A-132-76
The Queen in the right of Canada (Appellant)
v.
The Queen in the right of the Province of Prince
Edward Island (Respondent)
Court of Appeal, Jackett C.J., Pratte and Le Dain
JJ.—Ottawa, May 10 and 11 and December 5,
1977.
Crown — Torts — Damages — Government of Prince
Edward Island claimed damages in Trial Division for inter
ruption of ferry service Trial Division ruled ferry service
statutory duty of federal Government and found breach —
Breach did not give rise to damages — Federal Government
appealed and P.E.I. cross-appealed Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, s. 19 — The British North
America Act, 1867. 30 & 31 Victoria, c. 3, s. 146 (U.K.)
(R.S.C. 1970, Appendix II) — Order in Council (Imp.) dated
June 26, 1873 (R.S.C. 1970, Appendix II).
An action for damages was brought under section 19 of the
Federal Court Act by the Queen in right of Prince Edward
Island because of an interruption in the ferry service between
the Island and the mainland—a service required of Canada by
the Terms of Union. The Trial Division held that there was a
breach of statutory duty by the Government of Canada, but
that it did not give rise to an action in damages. The Govern
ment of Canada appealed against the determination that there
was a breach of statutory duty, and the Government of Prince
Edward Island cross-appealed against the determination that it
does not give rise to liability in damages.
Held, per Jackett C.J., the appeal is dismissed and the
cross-appeal is allowed. The Prince Edward Island Terms of
Union created a legal duty in favour of that Province in respect
of a ferry service. By imposing duties on Canada in favour of
Prince Edward Island, the United Kingdom Parliament made
both Governments parties to statutory rights or duties, no
matter how unorthodox it may be to create legal rights without
legal remedies. When there is a statutory right to have some
thing done with no express sanction for breach, there is, prima
facie, an implied right to be compensated for breach of such
right. It does not follow, however, that the Province has a right
to judgment against Canada. Section 19 of the Federal Court
Act creates a jurisdiction to decide disputes as between political
entities and not as between persons recognized as legal persons
in the ordinary municipal courts. The effect of the enactment of
the original forerunner of section 19, once the "agreeing"
provincial legislation was passed, was to convert a legal (statu-
tory) right into a legal right with a remedy, albeit a remedy
that can be nothing more than a judicial declaration. In a
section 19 proceeding, the parties are political entities which
cannot be described more accurately than the peoples or public
for the time being of the geographical areas involved. It does
not matter whether such parties are referred to in the proceed
ings by the geographical names or by references to the execu
tive governments that represent the inhabitants of the geo
graphical areas.
Per Pratte J. (dissenting in part), the appeal should be
dismissed, for reasons given by Jackett C.J. and Le Dain J., and
the cross-appeal should also be dïsmissed. A constitutional
document of the nature of the Order in Council cannot be
ascribed with the intention of imposing on the Dominion Gov
ernment the obligation to compensate all those of the public
who might suffer damage as a consequence of its failure to
perform its obligation of maintaining the ferry service. Further,
if the duty in respect of the ferry service is conceived of as an
obligation toward the new Province, it was not the intention of
the Order in Council that the Dominion Government, in case of
breach, be liable to the Province for the damage suffered as a
consequence of the breach. When this duty was imposed on the
Dominion Government, it was not, even if it is considered a
duty toward the Province, a duty enforceable through legal
means for there was no Court then before which the Dominion
could be brought to answer the claim of the Province. That an
authority, imposing an obligation enforceable by purely politi
cal means, might intend to create liability in damages in case of
breach is unimaginable. The question of liability resulting from
a breach of obligation can only arise in respect of a legally
enforceable obligation. Furthermore, in the case of failure of
the Dominion Government to operate the ferry service, the
Government of the Island would not be likely to suffer any
direct damage. It is inconceivable that the Order in Council
intended to create a liability toward a government which was
not likely to suffer any direct damage as a consequence of the
Dominion's failure to perform its obligation.
Per Le Dain J., the cross-appeal is allowed and the appeal
dismissed. What is to be looked for is an intention to create a
legal right to compensation, however it is to be enforced, rather
than a right of action as such. The intention of section 19 of the
Federal Court Act is that rights and obligations that would
otherwise be unenforceable for lack of a forum are now recog
nized as enforceable. (Such rights or liabilities may be thought
of as inchoate, perfected by the creation of a forum for their
enforcement.) The establishment and maintenance of the ferry
service was an essential condition of the Union and the Order in
Council clearly evidences a legal intention to create legal rights
and obligations between the two Governments. The Province as
distinct from individuals should be entitled to be compensated
for a breach of this duty; the duty was created to establish
which of the two Governments was to be responsible for
providing the ferry service. It must have been intended that if
Canada failed to perform this obligation the Province would
have a right to be compensated for any expense or loss directly
caused to it by such failure.
APPEAL.
COUNSEL:
G. W. Ainslie, Q.C., and Duff Friesen for
appellant.
John Coyne, Q.C., and John A. Ghiz for
respondent. ,
SOLICITORS:
Deputy Attorney General of Canada for
appellant.
Scales, Ghiz, Jenkins & McQuaid, Charlotte-
town, for respondent.
The following are the reasons for judgment
rendered in English by
JACKETT C.J.: This is an appeal and cross-
appeal from a judgment of the Trial Division in a
proceeding under section 19 of the Federal Court
Act in respect of an alleged breach by the "Federal
Government" of one of the terms upon which
Prince Edward Island was admitted, under section
146 of The British North America Act, 1867, to
the "Union" constituting Canada as created under
that Act.
By section 146, the Queen in Council was
authorized, inter alia, on Addresses from the
Canadian Houses of Parliament and the Legisla
ture of the Colony of Prince Edward Island, to
admit the Colony into the Union "on such Terms
and Conditions ... as are in the Addresses
expressed" and it was enacted that "the Provisions
of any Order in Council in that Behalf shall have
effect as if they had been enacted by the Parlia
ment of the United Kingdom of Great Britain and
Ireland". When Prince Edward Island was admit
ted to the Union on June 26, 1873, one of the
terms on which it was admitted read, in part:
That the Dominion Government shall assume and defray all
the charges for the following services, viz.:—
Efficient Steam Service for the conveyance of mails and
passengers, to be established and maintained between the
Island and the mainland of the Dominion, Winter and Summer,
thus placing the Island in continuous communication with the
Intercolonial Railway and the railway system of the Dominion;
By the statement of claim by which the proceed
ing was commenced in the Trial Division, it was
alleged, inter adia, in effect,
(a) that, during a period from August 23, 1973
to September 2, 1973, a ferry service established
by the Federal Government ceased to operate;
(b) as a result of that cessation of service, the
Province had been put to loss and expense and
will be put to further loss and, in addition, the
reputation of the Province in the tourist industry
has suffered severe reverses which will affect the
number of tourists coming to the Province caus
ing the Province to lose revenue;
and a claim was made for damages, costs and such
further and other relief as the Court might deem
just and expedient.
