Reference re Newfoundland Continental Shelf

Reference re Newfoundland Continental Shelf
Collection
Supreme Court Judgments
Date
1984-03-08
Report
[1984] 1 SCR 86
Case number
17096
Judges
Laskin, Bora; Ritchie, Roland Almon; Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; McIntyre, William Rogers; Chouinard, Julien
On appeal from
Canada
Subjects
Constitutional law
Notes
SCC Case Information: 17096
Decision Content
Supreme Court of Canada
Reference re Newfoundland Continental Shelf, [1984] 1 S.C.R. 86
Date: 1984-03-08
IN THE MATTER of Section 55 of the Supreme Court Act, R.S.C. 1970, chapter S-19, as amended
AND IN THE MATTER of a Reference by the Governor in Council concerning property in and legislative jurisdiction over the seabed and subsoil of the continental shelf offshore Newfoundland and set out in Order-in-Council P.C. 1982-1509 dated the 19th day of May, 1982
File No.: 17096.
1983: February 22, 23, 24; 1984: March 8.
Present: Laskin C.J.[1], Ritchie, Dickson, Beetz, Estey, Mclntyre and Chouinard JJ.
REFERENCE BY THE GOVERNOR IN COUNCIL
Constitutional law—International law—Continental shelf off Newfoundland—Natural resources—Whether Canada or Newfoundland has the right to explore and exploit natural resources of continental shelf—Newfoundland Act, 1949 (U.K.), c. 22, Terms of Union (Schedule), Terms 2, 3, 7, 35, 37—Statute of Westminster, 1931 (U.K.), c. 4, ss. 1, 3, 10, 11—Geneva Convention, 1958, art. 2—Statute of the International Court of Justice, art. 38(1)—Constitution Act, 1867, ss. 109 , 132 .
Constitutional law—Distribution of legislative powers—Legislative jurisdiction over the natural resources of continental shelf off Newfoundland—Federal jurisdiction—Peace, order and good government power—Constitution Act, 1867, ss. 91 , 92 , 92(5) , 92(13) , 92A(1) .
The Governor General in Council, in accordance with s. 55 of the Supreme Court Act, referred to this Court the following constitutional question:
In respect of the mineral and other natural resources of the seabed and subsoil of the continental shelf, in the area offshore Newfoundland…has Canada or Newfoundland:
(1) the right to explore and exploit the said mineral and other natural resources, and (2) legislative jurisdiction to make laws in relation to the exploration and exploitation of the said mineral and other natural resources?
The Attorney General of Canada submitted that the answers to both parts of the question should be in favour of Canada. The Attorney General of Newfoundland, whose position was supported by the other provinces—except Quebec, Ontario and Saskatchewan who were not represented on this reference—submitted that both parts of the question should be answered in favour of Newfoundland.
Held: Both parts of the question should be answered in favour of Canada.
There is no basis upon which the Province of Newfoundland could claim the right to explore and exploit or claim legislative jurisdiction over the resources of the continental shelf:
(1) The continental shelf rights claimed by the parties are the rights granted by international law for a coastal State to explore and exploit its continental shelf. These rights are not in pith and substance proprietary: they are an extraterritorial manifestation of external sovereignty. During the relevant period prior to its entry into Confederation in 1949, Newfoundland did not have the requisite external sovereignty to acquire continental shelf rights. As a matter of Imperial constitutional law any continental shelf rights available at international law before 1949 would have been acquired by the Crown in right of the United Kingdom, not the Crown in right of Newfoundland.
Even if Newfoundland had acquired continental shelf rights prior to its entry into Confederation these rights would have passed to Canada by virtue of the Terms of Union. Term 37, which perpetuates the province’s proprietary rights in natural resources “belonging to Newfoundland at the date of Union”, would not suffice to pass any existing continental shelf right to the province.
In any event, Newfoundland could not, upon entry into Confederation, have held rights to explore and exploit in the continental shelf because at that time international law conferred no such rights. These rights, which were not indisputably recognized before the Geneva Convention of 1958, do not have a retroactive effect capable of assisting Newfoundland.
