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

• Author: Jim Phillips and Jeremy Martin
• Pages: 259-301

ﾆﾉﾍ

ManitobaFisheriesvTheQueen:

The Origins of Canada’s De Facto

Expropriation Doctrine

JimPhillipsandJeremyMartin

Introduction

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

ﾆﾊﾄJimPhillipsandJeremyMartin

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

accountoftheeectsoftheSupremeCourtjudgment

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

theirbroadlysmallppoliticalviewstoinuencetheirjudgment

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

ManitobaFisheriesvTheQueenﾆﾊﾅ

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

panyarguedthattheeectofthefederalstatutehadbeentotakeawaytheir

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

CanadasFreshwaterFisheryandGovernmentIntervention

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