The Deputy Attorney General of Canada filed a
defence, which, in addition to raising various ques
tions of a legal character, in effect,
(a) alleged that the Government of Canada has
maintained at all material times an efficient
ferry service between Prince Edward Island and
the mainland of Canada, and
(b) admitted that there was no ferry service
between Borden and Cape Tormentine on
August 21, 1973, or from 6:30 p.m. on August
23, 1973 to 3:00 a.m. on September 2, 1973.
It appears from the learned Trial Judge's rea
sons for judgment [[1976] 2 F.C. 712] that the
trial was, in the first instance, limited to the
question of "liability" and that the question of
damages was deferred to a subsequent time
depending upon the resolution of the question of
liability. At his request, the parties had agreed
upon the following statement of issues:
1. Was there a breach of statutory duty on the part of the
Dominion Government?
2. Does the breach give rise to an action for damages?
3. Does the statute contemplate the type of damages com
plained of?
4. Quantification.
He found it necessary, therefore, at the end of the
first stage of the trial, to deal only with the first
two of the issues so stated and he, accordingly,
posed to himself the following questions:
1. What is the duty imposed upon the Government of Canada
and the nature thereof?
2. Depending upon the answer to the first question, the next
question arising is whether there was a breach of that duty by
the Government of Canada, and
3. Assuming there was a breach of the duty or failure to
comply with constitutional obligations, does that breach or
failure give rise to an action for damages, which is the relief
sought, at the instance of the Government of the Province?
The learned Trial Judge's conclusion [at page
726] on the first of these three questions was as
follows:
Accordingly I conclude that the obligation is upon the
Dominion to assume and defray the cost of the establishment
and maintenance of an efficient ferry service between the
Province and the mainland. The words "assume and defray all
the charges" mean that the Dominion is to accept the responsi
bility for the cost of the services named in the Order in Council
and to pay these costs. For the reasons expressed it is also the
responsibility of the Dominion to establish and maintain an
efficient and continuous (in the sense of being uninterrupted
and inoperative for a protracted period) ferry service between
the Province and the mainland and to pay the cost of so
establishing and maintaining that service.'
With reference to the second question, the
learned Trial Judge found the facts [at pages
726-728] as follows:
It is agreed that there was an interruption of the ferry service
by the Canadian National Railway employed by the Dominion
to conduct that ferry service on its behalf from August 21,
1973, until September 2, 1973, a period of 10 days, 8 1 / 2 hours.
That interruption of ferry service was consequent upon a
national strike by the employees of the Canadian National
Railways. It was known that 1973 was a "contract year" and it
was also known generally, as early as May and June of that
year, that there was every likelihood that a settlement would
not be reached between the bargaining parties and that the
possibility of a strike was imminent. The strike, when it
occurred, was a legal strike after all procedures by the Canada
Labour Code had been taken. In the public interest and for the
public economy Parliament legislated the employees back to
work and the railway service, including the ferry service, was
resumed on September 2, 1973.
The CNR operated the ferry service over two routes and
engaged five vessels in doing so. These five vessels had a daily
capacity of 4,270 vehicles. This is the service that was struck.
The Northumberland Ferries Limited operated a third ferry
service on behalf of the Dominion in which it had engaged
three vessels with a total daily capacity of 960 vehicles. This
While the appeal has not developed in such a way as to
require that I express a conclusion with regard thereto, having
regard to their political context, and notwithstanding where the
particular obligation was inserted, I am inclined to construe the
particular obligation in the Terms of Union as an obligation to
"assume" and "defray all the charges for" an efficient ferry
service and not to regard the words beginning "thus placing
..." as a limitation on the scope of the obligation.
service was in continuous service during the period that the
CNR was struck.
It was agreed that there was no interruption in mail service
to the Island during the railway strike and that there was a
scheduled air service operating daily carrying passengers.
The two principal industries of the Island are agriculture and
tourism, in that order. The tourist season lasts for ten weeks,
the peak being in July and August. Almost all of the tourists
reach the Island by automobile carried on the ferries. In
addition, the residents of the Magdalen Islands in the Gulf of
St. Lawrence and tourists visiting those Islands, if they wish to
reach the mainland, do so by taking a ferry service from those
Islands to Prince Edward Island and continue their journey by
ferry service from Prince Edward Island to the mainland.
About 80 automobiles per day sought to do this during the
period of the strike.
The tourist season ends approximately in the last week in
August each year and in 1973 it ended on August 23, the day
after the strike began. It takes no imagination to realize the
consternation which resulted. Families on vacation were
anxious to return home to get their children back to school for
the fall term. A great many people were stranded on the Island
and many of that number had exhausted their holiday funds.
The Government of the Province provided free food and lodging
for those who were destitute and set up an emergency cheque
cashing service for those with reliable credit. The Province set
up an emergency reservation system for the sole operating ferry
service. It issued reservation tickets, numbered sequentially,
which were in effect reservations to make reservations. Top
priority was accorded to truck traffic with lesser priorities
following. To make an actual reservation on the only ferry
involved a delay of seven to eight days. The Province assigned
144 of its employees to provide these services.
During the period of the strike Northumberland Ferries
Limited was able to move 6,463 vehicles and their passengers
off the Island. In 1974, that is the next year, the Canadian
National Railways over its two ferry lines moved 20,874 vehi
cles off the Island over the same period of time for which the
strike had lasted in 1973. Assuming the traffic conditions to be
approximately the same in both years, this comparison would
afford a reasonable indication in the breakdown of the ferry
service in the period in 1973.
The damage to the national economy caused by the strike
was such that Parliament deemed it wise to order the
employees back to work by appropriate legislation. The incon
venience caused to the public resident on the mainland was
great but those persons could adjust to other means of transpor
tation of passengers and freight, though not as efficiently. The
impact upon the residents of Prince Edward Island was accen
tuated manifold by reason of the fact that the Province is an
island separated from the mainland by the Strait of Northum-
berland which at its narrowest point is approximately 9 miles
wide.
On these facts, he found [at page 729] that, during
the period of the strike, the ferry service "fell short
of being productive of the results required and was
therefore inefficient"; and he concluded [at page
730], therefore, that "the Dominion Government
was in breach of its duty imposed upon it by the
Order in Council".
