A-696-75
In re the National Transportation Act and in re
Pacific Western Airlines Ltd.
Court of Appeal, Heald, Ryan and Le Dain JJ.—
Ottawa, January 27 and February 19, 1976.
Jurisdiction—Aeronautics—Whether The Queen in Right of
Alberta subject to ss. 19 and 20 of the Air Carrier Regulations
and the jurisdiction of the CTC concerning acquisition of a
controlling interest in Pacific Western Airlines Ltd. National
Transportation Act, R.S.C. 1970, c. N-17, ss. 3, 27, 55—
Aeronautics Act, R.S.C. 1970, c. A-3, ss. 3(a),(k),(1), 9-19—
Air Carrier Regulations, SOR/72- 145, ss. 19, 20—Interpreta-
tion Act, R.S.C. 1970, c. I-23, s. 16—British North America
Act, 1867, s. 92(11), (13).
The Alberta government bought a controlling interest in
Pacific Western Airlines, and informed the Canadian Trans
port Commission that in its view sections 19 and 20 of the Air
Carrier Regulations do not bind the provincial Crown in the
acquisition of shares in a public company, and that it was not
bound to give the required notice of its acquisition.
Held, The Queen in Right of Alberta is subject to sections 19
and 20, and to the jurisdiction of the CTC. The argument that
ownership of an air carrier is a relatively unimportant facet of
the conduct of aeronautics by the CTC and that any problem
could be dealt with by the CTC regardless of the question of
ownership of a carrier, and that accordingly the CTC could not
use the "necessary implication" argument, is unacceptable. A
consideration of the Aeronautics Act, the Air Carrier Regula
tions and section 27 of the National Transportation Act
demonstrates that it was Parliament's intention to bind the
Crown; the purpose of the Aeronautics Act would otherwise be
frustrated. There is no basis for distinguishing sections 19
and 20 and the other legislative and regulatory provisions.
Section 27 of the National Transportation Act imposes on the
CTC a duty to investigate a proposed acquisition of an air
carrier. Considering also the National Transportation Policy
statement in section 3 of the same Act, it becomes crucial for
the CTC to be entitled to investigate ownership changes wheth
er by the provincial Crown, or private carriers. Such a change
could lead to a policy change in contravention of the expressed
objectives of the National Transportation Act or Aeronautics
Act. The Province, then, is bound by necessary implication. The
wording of section 16 of the Interpretation Act permits this
application. As to whether sections 19 and 20 of the Regula
tions and section 14(e) and (f) of the Aeronautics Act are ultra
vires in that they purport to grant to the CTC jurisdiction over
provincial companies, the provisions relate to a matter that is of
concern in the regulation of aeronautics, and fall within federal
competence. The legislation, in its true character is not "in
relation to" property and civil rights in the province.
Bombay v. Bombay [1947] A.C. 58 and Munro v. Nation
al Capital Commission [1966] S.C.R. 663, applied. In re
Silver Brothers Limited [1932] A.C. 514, distinguished.
STATED case.
COUNSEL:
G. W. Ainslie, Q.C., and W. G. St. John for
the CTC.
J. C. Major, Q. C., for The Queen in Right of
the Province of Alberta.
SOLICITORS:
Deputy Attorney General of Canada for the
CTC.
Jones, Black, Gain & Laycraft, Calgary, for
The Queen in Right of the Province of
Alberta.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is a stated case pursuant to
section 55 of the National Transportation Act' on
the motion of the Canadian Transport Commission
(hereafter CTC). Said question of law and of
jurisdiction is stated as follows:
Is Her Majesty in Right of the Province of Alberta a person
subject to the provisions of sections 19 and 20 of the Air
Carrier Regulations and the jurisdiction of the Commission
concerning the acquisition of controlling interest in Pacific
Western Airlines Ltd.?
Pacific Western Airlines Ltd. (hereafter
P.W.A.), a public company, was originally incor
porated under the laws of British Columbia and
carries on business as a commercial air carrier,
serving the Northwest Territories, the State of
Washington and the Provinces of British Columbia
and Alberta on a regularly scheduled basis. It also
operates internationally on a charter basis. In early
55. (1) The Commission may of its own motion, or upon
the application of any party, and upon such security being
given as it directs, or at the request of the Governor in Council,
state a case in writing, for the opinion of the Federal Court of
Appeal upon any question that in the opinion of the Commis
sion is a question of law or of the jurisdiction of the
Commission.