(2) Newfoundland’s legislative competence, like that of all the other provinces, is confined to legislation operating within the province. The continental shelf, being outside the boundaries of Newfoundland, does not fall within any of the enumerated heads of s. 92 . Legislative jurisdiction falls therefore to Canada under the peace, order, and good government power in its residual capacity.
Reference re Offshore Mineral Rights of British Columbia, [1967] S.C.R. 792; Reference re Mineral and other Natural Resources of the Continental Shelf (1983), 145 D.L.R. (3d) 9; North Sea Continental Shelf, Judgment, I.C.J. Reports 1969, p. 3; R. v. Keyn (1876), 2 Ex. D. 63; MacLeod v. Attorney-General for New South Wales, [1891] A.C. 455; Nadan v. The King, [1926] A.C. 482; Croft v. Dunphy, [1933] A.C. 156; St. Catherine’s Milling and Lumber Co. v. The Queen (1888), 14 App. Cas. 46; Interprovincial Co-Operatives Ltd. v. Dryden Chemicals Ltd., [1976] 1 S.C.R. 477; Attorney-General of British Columbia v. Attorney‑General of Canada (1889), 14 App. Cas. 295; Abu Dhabi Arbitration (1952), 1 International and Comparative Law Quarterly 247; New South Wales v. Commonwealth of Australia (1975), 135 C.L.R. 337, referred to.
REFERENCE by the Governor General in Council, pursuant to s. 55 of the Supreme Court Act, concerning property in and legislative jurisdiction over the seabed and subsoil of the continental shelf off Newfoundland. Both parts of the question answered in favour of Canada.
Pierre Genest, Q.C., Clyde K. Wells, Q.C., Peter W. Hogg, Q.C., and Donald Kubesh, for the Attorney General of Canada.
James J. Greene, Q.C., Colin K. Irving, Margaret Cameron, John Ashley and James Thistle, for the Attorney General of Newfoundland.
Gordon F. Henderson, Q.C., Emilio Binavince and Edward Foley, for the Attorney General of Nova Scotia.
P.A. MacNutt and Bruce Judah, for the Attorney General for New Brunswick.
Brian F. Squair, for the Attorney General of Manitoba.
E. Robert A. Edwards, for the Attorney General of British Columbia.
Ralph C. Thompson, for the Attorney General of Prince Edward Island. Wm. Henkel, Q.C., for the Attorney General for Alberta.
The following is the judgment delivered by
THE COURT
Introduction
The Governor in Council, in P.C. 1982-1509, dated May 19, 1982, referred the following constitutional question to the Court under s. 55 of the Supreme Court Act, R.S.C. 1970, c. S‑19:
In respect of the mineral and other natural resources of the seabed and subsoil of the continental shelf, in the area offshore Newfoundland approximately 320 kilometres (170 nautical miles) east south east of St. John’s, Newfoundland, bounded by 46° 30′ north latitude and 47° 00′ north latitude and by 48° 30′ west longitude and 49° west longitude, where resource exploration is being conducted and more particularly delimited on the map attached hereto as the Appendix to this Order, as between Canada and Newfoundland, pursuant to The Newfoundland Act, 1949 or otherwise, has Canada or Newfoundland:
(1) the right to explore and exploit the said mineral and other natural resources, and
(2) legislative jurisdiction to make laws in relation to the exploration and exploitation of the said mineral and other natural resources?
The Attorney General of Canada submits that the answers to both parts of the question should be in favour of Canada. The Attorneys General of Newfoundland, British Columbia, Nova Scotia, New Brunswick, Prince Edward Island, Manitoba and Alberta submit that the answers to both parts of the question should be in favour of Newfoundland.
The metes and bounds description in the reference designates an area of the continental shelf known as the Hibernia field, the location of which is shown on the map on the page following. It is not suggested that the legal issues are any different in respect of Hibernia than in respect of any other portion of the continental shelf off Newfoundland. The significance of the limitation to Hibernia is that it excludes consideration of the territorial sea, i.e., waters adjacent to Newfound- [Page 91]
land within formerly three, now twelve, nautical miles thereof.
