiff
— Proximity between parties flowing from representation
licences would be issued — Breach of standard of care
Harmful effect to plaintiff foreseeable — Plaintiff suffered fore
seeable financial loss as result of about-face — Although loss
purely economic, where "circumstantial proximity", defendant
liable for loss — No defence of statutory authority where Min
ister exceeding powers — Duty of care not limited — Refusal
to issue licences not policy decision — Defence of statutory
authority never absolute — Minister not demonstrating man
ner lobster fishery managed herein inevitable consequence of
exercise of discretion under s. 7 — Crown Liability and Pro
ceedings Act, s. 8, giving Crown special immunity from torts
liability not applicable as applies only to non-negligent con
duct.
Crown — Contracts — After Minister announcing authori
zation of issuance of offshore lobster licences, plaintiff advis
ing conversion of vessel under way — Minister subsequently
announcing licences would not be issued — Plaintiff alleging
contractual relationship established whereby Minister issuing
licences in return for plaintiff preparing for and carrying out
offshore lobster . fishing — No breach of contract as not estab
lished parties intended contractual rights and duties to flow
from application for and grant of licence.
Fisheries — Minister advising plaintiff offshore lobster
licences authorized — Plaintiff advising Department vessels
under conversion to use licences — Minister giving in to objec
tions of inshore fishermen, announcing licences not to be
issued — Crown sued for negligence, breach of contract —
Minister exhausted statutory discretion in authorizing issue of
licenses — Minister's breach of statutory duty constituting
actionable negligence — Plaintiffs economic loss foreseeable
— Defence of statutory authority unavailable in case of negli
gence — Crown not demonstrating conduct necessary way of
exercising Minister's discretion in management of lobster fish
ery.
This was an action for damages caused by the failure to
issue lobster fishery licences. The Minister advised the plain
tiff that he had authorized the issuance to it of two offshore
lobster licences and two experimental offshore lobster/red crab
licences. The conditions of the licences were to be discussed at
a later date. Shortly thereafter, plaintiff provided the Depart
ment with the names and numbers of the vessels which were to
appear on the licences, and indicated that conversion work on
the vessels was in progress. Later, however, the Regional
Director was ordered not to issue any licences without specific
authority from Ottawa. This was apparently in response to the
objections of inshore fishermen who believed that more off
shore lobster fishing would adversely affect the inshore fish
ery. Later still the Minister announced that the experimental
licences would not be issued. The Department confirmed by
letter to the plaintiff that it would not be receiving the four
licences authorized to be issued. The plaintiff had spent about
$500,000 converting its vessel for lobster fishing. Fisheries
Act, section 7 gives the Minister absolute discretion to issue or
authorize to be issued fishing licences. Under section 9, he
may suspend or cancel any licence under certain circum
stances.
The plaintiff asserted liability in tort for negligence (breach
of statutory duty), liability for "breach of a government under
taking", and liability for breach of contract, contending that a
contractual relationship had been established whereby it was
understood that in return for the Minister issuing the licences
the plaintiff would prepare for and carry out offshore lobster
fishing. It was argued that, at least with respect to fishing
under the "experimental" licences, the Department would ben
efit from the data gathered on the lobster habitat in the area
where licences had not previously been issued.
The Crown's argument was that section 7 gave the Minister
absolute discretion to issue licences, which was not affected by
the section 9 limit on the authority to revoke a licence since no
licence had been issued. Alternatively, it was contended that
(I) the defendant did not owe a duty of care to the plaintiff
because the decision not to issue the licences was a "policy"
decision; and (2) the Minister's actions were authorized by
statute so that by both general principles of law and the Crown
Liability and Proceedings Act (section 8 of which provides that
the Crown is not liable in respect of anything done in the exer
cise of any power or authority exercisable by the Crown), the
Crown was not liable.
Held, the action should be allowed.
The Minister has an absolute discretion under section 7 to
either issue or to authorize the issue of a licence. If he issues
the licence, nothing remains to be done by anyone. If he autho
rizes the issue, as was done here, with certain conditions to be
settled, then it only remains for those conditions to be settled
between departmental officials and the licensee. There is no
continuing role for the Minister in respect of an authorized
licence. The refusal of the licences was not related to any fail
ure by plaintiff to meet specific conditions. When the Minister
authorized the issue of licences to the plaintiff, he had
exhausted his discretion under section 7. The restrictions on
suspension or cancellation of licences provided in section 9 did
not apply since no licence had been issued.
While breach of a statute does not automatically give rise to
tort liability, the acts constituting breach of a statutory duty by
the Minister also constituted actionable negligence. The negli
gent act was the decision that the licences previously author
ized were not to be issued. The elements of negligence were
established. (1) The Minister owed a duty of care to the plain
tiff. There was a proximity between the defendant and the
plaintiff flowing from the Minister's representation that the
licences would be issued. (2) There was a breach of the requi
site standard of care. From the time the plaintiff advised the
Department that it was undertaking work to convert vessels in
order to use the licences, it was foreseeable that any departure
from the announced line of conduct (i.e. the issue of the
licences) would have a harmful effect on the plaintiff. (3) The
plaintiff suffered some foreseeable financial loss as a result of
the about-face. Although the plaintiff's loss was purely eco
nomic, the Supreme Court of Canada has held that where there
is the necessary "circumstantial proximity", a defendant can be
held liable for such loss.