(2) The Federal Court of Appeal shall hear and determine
such question, and remit the matter to the Commission with the
opinion of the Court thereon.
August of 1974, Her Majesty in Right of the
Province of Alberta purchased a very large majori
ty of the issued and outstanding shares of P.W.A.
On or about August 9, 1974, the Secretary of
the CTC telexed the Government of Alberta
requesting comment on an alleged failure to notify
the CTC of the acquisition of control of P.W.A. in
accordance with the Air Carrier Regulations and
the National Transportation Act. Through corre
spondence, the Government of Alberta advised the
CTC that it was prepared to co-operate and supply
information to the CTC on a voluntary basis but
that, in its view, sections 19 and 20 of the Air
Carrier Regulations do not extend to or bind Her
Majesty in Right of a province in the acquisition
of shares in a public company and that, in particu
lar, Alberta was not bound to give notice of its
purchase of these shares on the open market to the
CTC, either under sections 19 and 20 of the Air
Carrier Regulations or otherwise.
The CTC, on the other hand, took the view that
said sections 19 and 20 did apply and accordingly,
the Air Transport Committee of the CTC proceed
ed to direct public notice of subject acquisition,
and requested objections from those persons
affected who wished to intervene to object to said
acquisition, as is contemplated by the provisions of
said Regulations.
Said sections 19 and 20 of the Air Carrier
Regulations, SOR/72-145 read as follows:
19. No person shall enter into a transaction that is intended
to or would result in a change of control, consolidation, merger,
lease or transfer of any commercial air service unless he
complies with section 20.
20. (1) Any person who proposes to enter into a transaction
described in section 19 shall give notice of such proposed
transaction to the Committee.
(2) Subject to subsection (4), where section 27 of the Na
tional Transportation Act applies to a transaction described in
section 19, the provision of that Act shall be complied with.
(3) Subject to subsection (4), where section 27 of the Na
tional Transportation Act does not apply to a transaction
described in section 19, the provisions of section 27 of that Act
shall be complied with as though that section did apply to that
transaction, subject to such modifications as the circumstances
require, except that the Committee may proceed to investigate
the transaction even if no objection is received.
(4) The Committee may, following receipt of notice of a
transaction described in section 19, require the person referred
to in subsection (1) to file with the Secretary such information
and documents as will enable the Committee to determine
whether the transaction will unduly restrict competition or
otherwise be prejudicial to the public interest.
Certain objections were received by the Air
Transport Committee pursuant to the public notice
referred to supra. The Air Transport Committee
commenced its investigation of the acquisition.
However, the Government of Alberta objected to
the jurisdiction of the Commission with respect to
subject acquisition as stated supra and suggested
that the question of the CTC's jurisdiction be
determined as a question of law before any further
proceedings were taken. Thus, this stated case has
resulted.
In support of his position, counsel for Alberta
made a twofold submission. His first submission
was to the effect that Her Majesty in Right of
Alberta is not subject to sections 19 and 20 of the
Air Carrier Regulations quoted supra and cannot
as a matter of law be required to give notice of its
acquisition of control of P.W.A. or otherwise
comply with the said sections 19 and 20.
Counsel for both parties cited the case of Prov
ince of Bombay v. Municipal Corporation of
Bombay 2 as the leading case on the principles to
be applied in deciding the question whether or not
the Crown is bound by a particular statute. At
page 61, Lord Du Parcq, delivering the judgment
of the Judicial Committee of the Privy Council
stated:
The general principle to be applied in considering whether or
not the Crown is bound by general words in a statute is not in
doubt. The maxim of the law in early times was that no statute
bound the Crown unless the Crown was expressly named
therein, .... But the rule so laid down is subject to at least one
exception. The Crown may be bound, as has often been said,
"by necessary implication". If, that is to say, it is manifest from
the very terms of the statute, that it was the intention of the
Legislature that the Crown should be bound, then the result is
the same as if the Crown had been expressly named.
2 [1947] A.C. 58.