A few months before the federal reference was submitted to this Court, the Lieutenant Governor in Council of Newfoundland, on February 18, 1982, referred its own question to the Newfoundland Court of Appeal. The Newfoundland reference includes not only the continental shelf, but also the territorial sea. The question before the Newfoundland Court of Appeal was this:
Do the lands, mines, minerals, royalties or other rights, including the right to explore and exploit and the right to legislate, with respect to the mineral and other natural resources of the seabed and subsoil from the ordinary low-water mark of the Province of Newfoundland to the seaward limit of the continental shelf or any part thereof belong or otherwise appertain to the Province of Newfoundland?
The Newfoundland Court of Appeal, in Reference re Mineral and other Natural Resources of the Continental Shelf (the Newfoundland Reference) (1983), 145 D.L.R. (3d) 9, answered the question in respect of a three mile territorial sea in favour of Newfoundland, but answered the question in respect of the continental shelf against Newfoundland. The Attorney General of Newfoundland has filed a Notice of Appeal in respect of the continental shelf and the Attorney General of Canada has filed a Notice of Appeal in respect of the territorial sea. Nothing further has been done to bring these appeals before this Court.
Accordingly, the Newfoundland Court of Appeal’s decision is not actually before this Court in the present reference. The Court of Appeal’s decision, however, was rendered on February 17, 1983, the week before this Court’s hearing on the present federal reference. Much of the oral argument in the present case was directed toward the reasons of the Newfoundland Court of Appeal since, in respect of the continental shelf, the identical issue is raised. We therefore think it proper in these reasons to comment on the reasons of the Court of Appeal insofar as they relate to the continental shelf.
The 1967 Offshore Reference
In Reference re Offshore Mineral Rights of British Columbia, [1967] S.C.R. 792 (the 1967 Offshore Reference), this Court was asked to give its opinion upon the following questions:
1. In respect of the lands, including the mineral and other natural resources, of the sea bed and subsoil seaward from the ordinary low-water mark on the coast of the mainland and the several islands of British Columbia, outside the harbours, bays, esturaries and other similar inland waters, to the outer limit of the territorial sea of Canada, as defined in the Territorial Sea and Fishing Zones Acts, Statutes of Canada 1964, Chapter 22, as between Canada and British Columbia,
(a) Are the said lands the property of Canada or British Columbia?
(b) Has Canada or British Columbia the right to explore and exploit the said lands?
(c) Has Canada or British Columbia legislative jurisdiction in relation to the said lands?
2. In respect of the mineral and other natural resources of the sea bed and subsoil beyond that part of the territorial sea of Canada referred to in Question 1, to a depth of 200 metres or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the mineral and other natural resources of the said areas, as between Canada and British Columbia,
(a) Has Canada or British Columbia the right to explore and exploit the said mineral and other natural resources?
(b) Has Canada or British Columbia legislative jurisdiction in relation to the said mineral and other natural resources?
The Court unanimously answered both questions in favour of Canada. In all material respects, the second question in the 1967 Offshore Reference is identical to the questions in the present reference. The primary argument in favour of Newfoundland is that Newfoundland’s historical and constitutional position distinguishes its case from that of Brit- ish Columbia. In the alternative, we are asked to reconsider the 1967 Offshore Reference.
In the 1967 Offshore Reference the major part of this Court’s analysis was directed toward the question as to property in the territorial sea. The Court distinguished between two meanings of the word “property”: the common law sense of ownership and the type of property rights recognized by international law. British Columbia’s claim to property in the territorial sea could only be based on the common law notion. In particular, British Columbia’s case depended on s. 109 of the Constitution Act, 1867 , made applicable to British Columbia upon its entry into Confederation in 1871.
109. All Lands, Mines, Minerals and Royalties belonging to the several Provinces of Canada, Nova Scotia, and New Brunswick at the Union, and all Sums then due or payable for such Lands, Mines, Minerals, or Royalties, shall belong to the several Provinces of Ontario, Quebec, Nova Scotia, and New Brunswick in which the same are situate or arise, subject to any Trusts existing in respect thereof, and to any Interest other than that of the Province in the same.