Courts do not review policy decisions for which public
authorities are politically responsible, but decisions taken in
the "implementation" of those policy decisions are subject to a
duty of care. Once the necessary policy decision is taken, it
should be implemented in a way which will not cause an
unreasonable risk of harm to those reasonably affected by it.
This rationale proceeds on the assumption that the alleged
"policy" decision is authorized by statute. The refusal to issue
the licences was ultra vires the Minister. Furthermore, the only
relevant policy decision was the Minister's decision to author
ize the issue of the licences, a step specifically provided for in
section 7. The decision was to authorize the issue rather than
the actual issue because there were some detailed conditions to
be worked out, but matters were proceeding without difficulty
to the actual issue. No policy issues remained to be resolved.
As the Minister's purported withdrawal of the licence authori
zations was beyond his powers, there could be no defence of
statutory authority. Also, the defence of statutory authority has
never been absolute. If an agency was given a discretionary
power it could not rely on statutory authority as a defence in
actions in tort for harm committed in the exercise of that
power unless it could show that the interference with private
rights complained of was inevitable in the exercise of the
power. This doctrine was modified in favour of plaintiffs in
Tock v. St. John's Metropolitan Area Board. In that case,
Sopinka J.—who took the most generous view of the defence
—said that the onus was on the defendant to at least show that
what was done under purported statutory authority was done
without negligence and therefore the harmful result was inevi
table. The Crown had not demonstrated that to authorize issue
of a licence but then to refuse its issue after an intended licen
see undertook expenditures in reliance on the authorization
was a necesssary way of exercising the Minister's section 7
discretion. Crown Liability and Proceedings Act, section 8 is
relevant to non-negligent conduct; the conduct herein was neg
ligent.
Generally, the relations between public officials who issue
licences pursuant to statutory authority and licensees are gov
erned not by the law of contract but by the provisions of the
statute and general principles of administrative law. While a
contractual relationship is not impossible, there should be clear
evidence that the parties intended that contractual rights and
duties were to flow from the application for and grant of a
licence. The circumstances here would not have given rise to
such expectations. Apart from the fact that no particular benefit
to the Minister was identified with respect to the grant of two
of the licences, even the licences in the experimental area were
not intended to give rise to mutual obligations. There was no
contractual intention.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Atlantic Fishery Regulations, 1985, SOR/86-21, s.
28(1)(a) (rep. by SOR/91-296, s. 1).
Crown Liability and Proceedings Act, R.S.C., 1985, c.
C-50 (as am. by S.C. 1990, c. 8, s. 21), ss. 8, 31 (as am.
idem, s. 31).
Fisheries Act, R.S.C., 1985, c. F-14, ss. 7, 9 (as am. by
R.S.C., 1985 (1st Supp.), c. 31, s. 95).
CASES JUDICIALLY CONSIDERED
APPLIED:
Canadian National Railway Co. v. Norsk Pacific Steam
ship Co., judgment dated 30/4/92, S.C.C. confg [1990] 3
F.C. 114; (1990), 65 D.L.R. (4th) 321; 3 C.C.L.T. 229;
104 N.R. 321 (C.A.); Swanson v. Canada (Minister of
Transport), [ 1992] I F.C. 408; (1991), 80 D.L.R. (4th)
741; 7 C.C.L.T. (2d) 186 (C.A.); Tock v. St. John's Metro
politan Area Board, [1989] 2 S.C.R. 1181; (1989), 64
D.L.R. (4th) 620; 104 N.R. 241.
CONSIDERED:
Anns v. Merton London Borough Council, [1978] A.C.
728 (H.L.); Kamloops (City of) v. Nielsen et al., [1984] 2
S.C.R. 2; (1984), 10 D.L.R. (4th) 641; [1984] 5 W.W.R.
1; 29 C.C.L.T. 97; Just v. British Columbia, [1989] 2
S.C.R. 1228; (1989), 64 D.L.R. (4th) 689; [I990] 1
W.W.R. 385; 103 N.R. 1.
REFERRED TO:
R. in right of Canada v. Saskatchewan Wheat Pool,
[I983] 1 S.C.R. 205; (1983), 143 D.L.R. (3d) 9; [1983] 3
W.W.R. 97; 23 C.C.L.T. 121; 45 N.R. 425.
AUTHORS CITED
Hogg, Peter W. Case Comments, "Tock v. St. John's Met
ropolitan Area Board" (1990), 69 Can. Bar Rev. 589.
ACTION for damages arising from Minister's
refusal to issue authorized lobster fishery licences.
Action allowed.
COUNSEL:
Hon. Stewart McInnes, Q.C. for plaintiff.
Michael F. Donovan for defendant.
SOLICITORS:
McInnes, Cooper & Robertson, Halifax, for
plaintiff.
Deputy Attorney General of Canada for defen
dant.