The learned Trial Judge, however, decided [at
page 738], with reference to the third question, for
reasons to which reference will be made hereafter,
that "the breach of the duty does not give rise to
an action for damages at the suit of Her Majesty
in the right of Prince Edward Island".
At the conclusion of the part of the Trial dealing
with the question of liability, judgment was ren
dered in the following terms:
The breach of the statutory duty upon Her Majesty the
Queen in the right of Canada does not give rise to an action for
damages for that breach at the suit of Her Majesty the Queen
in the right of the Province of Prince Edward Island.
The plaintiff is, therefore, not entitled to judgment for the
relief sought in Her statement of claim.
Each party shall bear its own costs.
From this judgment, the Deputy Attorney General
of Canada appealed on behalf of the appellant,
and the respondent cross-appealed.
The point on which the appeal is based is put by
the memorandum filed in this Court by the Attor
ney General of Canada, as follows:
The Attorney General of Canada submits that the learned
trial judge erred in holding that a ferry service, which was
acknowledged to be an efficient service, had become an inef
ficient service during a 10-day and 8 1 / 2 -hour period when there
was a general strike by the employees of the operator with the
consequence that the services provided by the other ferryman
were inadequate.
On this question, I am in agreement with the
conclusion reached by the learned Trial Judge. In
any event, in my view, his conclusion was a conclu
sion of fact, was open to him on the evidence and
cannot be said to be clearly wrong. 2 In my view,
the appeal should, therefore, be dismissed.
2 It is to be noted that the Attorney General's memorandum
raises no question as to the legal effect of the particular part of
the Terms of Union but merely the question of fact as to
whether what had admittedly been an "efficient service" had
become "inefficient". No request was made for any amendment
to the memorandum. The only question to be considered,
therefore, is the question of fact. I do not mean to cast doubt on
the view that Canada was bound by the Terms of Union to
provide an efficient ferry service or the view that, having regard
to changes in circumstances since 1873, what was required by
the "Terms" was the kind of ferry service being provided before
the 1973 strike.
On the cross-appeal, the respondent submits
that the finding of the learned Trial Judge that the
breach of duty "did not give rise to a cause of
action in the Province for damages" was wrong.
The reasons given by the learned Trial Judge for
holding that the appellant is not liable in these
proceedings to the respondent even though he had
concluded that the "Dominion Government" was
in breach of its duty under the Terms of Union
may, as I understand them, be summarized as
follows:
1. He conceived the question to be whether "an
action will lie for damages" and expressed the
view [at pages 730-731] that
Whether such action for damages will lie will depend on the
intention of the legislature to be derived from the language
of the statute, in this instance The British North America
Act and the Order in Council, and taking the matter a step
further, what party is entitled, within the ambit of the
statute, to bring the action, or put another way, who is the
intended beneficiary of the right.
2. He cited authority for the proposition that a
provincial executive's power to create binding
contractual obligations is subject to legislative
authorization or ratification and seemed to
apply that principle as leading to the conclusion
[at page 732] that "the Crown" cannot "be held
liable in a civil action for damages".
3. Based on We!bridge Holdings Ltd. v. Greater
Winnipeg', which held that an action in negli
gence would not lie against that municipality for
the manner in which it attempted unsuccessfully
to exercise its legislative powers, he concluded
[at page 733] that "a breach of a general public
duty, in this case the duty to provide and pay for
a ferry service, does not give rise to a civil action
in damages against the Crown in the right of
Canada".
4. He cited a decision of the Trial Division that
held that a user of the mails has no right of
action against Her Majesty for an interruption
of postal service and concluded [at page 734]
3 [1971] S.C.R. 957.
that "where there is an obligation created by the
statute for the general public good and where
there is a breach of that obligation, there is no
right of action in a particular person injured by
the breach". He proceeded from there to consid
er whether "Her Majesty in the right of the
Province of Prince Edward Island can maintain
a civil action for damages caused by this breach
of the statutory duty any more so than an
individual who may have been affected there
by". He dealt with this matter as follows [at
pages 734-736]:
The general scheme of The British North America Act is
that with regard to the distribution of legislative powers when it
has been determined that the subject matter of the legislation
falls within the exclusive purview of the Provincial Legislatures
or the Parliament of Canada, then each such legislature is
supreme. Here there is no question that the Parliament of
Canada has exclusive and omnipotent jurisdiction, by virtue of
section 91, Head 13, over "Ferries between a Province and any
British or Foreign Country or between Two Provinces".
In Theodore v. Duncan [1919] A.C. 696, Viscount Haldane
said at page 706:
The Crown is one and indivisible throughout the Empire, and
it acts in self-governing States on the initiative and advice of
its own Ministers in these States.
Section 9 of The British North America Act, 1867 reads:
9. The Executive Government and Authority of and over
Canada is hereby declared to continue and be vested in the
Queen.
As such, Her Majesty the Queen in the right of Canada has
seen fit to assume the responsibility of establishing and paying
for a ferry service with the Island for the general good of all
residents of Canada and not only for the residents of Prince
Edward Island. At best, the failure to fulfill that duty might
affect the residents of Prince Edward Island to a greater degree
than residents of a distant province but that of itself does not
confer a right of action for damages.
The Queen in the right of Prince Edward Island is the same
Queen as the Queen in the right of Canada. Here the liability is
that of the Queen in the right of Canada. The action to enforce
that liability by way of compensation in damages is by the
Queen in the right of the Province who is the same Royal
Person, although advised by different ministers, but it is the
Queen suing Herself which is incongruous. Accordingly I do
not think that The British North America Act intended that
the duty can be enforceable in a court by way of judgment for
damages for a breach of that duty at the behest of the Queen in
the right of the Province against the Queen in the right of
Canada.
If that were so, there would be no need for the enactment of
section 19 of the Federal Court Act but rather relief by way of
damages could be obtained as it can by any person or legal
entity under section 17 against the Crown which is defined in
the Act as Her Majesty in the right of Canada.
I do not overlook that section 19 vests jurisdiction in the
Trial Division of this Court in the first instance to determine
controversies between Canada and a province where the legisla
ture of the province has passed an Act agreeing that this Court
has jurisdiction in such controversies as Prince Edward Island
has done. However, it seems to me that because Her Majesty in
the right of the Province and in the right of Canada being one
and the same person cannot be construed as separate entities
for the purpose of a civil action in damages, but that they can
only be considered as separate entities for the limited purpose
of determining the obligation of the Dominion and if there has
been a breach thereof, that is to set forth the rights and
obligations vis-Ã -vis the Dominion and the Province. That
would be declaratory relief. But to carry the matter a step
forward and say that there shall be judgment for monetary
damages is not contemplated because of the very nature of the
constitution as outlined in The British North America Act.