As to when the intention to bind the Crown is to
be considered to be manifest, he said at page 63:
If it can be affirmed that, at the time when the statute was
passed and received the royal sanction, it was apparent from its
terms that its beneficent purpose must be wholly frustrated
unless the Crown were bound, then it may be inferred that the
Crown has agreed to be bound. Their Lordships will add that
when the court is asked to draw this inference, it must always
be remembered that, if it be the intention of the legislature that
the Crown shall be bound, nothing is easier than to say so in
plain words.
Addressing himself to the "necessary implica
tion" argument, counsel for Alberta stated that the
Province of Alberta was not challenging the juris
diction of the CTC with respect to the regulation
of the air industry nor the power of the CTC to
call for hearings in respect of the licensing of air
carriers. He also conceded that the various vendors
of the P.W.A. shares were subject to sections 19
and 20 of the Regulations quoted supra. His sub
mission was that the ownership or the transfer of
ownership of an air carrier was a relatively unim
portant facet of the conduct of aeronautics by the
Commission and that any problems which might
arise could be dealt with by the Commission
regardless of the question of ownership of an air
carrier and that, accordingly, the "necessary
implication" argument was not available to the
Commission so as to make applicable to Her
Majesty in Right of the Province of Alberta the
provisions of sections 19 and 20. I am unable to
accept this submission. Subject Air Carrier Regu
lations are expressed to have been passed under
the authority of the Aeronautics Act, R.S.C. 1970,
c. A-3. It is, in my view, thus necessary to consider
the scheme of that statute in order to determine
whether the Crown is bound by the provisions
thereof "by necessary implication", bearing in
mind the tests set out in the Bombay case referred
to supra. Section 3 of the Aeronautics Act stipu
lates, inter alia, that it is the duty of the respon
sible Minister "to supervise all matters connected
with aeronautics;" (section 3(a)). Section 3(k)
imposes the duty on the Minister "to investigate,
examine and report on the operation and develop
ment of commercial air services within or partly
within Canada ...." Section 3(1) charges the
Minister with the duty "to consider, draft and
prepare for approval by the Governor in Council
such regulations as may be considered necessary
for the control or operation of aeronautics in
Canada ...."
Part II of the statute comprising sections 9 to 19
inclusive thereof are the licensing provisions of the
statute in respect of commercial air services. The
power to grant such licences is delegated to the
CTC. Section 16(3) provides that the Commission
shall not issue any such licence unless it is satisfied
that the proposed commercial air service "... is
and will be required by the present and future
public convenience and necessity." Section 14 of
the Act empowers the Commission to make regu
lations, inter alia:
(e) requiring any person to furnish information respecting the
ownership or any existing or proposed control, transfer, consoli
dation, merger or lease of commercial air services;
and,
(f) requiring copies of agreements respecting any control,
transfer, consolidation, merger or lease referred to in paragraph
(e), copies of contracts and proposed contracts and copies of
agreements affecting commercial air services to be filed with
the Commission;
Sections 19 and 20 of the Air Carrier Regulations
quoted supra were, presumably, promulgated
under the authority of said subsections 14(e) and
(f) of the Act. Section 20 requires that the provi
sions of section 27 of the National Transportation
Act' be complied with.
3 27. (1) A railway company, commodity pipeline company,
company engaged in water transportation, or person operating
a motor vehicle undertaking or an air carrier, to which the
legislative jurisdiction of the Parliament of Canada extends,
that proposes to acquire, directly or indirectly, an interest, by
purchase, lease, merger, consolidation or otherwise, in the
business or undertaking of any person whose principal business
is transportation, whether or not such business or undertaking
is subject to the jurisdiction of Parliament, shall give notice of
the proposed acquisition to the Commission.
(2) The Commission shall give or cause to be given such
public or other notice of any proposed acquisition referred to in
subsection (1) as to it appears to be reasonable in the circum
stances, including notice to the Director of Investigation and
Research under the Combines Investigation Act.
(3) Any person affected by a proposed acquisition referred
to in subsection (1) or any association or other body represent
ing carriers or transportation undertakings affected by such
acquisition may, within such time as may be prescribed by the
(Continued on next page)
When the provisions of the Aeronautics Act, the
Regulations passed thereunder, and the provisions
of section 27 of the National Transportation Act
are considered together, it becomes clear that it
was the intention of Parliament to bind the Crown
in so far as the provisions of the Aeronautics Act
and Regulations passed thereunder are concerned.
