Algoma Central Corporation v. Canada

Algoma Central Corporation v. Canada
Court (s) Database
Federal Court Decisions
Date
2009-12-17
Neutral citation
2009 FC 1287
File numbers
T-1798-04
Decision Content
Federal Court
Cour fédérale
Date: 20091217
Docket: T-1798-04
Citation: 2009 FC 1287
Ottawa, Ontario, December 17, 2009
PRESENT: The Honourable Mr. Justice O'Keefe
BETWEEN:
ALGOMA CENTRAL CORPORATION
UPPER LAKES GROUP INC.
and SEAWAY MARINE TRANSPORT,
A PARTNERSHIP OF UPPER ALES GROUP INC.
and ALGOMA CENTRAL CORPORATION
Plaintiffs
and
HER MAJESTY THE QUEEN
Defendant
AND BETWEEN:
HER MAJESTY THE QUEEN
Plaintiff by Counterclaim
And
ALGOMA CENTRAL CORPORATION
UPPER LAKES GROUP INC.
and SEAWAY MARINE TRANSPORT,
A PARTNERSHIP OF UPPER LAKES GROUP INC.
and ALGOMA CENTRAL CORPORATION
and UPPER LAKES SHIPPING LTD.
and UPPER LAKES SHIPPING INC.
Defendants to the Counterclaim
REASONS FOR JUDGMENT AND JUDGMENT
O’KEEFE J.
[1] This motion arises from an action filed by the plaintiffs claiming among other things, that harbour dues at certain Ontario ports set by the Minister of Transport (the Minister) under the Canada Marine Act, S.C. 1998 c. 10 (CMA or the Act), constitute an unlawful tax, and a corresponding counterclaim by the defendant, Her Majesty the Queen in Right of Canada, for payment of the outstanding dues.
[2] The defendant brings this motion for summary judgment, requesting an order dismissing the plaintiffs’ action and granting the counterclaim for the following relief:
1. As against Algoma Central Corporation, payment of the sum of $528,125.66 owing in respect of harbour dues as of September 30, 2004, and such further amounts as become payable thereafter, and up to the date of judgment in this proceeding;
2. As against Upper Lakes Shipping Ltd., payment of the sum of $230,991.60 owing in respect of harbour dues as of September 30, 2004, and such further amounts as become payable thereafter, and up to the date of judgment in this proceeding;
3. As against Seaway Marine Transport, and therefore also jointly and severally as against its constituent partners, Algoma Central Corporation and Upper Lakes Group Inc. and/or Upper Lakes Shipping Inc., payment of the sum of $759,117.26 owing in respect of harbour dues as of September 30, 2004, and such further amounts as become payable thereafter, and up to the date of judgment in this proceeding;
4. As against all of the defendants to the counterclaim:
(i) interest on the aforesaid sums owing by them, from and after September 30, 2004, calculated and compounded monthly, at the rate and in the manner prescribed in section 5 of the Interest and Administrative Charges Regulations, SOR/96-188;
(ii) the costs of this proceeding;
(iii) such further and other relief as this Honourable Court may deem just.
Background
[3] The plaintiffs, Algoma Central Corporation and Upper Lakes Group Inc. are corporations carrying on business in Canada and are the owners of vessels trading on the Great Lakes and St. Lawrence Seaway system. Seaway Marine Transport is a partnership of these two corporations. The plaintiffs engage in the carriage of bulk cargo such as grain, iron ore, aggregates, salt and other commodities between ports in Canada and between ports in Canada and the United States. The ports to which the plaintiffs travel include the Ontario ports of Kingsville, Sarnia and Sault Ste. Marie, and it is harbour dues at these three ports that the plaintiffs challenge.
[4] The plaintiffs claim that, pursuant to the 1995 National Marine Policy and the coming into force of the CMA, the Government of Canada intended to divest itself of these three ports and no longer provides services at Kingsville or Sault Ste. Marie, yet the Minister continues to levy harbour fees against Canadian ships that use these ports. This they say has transformed the harbour dues from what was formerly a fee for a service into an unlawful tax.
[5] The plaintiffs also claim that a reciprocal agreement between Canada and the United States which exempts U.S. ships from harbour dues at these ports and exempts Canadian ships from harbour dues at similar U.S. ports is not authorized by law and constitutes a discriminatory practice, particularly in respect of dues levied at Sarnia.
