On December 23, 1997, a unanimous decision of the Federal Court of Appeal overturned the Carpenter Fishing Decision.
This case involved a challenge to the Current Owner Restriction (C.O.R.) of the individual quota system (I.V.Q.) set up for the halibut fishery in 1990. When the I.V.Q. system was implemented, it allocated the total quota amongst the licence holders on the basis of a formula allowing a weight of 30% for the length of the vessel and 70% for catch history of the licence in the best fishing year during the qualifying period of 1986 through 1989. The C.O.R. provided that if a licence was purchased during the qualifying period, the new owner of the licence was restricted to using landings for only the years when that operator held the licence. If a licence was purchased after the qualifying period, only the landings of the previous owner could be used.
The seven plaintiffs were all persons who were limited to a choice of less than the full four years in the qualifying period because they had acquired their halibut licences between the Fall of 1987 and February of 1990. After a six day trial of the matter in June of 1996, the Federal Court of Canada, declared that the C.O.R was a nullity and no longer enforceable by D.F.O. It then invited the parties to continue the trial at a later time to determine the damages to be paid to the plaintiffs for their loss of income between 1990 and the 1996. The trial court based its decision to declare C.O.R. a nullity upon the following grounds: (1) the consultative process for implementing the I.V.Q. breached the rules of natural justice and was undemocratic; and (2) the Minister of Fisheries acted for an improper purpose in endorsing a policy which was discriminatory.
The decision to overturn the decision of the trial court, was given by Mr. Justice Decarry with Pratt, J.A. and Linden J.A. concurring.
With respect to the consultative process, the Court of Appeal said as follows: "When examining an attack on an administrative action,the granting of the licence,a component of which is a legislative action,the establishment of a quota policy,reviewing courts should be careful not to apply to the legislative component the standard of review applicable to administrative functions" (p.11). The court then held that since the establishment of a quota was a legislative function, the Minister of Fisheries was under no duty to consult at all. With respect to the trial courts criticism of the consultative process voluntarily adopted by D.F.O., the court said: "The finding by the Trial Judge that the process was undemocratic was at best irrelevant, at worst totally unsupported by the evidence" (p.13).
The court said that since the decision of the Minister to implement an I.V.Q. program was legislative in nature, his decision could only be challenged if the plaintiffs established either bad faith or reliance upon considerations that were irrelevant or extraneous to the statutory purpose of the Fisheries Act.
Irrelevant Purpose and Bad Faith
The Court of Appeal strongly criticized the finding of the trial court with respect to bad faith. The words of the court in this regard are worth quoting at length: "Allegations and findings of bad faith against a minister are so serious and damaging that the least one can expect from a litigant and trial judge is that they make them expressly and unequivocally. Unfortunately, in the case at bar, the respondents and the Trial Judge were content with elusive innuendos that make the task of the appellants and of this court very difficult . . . If the quota policy is adopted for a valid purpose . . . one cannot look at its effects to condemn the motives of its proponents"(p.12)
With respect to improper purpose, the trial court found the Minister’s purpose for implementing C.O.R. to be improper because it discriminated against new entrants to the fishery in order to benefit and thus gain the support of, old entrants. The Court of Appeal referred to the Gulf Trollers Association case which found that Parliament may manage the fisheries for social or economic purposes, as well as to section 7, of the Fisheries Act which gives the Minister of Fisheries absolute discretion to issue fishing licences. It then concluded that the courts should give effect to the intent of Parliament to confer upon the Minister the "widest possible freedom to manoeuvre" (p.15). It is only when actions of the Ministry . . . are clearly beyond the broad purposes permitted under the Act that courts should intervene" (p. 15).
Upon reviewing the evidence of the trial court, the Court of Appeal noted that the imposition of individual quotas inescapably carries with it some element of arbitrariness and unfairness and then concluded as follows: " can it reasonably be said that a compromise which attracted the support of the halibut industry, which was centred on the personal fishing experience of the licence holders, which allowed for new entrants to participate in the quotas on the basis of the personal fishing experience of their immediate predecessor and which preserved the right of dissatisfied licence holders to challenge the quotas attributed to them under the chosen formula, is based on considerations irrelevant or extraneous to the statutory purpose of the Fisheries Act? Of course not" [emphasis added].
Severance of C.O.R.
In its reasons for judgement, the Court of Appeal noted that the plaintiffs were not attacking the I.V.Q. policy itself, they were simply attacking the portion of it which they did not like. In response, the court said as follows: "They asked the Trial Judge, for all practical purposes to substitute their own formula to that of the Minister, without any consultation with the industry and without any vote. In complying with their request, the Trial Judge became the Minister for a day and imposed a formula the effect of which on the halibut fishery is unknown and untested. This, clearly, the Trial Judge could not do . . . the most he could have done would have been to remit the matter back to the Minister for reconsideration and adoption of a different formula"(p.16).
Counsel for the Respondent: Murray Smith
Counsel for the Appellant: Not known
(Leave to appeal to S.C.C. denied 20 August 1998, S.C.C. Bulletin, 1998, p. 1194 & 19 November 1998 Bulletin 1998.)