For the reason that Her Majesty cannot sue herself there
must be a recourse to basic principles, that is the principle
applicable where there is a general public duty for the benefit
of all residents of Canada, not only a segment of the whole
population, whom Her Majesty in the right of the Province
seeks to represent. Being a general public duty for the reasons
previously expressed no cause of action lies in an individual who
is adversely affected by a failure to perform that duty. The
right, if it had existed, would be in the individual and not in
Her Majesty in the right of the Province. 4
The submissions of the appellant on the cross-
appeal that, as I understood them, were intended
to support the conclusion that, even if there were a
breach of statutory duty, in the circumstances of
this case there is no right to damages, in a manner
that differed somewhat from the reasons of the
learned Trial Judge are summarized in that part of
the memorandum of the Attorney General of
Canada on the cross-appeal that reads as follows:
4. It is respectfully submitted that, having regard to the whole
of the Order-in-Council and The British North America Act,
1867, and the circumstances in which they were enacted, the
statutory duty must be held to be of a political rather than of a
legal nature. The Order-in-Council divides constitutional re
sponsibility for various subject matters between the Federal and
Provincial levels of government in Canada, and the legislative
° He went on to demonstrate that he found support for his
conclusion in remarks of the Chief Justice of Canada in P.P.G.
Industries Canada Ltd. and Pilkington Brothers (Canada)
Limited v. The Attorney General of Canada [1976] 2 S.C.R.
739. As these remarks do not, as it seems to me, bear on the
problems raised by this proceeding, I shall not further refer to
them.
intent that those responsibilities are political and not legal is
shown by the facts that:
(a) constitutional obligations are imposed for the benefit of
the public in general rather than for the benefit of the
Crown;
(b) in light of the fact that the statutory duty upon which
Prince Edward Island relies does not expressly remove the
Crown's prerogative not to be sued in tort, it cannot have
been intended by the enactment of that statutory duty to
create rights enforceable by action in tort against the Crown
because:
(i) the prerogative of the Crown not to be sued in tort can
be removed only by express language.
(ii) an action for breach of statutory duty is an action in
tort;
(iii) at the time the statutory duty was enacted (1873), the
Crown in right of Canada was immune from actions for
torts.
The subsequent enactment of legislation making the Crown
liable to actions in tort as though it were a private person does
not alter the fact that it was never intended by the enactment of
statutory duties in The British North America Act that breach
of the duty by the Crown should be considered as giving rise to
a tortious conduct. As mentioned above, such legislative intent
must be demonstrated as the basis of any action for damages
for breach of a statutory duty. The duty or obligation imposed
on the Federal Government by the Order-in-Council to assume
and affray [sic] all charges for an efficient transit service
between the island and the mainland was not an obligation
enforceable in a Court of law. The obligation was' and remains
in the nature of a political obligation the breach of which would
not give rise to any judiciable issue. In the event that there
should be a failure to comply with that duty or an omission
then
"For any omission of that duty the Sovereign cannot be held
responsible. The responsibility would rest with the advisers of
the Crown, and they are responsible to Parliament, and to
Parliament alone" per Lush, J. in Rustomjee v. The Queen
(1876) 1 Q.B.D. 487 at 497, cited with approval by Lord
Buckmaster in Civilian War Claimants Association, Limited
v. The King [1932] A.C. 14 at 25-26
Having regard to the realities of Canadian Confederation, it is
necessary to have some means of adjudicating inter-governmen
tal controversies, and section 19 of the Federal Court Act was
enacted for that purpose. This is a statutory exception to the
principle of law mentioned above, and this Court's jurisdiction
in such controversies is no broader than the terms of the
enactment. However, that provision is inapplicable inasmuch as
the Province has not sought determination of a controversy but
has brought an action for damages. Any decision of this
Honourable Court that a breach of the obligation to be found
in the Order-in-Council, would give rise to an action for
damages would constitute an extension of the Court's true
function into a domain that does not belong to it, namely the
consideration of undertakings and obligations depending entire
ly on political sanctions.
7. The statutory duty upon which the Respondent relies is by
its terms imposed upon the "Dominion Government" but, there
being no such legal entity, the duty must in law be considered
to have been imposed upon the Crown.
8. It is therefore submitted that no action for damages lies
against the Crown in right of Canada at the instance of the
Crown in right of Prince Edward Island. Rather, the Province's
appropriate and only remedy is to proceed under section 19 of
the Federal Court Act for a declaration determining the nature
and extent of the duty imposed on Canada and whether that
duty has been breached.
There are two aspects of the cross-appeal that,
in my view, may be disposed of shortly.
In so far as the appellant's position is based on
the description of the parties in the style of cause
and the body of the statement of claim being such
as to characterize the proceeding as a claim in
damages against Her Majesty in right of Canada
that would fall under section 17 of the Federal
Court Act rather than a dispute between Canada
and the Province that would fall under section 19,
I am of the view that this is a mere technicality
(Rule 302) that should not be allowed to affect the
outcome of the cross-appeal. In my view, if the
Trial Division has jurisdiction over the substance
of the matter in the statement of claim, that is
sufficient. Here, in my view, which I shall
endeavour to explain hereafter, there is a matter
that falls within section 19, viz., a dispute between
Canada and Prince Edward Island as to whether
Prince Edward Island is entitled to be compensat
ed for breach of the Term of Union and, if so, to
what extent. Furthermore, the parties are acting
through officers of state that have the responsibili
ty of safeguarding the rights of the parties whether
those parties be legal persons such as Her Majesty
or political entities such as Canada or Prince
Edward Island. I can see no ground of substance
for allowing the matter to turn on the way the
parties were described.
In so far as the learned Trial Judge relied upon
the principle that the executive's power to contract
is conditional upon legislative authority or appro
bation is concerned, it seems to me that the only
comment required is that that principle only
applies to contracts and has no application to the
present problem. 5 As I view it, the present problem
is to decide what effect is to be given to an
obligation imposed by a particular part of the
Constitution, which takes the form of an order
having the effect of a United Kingdom statute. 6
The other reasons given by the learned Trial
Judge and the other submissions of the appellant
on this branch of the case raise problems that are
more difficult, in part, because of the murky
nature of the legal personality of Her Majesty and
because of the problems raised by the fact that our
Constitution adopts, for a country with divided
sovereignty, a sovereign whose legal characteristics
have been developed for a unitary state.'