The following are the reasons for judgment ren
dered in English by
STRAYER J.:
Relief Requested
This is an action for damages which the plaintiff
says it has suffered as a result of the failure of the
defendant, represented by the Minister of Fisheries
and Oceans, to issue to it four lobster fishery licences
after allegedly undertaking, representing, or con
tracting to issue such licences. The plaintiff alleges it
has incurred expenses as a result of such representa
tion, undertaking, or agreement.
By order of May 7, 1991 Martin J. directed that the
issue of damages, including quantum, accounting and
other relief, be referred to a judge nominated by the
Associate Chief Justice after the issue of liability has
been decided by the Court. I am therefore only con
cerned in the present proceedings with determining
liability.
Facts
The inshore lobster fishery off the east, south, and
southwest coast of Nova Scotia is carried on within a
geographical area extending approximately fifty nau
tical miles from those coasts and forming part of
North Atlantic Fisheries Organization Convention
areas 4X and 4W. There are 1,601 inshore lobster
fishery licensees in this inshore area. The offshore
lobster fishery is carried on in those portions of areas
4X and 5Z beyond the inshore area. The eastern
boundary of area 4X and the western boundary of
area 4W is a line commencing at approximately Hali-
fax and running due southward. Area 5Z lies to the
west of area 4X, including both some Canadian and
some U.S. fisheries territory. There were eight off
shore lobster licensees operating in areas 4X/5Z at
the time in question. In the offshore portion of NAFO
Convention area 4W there were and are no offshore
lobster licensees.
The plaintiff is an integrated fishing company
operating on the southwest coast of Nova Scotia. It
has some fifteen vessels and in peak season employs
up to one thousand people. It has no offshore lobster
licences but had been expressing to the Minister of
Fisheries since at least 1984 an interest in obtaining
such licences.
In 1985 by the decision of a panel of the Interna
tional Court of Justice the Canada-U.S. boundary was
defined in the Gulf of Maine, deciding in favour of
Canada in respect of certain additional areas of value
for the lobster fishery. This resulted in a renewed
effort by the plaintiff to obtain two offshore lobster
licences: by a letter of August 21, 1986 the President
of the plaintiff, Marcel Comeau, wrote to the
Honourable Thomas Siddon, asking for such licences
and stating that the plaintiff was "prepared to start
fishing immediately" once it had the necessary
licences. Subsequently Mr. Comeau and his father,
the Chairman of the Board of the plaintiff company,
pursued this matter personally with the Minister.
They spoke to him at a meeting in Boston in March,
1987 and the Minister assured them that he would
definitely look into the possibility of them getting a
licence. In September, 1987 they spoke to the Minis
ter at a meeting in Quebec City and he told Marcel
Comeau and his father that their company would def
initely get one offshore lobster licence.
It appears that in fact some thirteen applications
for new offshore lobster licences were received by
the Minister in 1987. The evidence also seems clear
that one of the factors militating in favour of some
changes in licensing in areas 4X/5Z was that at that
time seven of the eight licences in those areas were
held by closely-related corporations. Another factor
was that there was thought to be a possibility of a
worthwhile offshore lobster fishery in area 4W and it
was thought best to issue some licences in this area
on an experimental basis. The Minister appears there
fore to have decided to maintain the same total allow
able catch for areas 4X/5Z of 720 tonnes per annum,
to reduce the number of licences held in those areas
by the then licence holders (giving the withdrawn
licences to new applicants such as the plaintiff) and
giving "experimental" licences in area 4W as well to
both new applicants and old licence holders in 4X/5Z
(the latter to compensate them for loss of their 4)C/5Z
licences). The net result as far as the plaintiff is con
cerned is that on December 29, 1987 the Minister
sent to the plaintiff a telex as follows:
I am pleased to advise you that I have authorized the issuance
of two offshore lobster licences to your company valid for
NAFO divisions 4X/5Z and two experimental offshore lob-
ster/red crab licences valid for NAFO division 4W. One of
each of these licences will be fished as a unit and will be
placed on two of your company vessels greater than 60 feet
LOA.
Your company's EA based on a 12 month fishing season (Oct.
15—Oct. 14) for lobster in division 4W will be 60T per vessel
with no catch limit for red crab. Similarly your company's EA
for lobster in divisions 4X/5Z will be 30T per vessel.
These EAS will be prorated for the 1987/88 season as follows
for each of your vessels:
Division 4W-48T
Divisions 4X/5Z-24T
Regional officials will be in contact with you shortly at which
time specific conditions of licence will be discussed.
As will he seen the Minister confirmed that the plain
tiff was to get two licences for division 4X/5Z and
two experimental licences for division 4W. The "EA"
referred to, according to the evidence, is the "enter-
prise allocation". It will be noted that such allocations
were stated very precisely in respect of the plaintiff.
Further, these allocations were specifically prorated
for the 1987/88 season with each vessel to have only
80% of its normal annual allocation for the remainder
of that season, the season running from October 15,
1987 to October 14, 1988 with approximately 20% of
it having elapsed at the time of this telex.
