Manitoba Fisheries v The Queen: The Origins of Canada's De Facto Expropriation Doctrine

AuthorJim Phillips and Jeremy Martin
The Origins of Canada’s De Facto
Expropriation Doctrine
IO   Supreme Court of Canada decided Manitoba Fisheries
vThe Queen,therstcaseinwhichthecourtheldthatastatutethefed
eral FreshwaterFishMarketingAct (FFMA) — that did not expropriate title to
propertynonet helesshad theeect oft aking away and givingto the gov
ernmentac itizenspropert yManitobaFisheriesestablished in Canadian law
a doctrine that in US law has been a round since the early twentieth century
and is known as “regulatory taki ngs”; in Canada it is known by either that
term or, more commonly, as “defactoexpropriation.” A defactoexpropriation
occurs when the state does not take title to propert y, but regulates in such
away and tosuch an extent thatit is considered tohave eectivelyta ken
it. Most claims for defacto expropriation, in t he US and in Canada, concern
regulation of land use, but they are not limited to that. Manitoba Fishe ries
cameoutofbroadereconomicregulationwhich hadanincidentaleecton
property other than la nd. Indeed it is fair to say that clever lawyering turned
an issue of economic regulation into a property case, and thus enabled one
set of economic actors to receive compensation that is not otherwise given
for losses occasioned by changes to a regulatory fra mework.
Inthe secondpar twewi llrst brieydescribe theca seThe thirdpa rt
deals with the prelitigation background looking at the state of Can adas
freshwater lake shery before a new regulatory regime was brought in
analyzingthe variousfederala ndprovincialenac tmentsthatmadeup that
regime, and examini ng the demands for compensation by some Manitoba
corporations as they were played out in the politics of the province in the
earlysTothispointthe storyislargely aneconomica ndpoliticalone
Partf ourde als with thel itig ation beg in ning inwhe nayou nga ndrat h
eri nexperienced solepractitioner found a wayto make the maer alegal
case. From then on the story becomes a legal one. We conclude with a brief
The ManitobaFisheries story contai ns a number of interrelated themes. In
part it is a very Canadian story, one about a willingness to employ govern
ment intervention in the economy to remedy socioeconomic ills caused by
the operation of the free market. In part, li ke so many other Canadian legal
stories, it is about federalism. As an exercise in legal archeology, however, it
is ultimately a tale of lawyers and judges. The principal player is Ken Aren
son, a young sole practitioner who through an inventive argument was able
to turn what everybody, including four federal court judges, thought was a
hopeless case into a winner. Equally importa nt in the end were the men who
decided the case at the Supreme Court of Canada, who arguably allowed
A Brief Account of Manitoba Fisheries v T he Queen
I an agreement among the federal government, the prov
inces of Alberta, Manitoba, Ontario, and Saskatchewan, a nd the Northwest
Territories, the federal parliament passed the FFMA. Its principal provi
sions were the establishment of a federal crown corporation, the Freshwater
Fish Marketing Corporation (FFMC), and the granting to that corporation
ofamonopolyof international andinterprovincial tradein freshwatersh
caught in the provinces noted. The Act went into force in those provinces
only when each made an agreement with the federal government, and in each
province parallel provincial legislation was to be passe d giving the FFMC an
internalmonopolyinthebuyi ngandsellingoff reshwatershSucharethe
needs of federalism; the federal government can only legislate with regards
tointernationalandinterprovincialt radenotintraprovincialtrade
Theeect oft heAct andt heoperations ofthe FFMCwas toput outof
business all the private companies that had operated as middlemen — deal
ersprocessorsa ndexporters takingt heshfrom theprima ryproducer
andgeingit tomarketThefederalprovincia llegislativescheme included
provision for some compensation for these companies, but it was considered
inadequate by those who had operated in Manitoba. When neither the prov
incial nor the federal government would yield to demands for higher com
pensation, eight Manitoba companies sued the federal government in federal
court, with ManitobaFisheriesbecomi ng the test case for the group. The com
goodwill and to give it to the FFMC, an agent of the crown. Since goodwill
isarecognizedspec iesofpropertythecrownhadineecttakenproperty
The claim failed at the t rial level and on appeal, but was accepted by a
unanimous Supreme Court of Canada. The Cour t accepted that there were
many customers of Manitoba Fisheries who could no longer do business
withthecompanyafter butwerecompelledtodobusinesson lywith
the Corporation.” That process represented a transfer of property from t he
company to the Crown, for goodwill “although intangible in character” was
“a part of the property of a business just as much as the premises, mac hinery
and equipment employed in the production of the product whose quality
engenders that goodwill.” Since goodwill was property, and since that good
will necessarily owedto the corporation theappellant was deprivedof
property which was acquired by the Crown.” For this Manitoba Fisheries
should be compensated. Although there was and is no constitutional protec
tion for property in Canada, the common law’s respect for private property
gives rise to a presumption of statutory interpretation, whic h provides that
while in a system of parliamentary supremacy, Parliament has the power to
take property, if it wishes to do so without paying compensation it must say
so “cl ear ly.” Since the FFMA did not do so, compensation was payable.
Background to the Litigation
C   Prairie provi nces had begun in the latenine 
teenth century, and it expanded rapidly by century’s end, as a ready market
wasfoundin theUSAboriginaland EuroCanadian sherscontributed to
the catc h. The American demand was fuelled largely by the substantial Jew
ish communities of the North East and Midwest, who used various species
of lake sh to make gelte sh The industry enjoyed its most successful
years upto  after which it suered a series of crise si ncluding over

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