At this point I should say that, as I understood
it, the matter was discussed before us on the basis
that there was an obligation (duty) imposed by the
term in question, by virtue of the Order in Council
under section 146, on the "Dominion Govern
ment" in favour of "Prince Edward Island". There
is another possible view—namely, that the term
did not create an obligation (which, by definition,
requires that there be an obligee) but merely
imposed a constitutional duty or function on the
"Dominion Government" of the same character as
that that is sometimes imposed expressly when a
government service is established by statute or
The appellant relied strongly on the decision of the High
Court of Australia in The State of South Australia v. The
Commonwealth of Australia (1961-1962) 108 C.L.R. 130, but
that decision involved a claim based on an intergovernmental
agreement and I can see no application for the reasoning of the
judges in that case to the problems raised by this case.
6 "... the principle actually adopted was not that of federa
tion in the strict sense, but one under which the Constitutions
of the provinces had been surrendered to the Imperial Parlia
ment for the purpose of being refashioned. The result had been
to establish wholly new Dominion and provincial Governments
with defined powers and duties both derived from the statute
..." per Viscount Haldane in Bonanza Creek Gold Mining
Company, Limited v. The King [1916] I A.C. 566 at p. 579.
See also In re Representation of P.E.I. in the House of
Commons (1903) 33 S.C.R. 594 at pp. 664-665; and Samson v.
The Queen [1957] S.C.R. 832, per Rand J., at p. 836.
' See Appendix "B" for a portion of "The Crown as Corpora
tion" from Maitland Selected Essays 1936. See also Town
Investments Ltd. v. Department of the Environment [1977] 2
W.L.R. 450 (HI.).
impliedly by the conferring of monopoly or other
powers. I am, however, of the view, for the reasons
set out in Appendix "A", that the condition in
question does impose an obligation in favour of
"Prince Edward Island", whatever may be repre
sented by those words, and I shall consider what
effect should be given to proceedings based on
breach of the statutory obligation so understood.
In my view, the learned Trial Judge miscon
ceived the true character of what was involved,
when he
(a) regarded it as a claim against Her
Majesty,'
(b) regarded it as a claim by Her Majesty,'
(c) regarded it as an "action", as that word is
ordinarily used in the judicial system whose
normal function is to settle disputes between
ordinary persons.
As I have already indicated, I do agree with the
learned Trial Judge as to the substance of the
obligation involved. The problem, as I see it, is to
establish, as far as is necessary for these proceed
ings, the nature or character of the "obligor" and
"obligee" and of the appropriate parties to legal
proceedings concerning disputes arising from
breach of such an obligation.
I propose to consider the matter
(a) first, from the point of view of what legal
rights and obligations are involved because the
identification of the "obligor" and "obligee" is
an integral part of describing an obligation, and
(b) second, from the point of view of the nature
and character of the proceeding in the Trial
Division and the parties thereto.
I turn, first, to the difficult problem of deter
mining the character of the "obligor" and the
"obligee" in the statutory obligation that has been
breached.
s The fact that the style of cause was so framed is a techni
cality that should not, as the learned Trial Judge very properly
recognized, be allowed to defeat the obvious purpose of the
proceedings.
While the Constitution must be interpreted,
having regard to changing times, 9 in considering
what was intended by certain expressions used at
the time when parts of the Constitution were given
statutory form, it is of help to consider those
expressions in the light of developments in the
institutions in question as of that time. 10 For this
reason, in considering who is the "obligor" and
"obligee" in respect of the duty that the learned
Trial Judge has held to be breached, it is worthy of
note, without undue reference to the statutes and
authorities,
(a) that, for present purposes, it is sufficiently
accurate to say that, in England, as it existed
prior to the incorporation of the other parts of
the United Kingdom of Great Britain and Ire-
land (which was the Kingdom when The British
North America Act was enacted in 1867),"
absolute power of government had been origi
nally, legally and factually, vested in the Sover
eign but, by a process of gradual development,
government had been separated into legislative,
executive and judicial branches, carried on
legally in the name of the Sovereign, although in
fact by a democratically controlled organization;
(b) that, by 1867, as a result of such gradual
development—statutory, jurisprudential and
conventional government was carried on in the
United Kingdom
(i) on the legislative side, by the Sovereign
acting by and with the advice and consent of
the United Kingdom Houses of Parliament,
(ii) on the executive side, by the Sovereign
acting either on the advice of, or through the
agency of, Ministers (collectively called, as of
any time, the "Government" of "the day")
which Ministers were not, generally speaking,
chosen by the Sovereign but had tenure based
on maintaining the confidence of Parliament,
and
9 Cf. Edwards v. Attorney-General for Canada [ 1930] A.C.
124.
10 Cf. Attorney-General of Ontario v. Attorney-General for
Canada [1894] A.C. 189 at pp. 199 et seq.; Croft v. Dunphy
[1933] A.C. 156 at p. 166; and Attorney-General for British
Columbia v. Attorney-General for Canada [1937] A.C. 391 at
pp. 401-403.
" See the preamble to The British North America Act, 1867.
(iii) on the judicial side, by judges who were
appointed by the Sovereign on the advice of
Ministers but who, once appointed, were,
during good behaviour, independent, in fact if
not in law, of the Sovereign, the executive
Government and Parliament;
with the result that, subject to statutory excep
tions, while others had the de facto power and
responsibility, all acts of government, in the
widest sense of that word, were, in law, acts of
the Sovereign and all public property was vested
in the Sovereign;
(c) that, during the period leading up to The
British North America Act, 1867, colonies and
other possessions of the British Crown outside
the Kingdom proper, sometimes called "prov-
inces", were subject to the authority of the
Sovereign acting on the advice of the United
Kingdom Ministers and the legislative au
thority of the United Kingdom Parliament;' 2
(d) that grants of local government, which,
sooner or later, developed into responsible gov
ernment, were ordinarily made to such colonies
and possessions, which governments were car
ried on by governors or other officials in the
name of the Sovereign on the advice of local
executive and legislative councils and, in accord
ance with authority from the Sovereign or legis
lative authority, acquired control of public
monies and property legal title to which was in
the Sovereign; 13
(e) that, with rare exceptions, all such govern
ments as well as the Government of the United
Kingdom, were, in law, pretty generally regard
12 "Crown" was used then, as it is now, as the equivalent of
"Her Majesty" to refer to the Person who was the Sovereign.
Compare the definition of "Her Majesty ..." in the Interpreta
tion Act, R.S.C. 1970, c. 1-23, s. 28. For the constitutional
position of possessions of the Crown outside the Kingdom, see,
for example, Campbell v. Hall (1774) 98 E.R. 848, and
Halsbury's Laws of England, first edition, vol. 6, pp. 421 et
seq.
