Calwell Fishing Ltd. v. Canada

Calwell Fishing Ltd. v. Canada
Court (s) Database
Federal Court Decisions
Date
2016-03-11
Neutral citation
2016 FC 312
File numbers
T-653-10
Decision Content
Date: 20160311
Docket: T-653-10
Citation: 2016 FC 312
Toronto, Ontario, March 11, 2016
PRESENT: The Honourable Madam Justice Heneghan
BETWEEN:
CALWELL FISHING LTD., MELVIN GLEN CALWELL, DALE VIDULICH, GERALD WARREN, AQUAMARINE TRANSPORTATION LTD., AND GEORGE MANSON
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
JUDGMENT AND REASONS
I. INTRODUCTION [1] By a Statement of Claim issued on April 27, 2010, Calwell Fishing Ltd., Mr. Melvin Glen Calwell, Mr. Dale Vidulich, Mr. Gerald Warren, Aquamarine Transportation Ltd. and Mr. George Manson (collectively the “Plaintiffs”) commenced this action against Her Majesty the Queen in Right of Canada (the “Defendant”), seeking the following relief:
(a) A declaration that:
(i) The Plaintiffs and each of them are entitled to compensation for the loss of their businesses as fish packers, of which they have been and are being deprived by the Defendant by virtue of the Fisheries Act R.S. c. F-14 [sic] (“Fisheries Act”) and the Department of Fisheries and Oceans Act, 1978-79 c.13 [sic] (“Department of Fisheries and Oceans Act”) and the exercise of powers and authority granted thereby,
alternatively:
(ii) The Fisheries Act and the Department of Fisheries and Oceans Act do not authorize the taking of property without compensation,
(iii) Compensation is payable for property taken by virtue of the provisions of the Fisheries Act and the Department of Fisheries and Oceans Act and the exercise of the powers and authority conferred thereby,
(iv) For the purposes of this declaration, “property” includes the businesses of catching, transporting, purchasing and processing fish,
(v) For the purposes of this declaration, “taking” includes the deprivation of such business and/or the prohibiting or preventing the carrying on or continuance of such business, either directly or indirectly, where the purpose or effect of the grant or exercise of authority is to confer a benefit or benefits on the Defendant and/or on particular individuals or groups,
alternatively:
(vi) For the purpose of this declaration, “taking” includes the deprivation of such business and/or the prohibiting or preventing the carrying on or continuance of such business, either directly or indirectly, where the purpose or effect of the grant or exercise of authority is other than the conservation of fish or the proper regulation of the fishery as a public resource for the benefit of and in the interest of all Canadians,
(vii) The property of the Plaintiffs and each of them has been so taken by the Defendant,
alternatively:
(viii) Compensation is payable for loss or deprivation of property by virtue of the exercise of powers and authority granted by the Fisheries Act and the Department of Fisheries and Oceans Act where the grant or exercise of such power and authority has as its purpose or effect (pith and substance) the conferring, distribution or redistribution of economic or social benefit on or to the Defendant and/or particular individuals or groups,
alternatively:
(ix) Compensation is payable for loss or deprivation of property by virtue of the exercise of powers and authority granted by the Fisheries Act and the Department of Fisheries and Oceans Act, except where the grant or exercise of such power and authority is in purpose or effect (pith and substance) the proper management of the fisheries as a public resource for the benefit of and in the interest of all Canadians,
(x) For the purposes of this declaration, “property” includes the businesses of catching, transporting, purchasing and processing of fish,
(xi) The Plaintiffs and each of them have lost and are being deprived of their property by virtue of the grant or exercise of powers and authorities by or pursuant to the Fisheries Act and Department of Fisheries and Oceans Act,
(xii) The grant or exercise of such powers has been and is in purpose or effect (pith and substance) to confer, distribute or redistribute social or economic benefits on the Defendant and/or particular individuals or groups;
(b) Costs;
(c) All necessary and ancillary orders and directions;
(d) Such further and other relief as this Honourable Court deems just.
[2] By Notices of Discontinuance filed on October 11, 2012, Mr. Dale Vidulich and Mr. Gerald Warren discontinued their participation in this action.
II. THE PARTIES [3] Calwell Fishing Ltd. (“Calwell”) is a body corporate incorporated under the laws of British Columbia. Mr. Melvin Glen Calwell is the sole shareholder of this company.
[4] Aquamarine Transportation Ltd. (“Aquamarine”) is a body corporate incorporated under the laws of British Columbia. Mr. George Manson is the sole shareholder of this company.