[6] To understand the nature of this dispute, it is first necessary to review the recent changes to the regulation of marine transportation in Canada.
National Marine Policy
[7] The National Marine Policy was announced by the Minister in 1995 as a strategic plan intended to modernize this sector of the Canadian transportation system. The policy established three categories of ports, and a strategy to deal with each type. First, a national ports system was to be established under the control of Canada Port Authorities. These ports were large, self-sufficient ports vital to international and domestic trade, with diversified traffic, serving large market areas and linked to major rail lines or highway infrastructure. Eight national ports were identified under the policy.
[8] The second category of ports under the National Marine Policy was regional/local ports. Most of the ports operated by Transport Canada in 1995 fell under this category and under the policy, regional/local ports were to be transferred to provincial governments, municipal authorities, community organizations, private interests, other groups and, in some cases, other federal departments. The ports of Kingsville, Sarnia and Sault Ste. Marie are all included on a list of regional/local ports set out in Appendix B to the policy.
[9] The third category consisted of remote ports, which the Government committed to maintain.
[10] The policy recognized that the transfer of regional/local ports may not be a simple matter. The transfer was intended to take place over a six year period, led by implementation teams responsible to identify prospective transferees, whether in the public or private sector, and complete all legal, financial and regulatory measures necessary for a transfer.
[11] For its overall stated objectives, the policy intended to:
1. Ensure affordable, effective and safe marine transportation services;
2. Encourage fair competition based on transparent rules applied consistently across the marine transport system;
3. Shift the financial burden for marine transportation from the Canadian taxpayer to the user;
4. Reduce infrastructure and service levels where appropriate, based on user needs; and
5. Continue the Government of Canada’s commitment to safe transportation, a clean environment and service to designated remote communities.
[12] The policy also intended to reflect the broad principle of commercialization.
Canada Marine Act
[13] As part of this new strategic plan, the Government introduced the Act which was intended to embody some of the principles of the policy and be a comprehensive piece of legislation governing the marine sector, consolidating into one act what previously was spread over several acts.
[14] The CMA was assented to on June 11, 1998. It amended 12 other acts of Parliament and repealed nine additional acts. Prior to its coming into force, public ports were regulated under the Public Harbours and Port Facilities Act, R.S.C. 1985, c. P-29 (PHPFA) and its associated Regulations.
[15] The preamble to the CMA states its purpose as follows:
An Act for making the system of Canadian ports competitive, efficient and commercially oriented, providing for the establishing of port authorities and the divesting of certain harbours and ports, for the commercialization of the St. Lawrence Seaway and ferry services and other matters related to maritime trade and transport and amending the Pilotage Act and amending and repealing other Acts as a consequence.
Loi favorisant la compétitivité du réseau portuaire canadien par une rationalisation de sa gestion, prévoyant la création des administrations portuaires et l’aliénation de certains ports, régissant la commercialisation de la Voie maritime du Saint-Laurent et des traversiers et des questions connexes liées au commerce et au transport maritimes, modifiant la Loi sur le pilotage et abrogeant et modifiant certaines lois en consequence.
[16] Part I of the Act concerns Canada Port Authorities, federally incorporated not-for-profit corporations intended to be financially self-sufficient. Part II of the Act deals with the second and third categories of ports identified in the National Marine Policy. Part II of the Act defines the category of ports to which it applies by reference to the terms “public ports” and “public port facilities”.
[17] In section 2 of the Act:
"public port" means a port designated as a public port under section 65.
"public port facility" means a port facility designated as a public port facility under section 65.
« port public » Port désigné comme port public en application de l’article 65.
« installations portuaires publiques » Les installations portuaires désignées comme installations portuaires publiques en application de l’article 65.
[18] Under section 65 of the CMA, all ports that were previously public harbours under the PHPFA were deemed to be public ports under the CMA. Section 65 of the CMA further gave the Governor General in Council broad authority to designate and define the limits of public ports or repeal the designation of public ports. Section 65 of the CMA provided:
65.(1) The Governor in Council may, by regulation,
(a) designate as a public port any navigable waters within the jurisdiction of Parliament and any land covered by the navigable waters, if the land is under the administration of the Minister, including any related foreshore;
(b) define the limits of a public port; and
(c) designate any port facility under the administration of the Minister as a public port facility.