This Court held, on its analysis of R. v. Keyn (1876), 2 Ex. D. 63 and other authorities, that at common law the realm ends at low water mark such that the Crown has no property, in the common law sense, below low water mark unless expressly claimed. There being no such claim in respect of British Columbia prior to 1871, and no alteration of boundaries since 1871, the Court decided the territorial sea was outside British Columbia. It followed that British Columbia had no legislative jurisdiction either. It was Canada that was in the position to acquire the property in the territorial sea recognized by international law.
Once it had been decided that Canada had property and legislative jurisdiction in the territorial sea, it followed almost automatically that Canada had the right to explore and exploit in the continental shelf. It would be illogical to hold that the province had property in its land mass, that Canada had property in the territorial sea, but that the province had the right to explore and exploit in the continental shelf. Accordingly, in the 1967 Offshore Reference, the Court was not required to undertake a detailed separate analysis of the continental shelf. After a review of the recent emergence of the continental shelf regime in international law, the Court simply said this, at p. 821:
As with the territorial sea, so with the continental shelf. There are two reasons why British Columbia lacks the right to explore and exploit and lacks legislative jurisdiction:
(1) The continental shelf is outside the boundaries of British Columbia, and
(2) Canada is the sovereign state which will be recognized by international law as having the rights stated in the Convention of 1958, and it is Canada, not the Province of British Columbia, that will have to answer the claims of other members of the international community for breach of the obligations and responsibilities imposed by the Convention.
There is no historical, legal or constitutional basis upon which the Province of British Columbia could claim the right to explore and exploit or claim legislative jurisdiction over the resources of the continental shelf.
The fact that the constitutional position regarding the territorial sea off Newfoundland is not at issue in the present reference, and indeed is pending in a separate appeal, means that we cannot use any conclusions about the territorial sea to lead us to the result in respect of the continental shelf. Accordingly, in the present case, it is necessary to undertake a careful analysis of the issues as they relate to the continental shelf alone.
The Nature of Continental Shelf Rights
The reference speaks of the right to explore and exploit mineral and other natural resources. The precise language is taken from international law. Article 2 of the 1958 Geneva Convention on the Continental Shelf, signed in 1958, in force in 1964 upon receiving the requisite number of ratifications, and ratified by Canada in 1970, reads as follows:
Article 2
1. The coastal State exercises over the continental shelf sovereign rights for the purpose of exploring it and exploiting its natural resources.
2. The rights referred to in paragraph 1 of this article are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit its natural resources, no one may undertake these activities, or make a claim to the continental shelf, without the express consent of the coastal State.
3. The rights of the coastal State over the continental shelf do not depend on occupation, effective or notional, or on any express proclamation.
4. The natural resources referred to in these articles consist of the mineral and other non-living resources of the sea-bed and subsoil together with living organisms belonging to sedentary species, that is to say, organisms which, at the harvestable stage, either are immobile on or under the sea-bed or are unable to move except in constant physical contact with the sea-bed or the subsoil.
Both Canada and Newfoundland claim the rights of the coastal State recognized by international law. Neither purports to claim anything more or anything different. Neither Canada nor Newfoundland made any claims to the continental shelf prior to the codification of the regime in the 1958 Geneva Convention. The rights claimed are those accorded by operation of international law.
There has developed in international law a carefully constructed regime respecting the continental shelf. International law was forced to take note of the continental shelf when, in the middle of this century, the technology was developed to exploit offshore resources. A consensus developed that the exploitation should be under the control of the coastal State. The 1958 Geneva Convention was drafted so as to do no more than was necessary to achieve this result. Thus the Convention does not grant “sovereignty” over the continental shelf but rather “sovereign rights to explore and exploit”. These limited rights co-exist with the rights of other nations to make use of the seabed for submarine cables and pipelines (Article 4) and do not affect the status of the superjacent waters or airspace (Article 3). They stand in marked contrast to the full sovereignty (saving only other nations’ rights of innocent passage) which international law accords to coastal States over their territorial sea.
In the North Sea Continental Shelf cases, I.C.J. Reports 1969, p. 3, the International Court of Justice, at p. 29, referred to the notion of appurtenance:
…the right of the coastal State to its continental shelf areas is based on its sovereignty over the land domain, of which the shelf area is the natural prolongation into and under the sea.