[5] In this proceeding, the Defendant represents the Minister of Fisheries and Oceans (the “Minister”). The Minister is responsible for the regulation of marine fisheries pursuant to section 4 of the Department of Fisheries and Oceans Act, R.S.C., 1985, c. F-15.
[6] The Minister enjoys absolute discretion over the issuance of licences for the fisheries pursuant to subsection 7(1) of the Fisheries Act, R.S.C. 1985, c. F-14 (the “Fisheries Act”) which provides as follows:
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.
7 (1) En l’absence d’exclusivité du droit de pêche conférée par la loi, le ministre peut, à discrétion, octroyer des baux et permis de pêche ainsi que des licences d’exploitation de pêcheries — ou en permettre l’octroi —, indépendamment du lieu de l’exploitation ou de l’activité de pêche.
[7] Subsection 91(12) of the Constitution Act, 1867 (U.K.), 30 & 31 Vict., c. 3, reprinted in R.S.C. 1985, App. II, No. 5, is relevant to this proceeding and provides as follows:
91. It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say,
…
91. Il sera loisible à la Reine, sur l'avis et avec le consentement du Sénat et de la Chambre des communes, de faire des lois pour la paix, l'ordre et le bon gouvernement du Canada, relativement à toutes les matières ne tombant pas dans les catégories de sujets exclusivement assignés aux législatures des provinces par la présente loi mais, pour plus de certitude, sans toutefois restreindre la généralité des termes employés plus haut dans le présent article, il est par les présentes déclaré que (nonobstant toute disposition de la présente loi) l'autorité législative exclusive du Parlement du Canada s'étend à toutes les matières tombant dans les catégories de sujets énumérés ci‑dessous, à savoir :
…
12. Sea Coast and Inland Fisheries
12. les pêcheries de côtes de la mer et de l’intérieure
III. THE EVIDENCE [8] By agreement of the parties, the evidence in this trial was wholly documentary; there was no viva voce evidence. Those documents consisted of affidavits, discovery examination transcripts, transcripts of cross-examinations upon the affidavits filed, admissions and several volumes of documentary exhibits. All the admissible evidence submitted was considered, even if not specifically mentioned below.
[9] Some of the documentary exhibits were entered jointly as a Common Book of Documents and a Supplemental Common Book of Documents. Some documentary exhibits were entered on the basis of the truth of their contents, that is Tabs 1 through 12 of the Common Book of Documents. The remaining documents, Tabs 13 to 163 were admitted for the authenticity of the document, that is proof that the documents are true copies.
[10] The Plaintiffs filed the following affidavits:
a) affidavit of Ms. Teresa Calwell, wife of Plaintiff Mr. Calwell and director of Calwell sworn October 30, 2013,
b) affidavit of Mr. Calwell sworn October 30, 2013,
c) affidavit of Mr. Manson sworn October 31, 2013,
d) affidavit of Mr. Ronald Hooge, chartered accountant with Smythe Ratcliffe Valuations Inc. sworn October 24, 2013,
e) affidavit of Mr. Manson sworn September 10, 2014,
f) affidavit of Mr. Manson sworn September 18, 2014,
g) affidavit of Ms. Calwell sworn September 18, 2014, and
h) affidavit of Mr. Calwell sworn September 18, 2014.
[11] The Defendant filed the following affidavits:
a) affidavit of Mr. James Albert Ionson, former Regional Salmon Manager, Department of Fisheries and Oceans sworn October 28, 2013, and
b) affidavit of Mr. Gregory Thomas, former Regional Pelagics Coordinator, Department of Fisheries and Oceans sworn October 28, 2013.
[12] Written discovery examinations of Mr. Calwell and Mr. Manson were conducted. Undated answers to these examinations were filed as exhibits to the cross-examination of Mr. Manson on his affidavit. Oral discovery examinations were conducted of Mr. Calwell and Mr. Manson, by the Defendant, on June 21, 2012, June 22, 2012, and October 17, 2012; and August 21, 2012, August 22, 2012, and October 17, 2012, respectively. The evidence given by Mr. Calwell and Mr. Manson is binding upon Calwell and Aquamarine, respectively.
[13] Oral discovery of Mr. Ionson, as the representative of the Defendant, was conducted on October 18, 2013 and October 22, 2013. He also provided written answers, dated September 2012, to a written examination. Portions of these examinations were read in at trial pursuant to Rule 288 of the Federal Courts Rules, SOR/98-106 (the “Rules”), as part of the evidence for the Defendant and the Plaintiffs, respectively.