(2) Every port and port facility that on the coming into force of this section was a public harbour or public port facility to which the Public Harbours and Port Facilities Act applied is deemed to have been designated under subsection (1).
(3) With the exception of a port for which a port authority is incorporated under Part 1, every port and facility to which the Canada Ports Corporation Act applied on the coming into force of this section is deemed to have been designated under subsection (1).
(4) For greater certainty, the Governor in Council may make regulations under subsection (1) in respect of any public harbour or public port facility that is deemed under subsection (2) or (3) to have been designated and, in the case of a public port, define its limits.
65.(1) Le gouverneur en conseil peut, par règlement :
a) désigner comme port public tout plan d’eau navigable relevant du Parlement de même que le fond de ce plan d’eau s’il est sous la responsabilité du ministre, y compris l’estran;
b) fixer le périmètre de tout port public;
c) désigner publiques des installations portuaires sous la gestion du ministre.
(2) Les ports et installations portuaires qui, à l’entrée en vigueur du présent article, sont des ports publics ou des installations portuaires publiques régis par la Loi sur les ports et installations portuaires publics sont réputés avoir été désignés par règlement pris en vertu du paragraphe (1).
(3) À l’exception de ceux pour lesquels une administration portuaire du Canada est constituée sous le régime de la partie 1, les ports et les installations portuaires qui, à l’entrée en vigueur du présent article, sont régis par la Loi sur la Société canadienne des ports sont réputés avoir été désignés par règlement pris en vertu du paragraphe (1).
(4) Il est déclaré pour plus de certitude que le gouverneur en conseil peut prendre un règlement en vertu du paragraphe (1) à l’égard d’un port ou des installations mentionnés au paragraphe (2) ou (3) et, dans le cas d’un port, en fixer le périmètre.
[19] All three ports at issue in this motion had long been public harbours under the PHPFA and thus, were all public ports under the new Act.
[20] Section 67 of the Act authorizes the Minister to fix fees in relation to public ports or public port facilities:
67.(1) The Minister may fix the fees to be paid in respect of
(a) ships, vehicles, aircraft and persons coming into or using a public port or public port facility;
(b) goods loaded on ships, unloaded from ships or transhipped by water within the limits of a public port or stored in, or moved across, a public port facility; and
(c) any service provided by the Minister, or any right or privilege conferred by the Minister, in respect of the operation of a public port or public port facility.
67.(1) Le ministre peut fixer les droits à payer à l’égard :
a) des navires, véhicules, aéronefs et personnes entrant dans les ports publics ou faisant usage des ports publics ou d’installations portuaires publiques;
b) des marchandises soit déchargées de ces navires, chargées à leur bord ou transbordées par eau dans le périmètre portuaire, soit stockées dans ces installations portuaires ou passant par elles;
c) des services fournis par le ministre, ou des avantages qu’il accorde, en rapport avec l’exploitation des ports publics ou des installations portuaires publiques.
[21] The term “fees” as used in subsection 67(1) of the Act is defined in section 2:
"fees" includes harbour dues, berthage and wharfage, as well as duties, tolls, rates and other charges, but does not include payments made under a lease or licence agreement.
« droit » S’entend de toute forme de taxe, péage, contribution ou redevance, notamment pour l’accès, l’accostage et l’amarrage au port, à l’exclusion de toute somme versée au titre d’un bail ou d’un permis.
[22] Section 72 of the Act grants the Minister the power to divest the Government of any port property:
72.(1) The Minister may enter into agreements in respect of
(a) the disposal of all or part of the federal real property and federal immovables that formed part of a public port or public port facility by sale or any other means; and
(b) the transfer of the administration and control of all or part of the federal real property and federal immovables that formed part of a public port or public port facility to Her Majesty in right of a province.
(2) The agreements may include
(a) provisions for the performance and enforcement of obligations under the agreements; and
(b) any other terms and conditions that the Minister considers appropriate.
. . .
(8) Subject to any regulations made under section 74, the Minister continues to have the management of public ports and public port facilities that the Minister has not disposed of or transferred.
72.(1) Le ministre peut conclure des ententes en vue :
a) de la disposition, par vente ou tout autre mode de cession, de la totalité ou d’une partie des immeubles fédéraux et des biens réels fédéraux qui faisaient partie d’un port public ou d’installations portuaires publiques;
b) du transfert à Sa Majesté du chef de la province de la gestion et de la maîtrise de la totalité ou d’une partie des immeubles fédéraux et des biens réels fédéraux qui faisaient partie d’un port public ou des installations portuaires publiques.