13 See, for example, sections LIX and LXI of The Union Act,
1840 (U.K.).
ed as being carried on by a single person who
was Sovereign 14 although the forum in which
the Sovereign could be impleaded depended on
the government involved. 15
It is against this background that, by The Brit-
ish North America Act, 1867, provision was made
for the creation of Canada by the Union of certain
of such provinces, colonies and other possessions.
By that Act, legislative and executive power in the
Union was divided 16 between
(a) "Executive Government and authority of
and over Canada" that was vested in "The
Queen" (section 9) and a "Parliament for Cana-
da" consisting of the Queen and the Canadian
Houses of Parliament (section 17), and
(b) an "Executive Authority" for each province
(sections 58 et seq.), also vested in the Queen,"
and a Legislature for each province (sections 69
to 88) consisting of a Lieutenant Governor
acting on behalf of the Queen and an appropri
ate legislative body."
Public property of the provinces and colonies so
united, although legally vested in the Sovereign,
was divided between that which was subject to
appropriation by the Canadian Parliament (sec-
tions 106 et seq.) and that which was subject to
appropriation by the respective provincial legisla
tures (section 126). Furthermore, certain property
was described as being the "property" of Canada
' 4 Compare The Queen v. Bank of Nova Scotia (1885) 11
S.C.R. 1, per Strong J. at p. 19:
That the Crown ... by which I mean that Her Majesty the
Queen is, in her own royal person, the head of that govern
ment ... there can be no doubt ....
15 Cf. Robertson's Civil Proceedings by and against the
Crown (1908) p. 340.
16 Compare Bonanza Creek Gold Mining Co. Ltd. v. The
King [1916] 1 A.C. 566, at pp. 579-580.
17 See Liquidators of the Maritime Bank of Canada v.
Receiver-General of New Brunswick [ 1892] A.C. 437, and The
King v. Carroll [1948] S.C.R. 126.
(e.g., section 107 and section 108) or as "belong-
ing" to one of the "Provinces"' 8 (e.g., section 109
and section 110), and it was not only provided that
"Canada" was to be "liable" for certain "Debts of
each Province existing at the Union" (section 111)
but provinces were to be "liable to Canada" for
certain amounts (section 112, section 114 and
section 115). Furthermore, there were various
express provisions for payments by the "Govern-
ment of Canada" or by "Canada" to the "Prov-
inces" (e.g., section 116 and section 118). More
over, in at least one case, there was a statutory
duty imposed by the 1867 Act on Canada ("the
Government and Parliament of Canada") to carry
out a public work for the benefit of particular
provinces (section 145); and there was provision
(section 146) for "Terms and Conditions" having
the effect of statute that might require similar
obligations in favour of new provinces to be admit
ted after 1867.
One finds in the use of the "courageous
words" 19 "Canada" and the "Provinces" in
The British North America Act, 1867 an apparent
anomaly, viz., notwithstanding that all state prop
erty and all executive and legislative power, both
for Canada as a whole and for each province, are
legally vested in the Sovereign, it is contemplated
by the statute that there will be payments and
liability as between any two of them. As far as I
18 "... these expressions merely import that the right to its
beneficial use, or to its proceeds, has been appropriated to the
Dominion or the Province, as the case may be, and is subject to
the control of its legislature, and land itself being vested in the
Crown." per Lord Watson in St. Catherine's Milling and
Lumber Company v. The Queen (1889) 14 App. Cas. 46, at p.
56. "... it should be added that the right of disposing of the
land can only be exercised by the Crown under the advice of
the Ministers of the Dominion or province, as the case may be
..." per Lord Davey in Ontario Mining Company Ltd. v.
Seybold [1903] A.C. 73 at p. 79. Cf. Burrard Power Company,
Ltd. v. The King [1911] A.C. 87, per Lord Mersey at p. 95.
19 Compare Maitland's Essay "The Crown as Corporation"
(supra) at p. 121. Similar references to Canada and the
provinces seem to occur consistently in subsequent B.N.A. Acts,
Orders in Council made pursuant thereto and such statutes as
The Manitoba Act, The Saskatchewan Act, The Alberta Act
and The Natural Resources Transfer Agreement Act of 1930
discussed in West Canadian Collieries Limited v. Attorney
General of Alberta [1953] 8 W.W.R. (N.S.) 275. (See Appen
dix to the Revised Statutes of Canada.)
know, there has been no authoritative rationaliza
tion of this apparent anomaly. Two possibilities
are to be found in the jurisprudence, viz.,
(a) as between Canada or a province and an
ordinary person, the relationship is, in law, be
tween the Sovereign and the ordinary person
while, as between Canada and a province (or
between two provinces) it is a relationship be
tween governments, 20
(b) Her Majesty is not a single person but Her
Majesty in right of Canada is one legal person
and Her Majesty in right of a province is a
distinctly different legal person. 21
In my view, this anomaly does not have to be
clarified for present purposes. 22 Indeed, I doubt
20 Compare Theodore v. Duncan [1919] A.C. 696, per Vis
count Haldane at p. 706:
The Crown is one and indivisible throughout the Empire, and
it acts in self-governing States on the initiative and advice of
its own Ministers in these States. The question is one not of
property or of prerogative in the sense of the word in which it
signifies the power of the Crown apart from statutory au
thority, but is one of Ministerial administration, and this is
confided to the discretion in the present instance of the same
set of Ministers under both Acts. With the exercise of that
discretion no Court of law can interfere so long as no
provision enacted by the Legislature is infringed. The Minis
ters are responsible for the exercise of their functions to the
Crown and to Parliament only, and cannot be controlled by
any outside authority, so long as they do nothing that is
illegal.
See also Williams v. Howarth [1905] A.C. 551.
21 Compare Attorney General of British Columbia v. Attor
ney General of Canada (1887) 14 S.C.R. 345, per Fournier J.
(dissenting) at pp. 363-364; In re Taxation Agreement between
Saskatchewan and Dominion of Canada [1946] 1 W.W.R. 257
at p. 278 and at p. 285; The Government of the Province of
Newfoundland v. The Government of Canada per Thorson P. in
Ex.C.R. [1960] (unreported) and the judgment of the Chief
Justice of Canada in Her Majesty in Right of the Province of
Alberta v. Canadian Transport Commission [1977] (unreport-
ed).