[14] Mr. Calwell and Ms. Calwell were cross-examined upon their affidavits, in respect of the personal claim of Mr. Calwell and the claim of the corporation on November 21, 2013 and November 22, 2013. Mr. Manson was cross-examined upon his affidavit on November 18, 2016, in respect of his personal claim and the claim of Aquamarine.
[15] Mr. Ionson and Mr. Thomas were cross-examined on their affidavits on November 26, 2013 and November 13, 2013, respectively.
[16] The Plaintiffs filed two expert reports, each prepared by Mr. Hooge, addressing the estimations of the financial losses suffered by Calwell and Aquamarine. The Defendant filed an expert report prepared by Mr. Stuart Nelson, addressing the impact of changes in both the regulatory regimes affected by the government and the Pacific fishing industry brought about by the participants in that industry. Mr. Hooge was cross-examined on his affidavit on November 8, 2013. Mr. Nelson was cross-examined on November 29, 2013.
IV. BACKGROUND AND CONTEXT A. Fish Packing Industry [17] The role of a fish packing vessel is to collect the harvest from fishing vessels on the fishing grounds and convey the catch to the processing plants. Packers sometimes also purchase fish from harvesters on behalf of a processor.
[18] The fish packing industry is composed of packing vessels and consists of two types: packing vessels owned or chartered by large processing companies and packing vessels contracted to purchase fish by smaller, cash buying processing companies.
[19] In order for a vessel to collect and transport fish it must hold a commercial fishing licence or a category “D” licence. The “D” licence permits its holder to pack and transport any species of fish. These vessels are not authorized to harvest fish. The “D” licences, first introduced in 1972, are issued annually at the discretion of the Minister, pursuant to the Fisheries Act. Unlike commercial fishing licences, the number of “D” licences is not restricted.
B. Historical Context and Precipitating Events (1) Early History and Statutory Framework [20] The Supreme Court of Canada in Comeau's Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), [1997] 1 S.C.R. 12 at paragraph 37 acknowledged that the Canadian fisheries are a common property resource, deriving from the common law and belonging to all the people of Canada. The source of the common law right to fish in tidal waters is the Magna Carta, 1225, 9 Hen. III, c. 3 (U.K.); see the decision in R. v. Gladstone, [1996] 2 S.C.R. 723 at paragraph 67.
[21] Canada’s first Fisheries Act, S.C. 1868, c. 60, was enacted in 1868. The Act gave the Governor in Council the power to make regulations necessary for the better management of the fisheries.
[22] The importance of the fisheries resource can be inferred from the fact that this legislation was enacted so soon after the creation of the country.
[23] The governance and management of this resource in the far-flung young country was challenging. Throughout the years, many reports and studies were commissioned and several of those were referred to in this file and entered into evidence. The following reports were addressed in this trial:
- D.B. McEachern, Licencing in the Commercial Fisheries of British Columbia (Vancouver: Fisheries & Marine Service, 1976)
- Department of Fisheries and Oceans, Policy for Canada’s Commercial Fisheries (Vancouver: Department of Fisheries and Oceans, 1976)
- Anthony Scott and Philip A. Nether, ed., The Public Regulation of Commercial Fisheries in Canada (Ottawa: Minister of Supply and Services, 1981)
- Commission on Pacific Fisheries Policy, Turning the Tide: A New Policy for Canada’s Pacific Fisheries (Vancouver: Department of Fisheries and Oceans, 1982)
- R.W. Crowley, B. McEachern, and R. Jasperse, A Review of Federal Assistance to the Fishing Industry Since 1945 (Ottawa: Department of Fisheries and Oceans, 1990)
- L.S. Parsons, Management of Canada’s Marine Fisheries (Ottawa: Department of Fisheries and Oceans, 1993)
- Douglas Swenerton, A History of Pacific Fisheries Policy (Vancouver: Department of Fisheries and Oceans, 1993)
- Department of Fisheries and Oceans, Outlook for Canada’s Pacific Fisheries in 1994, 1995 & 1996 (Vancouver: DFO Pacific Region, 1994)
- Michelle James, Final Report on the 1996 Voluntary Fleet Reduction Licence Retirement Program (Vancouver: Department of Fisheries and Oceans, 1996)
- Donald McRae & Dr. Peter H. Pearse, Treaties and Transition: Towards a Sustainable Fishery on Canada’s Pacific Coast (Vancouver: Department of Fisheries and Oceans, 2004)
- Michelle James, Report prepared in connection with Ahousaht Indian Band et al. v. Attorney General of Canada and Her Majesty the Queen in right of the Province of British Columbia, June 28, 2007
- Dr. Peter H Pearse, Management of the Pacific Fisheries: The Development of Fishing Rights and Fisheries Management on the Pacific Coast, June 26, 2007
[24] Early regulation of the fisheries in Canada was heavily influenced by respect for the public right to fish and was subject to a “game warden” approach. The method of regulation was through “input restriction” which limited the allowable fishing times, areas and gear types.