(2) Les ententes peuvent comporter :
a) des dispositions sur l’exécution, volontaire ou forcée, des obligations que ces ententes prévoient;
b) les autres modalités que le ministre estime indiquées.
. . .
(8) Le ministre conserve, sous réserve des règlements pris en vertu de l’article 74, la gestion des ports et des installations portuaires publiques qui n’ont fait l’objet ni de disposition ni de transfert.
[23] The Public Ports and Public Port Facilities Regulations, SOR/2001-154 (the 2001 Regulations) provide further governance over the divestiture of public ports.
Harbour Dues
[24] Subsection 75(a) of the Act states that Regulations made under section 12 of the PHPFA in respect of rates, tolls, fees or other charges are deemed to have been made under Part II of the Act and continue in force until repealed by the Minister.
[25] The Public Harbours Regulations, SOR/96-196 and the Government Wharves Regulations, SOR/96-197, were enacted pursuant to the PHPFA and continued in force under the Act. These Regulations set the rates for harbour dues and restructured how they were to be collected. It was a significant change from the previous dues structure, as harbour dues became payable for each of the first five entries of a vessel into a public port each month as opposed to the first five entries per calendar year. The Regulatory Impact Analysis Statement to the 1996 Regulations notes that in 1994 to 1995, public ports recovered approximately 45% of operating and maintenance expenditures and 25% of total expenditures, and that the raise in fees were intended to address this shortfall. In addition to this change in fee structure, there were 5% increases in public port charges in each of 2000 and 2001 and a 10% increase in 2004.
[26] Effective January 1, 2004, the Public Harbour Dues Tariff Notice (the Dues Notice) set harbour dues at public ports in Canada, and set the rates for ships using public ports. The Dues Notice also provides that dues are not payable in respect of vessels which are exempt from the payment of such dues by a treaty.
The Ports: Kingsville, Sault Ste. Marie and Sarnia
[27] The port of Kingsville is located on the north shore of Lake Erie, approximately 45 kilometres southeast of Windsor, Ontario. It was declared a public harbour by Order-In-Council on November 29, 1938. On July 8, 1999, the Crown transferred the public port facilities to the town of Kingsville and the Kingsville Port Users Association (KPUA). Pursuant to the transfer, it was agreed that Kingsville and the KPUA would operate and maintain the port and facilities. As part of the privatization agreement, the Government contributed $400,000 to the ongoing maintenance of the port and Transport Canada retained rights and responsibilities with respect to compliance with conditions associated with the contribution. Following the privatization of the port, the record indicates that a harbour master continued in his position until August 2000 and has not been replaced since. The Crown retains ownership of the harbour beds at the port of Kingsville.
[28] Sault Ste. Marie is located in northern Ontario and is a transit point between Lake Huron and Lake Superior. The port of Sault Ste. Marie was established by Order-In-Council dated March 21, 1912 and was privatized on May 14, 1998. The Government no longer provides any services at Sault Ste. Marie, although it retains ownership of the harbour beds. There is currently a harbour master at Sault Ste. Marie whose only role, by all accounts, is to prepare invoices for harbour dues owing.
[29] With respect to Kingsville and Sault Ste. Marie, Transport Canada continues to maintain regulatory responsibilities including emergency planning, security assessments and planning, marine fire fighting programs, investigations of grounding incidents and review and approval of dredging proposals.
[30] The port of Sarnia is the entire 40 kilometre stretch of the St. Clair River which connects Lake Huron and Lake St. Clair. Because of its geographic position, it is a major fuel depot for ships transiting between Lake Huron and Lake Erie. The port of Sarnia was declared a public harbour and its boundaries as a public harbour were defined, by Orders-In-Council dated July 25, 1885 and July 23, 1917. Transport Canada continues to own and operate public port facilities in Sarnia. There are also privately built and maintained ports within the boundaries of the port of Sarnia, which provide fuel to fleets passing through. If a ship docks at one of the privately held ports, harbour dues are charged. If a ship does not stop, no dues are charged. Part of the plaintiffs’ concern is that the Crown now charges harbour dues for vessels refuelling in the St. Clair River and for other activities at privately owned docks.