22 The only class of case in which, as I conceive of it at the
moment, this jurisprudential problem might have to be
authoritatively determined, is illustrated by the case of a gov
ernment claiming against another in a court having jurisdiction
in claims between legal persons to which Her Majesty is
subject, but not having the section 19 type of jurisdiction. The
question then might arise as to whether Her Majesty in one
right could bring an action against Her Majesty in another
right on the same basis as an ordinary person brings an action
against Her Majesty. The Government lawyers instructed to
prepare the documentation for a transfer of administration
(Continued on next page)
whether the problem even arises in the circum
stances of the dispute that is in question. Assuming
the claim to be one against Her Majesty in one
right by Her Majesty in another right, I cannot
conceive that the special defences available to Her
as against an ordinary person would be available
to Her as against Herself in another right. Assum
ing the claim to be one government against
another, the parties must be acting in some repre
sentative capacity and not on behalf of the
individuals comprising their membership for the
time being.
In my view, the present problem may be solved
as a pure matter of statutory interpretation.
In so far as most of the provisions in The British
North America Act, 1867 to which I have referred
are concerned, they can be interpreted, on the
basis of the Sovereign being one and indivisible in
the light of the explanation given by Viscount
Dunedin in In re Silver Brothers Limited, 23 where
he said:
It is true that there is only one Crown, but as regards Crown
revenues and Crown property by legislation assented to by the
Crown there is a distinction made between the revenues and
property in the Province and the revenues and property in the
Dominion. There are two separate statutory purses. In each the
ingathering and expending authority is different.
On this view, a provision in the Constitution
describing property as belonging to Canada or a
province merely determines what legislative and
executive bodies have jurisdiction and powers in
relation thereto and when Canada (or the Govern
ment of Canada) is required to pay or transfer to,
or is said to be entitled to payment or a transfer
from, a province (or the Government of a prov
ince), it is merely a requirement of a transfer of
money or other property from the legislative and
executive control (sometimes called "administra-
(Continued front previous page)
have a problem as to which is the proper method, viz.,
(a) a transfer as between ordinary persons, or
(b) a statute, order in council or dispatch (see cases cited in
the Higbie case [ 1945] S.C.R. 385);
but this would appear to me more a problem of elegance than
substance as there is little doubt that the Courts would give
effect to the transfer no matter which method was chosen.
23 [1932] A.C. 514, at p. 524.
tion") of the one to the other. 24
In any such case, the content of the obligation
or right is clear, it is more difficult to define with
precision the obligor and obligee. (Fortunately,
this is a jurisprudential problem that does not
ordinarily require to be solved.)
Clearly, the obligor or obligee is not the particu
lar group of individuals who, at any particular
time happens to constitute the executive or legisla
tive arm of government of Canada or a province.
Those individuals have no more interest personally
in public property than other members of the
public. For the transfer of property or the payment
of monies type of case, it would be a practical
solution to personify the respective executive (or
executive and legislative) arms of government, or
to regard the Sovereign as having a separate legal
personality for Canada and for each of the prov
inces respectively. Such a personification might
also serve to rationalize the class of case typified
by Canada's claim against Ontario arising out of
the surrender of Indian lands under Indian treaties
negotiated by Canada. 25 This would, however, in
my view, be a judicial creation or fiction that is
unnecessary for such cases and would complicate
24 See, for example, Attorney-General of British Columbia v.
Attorney-General of Canada (1889) 14 App. Cas. 295, per
Lord Watson at p. 301.
The title to the public lands of British Columbia has all along
been, and still is, vested in the Crown; but the right to
administer and to dispose of these lands to settlers, together
with all royal and territorial revenues arising therefrom, had
been transferred to the Province, before its admission into the
Federal union.
Compare Attorney General of Canada v. Western Higbie and
Albion Investments Ltd. [1945] S.C.R. 385.
25 See Dominion of Canada v. Province of Ontario [1910]
A.C. 637, per Lord Loreburn L.C. at p. 645:
To begin with, this case ought to be regarded as if what
was done by the Crown in 1873 had been done by the
Dominion Government, as in substance it was in fact done.
The Crown acts on the advice of ministers in making treaties,
and in owning public lands holds them for the good of the
community. When differences arise between the two Govern
ments in regard to what is due to the Crown as maker of
treaties from the Crown as owner of public lands they must
be adjusted as though the two Governments were separately
invested by the Crown with its rights and responsibilities as
treaty maker and as owner respectively.
rather than simplify the problems arising from
such cases as a breach of the constitutional (statu-
tory) right
(a) under section 145 of The British North
America Act, 1867, to have a railway construct
ed to connect the St. Lawrence River to Halifax,
(b) under the Terms of Union with British
Columbia, to have a transcontinental railway
built, 26
(c) under the Terms of Union with British
Columbia, to provide "an efficient mail service"
between Victoria and San Francisco and be
tween Victoria and Olympia, or
(d) under the Prince Edward Island Terms of
Union, to have an efficient ferry service
operated.
In my view, there is a more realistic analysis of
the situation, at least for such cases.
By 1867, it would seem that, while provinces
and colonies such as the ones in question here were
subject to the sovereignty of the British Crown,
each of them had, as a political matter, achieved a
political identity of its own within the British
Empire not unlike the political identity of sover
eign states in the international sphere. While such
a political identity was not, at that time at least, in
the eyes of the ordinary municipal law, a "person"
capable of having rights and liabilities and suing
and being sued, it was a political reality in the
sense that the people of a particular "self-govern
ing" region had to be accepted and dealt with as a
unity having desires and interests in common, as is
demonstrated by the fact that they were, by The
British North America Act, 1867, so dealt with.
There is no doubt, in my view, that the United
Kingdom Parliament, by section 145 of the 1867
Act, created a legal duty in favour of three
"Provinces". 27 Similarly, in my view, the Prince
26 Compare Attorney General for Saskatchewan v. Canadian
Pacific Railway Co. [1953] A.C. 594, at pp. 610 et seq.
27 Compare Dominion of Canada v. Province of Ontario
[1910] A.C. 637, at p. 645. This, in itself, may have created a
right in a province to sue as such on the application of
reasoning such as is found in The Taff Vale Railway Company
v. The Amalgamated Society of Railway Servants [1901]
A. C. 426.
Edward Island Terms of Union created a legal
duty in favour of that province in respect of a ferry
service. In each case, as I view it, the "obligor",
while it was described as the "Dominion Govern
ment" or the "Government and Parliament of
Canada", was the newly created political entity
called "Canada" and the obligee was a province or
provinces. Neither the obligor nor obligee was an
entity having status as a person in any British or
international court of law. Nevertheless, the
United Kingdom Parliament, by imposing duties
on one in favour of another, made them parties to
statutory rights or duties, 28 no matter how unorth
odox it may be to create legal rights without legal
remedies. It is important to emphasize that what
we are discussing is "a general statutory arrange
ment" and not a contract or "independent treaty
between the two governments". 29
In my view, the result of conferring such statu
tory rights on the provinces in question, in the
absence of any other sanction, was to confer a
right on them to be compensated in respect of
damages arising from breach thereof; 30 but the
28 Speaking of section 109, it was said in Attorney General of
Ontario v. Mercer (1883) 8 App. Cas. 767, at p. 778:
The general subject of the whole section is of a high political
nature; it is the attribution of royal territorial rights, for
purposes of revenue and government, to the provinces....