[25] From 1920s to 1968, fisheries policy was centred on government assistance in industry development and the use of regulations to ensure conservation (see Swenerton Report at page 49). Despite Department of Fisheries and Oceans, Canada (the “DFO”) efforts, there were significant pressures on fish resources and poor economic performances of the fisheries by the mid-1960s.
[26] A major innovation in fishing controls, that is the limitation of commercial fishing licences, was introduced in the salmon fishery in 1969. Within a few years, licences were restricted in all major Pacific fisheries. This marked the beginning of limitations on the right to fish and an end to the tradition of “open access”.
[27] Prior to 1960, the fisheries management was driven from within the DFO. Beginning in the 1980s, the objectives of fisheries management have evolved, with input from advisory bodies on a regional basis. Further changes came in 1992 with broader consultation including consultation with commercial harvesters, First Nations, recreational fishermen and environmental organizations.
[28] The Pacific coast fisheries include the halibut fishery, the roe herring fishery and the salmon fishery. Below is a brief outline of the regulatory measures undertaken by the DFO that are at issue in this proceeding.
(2) Halibut Fishery [29] Licence limitation was introduced to reduce or restrict the addition of fishermen, fishing vessels or equipment. Limitation of commercial licences was introduced in 1979 for halibut licences.
[30] Individual Vessel Quotas (“IVQ”) were introduced in 1991 as a management tool, to reduce the number of vessels harvesting, as well as address to overfishing and the instances of lost gear which were negatively impacting fish stocks. Under this regime, each vessel is assigned a maximum catch limit. This regime is in contrast to the “derby style” fishery where fishermen would catch the maximum amount possible within the opening of the fishing season and at the locations determined by the DFO.
[31] Under the IVQ system, fishermen are required to go directly to a DFO landing site to have their catch counted, this meant they did not need the services of packers.
(3) Roe Herring Fishery [32] Beginning in 1974, limitations were imposed upon the number of commercial licences issued in the roe herring fishery.
[33] Area licencing was introduced to the roe herring fishery in 1981 in order to reduce the potential fleet size fishing in any one area. The purpose was to improve the overall management of the fishery. Licence stacking was introduced the following year. Licence stacking is the process by which a licence holder will use his licence to fish one area and lease another licence to fish in another area. The number of management areas increased from three to five in 1985.
[34] Mandatory pooling was introduced in the roe herring fishery in 1994 and fully implemented in both seine and gillnet fisheries by 1999. Under this regime, the available harvest is divided equally among all active licences. Licenced vessels are required to organize themselves into pools. Each pool is responsible for harvesting their total quota in an area, which is determined by multiplying the quota per licence by the number of licences held in the pool.
[35] Mandatory pooling reduced the need for packing vessels, particularly in the seine fishery. Under the pooling regime not all fishing vessels were needed to harvest the allowable catch for the pool. It became common for a vessel in the pool to act as a packer to the other vessels in the pool. This was preferred by fishermen as it was cheaper than hiring a packer.
(4) Salmon Fishery (a) Davis Plan [36] The limitation of commercial salmon licences was introduced in 1969 by Minister Jack Davis, as part of new regulations which came to be known as the Davis Plan. The Davis Plan was implemented by the following regulations:
- British Columbia Fishery Regulations, amended, SOR/69-226,
- Fisheries Improvement Loans Regulations, SOR/69-316,
- British Columbia Fishery Regulations, amended, SOR/70-200,
- Fraser River Sockeye and Pink Salmon Fishery Regulations, 1970, SOR/70-217,
- Fishing Vessel Assistance Regulations 1970, SOR/70-363,
- Fraser River Salmon Fishery Regulations, 1971, SOR/71-280 and
- British Columbia Fishery Regulations, amended, SOR/71-590.