[31] All three ports also appear in Schedule III to the 2001 Regulations, indicating that they are to have their section 65 designations as public ports repealed. However, subsection 3(1) of the 2001 Regulations sets out the conditions under which public port deproclamation will occur:
3(1) The designation under section 1 of a public port set out in Schedule 3 is repealed effective on the day on which the bed of the navigable waters at the port that is owned by Her Majesty in Right of Canada, or the last part of it, or, if applicable, the day on which the entire public port facility at the port, or the last part of it, is transferred to a person or body by Her Majesty in Right of Canada as represented by the Minister of Transport, whichever is later.
[32] This makes it clear that unless and until the bed of the navigable waters at any of those ports is transferred to a person or body by the Minister, they remain designated as public ports. At each of the three ports in question, the Crown has retained ownership of the harbour beds. Thus, Kingsville, Sault Ste. Marie and Sarnia all remain “public ports” subject to the Minister’s authority to fix fees under section 67 of the Act.
The Canada/U.S. Reciprocal Agreement
[33] There is a long-standing reciprocal agreement between Canada and the United States under which Canadian flagged ships travelling from Canadian Great Lake ports to U.S. Great Lake ports are exempt from U.S. tonnage taxes, and U.S. flagged ships travelling from U.S. ports to Canadian ports are exempt from the payment of harbour dues at Canadian ports. This agreement was memorialized in Canada by an Order-In-Council dated March 22, 1910 and through legislation in the U.S. signed into law on March 10, 1910. There is evidence, however, that the agreement goes back in time to at least 1884.
[34] In addition to their challenge to the legitimacy of harbour dues at the ports in question, the plaintiffs take the position that the exemption for U.S. ships is discriminatory, anti-competitive, unfair and contrary to the commercial objectives of the National Marine Policy and the Act.
Issues
[35] The issues are as follows:
1. Should this matter have been brought as an application for judicial review?
2. Is this an appropriate case for summary judgment?
3. Are the harbour dues an unlawful tax rather than a valid fee fixed pursuant to the Act?
4. Is the practice of not charging harbour dues to U.S. ships discriminatory and contrary to law?
[36] I have organized the remainder of this judgment under three headings. First, I have summarized the submissions of the defendant/moving party, second the submissions of the plaintiffs and third, I have provided my analysis. Within each heading, I have addressed each of the four disputed issues in turn.
Submissions of the Defendant/Moving Party
Judicial Review
[37] As a preliminary matter, the Crown complains that the plaintiffs have improperly brought this matter as an action and should have proceeded by way of an application for judicial review. They argue that at the heart of this action is a decision by the Minister, acting as a “federal board, commission or tribunal”, to fix certain fees pursuant to section 67 of the Act and is therefore properly the subject of an application for judicial review.
[38] In support of this argument, the Crown substantially relies on Canada v. Grenier, 2005 FCA 348 at paragraphs 27 to 33, for the proposition that the principle of finality guards against indirect challenges to statutory decision-making, and that the plaintiffs must challenge statutory decisions according to the judicial review regime set out in the Federal Courts Act, R.S.C. 1985, c. F-7, as amended, and the associated timelines.
[39] Notwithstanding the challenge to the appropriateness of bringing this action, the Crown acknowledges that the principles applicable to the review of an administrative decision apply whether the review of that decision is made by an application for judicial review, by appeal or by a collateral attack such as an action in damages (see Grenier above at paragraph 62). The Crown urges that if administrative law principles are applied, a standard of reasonableness should be applied to the decision on the basis that section 67 of the Act provides the Minister with a broad discretion in the setting of fees.
Summary Judgment
[40] It is the Crown’s position that all the issues in dispute in this action are legal issues and do not raise any material factual disputes. As such, viva voce evidence is not required and a trial is not necessary. They say that the issues in dispute in this matter are more typical of the sort resolved on judicial review and are amendable to resolution in their entirety on this motion.
[41] The Crown therefore asks this Court to resolve the disputed issues between the parties on this motion.
Vires of the Harbour Dues
[42] The Crown argues that the Minister’s authority with respect to setting charges under the Act is not constrained or limited in any of the ways suggested by the plaintiffs. They say, rather, that the Act permits the Minister to set charges, including harbour dues, on a national basis at common rates chargeable at all public ports.