Continental shelf rights arise as an extension of the coastal State’s sovereignty, but it is an extension in the form of something less than full sovereignty. The Court referred to the “title” in the continental shelf (p. 31) and said the shelf may be “deemed” to be part of the coastal State’s territory in a certain sense (p. 31). But in the ordinary meaning of the term, the continental shelf is not part of a coastal State’s territory. The coastal State cannot “own” the continental shelf as it can “own” its land territory. The regulation by international law of the uses to which the continental shelf may be put is simply too extensive to consider the shelf to be part of the State’s territory. International law concedes dominion to the State in its land territory, subject to certain definite restrictions. By contrast, in the continental shelf the limited rights that international law accords are the sum total of the coastal State’s rights.
It is true that the United Kingdom moved to extend territorial boundaries to include the continental shelf (though not the superjacent waters) of certain of its then colonies: Trinidad and Tobago (1942); Bahamas (1948); Jamaica (1948); British Honduras (1950); Falkland Islands (1952). Consistent with this practice, in 1953, the United Kingdom government’s opinion in response to the International Law Commission’s draft was that the nature of the coastal State’s rights over the continental shelf were the same as over its land territory. There were other countries that, in the late 1940’s and early 1950’s, i.e. during the early development of international law on the continental shelf, claimed the continental shelf as part of their territory. Ultimately, however, international law did not accept this contention and it is significant that when the United Kingdom passed the Continental Shelf Act 1964 giving municipal effect to the 1958 Convention, no claim was made to extend United Kingdom territory.
At international law, then, the continental shelf off Newfoundland is outside the territory of the nation state of Canada. Since, as a matter of municipal law, neither Canada nor Newfoundland purports to claim anything more than international law recognizes, we are here concerned with an area outside the boundaries of either Newfoundland or Canada. In other words, we are concerned with extraterritorial rights.
Much of the argument in the present case is based on the assumption that continental shelf rights are proprietary. We do not think continental shelf rights are proprietary in the ordinary sense. In the words of the 1958 Geneva Convention, they are “sovereign rights” and they appertain to the coastal State as an extension of rights beyond where its ordinary sovereignty is exercised. In pith and substance they are an extraterritorial manifestation of, and an incident of, the external sovereignty of a coastal State.
Can the 1967 Offshore Reference be distinguished?
As we have said, the primary argument in favour of Newfoundland is that its historical and constitutional position differentiates its case from that of British Columbia. In order to distinguish the 1967 Offshore Reference, Newfoundland must succeed on each of the following three points:
(i) international law must have recognized the right to explore and exploit in the continental shelf prior to Newfoundland’s entry into Confederation on March 31, 1949;
(ii) the Crown in right of Newfoundland must have been in a position to acquire these rights;
(iii) the Crown in right of Newfoundland must not have lost those rights under the Terms of Union with Canada.
The Attorney General of Canada submits that Newfoundland loses on all three points. The Attorney General of Newfoundland, supported by the Attorneys General of the other provinces, submits that Newfoundland succeeds on all three points.
The first point concerns matters of international law; the latter two raise questions of constitutional law. We prefer to deal with the constitutional arguments first.
The Constitutional Position of the Crown in Right of Newfoundland
In assessing the constitutional position of Newfoundland, we will, for the moment, put Newfoundland’s international law argument at its highest. For the purposes of argument, we will assume that 1949 international law recognized that continental shelf rights of coastal States arose ipso jure, that is to say, by operation of law. On that assumption, was the Crown in right of Newfoundland constitutionally in a position to acquire continental shelf rights prior to joining Canada and to retain them after union with Canada?
In respect of Newfoundland’s position prior to joining Canada, the primary submission of the Attorney General of Newfoundland is that in 1949 Newfoundland was an international person such that the Crown in right of Newfoundland was the only entity to which these rights could accrue. In the alternative, the Attorney General of Newfoundland submits that the Crown in right of a colony could acquire continental shelf rights. The Attorney General of Canada submits that Newfoundland never attained the status of an international person and that only international persons can, at international law, acquire continental shelf rights.