It will also be noted that in the telex the Minister
said that specific conditions of the licence would be
discussed with the plaintiff by regional officials. On
January 11 a telex was sent by the Department of
Fisheries and Oceans to the plaintiff and others
announcing a "meeting of the offshore lobster licence
holders" to be held at Hunt's Point, Nova Scotia, on
January 14. At this meeting were representatives of
the holders of licences theretofore granted as well as
those to whom the Minister had announced on
December 29, 1987 that he had authorized licences to
be issued. According to the minutes the Department
explained the new allocations and the controls which
would be imposed and "licence holders had no objec
tions to any of these controls". On January 27, 1988
the Department sent a telex to each of the firms rep
resented at the Hunt's Point meeting advising them
that it would be necessary to file a fishing plan for
each vessel for the balance of the fishing season. The
Department also said that it required the name and
number of each vessel which would appear on the
licence. On January 29, 1988 the plaintiff provided
the information required, by letter. In that letter it
advised that the fishing vessels it would use would be
the Lady Comeau and the Lady Denise. The letter
added:
These vessels are presently geared for the scallop fishery but
work to convert these for the offshore lobster fishery is due to
start very shortly. These vessels should be ready to go fishing
in Apri l.
This was a clear indication that the plaintiff was pro
ceeding with conversion work on these vessels in the
belief that the lobster licences would he issued to it in
due course. Mr. Neil Bellefontaine, now Regional
Director General of the Department of Fisheries and
Oceans for the Scotia-Fundy region, testified that
thereafter and until at least March 8 if the plaintiff
had asked for the actual licences to be issued the
Department would have issued them subject to set
tling any specific conditions which should be
attached to their licences or to the licences in this
area generally. Those conditions had not yet been set
tled finally. However, on March 8, 1988 Mr. Bel-
lefontaine was instructed from Ottawa not to issue
any such licences without specific clearance from the
Assistant Deputy Minister in Ottawa.
In the period since the announcement by the Min
ister on December 29, 1987 that new offshore
licences would be issued there had been strong objec
tions voiced by inshore fishermen against the issue of
any new offshore licences. This apparently stemmed
from a belief that more lobster fishing in the offshore
would affect the inshore fishery. (It will be noted that
only the proposed licences in division 4W would
involve new catch, as the total proposed allocation
for areas 4X/5Z remained the same but with some
change of licensees.) It seems amply clear that the
scientific evidence available to the Minister at that
time did not suggest any likely harmful effect on the
inshore fishery by increased offshore fishery activity:
indeed a report of the Canadian Atlantic Fishery Sci
entific Advisory Committee produced at about this
time indicates the contrary. Certainly the Minister
initially took the position with the inshore fishermen
that there was no evidence of any likely harmful
effect.
At a meeting of the Scotia-Fundy Lobster Advi
sory Committee, involving representatives of the
industry, held in Halifax on March 30, 1988 the Min
ister listened to the concerns of the inshore fisher
men. In a press release issued after that meeting he
maintained that he would not "cancel" the new off
shore licences but said he was prepared to impose the
necessary conditions to respond to the concerns of
inshore lobster fishermen. However the negative
pressure continued from the inshore fishermen and
the issue developed into a political dispute in Nova
Scotia and in Ottawa. Finally on April 29, 1988 the
Minister issued another press release announcing that
... the four experimental offshore lobster licences in Nova
Scotia would not be issued in the foreseeable future... .
He announced instead that he was launching a new
study "of all the major issues facing the lobster
industry in Scotia-Fundy Region", observing that
there had been no major study of the lobster fishery
since 1975. That study was subsequently launched
and was not completed until 1990. It was then
reviewed by the Minister and the Department and
only recently, as I understand it, have any decisions
flowed from it. In the meantime the Department con
firmed by letter to the plaintiff on May 31, 1988 that
it would not be receiving the four licences (neither
the "experimental" licences in area 4W nor the other
licences for area 4X/5Z) which the Minister had
authorized to be issued to the plaintiff, and it had not
received those licences as of the time of trial.
There was no evidence to explain the volte-face of
the Minister between December 29, 1987 and April
29, 1988 other than the obvious: namely the pressure
generated by the strenuous objections of the inshore
fishermen (who are far more numerous than the off
shore fishermen) to any new offshore lobster
licences. The Minister did not testify at this trial and
his Department did not produce any evidence sug
gesting any other reason. Ample evidence was
presented of the objections of the inshore fishermen.
As the question of damages had been referred for
determination after trial at a reference, should liabil
ity be found, I entertained evidence as to this subject
at the trial only to the extent of being satisfied that
the plaintiff did incur expenditures in contemplation
of receiving the lobster fishing licences which were
announced by the Minister in his telex of December
29, 1987 and aborted by the Minister's press release
of April 29, 1988. Mr. Marcel Comeau, the President
of the plaintiff company, testified that during the
period between these two dates the plaintiff had spent
about $500,000 converting the MV Lady Comeau for
lobster fishing. This was not presented as a detailed
claim and I made clear that I was receiving this evi
dence only to see if there was evidence of some loss,
not for the purpose of establishing quantum. I am sat
isfied that some loss was incurred sufficient to sup
port a claim for liability should the other elements of
actionable harm be established.