[43] The Crown further says that because fees and harbour dues are set on a national basis for all public ports, there is nothing unlawful about continuing to set public port charges on a national basis. They argue that a national transportation system looks beyond the individual examples of Kingsville, Sault Ste. Marie and Sarnia and instead considers the total costs and deficits being incurred by Transport Canada in relation to all public ports. On the basis of those larger expenditures, they say the fees are not unlawful.
[44] In fact, says the Crown, there is nothing in the Act which requires the Minister to set fees on a port by port basis, having regard to costs incurred at each individual port rather than on a system wide basis. The Minister’s powers under section 67 are not limited to cost recovery objectives at all, and include broader pricing and revenue generating powers.
[45] The Crown relies on Thorne’s Hardware v. Canada, [1983] 1 S.C.R. 106, in which the Supreme Court considered whether harbour dues charged for use of waters surrounding certain privately owned docks constituted an unauthorized tax rather than a toll. The Court held at page 123 that, regardless of whether any services are provided to the vessels, charging harbour dues was not a tax:
Even if the word "tolls" in s. 14 limits the Board to charges reasonably related to the cost of providing harbour services, a toll levied against a particular vessel need not be based on the actual cost of services rendered to that vessel. To show that the Board's fees were ultra vires as "taxes" it would at least be necessary to show that the Board's revenues were significantly greater than the cost of providing harbour facilities and services to the public and no such showing was attempted here. Indeed, a memorandum dated July 22, 1969 written to the National Harbours Board by Vice-Chairman of the Board indicates that the port of Saint John suffered net operating losses amounting to $644,049 and $781,222 in the years 1968 and 1967 respectively.
[46] The Crown also relies substantially on the authorities of Aerlinte Eirann Teoranta v. Canada, [1987] 3 F.C. 384, aff’d [1990] F.C.J. No. 170 (C.A.), Canadian Shipowners Association v. Canada, [1997] F.C.J. No. 1002, aff’d [1998] F.C.J. No. 1515 (C.A.) and Canadian Association of Broadcasters v. Canada, 2008 FCA 157.
Canada/U.S. Reciprocal Agreement
[47] Finally, the Crown submits that there is nothing discriminatory about distinguishing between classes of users when fixing fees and the Minister has broad discretion under section 67 of the Act to do so. The Crown relies on the authorities of Aerlinte above, Canadian Shipowners Association above, and Mid-Atlantic Minerals Inc., [2003] 1 F.C. 168, aff’d [2004] F.C.J. No. 79, for the proposition that a general power to set fees includes the discretionary power to create classes of users. The Crown further argues that nothing in the wording of section 67 or elsewhere in the Act supports the suggestion that the Minister cannot exercise his discretion to give effect to the reciprocal agreement between the U.S. and Canada.
[48] The Crown also responds to the plaintiffs’ claim that the reciprocal agreement is not a formal treaty under the provisions of the Dues Notice. It is the Crown’s position that the term “treaty” in the Dues Notice was intended to apply to the reciprocal agreement. In any event, harbour dues notices are not statutory instruments, nor regulations. Dues notices are instead merely a method of communication from Transport Canada to port users and in no way inhibit the Minister’s ability to set fees under the Act (see Deputy M.N.R., Customs and Excise v. Liberty Home Products Corp., [1990] F.C.J. No. 555 (C.A.)).
Submissions of the Plaintiffs/Defendants by Counterclaim
Judicial Review
[49] The plaintiffs state that their case is not a challenge to the decision of the Minister to promulgate the Public Harbour Dues Tariff Notice nor is it a challenge to the Minister’s power to prescribe fees under section 67 of the Act. Rather, the plaintiffs say it is the way the harbour dues are applied that is subject to challenge.
[50] In support of bringing the request for relief by way of action rather than by way of judicial review, the plaintiffs rely on the authority in Canadian Association of Broadcasters above. In that case, the plaintiff challenged the legality of broadcasting fees as an unlawful tax by way of action.
[51] The plaintiffs further advance Mid-Atlantic Minerals Inc. above, at paragraph 28, for the proposition that because they are the defendants on the counterclaim, they may raise and argue any point of law in their defence which might defeat a claim.