[37] This program limited the issuance of commercial salmon licences by creating two categories of vessels. Harvesters with catches greater than 10,000 pounds in the previous year received an “A” licence. Other vessels recieved a “B” licence. “A” licences were renewable and transferrable. The “B” vessels continued to fish until the expiry of the licences but their licences were not renewed or replaced.
[38] Licences and vessels were given up as part of the Davis Plan through a relinquishment program, also known as “buy-back”. This program was funded by licence fee increases implemented at the first stages of the Davis Plan. Licensees were compensated for relinquishing their licences.
[39] The program also included higher quality standards for fishing vessels. This plan led to the retirement of some 362 licenses from the fleet between 1970 and 1973.
(b) Pearse Royal Commission [40] By 1982, the Pacific fisheries were in crisis. The fishing industry was suffering through a financial crisis, which resulted in a series of mergers and consolidations in the processing sector. On January 12, 1981, the Governor General in Council of Canada appointed Dr. Peter H. Pearse to serve as the Commissioner of the Royal Commission on Pacific Fisheries Policy. The Royal Commission was instructed to investigate and make recommendations on the condition, management and utilization of the fisheries on the Pacific coast.
[41] The Final Report, “Turning the Tide: A New Policy for Canada’s Pacific Fisheries” was issued in September 1982.
[42] Dr. Pearse presented several objectives that provided a framework for his recommendations, including, among others, resource conservation and maximizing the benefits of resource use.
[43] Dr. Pearse identified the overcapacity of the fleets as the single largest cause of the economic difficulties in the Pacific fisheries. He recommended that the commercial fishing fleets be rationalized, reducing the excess capacity and excessive costs of fishing.
(c) 1985 Pacific Salmon Treaty [44] The Pacific Salmon Treaty, signed by Canada and the United States, created a harvest regime based on the objectives of conservation and the delivery of benefits to the country of origin, equal to the salmon originating in its waters. The Treaty contains an exemption of 400,000 Fraser sockeye salmon, in recognition by the parties of the importance of the Fraser River First Nation fishery.
(d) Aboriginal Fishery Strategy [45] The Aboriginal Fishery Strategy (“AFS”) was announced in 1992, in response to the Supreme Court of Canada decision in R. v. Sparrow, [1990] 1 S.C.R. 1075. The AFS was designed to provide a framework for the management of the fisheries in a manner consistent with Sparrow, supra.
[46] Commercial salmon licence relinquishment occurred under the AFS. The purpose of this program was to reduce harvesting power in the commercial fleet and to allow for increased allocations of licences to the First Nations Pilot Sales program.
[47] In 1992, the Pilot Sales program was introduced in three areas. It was designed to test the positive and negative aspects of First Nations being given the opportunity to sell part of their harvest under terms laid out in comprehensive agreements.
[48] In 1993, DFO introduced a new type of licence, Excess Salmon to Spawning Requirement (“ESSR”). This class of licence authorised fishing in terminal areas that are not open to regular commercial fisheries. These licences were issued to address outstanding food, social and ceremonial needs of local First Nations.
[49] Beginning in 1994 and continuing to the present, licence relinquishments occur under the Allocation Transfer Program (“ATP”). The ATP was added as a component of the AFS to support fisheries-based economic development for First Nations groups and coastal communities. Licences relinquished under the ATP were transferred to First Nations communities or held by the DFO to be used in other projects. Communal commercial licenses acquired under the ATP are issued under comprehensive fisheries agreements.
[50] In 2005, the Pilot Sales program was replaced by economic opportunity fisheries; these fisheries are conducted by members of First Nations under a licence that authorizes the sale of fish, issued under section 4 of the Aboriginal Communal Fishing Licences Regulations, SOR/93-332.
(e) Mifflin Plan [51] The Pacific Salmon Revitalization Strategy (“Mifflin Plan”) was introduced by Minister Fred Mifflin in 1996. This plan was intended to revitalize the West Coast commercial salmon fishery, together with a focus on conservation of salmon stocks to ensure their sustainability for the future.
[52] One of the central measures under this plan was the reduction of the commercial salmon harvesting fleet. Under this program, salmon licences were acquired by the government, that is through buy-backs. The reason for the program was to reduce the capacity of the gillnet fleet, and to address conservation and fleet viability.
[53] The Mifflin Plan also introduced area licencing and licence stacking in the commercial salmon fishery.
(f) Anderson Plan [54] The Pacific Fishery Adjustment and Revitalization Plan (“Anderson Plan”), was introduced in 1998. The purpose of this program was to continue with the objective of fleet reduction that had been introduced in the Mifflin Plan to reduce pressure on coho and other Pacific salmon stocks. This program was also focused on conservation of fish stocks.