The plaintiff in argument asserted four bases for
liability of the defendant: liability in tort for negli
gence; liability for the "breach of a government
undertaking"; liability for breach of contract; and
some kind of liability turning on "promissory estop-
pel". It appears to me that only breach of contract
was pleaded in the original statement of claim,
although it may perhaps be read to allege an obliga
tion of the defendant to issue the licences flowing in
part from more general obligations imposed on the
Minister pursuant to legislation. At the trial the plain
tiff proposed certain amendments to its statement of
claim and these amendments were permitted on con
dition, as requested by the defendant, that the defen
dant be allowed to raise any defences to these amend
ments without amending its own pleadings. Those
amendments are as follows:
12(a) In the alternative and in any event the plaintiff repeats
paragraphs 1 to II hereof and says that the refusal of the
defendant to issue the lobster fishing licence to the plaintiff
was ultra vires Fisheries Act and a breach of the defendant's
statutory duty thereunder, constituting the tort of negligence,
as a direct result of which the plaintiff has suffered damages.
12(b) In the further alternative and in any event the plaintiff
repeats paragraphs 1 to II hereof and says that the decision of
the defendant to issue the lobster fishing licence to the plaintiff
was an irrevocable legal act which the defendant wrongfully
purported to revoke as a direct result of which the plaintiff has
suffered damages.
It will be noted that these amendments allege liability
for negligence and also allege that the announcement
of the authorization of the licences was "an irrevoca
ble legal act" and the Minister's purported revocation
of it wrongfully caused damages to the plaintiff. The
defendant took the position at trial that the plaintiff
had not pleaded promissory estoppel and that if the
plaintiff was then seeking an amendment to allege
promissory estoppel, the defendant would object to
such an amendment being made. The plaintiff took
the position that if such an amendment were required
it was requesting the amendment. I reserved on that
question as argument had already been advanced on
the substance of promissory estoppel.
Conclusions
Scope of the Minister's Statutory Authority
Before considering the specific grounds of liability
alleged, it will be appropriate to consider the nature
and scope of the Minister's power under sections 7
and 9 of the Fisheries Act [R.S.C., 1985, c. F-14 (as
am. by R.S.C., 1985 (1st Supp.), c. 31, s. 95)] which
are relied on by the defendant as the source of the
Minister's authority to do what he has done. They
provide:
7. (1) Subject to subsection (2), the Minister may, in his
absolute discretion, wherever the exclusive right of fishing
does not already exist by law, issue or authorize to be issued
leases and licences for fisheries or fishing, wherever situated
or carried on.
(2) Except as otherwise provided in this Act, leases or
licences for any term exceeding nine years shall be issued only
under the authority of the Governor in Council.
9. The Minister may suspend or cancel any lease or licence
issued under the authority of this Act, if
(a) the Minister has ascertained that the operations under the
lease or licence were not conducted in conformity with its
provisions; and
(b) no proceedings under this Act have been commenced
with respect to the operations under the lease or licence.
The defendant argues that these sections give the
Minister absolute discretion under section 7 as to
whether or not to issue a fishing licence although,
once the licence is issued, the Minister's authority to
revoke it is limited by section 9. It is said that in the
present case as the licences had never been issued
there was nothing to prevent the Minister from first
authorizing them and then refusing to issue them. I
disagree.
The language of section 7 is quite clear in stating
that there is an absolute discretion either to issue or to
authorize the issue of a licence. The meaning of this
language seems plain. If the Minister issues the
licence nothing remains to be done by anyone. If he
authorizes the issue, as he did here, with certain con
ditions to be settled with the intended licensee, then it
only remains for someone else (his officials) to work
out those conditions with the licensee. The position
of an authorized licence is perhaps more ambiguous
than that of an issued licence (the latter being revoca
ble only in accordance with section 9). But there is
no continuing role for the Minister in respect of an
authorized licence. His absolute discretion is either
(1) to issue, or (2) to authorize the issue, of the
licence. Presumably if he has, as here, authorized its
issue on certain conditions to be settled between offi
cials and the licensee, and the conditions are not set
tled, then the officials will not issue the licence. But
that was not the situation here. As Mr. Bellefontaine
of the Department testified, everything was proceed
ing smoothly in relation to the conditions until word
came from Ottawa not to issue the licences without
specific authority. When the licences were ultimately
refused, the refusal had nothing to do with a failure
by the plaintiff to meet any specific conditions.
That the Minister's authorization to issue a licence
is considered definitive is apparent from the facts
here. As noted above, when the authorization was
announced on December 29, 1987, the Minister allo
cated catch to the plaintiff for 1987-1988 in a portion
of annual catch approximately equal to the portion of
the 1987-1988 fishing season remaining after that
date. In meetings and correspondence with the
Department in January, 1988 the plaintiff was treated
as if it already were a "licence holder".
I therefore conclude that when the Minister author
ized the issue of licences to the plaintiff subject to
certain conditions to be discussed with officials, he
had exhausted his discretion under section 7 of the
Fisheries Act.