Summary Judgment
[52] The plaintiffs argue that there are serious and genuine issues for trial, including the following:
1. Whether any services are provided in exchange for the harbour dues;
2. The original nature of harbour dues or harbour master fees and whether the harbour dues of today are consistent with their original purpose;
3. Whether there has been a shift in policy by the government to use harbour dues as a tax or means of generating revenue to support the Department of Transport;
4. Whether the harbour dues are applied in a manner that is consistent with the principles and objectives of the Canada Marine Act and the Canada Transportation Act;
5. Whether Canadian vessels are unfairly and unlawfully discriminated against in favour of American vessels and in particular, whether there is a valid treaty which permits the exemptions of U.S. vessels from the payment of harbour dues; and
6. Whether the delays in the divestiture and the continuing charge of harbour dues at ports where Transport Canada has withdrawn from service are consistent with the National Marine Policy and the Canada Marine Act.
[53] The plaintiffs submit that the Crown has not shown that the case is so doubtful that it does not deserve further consideration by the trier of fact.
Vires of the Harbour Dues
[54] The nub of the plaintiffs’ claim is that the harbour dues charged at ports where no services are provided, namely, Kingsville and Sault Ste. Marie, are not a toll but instead amount to an unlawful tax.
[55] Under the Dues Notice, “harbour dues” are defined as “a toll on a vessel that comes into or uses a public port”. A toll, the plaintiffs argue, requires that some service or value is provided in exchange for the charge. In contrast, the plaintiffs argue that a tax is a charge by government for the purposes of generating revenue for a public purpose or for the purpose of defraying a public expense. Since no direct services are provided at Kingsville or Sault Ste. Marie, the plaintiffs say the charge cannot be a toll and therefore must be a tax.
[56] The plaintiffs say that historically the purpose of harbour dues was to be a fee paid for the services of a harbour master in respect of the operation of a particular port. Since there is no harbour master in the case of Kingsville and the harbour master in Sault Ste. Marie provides no particular service, there is no quid pro quo.
[57] The plaintiffs seek to distinguish Thorne’s Hardware above, by suggesting it stands for the proposition that as long as services were generally provided at the port in question, it is not necessary for a toll imposed on a vessel to be related to the cost of services provided to that particular vessel.
[58] Applying a pith and substance analysis, the plaintiffs suggest that the dominant purpose of the harbour dues are to generate revenue for the funding of Transport Canada’s port line of business in a general way, and that the redirection of what was intended to be a fee for the services of a harbour master into a tax to fund a national port network is an improper use not authorized by law.
Canada/U.S. Reciprocal Agreement
[59] The plaintiffs first submit that this reciprocal agreement is not valid because there was no statutory authority for the 1910 Order-in-Council, which the Crown claims as the authority for the exemption.
[60] Next, the plaintiffs point to the wording of the Dues Notice which provides an exemption for “a vessel exempted from the payment of such dues by a treaty between Canada and Foreign Country.” The plaintiffs therefore submit that even if there is a valid reciprocal agreement, there is no formal treaty to allow for the exemption of U.S. flagged vessels.
[61] The plaintiffs argue that the exemption for U.S. ships constitutes discrimination against Canadian vessels for which there is no proper legal basis and should be held invalid on three principle grounds:
1. There is no proper legislative authority which authorizes the exemption of American vessels;
2. The exemption of American vessels constitutes discrimination or inequitable treatment between the ships and vessels of both countries and is therefore contrary to the International Boundary Waters Treaty Act, R.S.C. 1985, c-17; and
3. The exemption of American vessels under the Dues Notice does not promote and safeguard Canada’s competitiveness and trade objectives, contrary to the objectives of the Canada Marine Act and the Canada Transportation Act.
Analysis and Decision
Judicial Review
[62] The plaintiffs’ claim alleges that the Minister has acted beyond the scope of his statutory authority. The authority conferred upon the Minister by section 67 of the CMA is the authority to fix public port charges, including harbour dues. At issue, therefore, is the general decision or decisions of the Minister in fixing such dues, decisions taken by the Minister as a federal board, commission or other tribunal as defined in section 2 of the Federal Courts Act.
[63] The exclusive means to challenge a decision of a federal board, commission or other federal tribunal is an application for judicial review made pursuant to section 18.1 of the Federal Courts Act. Until a party has successfully pursued a judicial review application, the decision retains its legal force and authority (see Grenier v. Canada, 2005 FCA 348, 262 D.L.R. (4th) 337, [2005] F.C.J. No. 1778 (QL) at paragraphs 27 to 33).