We do not think it is necessary to determine whether, in the eyes of international law, Newfoundland ever became an independent State. In the days of Empire, international law had nothing to say about whether international rights accorded to the Empire accrued to the Crown in right of the colony or in right of the Imperial Crown. That is a matter for determination under Imperial constitutional law.
We said earlier that, in pith and substance, continental shelf rights are extraterritorial rights and a manifestation of external sovereignty. This is important because of the constitutional position of colonies. When colonies were established, they generally were given limited self‑government in the form of representative government. In Newfoundland’s case this happened in 1833. The grant of responsible government (1855 for Newfoundland) meant that, with limited exceptions, the colony was granted internal self-government, in other words, internal sovereignty. But what was universally withheld from the colonies was any right of external sovereignty. That was the distinguishing feature of a colony.
Extraterritorial legislative incompetence was a hallmark of colonies, often relied upon by colonial law officers in recommending disallowance of colonial laws. Judicial recognition of this incompetence is found in MacLeod v. Attorney-General for New South Wales, [1891] A.C. 455 (P.C.). The case concerned a bigamy statute which, on one reading, purportedly applied beyond the boundaries of the colony of New South Wales. In dealing with this construction of the statute Lord Halsbury L.C. said (at p. 458):
…it would have been beyond the jurisdiction of the Colony to enact such a law. Their jurisdiction is confined within their own territories, and the maxim which has been more than once quoted, “Extra territorium jus dicenti impune non paretur”, would be applicable to such a case.
In Nadan v. The King, [1926] A.C. 482, the Privy Council reiterated this view in holding that Canada did not have competence to abolish appeals to the Privy Council.
The precise limits of extraterritorial incompetence are unclear. The opinion of the Colonial Law Officers was that a colony could legislate in respect of the three nautical mile territorial sea, and there are numerous examples of Newfoundland having done so. Croft v. Dunphy, [1933] A.C. 156 (P.C.), seems to stand for the proposition that an incidental extraterritorial effect is permissible if necessary to the effectiveness of legislation operating within the colony. The basic principle, however, was that colonies were incompetent to legislate extraterritorially.
There was a parallel extraterritorial incompetence in executive powers. For example, colonies were not competent to sign treaties. They might be consulted about treaties affecting them. They might become involved in negotiations under the aegis of the Imperial authorities, but the ultimate control and responsibility in treaty matters rested with the Imperial government. One reflection of this is s. 132 of the Constitution Act, 1867 :
132. The Parliament and Government of Canada shall have all Powers necessary or proper for performing the Obligations of Canada or of any Province thereof, as Part of the British Empire, towards Foreign Countries, arising under Treaties between the Empire and such Foreign Countries.
Treaties were made by the Government of the United Kingdom and not Canada.
A particular example of the extraterritorial incompetence of colonies is that they were inca- pable of acquiring new territory. Boundaries could only be altered by the British authorities in the form of an order in council under the Colonial Boundaries Act.
The underlying basis of this denial of external sovereignty was that international relations were the preserve of the United Kingdom government and Parliament. Lack of external sovereignty made colonies incompetent to acquire continental shelf rights. The rights accrued initially to the Imperial Crown as the entity possessing external sovereignty in respect of colonies. The Imperial Crown could transfer them to the colony; this Court noted in the 1967 Offshore Reference, supra, at p. 808, that Imperial rights in the territorial sea could have been transferred to British Columbia. Indeed, continental shelf rights were given to certain colonies during the formative period of international law on the continental shelf. The territorial boundaries of Trinidad and Tobago (1942), Bahamas (1948), Jamaica (1948), British Honduras (1950), and Falkland Islands (1952) were extended by Imperial orders in council to include the continental shelf. In the background documents furnished in the case on appeal to constitutional incompetence of a colony itself to acquire such rights was alluded to. The Attorney General of Newfoundland does refer us to certain later colonial acts claiming continental shelf rights: Sierra Leone (1960); The Gambia (1963); Seychelles (1967); Cayman Islands (1978); British Virgin Islands (1972); St. Vincent (1970); British Solomon Islands Protectorate (1970). We have not been referred to the precise constitutional position of these colonies, nor is there any indication that the constitutional validity of these claims was tested, or even considered. We find these examples of slight persuasive value.