The plaintiff also argued that the refusal to issue
the licence was contrary to paragraph 28(1)(a) of the
Atlantic Fishery Regulations, 1985 1 which was in
effect at that time. That Regulation provided that
where a person had been convicted of an offence
under the Fisheries Act or any regulations the Minis
ter could "suspend any document issued to that per
son or refuse to issue to that person any docu
ment .... [Emphasis added.]" (The plaintiff argued
that this specified the only circumstance in which
there could be a refusal to issue, once the licence had
been authorized.) That Regulation was repealed in
1991 2 and the "Regulatory Impact Analysis State
ment" accompanying the repealing amendment indi
cated that subsection 28(1) was repealed because it
restricted the absolute discretion given to the Minis
ter in section 7 of the Fisheries Act. While that view
of the law is not determinative, I am inclined to agree
that such a regulation could not limit the exercise of a
discretion actually granted by the statute unless the
making of such a regulation was itself authorized by
the statute and it is not apparent that it was.
The restrictions on suspension or cancellation of
licences provided in section 9 of the Fisheries Act do
not of course apply to this situation since no licence
had actually been issued.
I shall then deal with each of the grounds of liabil
ity alleged by the plaintiff in argument.
Promissory Estoppel
I have concluded that promissory estoppel is not
pleaded in the statement of claim and, the defendant
having objected to such an amendment being made at
trial I am not going to permit such an amendment at
that late date. In coming to this conclusion I am influ
enced by the fact that I think such a pleading would
in any event he futile. It would he an attempt to base
a cause of action, a claim for damages, on a promis
sory estoppel and not merely the invocation of such a
promise in order to estop the promisor from acting
inconsistently with that promise. I believe this strains
I SOR/86-21.
2 SOR/91-296.
the concept of promissory estoppel and this is not a
case suitable for its application.
Contractual Liability
The plaintiff contends that a contractual relation
ship was established whereby it was understood that
in return for the Minister issuing to the plaintiff the
licences whose authorization he announced on
December 29, 1987 the plaintiff would prepare for,
and carry out, offshore lobster fishing. It is argued
that such activities by the plaintiff would constitute a
benefit to the Minister at least with respect to fishing
under the "experimental" licences in the offshore
portion of area 4W. Licences had not previously been
issued for offshore fishing in this area and it is clear
the Department of Fisheries wished to acquire data
on the lobster habitat in this area from the lobster
fishing to be undertaken by the licensees. It is argued
that the plaintiff had started to perform this contract
by preparing itself for undertaking the fishery and the
Minister was therefore contractually bound to issue
the licence which he had promised in his announce
ment of December 29, 1987. He having failed to do
so, the defendant is therefore liable for breach of con
tract.
I have considerable difficulty in fitting this situa
tion into a contractual model. Generally speaking, the
relations between public officials who issue licences
pursuant to statutory authority and those to whom
licences are issued are governed not by the law of
contract but by the provisions of the statute and gen
eral principles of administrative law. While a con
tractual relationship is not impossible, there should
he clear evidence that the parties intended that con
tractual rights and duties were to flow from the appli
cation for, and grant of, a licence. It does not seem to
me that the circumstances in question here would
have given rise to such expectations. Apart from the
fact that no particular benefit has been identified for
the Minister with respect to the grant to the plaintiff
of two of the licences—those in respect of divisions
4X/5Z—it is hard to imagine even with respect to the
licences in the experimental area of 4W that they
were intended to give rise to mutual obligations. If
the Minister had in fact issued the licences, could he
have sued the plaintiff in contract for failure to fish in
that area? Or was the "offer" the authorization of the
licences on December 29, 1987, with "acceptance" to
occur through the expenditure of money by the plain
tiff on preparations to undertake the fishery permitted
by the licences? If so this would mean that once the
plaintiff spent some money on preparations the offer
was accepted and the Minister was obliged to issue
the licences. The problem with this analysis is that
there is nothing to indicate that the Minister under
stood at the time he authorized the issue of licences
to the plaintiff that the plaintiff would be obliged to
spend money converting a vessel to use those
licences. On the contrary by letters of June 11 and
July 5, 1985 the plaintiff had advised the Minister or
his Department that it had two vessels (The Lady
Melissa and Sealife III) fully equipped for lobster
fishing. Under cross-examination at trial Marcel
Comeau, President of the plaintiff company, agreed
that at no time before the Minister's announcement
on December 29, 1987 of the authorization of the
licences had the plaintiff informed the Minister or his
Department that it would be converting one or more
scallop boats for the lobster fishery.
I therefore believe that it would be unrealistic to
conclude that the parties had some contractual inten
tion giving rise to an obligation on the part of the
Minister to issue the licences as promised.
Tortious Liability for Negligence
I have concluded above that the Minister's pur
ported withdrawal of the licence authorizations was
beyond his powers. There is therefore no defence of
statutory authority available. I agree with the defen
dant that breach of a statute does not automatically
give rise to tort liability. 3 For reasons which follow,
however, I have concluded that the acts constituting
breach of statutory duty by the Minister also consti
tuted actionable negligence here. Indeed, I am also of
the view that even if the revocation of authorization
3 R. in right of Canada v. Saskatchewan Wheat Pool, [1983]
I S.C.R. 205.
were permitted by the statute, it would in these cir
cumstances still constitute the tort of negligence.
However, the plaintiff has not so pleaded, its
amended statement of claim alleging only that the
refusal to issue
... was ultra vires Fisheries Act and a breach of the defend
ant's statutory duty thereunder, constituting the tort of negli
gence....