[64] The alleged invalidity of the Minister’s decision is at the heart of this action and is the basis for all of the relief sought by the plaintiffs. The plaintiffs are not entitled to disregard the statutory regime governing judicial review and thereby circumvent its prescribed procedures and time limitations by attacking the lawfulness of a decision in the guise of an action. The Federal Court of Appeal has stated definitively and repeatedly that to permit a plaintiff to proceed by action in order to have decisions of federal tribunals declared invalid is to compromise the finality of decisions, the principle which underlies the relatively short, 30 day time limit for the commencement of judicial review applications (see Manuge v. Canada, 2009 FCA 29, [2009] F.C.J. No. 73 (QL) at paragraph 51, Grenier above, at paragraphs 27 to 29, Budisukma Puncak Sendirian Berhad v. Canada (“Berhad”), 2005 FCA 267, [2005] F.C.J. No. 1302 (QL) at paragraph 60, Tremblay v. Canada, [2004] 4 F.C.R. 165, 244 D.L.R. (4th) 422, [2004] F.C.J. No. 787 (C.A.) (QL) at paragraphs 14 and 16 to 18).
[65] Even if the plaintiffs’ claim may be characterized as challenging an ongoing course of conduct rather than challenging the Minister’s specific decisions to fix the harbour dues as he did, the proper forum for such a challenge is an application for judicial review (see Manuge above, at paragraph 45, Krause v. Canada, [1999] 2 F.C. 476 (F.C.A.)).
[66] It is also settled that the proper method by which to attack the vires of subordinate legislation is through judicial review, albeit in those circumstances the standard of review will always be correctness (see Canadian Council for Refugees v. Canada, 2008 FCA 229, [2009] 3 F.C.R. 136, 74 Admin. L.R. (4th) 79 (QL) at paragraphs 55 to 58, Saskatchewan Wheat Pool v. Canada (Attorney General), 107 D.L.R. (4th) 190, at paragraphs 11 to 15). Thus, successful characterization of the Dues Notice as subordinate legislation is not of assistance to the plaintiffs.
[67] Nevertheless, there have been cases where the Federal Court of Appeal has, in the interests of clarity or efficiency or the particular circumstances of the parties, undertaken a review of a federal administrative decision challenged collaterally in an action. In such circumstances, notwithstanding that the matter was not brought before the Court through the proper procedure, the Court considered the decision in accordance with administrative law principles, particularly by determining the applicable standard of review (see Grenier above, at paragraphs 58 to 63, Berhad above, at paragraphs 65 and 66).
[68] Notwithstanding these authorities, the plaintiffs rely on Canadian Association of Broadcasters and Mid-Atlantic Minerals Inc. above, to support bringing this claim by way of action. The case at bar is in many ways analogous to the Canadian Association of Broadcasters case above, where there was a challenge to fees charged pursuant to a regulatory scheme on the basis that they are unlawful taxes. However, neither the Federal Court nor the Federal Court of Appeal commented on why that case proceeded by way of action rather than application and as a result, I cannot rely on it as an authority on this aspect of the law.
[69] The plaintiffs also argue that since the Crown has brought a counterclaim against it, they may raise and argue any point of law in their defence which might defeat a claim (see Mid-Atlantic Minerals above, at paragraph 28). Mid-Atlantic Minerals above, stands for the proposition that declaratory relief is available in defence of a claim, whereas it is not available to a plaintiff in an action, since declaratory relief under section 18 of the Federal Courts Act is only available on applications of judicial review made under section 18.1. Thus, the plaintiffs in an action cannot rely on Mid-Atlantic Minerals above, to avoid the provisions of the Federal Courts Act articulated upon in Grenier above.
[70] For the reasons stated above, it seems clear to me that this action should properly have been brought by way of judicial review.
[71] Though the Federal Court of Appeal decisions in Grenier and Berhad above, are binding upon this Court, I do note that the law is not entirely settled. The Ontario Court of Appeal has openly questioned the effect of Grenier: TeleZone Inc. v. Canada (Attorney General), 2008 ONCA 892, 86 Admin L.R. (4th) 163. Thus, at this time, the best approach is to proceed cautiously and not dispose of the case on this ground. I also note that the plaintiffs’ action was commenced prior to the Grenier decision and in my view, fairness to both parties dictates that this case be decided on its merits without further delay. At the hearing, the parties were prepared to argue the merits of the case