(5) Trends in the Fishing Industry [55] Direct delivery premiums were paid to fishing vessels by processing companies who pack their own catch and deliver it to a location prescribed by the processor. The payments were made on a per pound basis. By the 1990s, the practice of paying direct delivery premiums was entrenched.
[56] Farmed salmon production grew exponentially. By 1997, farmed salmon production exceeded global wild salmon production. The increased supply of farmed salmon contributed to the decline in wild salmon prices beginning in 1989.
[57] The growth in Alaskan wild salmon production also contributed to the decline in salmon prices from 1985 to 2005.
[58] The price of roe herring also declined in the period of 1985 to 2005. There was a brief spike in roe herring fish prices in 1995 and 1996 as Japanese purchasers paid record high prices for B.C. roe, approximately $1.60 per pound. Prices dropped substantially in 1997 to less than $0.40 per pound, when the Japanese market refused to pay the high prices. There has been minimal recovery.
C. Plaintiffs’ Evidence (1) Mr. Calwell [59] Mr. Calwell began commercial fishing in 1956. He fished for sockeye in Smith’s Inlet, and for coho and chum at Toba Inlet and Okover, on the central coast of the British Columbia mainland. In June 1975, he purchased the vessel M.V. “Riverside Y” and began to pack fish. At that time, he was engaged in packing sockeye, roe herring, spring salmon and fall chum.
[60] The M.V. “Riverside Y” was a wooden vessel, 68 feet long, formerly a rum runner from the East Coast. It had never been used as a fishing vessel, according to Mr. Calwell’s belief. It was a fish packer when he bought the vessel. The M.V. “Riverside Y” had a packing capacity of 65,000 pounds.
[61] Calwell was incorporated on July 12, 1979. The company continued in the fish packing business. In October 1982, Calwell became the owner of the M.V. “Riverside Y”.
[62] Ms. Calwell began working for Calwell, as a deckhand, in the fall of 1980. She lived with Mr. Calwell until they married in 2005. She worked with Calwell until the company ceased operations in 2002.
[63] In 1986, Calwell sold the “Riverside Y” for $85,000.00.
[64] In 1982, Calwell purchased the M.V. “Derek Todd” for $80,000.00. The M.V. “Derek Todd” had a packing capacity of 200,000 pounds. That vessel was used to pack farmed salmon and other species. In 1989, Calwell upgraded the M.V. “Derek Todd” with a fish pump and a grading system.
[65] The M.V. “Derek Todd” was rammed and was lost in August 1990.
[66] In September 1991, Ms. Calwell borrowed $42,000.00 from Calwell to purchase the M.V. “Riverside Y” from the Royal Bank of Canada and in February 1992, Calwell purchased that vessel from Ms. Calwell for $159,000.00.
[67] In May 1999, Mr. and Ms. Calwell received an offer of financing through the Community Futures Development Corporation, a federal program, to assist in the development of an ecotourism business. They were unable to accept the offer because Mr. Calwell did not meet the conditions of the loan, specifically an age requirement.
[68] In August 2002, Calwell Fishing Ltd. sold the M.V. “Riverside Y” for $20,000.00.
[69] Calwell primarily packed fish for small, cash buyer processors and was compensated on the basis of a seasonal charter or poundage packed. However, from 1987 to1989 and 1992 to 1994 Calwell purchased fish and resold fish to processors using its own funds and funds borrowed from Royal Bank.
[70] According to the evidence of Mr. Calwell, the volume of business began to decrease in early 1980s. He testified, via his affidavit and elsewhere, that the changes in the regulation of the Pacific fisheries, which began in early 1980s, ultimately put him out of business.
[71] Records of income over the period 1994 to 2001 show a reduction in earnings. Mr. Calwell deposed in his affidavit that by 1994, the company was losing money. It is apparent from the financial records of Calwell, that were entered into evidence and from his discovery “read-ins”, that prior to 1994, the company made money in some years and lost money in other years.
[72] At all relevant times, Calwell’s vessels, the M.V. “Riverside Y” and the M.V. “Derek Todd”, held “D” licences.
(2) Mr. Manson [73] Mr. George Manson entered the commercial fishery in 1961. In 1972, he sold his commercial fishing vessel and began working full time for B.C. Ferries.