The purpose of the Aeronautics Act would be
wholly frustrated if provincial governments were
not subject to its provisions. As I understood the
submission of counsel for Alberta, he did not really
dispute this; he rather argued that it was unneces
sary for the provincial Crown to be bound by the
provisions of sections 19 and 20 of the Air Carrier
Regulations because it would be effectively subject
to federal regulation by virtue of being bound by
the other provisions of the Act and Regulations. I
can see no basis for distinguishing in this respect
between those sections and the other provisions of
the legislative and regulatory scheme. I am unable
to accept the view that the question of ownership
of air carriers is a relatively unimportant matter in
so far as the conduct of aeronautics is concerned.
Section 27 of the National Transportation Act
imposes a duty on the Commission to investigate a
proposed acquisition of an air carrier and sets up
the machinery whereby interested parties may
oppose such proposed acquisition. The Commission
is empowered to disallow such acquisition if, in its
opinion, such acquisition "will unduly restrict com
petition or otherwise be prejudicial to the public
interest." Concerning the "public interest" it is
useful to also consider the statement of National
(Continued from previous page)
Commission, object to the Commission against such acquisition
on the grounds that it will unduly restrict competition or
otherwise be prejudicial to the public interest.
(4) Where objection is made pursuant to subsection (3), the
Commission
(a) shall make such investigation, including the holding of
public hearings, as in its opinion is necessary or desirable in
the public interest;
(b) may disallow any such acquisition if in the opinion of the
Commission such acquisition will unduly restrict competition
or otherwise be prejudicial to the public interest;
and any such acquisition, to which objection is made within the
time limited therefor by the Commission that is disallowed by
the Commission, is void.
(5) Nothing in this section shall be construed to authorize
any acquisition of an interest in any other company that is
prohibited by any Act of the Parliament of Canada.
Transportation Policy contained in section 3 of the
National Transportation Act 4 . Having regard to
the emphasis placed therein on "lowest total cost"
to "the users of transportation" and the objective
of free c6mpetition as between various modes of
transport, it becomes most important indeed for
the regulatory body charged with regulating the
aeronautics industry, to be entitled to investigate
changes in ownership of air carriers, be they the
provincial Crown or a private carrier since a
change of ownership could very well result in a
change of policy which would contravene the
expressed objectives of the Aeronautics Act and
the National Transportation Act referred to
supra. I have accordingly concluded that Her
4 3. It is hereby declared that an economic, efficient and
adequate transportation system making the best use of all
available modes of transportation at the lowest total cost is
essential to protect the interests of the users of transportation
and to maintain the economic well-being and growth of
Canada, and that these objectives are most likely to be achieved
when all modes of transport are able to compete under condi
tions ensuring that having due regard to national policy and to
legal and constitutional requirements
(a) regulation of all modes of transport will not be of such a
nature as to restrict the ability of any mode of transport to
compete freely with any other modes of transport;
(b) each mode of transport, so far as practicable, bears a fair
proportion of the real costs of the resources, facilities and
services provided that mode of transport at public expense;
(c) each mode of transport, so far as practicable, receives
compensation for the resources, facilities and services that it
is required to provide as an imposed public duty; and
(d) each mode of transport, so far as practicable, carries
traffic to or from any point in Canada under tolls and
conditions that do not constitute
(i) an unfair disadvantage in respect of any such traffic
beyond that disadvantage inherent in the location or
volume of the traffic, the scale of operation connected
therewith or the type of traffic or service involved, or
(ii) an undue obstacle to the interchange of commodities
between points in Canada or unreasonable discouragement
to the development of primary or secondary industries or
to export trade in or from any region of Canada or to the
movement of commodities through Canadian ports;
and this Act is enacted in accordance with and for the attain
ment of so much of these objectives as fall within the purview
of subject-matters under the jurisdiction of Parliament relating
to transportation.
Majesty in Right of the Province of Alberta is
bound by sections 19 and 20 of the Air Carrier
Regulations by "necessary implication".