It is clear that what was done on behalf of the
defendant in this case was erratic public administra
tion which was productive of serious mischief to pri
vate entrepreneurs. I am satisfied from the evidence
given on behalf of the plaintiff by its President, Mar-
cel Comeau, that the plaintiff acted reasonably and in
good faith. The evidence presented on behalf of the
defendant, while honest and straightforward, simply
did not demonstrate any reasonable justification for
first announcing a decision authorizing the issue of
the lobster licences to the plaintiff and then the with
drawal of that authorization. The only apparent justi
fication for a change in the decision to issue the
licences was the strident opposition of the inshore
fishermen. But the evidence indicated that even prior
to the announcement authorizing the licences, such
opposition was quite predictable if not perhaps its
strength and volubility.
The question remains, however, as to whether this
kind of decision-making amounts to actionable negli
gence. I have concluded that, in the circumstances, it
does. The negligent act was, in my view, the decision
announced on April 29, 1988 that the lobster fishing
licences previously authorized on December 29, 1987
to be issued to the plaintiff were not to be issued. The
elements of negligence are established. First there
was a duty of care owed by the Minister to the plain
tiff. There was a proximity between the defendant
and the plaintiff, flowing from the Minister's repre
sentation to the plaintiff on December 29, 1987 that
the licences would be issued to it. At least from that
day onward it should have been obvious to the Minis
ter that any further decisions he took in this matter
would directly affect a determinate party, namely this
plaintiff. Second, there was a breach of the requisite
standard of care. At least as of January 29, 1988
when the plaintiff advised the Department of Fisher
ies and Oceans that it was undertaking work to con
vert vessels for the offshore lobster fishery in order to
use the licences, it was perfectly foreseeable that any
departure from the line of conduct (i.e. the issue of
the licences) previously announced by the Minister
on December 29, 1987 would have a harmful effect
on the plaintiff. Third, as I have indicated the evi
dence satisfies me that at least some foreseeable
financial loss was suffered by the plaintiff as a result
of the volte-face of the Minister on April 29, 1988,
although the precise nature and amount of that loss
remains to be determined on a reference. While the
plaintiff s loss appears to be purely economic, it has
been held by the Supreme Court of Canada in Cana-
dian National Railway Co. v. Norsk Pacific Steam
ship Co. 4 that where as here there is the necessary
"circumstantial proximity" a defendant can be held
liable for purely economic loss.
Notwithstanding the existence of such circum
stances as would give rise to the liability of ordinary
mortals, the defendant in effect contends that the
Crown or the Minister is entitled to escape liability. It
appears to me that the defendant's argument is based
essentially on two possible defences peculiar to this
kind of public authority: that there are considerations
justifying a refusal to find the duty of care owed by
the defendant to the plaintiff; and that what was done
by the Minister in the exercise of his absolute statu
tory discretion was therefore authorized by statute, so
that by both general principles of law and by the spe
cific provisions of the Crown Liability and Proceed
ings Act 5 it cannot give rise to liability of the Crown.
First, with respect to the lack of a duty of care, the
defendant relies on the jurisprudence developed in
a April 30, 1992, not yet reported, confirming [1990] 3 F.C.
114 (C.A.).
5 R.S.C., 1985, c. C-50 (as am. by S.C. 1990, c. 8, s. 21).
cases such as Anns v. Merton London Borough Coun
cil 6 approved by the Supreme Court of Canada in
Kamloops (City of) v. Nielsen et al. 7 and applied by it
in Just v. British Columbia. 8 According to these
authorities even though a sufficient relationship of
proximity exists between the parties so that a prima
facie duty of care may be found, it is still necessary
to consider whether there are any considerations
which ought to reduce or limit the scope of the duty
or the class of person to whom it is owed. In respect
of public authorities there is a good reason not to find
a duty of care if the decision of the authority which
caused harm was a "policy" decision. By this means
courts respect the right and obligation of public bod
ies to make policy within the ambit of their authority
and the courts do not presume to review such policy
decisions for which the public authorities are politi
cally responsible. Typical of such policy decisions are
those concerning the allocation, or failure to allocate,
funds for public works which might enhance the
safety of the public. On the other hand, decisions
taken in the "implementation" of those policy deci
sions are subject to a duty of care. In effect, once the
necessary policy decision is taken, it should be imple
mented in a way which will not cause an unreasona
ble risk of harm to those foreseeably affected by it.
It should first be observed that this rationale pro
ceeds, as I understand it, on the assumption that the
alleged "policy" decision is authorized by statute. In
the present case I have already decided that the deci
sion complained of, the refusal to issue, was ultra
vires the Minister.
But I have also concluded that the only relevant
policy decision was taken by the Minister when he
announced that he had authorized the issue of the
licences to the plaintiff. This was no mere informal
step but was one specifically provided for in subsec
tion 7(1) of the Fisheries Act which gives him a dis-
[l978] A.C. 728 (H.L.).
7 [1984] 2 S.C.R. 2.