[74] In 1986, Mr. Manson purchased the M.V. “Godfather”. The M.V. “Godfather” was a wooden vessel built in 1945. Mr. Manson converted the vessel into a packer, which he operated as a fish packing operation. That vessel was worked by Mr. Stewart Manson, Mr. Manson’s brother. On July 3, 1987, Aquamarine was incorporated.
[75] The M.V. “Godfather” was 61 feet in length and had a packing capacity of 68,000 pounds.
[76] Throughout the period Aquamarine owed the M.V. “Godfather”, it held a “D” licence.
[77] In March 1993, Aquamarine signed a three-year packing contract with Icicle Seafoods, a processing company. In 1996, Aquamarine signed another contract with Icicle Seafoods under which it would receive $75,000 per year for packing salmon and $30,000 per year for packing herring.
[78] On February 21, 1997, Icicle Seafoods cancelled the contract and paid $21,400 as compensation for the loss of the contract.
[79] After the termination of the second contract with Icicle, Mr. Manson went to different companies looking for work. Aquamarine was able to secure a few contracts to pack herring and salmon in 1997.
[80] In 1998, Aquamarine sold the M.V. “Godfather” to Stewart Manson for $19,105.00.
(3) Mr. Hooge [81] Mr. Ronald Hooge, a chartered accountant, prepared expert reports on behalf of both Calwell and Aquamarine. In those reports, he estimated the amount of income lost by the corporate Plaintiffs. He did not conduct an audit in respect of either company, and based his opinions on the propositions given to him by the Plaintiffs.
[82] Mr. Hooge was provided with an initial mandate letter, dated March 4, 2013, by Counsel for the Plaintiffs. In September 2013, he was sent a draft letter by Counsel for the Plaintiffs. This draft letter dated September 9, 2013, was effectively the final mandate letter, in which he was asked to provide his opinion on when the businesses became economically unviable and the nature and amount of the loss suffered as a result to the events that rendered the businesses economically unviable.
[83] Mr. Hooge gave his opinion that Calwell’s business was economically unviable in 1994. The effective date for the economic unviability of Aquamarine was identified as April 1, 1998. Upon his cross-examination, Mr. Hooge expressed the opinion that, after the dates in question, neither company had any goodwill and the only value was in the vessels. In the case of Calwell, that was the M.V. “Riverside Y”. Aquamarine had sold its vessel the M.V. “Godfather” in 1998, so there was no asset to be valued.
D. Defendant’s Evidence (1) Mr. Ionson [84] The Defendant filed the affidavit of Mr. Ionson, now retired from employment with the DFO. He was employed, in various capacities, with the DFO from 1974 until 2007. He began his employment as a Fishery Officer working on Vancouver Island and in the Yukon. Prior to his retirement in June 2007, he was the Regional Salmon Manager, Vancouver, British Columbia.
[85] His affidavit addresses general and specific aspects of the Pacific salmon industry, the AFS, and management and regulation of the commercial salmon fishery, and particular developments in the fishing industry between 1969 and 2005. He focused on the predominate purpose of the regulations as conservation of the resource.
[86] His affidavit includes, by reference, some 65 exhibits. These exhibits include press releases and background information prepared for various ministerial and departmental announcements and extracts from various fisheries management plans that were introduced in the 1990s and early 2000s. The evidence of Mr. Ionson and, including the exhibits and the cross-examination transcript, provide a perspective on the Pacific fishing industry in the time frame relevant to the Plaintiffs’ claims.
[87] Mr. Ionson spoke generally about the legislative and regulatory framework which governs the fisheries, noting that this responsibility lies with the Minister, pursuant to the Fisheries Act. Various regulations have been enacted under that legislation, including the Aboriginal Communal Fishing Licences Regulations, supra, British Columbia Sport Fishing Regulations, SOR/96-137, Fishery (General) Regulations, SOR/93-53, and Pacific Fishery Regulations, SOR/93-54.
[88] In paragraphs 90 to 115, inclusive, of his affidavit Mr. Ionson described various initiatives that were undertaken between 1969 and 2005 relative to the management and regulation of the West Coast fisheries. These initiatives included the Davis Plan, the Pacific Salmon Treaty, the IVQ system, the Mifflin Plan, the Anderson Plan, and the AFS as well as those described below.
[89] In 1981, area licensing was introduced for the troll fishery, that is for fishing in the Strait of Georgia or outside that body of water. In the same year, there was also a commercial salmon licence buy-back program.
[90] Mr. Ionson noted that the introduction of IVQ in 1991 was a conservation measurement.