The Attorney General of Newfoundland argues that colonies could acquire continental shelf rights because rights of the Crown in overseas territories were held by the Crown in right of the colony. The Attorney General of Nova Scotia makes a similar argument. We quote from the factum of the Attorney General of Nova Scotia, at p. 30:
Accordingly, under colonial constitutional law, it was a general principle that any lands owned by the Crown in a Colony are lands owned by the Crown in Right of the Colony and not in Right of the United Kingdom. Exception to this rule may be made in respect to a particular property (that is it can be considered to be held by the Crown in Right of the United Kingdom) but such exception must be made by an overt act making this reservation and the burden to prove the exception lies with the person claiming the exception.
This argument ignores one critical element. The proposition enunciated applies only to property within the colony. This territorial restriction is stated expressly in one of the authorities relied on: St. Catherine’s Milling and Lumber Co. v. The Queen (1888), 14 App. Cas. 46 (P.C.) at p. 57-58:
The enactments of sect. 109 are, in the opinion of their Lordships, sufficient to give to each Province, subject to the administration and control of its own Legislature, the entire beneficial interest of the Crown in all lands within its boundaries, which at the time of the union were vested in the Crown, with the exception of such lands as the Dominion acquired right to under sect. 108, or might assume for the purposes specified in sect. 117. Its legal effect is to exclude from the “duties and revenues” appropriated to the Dominion, all the ordinary territorial revenues of the Crown arising within the Provinces.
(Emphasis added.)
There was considerable argument in the factums in this case to the effect that this Court was in error in holding in the 1967 Offshore Reference that the territorial sea was outside the boundaries of, and therefore not the property of, a colony. Even if valid these submissions would not advance Newfoundland’s position. Whatever the status of the territorial sea, continental shelf rights remain extraterritorial. The same reasoning that denies extraterritorial legislative and executive competence to colonies applies with equal force to pre- vent colonies from exercising any extraterritorial sovereign rights conferred by international law. It is only when a former colony, as a matter of constitutional law, acquires external sovereignty that it can also acquire continental shelf rights. Until such time it is the British Crown that is the beneficiary of the extraterritorial rights over the continental shelf accorded by international law.
In the 1967 Offshore Reference this Court noted that sometime between 1919 and 1931 the Canadian federal government acquired external sovereignty. The Canadian Parliament’s extraterritorial legislative competence was recognized in the Statute of Westminster, 1931 (U.K.), 22 Geo. V, c. 4. The first nine Canadian provinces, by contrast, never gained extraterritorial legislative competence: Interprovincial Co-Operatives Ltd. v. Dryden Chemicals Ltd., [1976] 1 S.C.R. 477 at p. 512. They have never acquired external sovereignty. They are thus incapable of acquiring continental shelf rights.
Is the situation of Newfoundland any different from that of the nine other provinces? Citing, inter alia, the Balfour Declaration, the Statute of Westminster, 1931 and the Terms of Union, the Attorney General of Newfoundland contends that it is and that Newfoundland acquired and retained external sovereignty sufficient to make it the beneficiary of the rights over the continental shelf recognized by international law.
Because of the change in Newfoundland’s constitutional status in 1934, it is convenient to consider this contention first with reference to the period before 1934 and then to the period between 1934 and Confederation in 1949.
(1) The Status of Newfoundland Prior to 1934
The Attorney General of Newfoundland provides us with an extensive review of the history of the colony of Newfoundland, but we think it sufficient to begin with the Imperial Conference of 1926, at which Newfoundland was a full partici- pant along with Great Britain and the other Dominions. The Conference produced the Balfour Declaration, which included the following passage:
There is, however, one most important element in it which from a strictly constitutional point of view, has now, as regards all vital matters, reached its full development—we refer to the group of self-governing communities composed of Great Britain and the Dominions. Their position and mutual relation may be readily defined. They are autonomous communities within the British Empire, equal in status, in no way subordinate one to another in any aspect of their domestic or external affairs, though united by a common allegiance to the Crown, and freely associated as members of the British Commonwealth of Nations.