Counsel for Alberta relied on the Privy Council
decision of In re Silver Brothers Limited' in which
it was held that the Crown in right of the Province
of Quebec was not bound by certain provisions of
federal legislation because it was not expressly
mentioned therein. That the Privy Council
appeared to consider that it was not open, on the
wording of the provision of the Federal Interpreta
tion Act that was then in force, to invoke "neces-
sary implication", is indicated by the following
passage of the judgment delivered by Viscount
Dunedin, at page 523:
Next it was said that inasmuch as the Bank Act and Bank
ruptcy Act not only dealt with preferences, but (inter alia) with
Crown preferences, there is an "irresistible implication" that
the Act was meant to deal with all Crown preferences. The
simple answer to this is to fix one's eyes on s. 16, and it
becomes apparent that it is a contradiction in terms to hold that
an express statement can be found in an "irresistible
implication".
However, it is my opinion that the comments
therein contained do not assist Her Majesty in
Right of the Province of Alberta because section
16 of the Interpretation Act there under review is
signitl different from the present section 16 6 .
The section being considered in the Silver
Brothers case (supra) reads as follows:
16. No provision or enactment in any Act shall affect, in any
manner whatsoever, the rights of His Majesty, his heirs or
successors, unless it is expressly stated therein that His Majesty
shall be bound thereby. [Underlining mine.]
The present section 16 reads:
16. No enactment is binding on Her Majesty or affects Her
Majesty or Her Majesty's rights or prerogatives in any manner,
6 [1932] A.C. 514.
6 The Interpretation Act, R.S.C. 1970, c. I-23.
except only as therein mentioned or referred to. [Underlining
mine.]
The change in the wording of said section 16 is, in
my view, a significant one, and permits the "neces-
sary implication" argument to apply to the facts
here present.
The second submission of counsel for Alberta
may be stated as follows: the acquisition of shares
in a provincially incorporated company such as
P.W.A. is a matter of provincial jurisdiction either
under section 92(11)—"The Incorporation of
Companies with Provincial Objects" or section
92(13)--"Property and Civil Rights in the Prov
ince" of the British North America Act and sub
sections 14(e) and (f) of the Aeronautics Act and
sections 19 and 20 of the Air Carrier Regulations
are ultra vires and void in so far as they purport to
grant any jurisdiction to the Committee to inter
fere with the change of control of companies incor
porated by a province.
In my view, these provisions of the Act and
Regulations, for reasons already indicated, relate
to a matter that is of concern in the regulation of
aeronautics and as such clearly fall within federal
legislative jurisdiction with respect to that subject.
In so far as their effect on property and civil rights
is concerned, the submission of counsel for the
Province of Alberta is fully answered, I believe, by
the following passage from the judgment of the
Supreme Court of Canada in Munro v. National
Capital Commission':
There is no doubt that the exercise of the powers conferred
upon the Commission by the National Capital Act will affect
the civil rights of residents in those parts of the two provinces
which make up the National Capital Region. In the case at bar
the rights of the appellant are affected. But once it has been
determined that the matter in relation to which the Act is
passed is one which falls within the power of Parliament it is no
objection to its validity that its operation will affect civil rights
in the provinces. As Viscount Simon, adopting what had been
pointed out by Rand J., said in Attorney General for Saskatch-
ewan v. Attorney-General for Canada [1949] A.C. 110 at 123,
1 W.W.R. 742, 2 D.L.R. 145:
7 [1966] S.C.R. 663 at 671.
Consequential effects are not the same thing as legislative
subject matter. It is "the true nature and character of the
legislation"—not its ultimate economic results—that
matters.
The passage from the judgment of Duff J., as he then was, in
Gold Seal Limited v. Dominion Express Company and Attor-
ney-General for Alberta (1921) 62 S.C.R. 424 at 460, 3
W.W.R. 710, 62 D.L.R. 62, quoted by the learned trial judge,
correctly states the law. It is as follows:
The fallacy lies in failing to distinguish between legislation
affecting civil rights and legislation "in relation to" civil
rights. Most legislation of a repressive character does inci
dentally or consequentially affect civil rights. But if in its
true character it is not legislation "in relation to" the subject
matter of "property and civil rights" within the meaning of
section 92 of the British North America Act, then that is no
objection although it be passed in exercise of the residuary
authority conferred by the introductory clause.
For the foregoing reasons, I have concluded that
the question of law and of jurisdiction asked of this
Court and quoted at the commencement of these
reasons should be answered in the affirmative.
* *
RYAN J. concurred.
* * *
LE DAIN J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.