(2) Mr. Thomas [91] The Defendant also submitted the affidavit of Mr. Greg Thomas who, prior to his retirement in May 2013, was employed with the DFO from 1997 until 2003, working primarily in the areas of salmon, shellfish and pelagics. At various times, he worked as a Program Coordinator and most recently, that is from 2010 until May 2013, as Area Chief, Resource Management, South Coast area for salmon, herring and shellfish.
[92] In his affidavit, Mr. Thomas gives an overview of the roe herring fishery, referring to a set of management measures implemented by the DFO in the 1970s, 1980s and 1990s to control ineffective harvest. This led to the introduction of a “pooling strategy” that was designed to ensure that catches did not exceed harvest targets. The pooling strategy also contributed to the safety of the roe herring fishery by limiting the number of vessels fishing in an area at a given time.
[93] Mr. Thomas said that seine vessels and gillnet vessels were used in the prosecution of the herring fishery. The roe herring pool fisheries policy meant that the catch target for each pool was limited to the amount of roe herring equal to the average license catch, multiplied by the number of licenses in the pool.
[94] Mr. Thomas also addressed the introduction of Integrated Fisheries Management Plans (the “IFMPs”) by the DFO in the mid-1990s as a tool in the management of the herring fishery.
[95] He gave a history of the herring and roe herring fisheries, beginning in 1940 and referenced the Pearse Report of 1982.
[96] Mr. Thomas reviewed certain regulatory measures undertaken by the DFO, beginning in 1974 with limited entry licensing. In 1981, area licensing was introduced; this plan limited the number of vessels fishing in a particular area.
[97] In 1983, roe herring total allowable catches (“TACs”) were introduced. Mr. Thomas referred to this as a conservation measure. Management areas were established in 1983 and in 1985, those areas were increased from three to five.
[98] Further roe herring conservation measures were taken in 1986 with the introduction of “cut-off levels” for area stock forecasts.
[99] By 1997 the Department began a reform of the management of the roe herring fishery, since roe herring fisheries were exceeding quotas, on a regular basis. In the meantime, pool management had been introduced to the roe herring fishery in 1994, on a trial basis, and was fully implemented in 1998.
[100] Pool management was intended to limit the number of fishing vessels taking part in the fishery, thereby increasing harvest control and protecting conservation of the species. Mr. Thomas addressed certain advantages of the pool management system, including reduction of congestion of vessels on the fishing grounds, leading to increased safety for industry participants.
(3) Mr. Nelson [101] Mr. Stuart Nelson provided an expert report on behalf of the Defendant. He is an independent management consultant, carrying on business as Nelson Bros. Fisheries Ltd. His work experience includes employment with B.C. Packers for 12 years, with various responsibilities, including Assistant Vice President, Production and Director, B.C. Fishing Operations. In his present employment, he is not an active participant in the commercial fishing industry. He stated that the majority of his consulting assignments, in the 15 year period between 1998 and 2013, were fishery related.
[102] In the introduction to his expert report, Mr. Nelson set out, in nine paragraphs, the mandate he was given by the Defendant. In brief, he was asked to provide an overview of the evolution of the fishing industry, from the 1970s to the present, including identification and description of the important markets, environmental and policy changes that affected the industry in that timeframe, particularly in reference to the businesses of the Plaintiffs.
[103] He was also asked to describe the technological changes that took place in the fishing industry, in general, and specifically in the fish packing industry between 1985 and 2005. Again, he was asked to address the impact of those changes upon the businesses of the Plaintiffs.
[104] His report includes a number of graphs addressing the landing volumes of various species including B.C. roe herring, B.C. halibut, and B.C. salmon catch by species, as well as graphs providing data about the price per pound paid to B.C. fishermen for various species, including salmon and roe herring, between 1985 and 2005. There is also information about the landings and landed values of Alaska salmon.
[105] Mr. Nelson was asked to address the impact of the development of salmon aquaculture upon the fish packing industry in general, and upon the Plaintiffs’ businesses, in particular.
[106] Finally, he was asked to address the impact upon the fish packing industry by specific initiatives undertaken by the Defendant, that is a mandatory pooling regime for the roe herring fishery; reduction in the number of licensed commercial salmon fishing vessel; restrictions in the areas for harvesting salmon and herring; the reduction in the allowable commercial catch of salmon; and the allocation of special access to the fisheries to particular Aboriginal groups and individuals, and recreational fishers.
[107] Mr. Nelson provided detailed responses to the nine questions presented to him. In the summary of