(Emphasis added.)
The equating of status of Dominions, including Newfoundland, with Great Britain was an express recognition that, as a matter of Imperial constitutional law, the Dominions had evolved to the stage of possessing external sovereignty.
It was argued on behalf of Canada that, during the period immediately following 1926 two factors distinguished the position of Newfoundland from that of the other Dominions. Newfoundland chose not to be a member of the League of Nations and Newfoundland chose to leave the conduct of its external relations to the British authorities. These two factors did cause considerable confusion concerning the manner in which Newfoundland was to be dealt with in treaties. These considerations may reflect on whether Newfoundland was an independent person in the eyes of international law, but they were not constitutional impediments. We do not think they detract from the fact that as a matter of status, according to Imperial constitutional convention, Newfoundland possessed external sovereignty.
In 1931 the Statute of Westminster included Newfoundland within the category of “Dominion”. The following provisions of the Act are of particular significance:
1. In this Act the expression “Dominion” means any of the following Dominions, that is to say, the Dominion of Canada, the Commonwealth of Australia, the Dominion of New Zealand, the Union of South Africa, the Irish Free State and Newfoundland.
…
3. It is hereby declared and enacted that the Parliament of a Dominion has full power to make laws having extra-territorial operation.
…
10. (1) None of the following sections of this Act, that is to say, sections two, three, four, five and six, shall extend to a Dominion to which this section applies, as part of the law of that Dominion unless that section is adopted by the Parliament of the Dominion, and any Act of that Parliament adopting any section of this Act may provide that the adoption shall have effect either from the commencement of this Act or from such later date as is specified in the adopting Act.
(2) The Parliament of any such Dominion as aforesaid may at any time revoke the adoption of any section referred to in subsection (1) of this section.
(3) The Dominions to which this section applies are the Commonwealth of Australia, the Dominion of New Zealand and Newfoundland.
11. Notwithstanding anything in the Interpretation Act, 1889, the expression “Colony” shall not, in any Act of the Parliament of the United Kingdom passed after the commencement of this Act, include a Dominion or any Province or State forming part of a Dominion.
(Emphasis added.)
Newfoundland never did adopt the Statute of Westminster, 1931. Sections 1 and 11 automatically applied to it. Section 3, however, did not. It may well be that, because it failed to adopt the Statute, Newfoundland did not have power to make extraterritorial law. For the sake of argument, however, we are willing to assume that this failure is of no particular consequence and that, at least from 1926 to 1934, Newfoundland had sufficient external sovereignty to acquire continental shelf rights. By itself, though, that conclusion would do little to assist Newfoundland. As we shall see, there is not even a faint argument that continental shelf rights existed at international law by 1934. There was no State practice as of that date. The critical question respecting pre-Confederation status is the position of Newfoundland from 1934 to 1949.
(2) The Status of Newfoundland under The Commission of Government, 1934-1949
In the early 1930’s Newfoundland was facing serious financial difficulties. It turned to the United Kingdom for assistance. The United Kingdom was prepared to assume financial responsibility for Newfoundland on the condition that the form of government of Newfoundland be changed. A joint Newfoundland-United Kingdom royal commission made the following recommendations:
We therefore recommend that the Newfoundland Government, recognising that it is impossible for the Island to surmount unaided the unprecedented difficulties that now confront it, should make an immediate appeal for the sympathetic co-operation of Your Majesty’s Government in the United Kingdom in the adoption and execution of a joint plan of reconstruction, of which the following would be the main features:
(a) The existing form of government would be suspended until such time as the Island may become self-supporting again.
(b) A special Commission of Government would be created which would be presided over by His Excellency the Governor, would be vested with full legislative and executive authority, and would take the place of the existing Legislature and Executive Council.
(c) The Commission of Government would be composed of six members, exclusive of the governor, three of whom would be drawn from Newfoundland and three from the United Kingdom.
(d) The government Departments in the Island would be divided into six groups. Each group would be placed in the charge of a Member of the Commission of Government, who would be responsible for the efficient working of the Departments in the group, and the