8 [1989] 2 S.C.R. 1228.
cretion to "issue or authorize to be
issued ... licences". The evidence suggests in this
case that the decision was to authorize the issue
rather than the actual issue because there were still
some detailed conditions to be worked out. The evi
dence further was to the effect that, as a result of sub
sequent discussions undertaken between fisheries
officials and those authorized to receive the new
licences, matters were proceeding without difficulty
to the actual issue of the licences. No policy issues
remained to be resolved. The objective facts indicate
the assumption on both sides that the actual issue of
the licence certificates was a matter of routine, not a
matter of policy. Therefore there is no basis for deny
ing the existence of a duty of care in the manner in
which the licence authorizations were cancelled.
Second, even if one accepted the defendant's argu
ment that after authorizing the issue of the licences
the Minister retained an absolute discretion to refuse
to issue them, I am not satisfied that this would be an
obstacle to a plea of simple negligence. The defence
of statutory authority has never been absolute. If an
agency was given a discretionary power it could not
rely on statutory authority as a defence in actions in
tort for harm committed in the exercise of that power
unless it could show that the interference with private
rights complained of was inevitable in the exercise of
the power. 9 This doctrine has been somewhat modi
fied in favour of plaintiffs by the recent Supreme
Court of Canada decision in Tock v. St. John's Metro
politan Area Board 10 where opinion was divided as
to the effect to be given to the defence of statutory
authority. The most generous view of that defence
was taken by Sopinka J., hut he held that the onus
was on the defendant to prove that what was done
under purported statutory authority was done without
negligence and therefore that the harmful result was
inevitable. Other members of the Court took a less
generous view of the scope of the defence of statu
tory authority. In the present case the defendant has
not demonstrated that this manner of managing lob
ster fishery licences was the inevitable consequence
of the exercise of discretion under section 7 of the
9 See e.g. Hogg, Case Comments on Tock v. St. John's
Metropolitan Area Board (1990), 69 Can. Bar Rev. 589.
10 [1989] 2 S.C.R. 1181.
Fisheries Act. Authorizing the issue of a licence
within the licence year in which the announcement
was made, and then refusing to issue the licence after
an intended licensee has to the knowledge of the
Minister undertaken expenditure on the basis of the
authorization of his licence, has not been shown to
my satisfaction to be a necessary means of exercising
the Minister's discretion under section 7.
Third, the defendant's other claim for special
immunity from torts liability is based on section 8 of
the Crown Liability and Proceedings Act which pro
vides as follows:
8. Nothing in sections 3 to 7 makes the Crown liable in
respect of anything done or omitted in the exercise of any
power or authority that, if those sections had not been passed,
would have been exercisable by virtue of the prerogative of the
Crown, or any power or authority conferred on the Crown by
any statute, and, in particular, but without restricting the gener
ality of the foregoing, nothing in those sections makes the
Crown liable in respect of anything done or omitted in the
exercise of any power or authority exercisable by the Crown,
whether in time of peace or of war, for the purpose of the
defence of Canada or of training, or maintaining the efficiency
of, the Canadian Forces.
It has been held by the Federal Court of Appeal that
this section is only relevant to non-negligent con-
duct.tt What is involved in the present case is negli
gent conduct. If the Minister had any legitimate
doubts about the issue of the licences he should not
have exercised his admitted policy discretion under
section 7 to authorize their issue. But once he pub
licly authorized that issue, it was negligent of him to
withhold the licence in the knowledge that he would
probably inflict an injury on a person to whom the
issue of a licence had been authorized.
l Swanson v. Canada (Minister of Transport), [1992] 1 F.C.
408, at p. 426.
Irrevocable Legal Act
This alleged ground of liability is based on the
amended pleading that the issue of the lobster licence
was
an irrevocable legal act which the defendant purported to
revoke as a direct result of which the plaintiff has suffered
damages.
The argument in support of this seemed to he in part
based on estoppel and partly on the suggestion that
after the initial authorization under section 7 the Min
ister was functus officio. I have rejected estoppel
above, and I am not convinced the functus officio
argument adds anything to my conclusion that it was
ultra vires the Minister to revoke an authorization
once given and refuse to issue where the refusal to
issue had nothing to do with the conditions on which
the licence was authorized to be issued. To the extent
that there is a damage claim, I think it must be based
on liability for negligence as already relied on.
Disposition
I therefore conclude that the defendant is liable for
the plaintiff's financial losses flowing from its reli
ance during the period between December 29, 1987
and April 29, 1988 on the legitimate expectation of
receiving the offshore lobster licences whose authori
zation was announced by the Minister on December
29, 1987.
No argument was presented at the trial on the
nature of the damages that should be ordered. The
original statement of claim makes specific mention of
loss of profits, but that was in relation to the claim for
breach of contract which I have dismissed. As the
reference as to quantum is to be heard by a judge, I
will leave the better definition of permissible heads
of damage to argument and decision on the reference,
subject to the general terms I am specifying in the
judgment.
In its statement of claim the plaintiff seeks pre
judgment interest. In accordance with section 31 of
the Crown Liability and Proceedings Act 12 I am
directing that pre-judgment interest be payable as of
February 1, 1992 (when this section came into force)
in accordance with the law of Nova Scotia as
between subject and subject. As the provisions of
such law were not put before me, any further direc
tion as to its application can be made by the judge
who hears the reference as to damages.
12 As am. by S.C. 1990, c. 8, s. 31.
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.