In my view, from the point of view of an implied right to be
compensated for breach, there is a difference in kind between a
provision, such as that under consideration, which is, on the
face of it, a part of the inducement by means of which the
particular province was persuaded to join the union and other
provisions (even though they are grammatically joined with it)
that merely provide for Canada assuming the same responsibili
ties toward the new province as it assumes toward all the rest of
the country.
29 Compare Attorney-General of British Columbia v. Attor-
ney-General of Canada (1889) 14 App. Cas. 295, per Lord
Watson at p. 303 and Bonanza Creek Gold Mining Co. Ltd. v.
The King [1916] 1 A.C. 566, per Viscount Haldane at p. 579
(quoted in footnote supra).
3° Compare Samson v. The Queen [ 1957] S.C.R. 832, per
Locke J. at p. 841. As a realistic matter, it seems obvious that,
just as being joined to the eastern provinces by railway was a
sine qua non of British Columbia joining the union, so the right
to be joined to the mainland by ferry service was a sine qua non
of Prince Edward Island joining. To my mind, it is inconceiv
able that when such terms of union were given statutory form,
(Continued on next page)
only remedy, at the time that the right was created
was that that was available where there was no
legal regime for settling disputes namely (leaving
aside force or other illegal acts), negotiation and
invoking the intervention of third parties (e.g. in
1867 and 1873, Her Majesty's United Kingdom
Government). 31 However, the lack of legal ma
chinery at that time to determine disputes does
not, in my view, detract from the existence at that
time of a right to have the statutory duty carried
out or to be compensated for breach of that duty.
In my view, when there is a statutory right to
have something done with no express sanction for
breach, there is, prima facie, an implied right to be
compensated for a breach of such right; and nei
ther the reasons given by the learned Trial Judge
nor the submissions on behalf of the respondent
make that reasoning inapplicable here. 32 I am,
therefore, of the view that the learned Trial Judge
(Continued from previous page)
the resultant rights were meant to be of such an empty nature
that breach thereof would not give rise to a right to
compensation.
That is not to say that an individual who happened to be an
inhabitant of the Province at the time of breach has a legal
claim to damages for his loss suffered as an individual. I
express no opinion on that question but I must express doubt
with regard thereto. I am of opinion that the "obligee" is the
"Province"—i.e., the mass of inhabitants of the geographical
area whoever they may be from time to time. I do not see the
obligation to the Province as a joint right of the individuals or
as a right held in trust for them as individuals. I see an analogy
to the "booty of war" case (Kinloch v. The Secretary of State
for India in Council (1882) 7 App. Cas. 619 (H.L.)) and to the
case of reparations received by a country which is the success
ful party to a peace treaty.
3' The only machinery contemplated by The British North
America Act, 1867, for settling disputes between Canada and
the provinces as to the effect of the arrangements among them
laid down by that Act is section 142 thereof, which reads:
142. The Division and Adjustment of the Debts, Credits,
Liabilities, Properties, and Assets of Upper Canada and
Lower Canada shall be referred to the Arbitrament of Three
Arbitrators, One chosen by the Government of Ontario, One
by the Government of Quebec, and One by the Government
of Canada; and the Selection of the Arbitrators shall not be
made until the Parliament of Canada and the Legislatures of
Ontario and Quebec have met; and the Arbitrator chosen by
the Government of Canada shall not be a Resident either in
Ontario or in Quebec.
32 The question whether what we are discussing is a "legal"
obligation or a "political" obligation has no bearing that I can
was wrong when he concluded, in effect, that the
breach of the Terms of Union that he found did
not give rise to a right to compensation for dam
ages suffered as a result of the breach.
However, it does not follow that, because a right
conferred on the Province by virtue of Imperial
legislation has been breached by Canada, the prov
ince has a right to a judgment against Canada.
This brings me to a consideration of the nature
and character of the proceeding in the Trial Divi
sion and of the parties thereto.
I doubt that either Canada or a province is a
person in the sense that it would, as such, be
recognized as falling within the jurisdiction of a
Superior Court having the jurisdiction of the
common law Superior Courts." In any event, the
see on the question whether there is an implied right to
compensation for breach. Just as there can be social obligations
that, not being legal obligations, are not justiciable in a court of
law, so there can be political obligations that are not so
justiciable; and, prior to the creation of the special type of
judicial remedy now reflected in section 19 of the Federal
Court Act, any obligation (e.g., to pay money) to which "Cana-
da" or the "provinces" were parties, as such, must have been
such a "political obligation" because the parties were political
entities and were not as such entities in respect of which any
court of law had jurisdiction. It follows that, at that time, the
sole remedy was political pressure just as, in the case of social
obligations, the sole remedy is social pressure. However, what
has to be considered is not the nature of the remedy but the
nature of the right. Whether the remedy was political or
judicial action, in my view, just as failure to pay money or
transfer property when required by law gives rise to an inciden
tal right to future payment or transfer and compensation for
loss arising from delay, so failure to provide a service required
by law during a period gives rise to a right to compensation for
loss arising from the failure.
33 As I understand the use of the word "person" in the law, it
is that which is competent in the eyes of the law to have rights
and obligations and to sue and be sued. (Cf. section 20 of the
Interpretation Act and the definition of "person" in section 28
thereof.) Persons may, therefore, vary from one system of law
to another; e.g., from a municipal system to international law.
As I see it, the provisions of The British North America Act
that are being considered create a system of rights somewhere
in between and section 19 sets up a jurisdiction to give effect to
such rights. Canada and the provinces are the persons who are
competent to have rights and obligations and to sue and be sued
under such system and jurisdiction.
Trial Division would, in my view, have no jurisdic
tion in a dispute between two such political
entities 34 apart from section 19 of the Federal
Court Act, which reads:
19. Where the legislature of a province has passed an Act
agreeing that the Court, whether referred to in that Act by its
new name or by its former name, has jurisdiction in cases of
controversies,
(a) between Canada and such province, or
(b) between such province and any other province or prov
inces that have passed a like Act,
the Court has jurisdiction to determine such controversies and
the Trial Division shall deal with any such matter in the first
instance.
and the "agreeing" provincial Act. In my view,
this legislation (section 19 and the provincial
"Act") creates a jurisdiction differing in kind from
the ordinary jurisdiction of municipal courts to
decide disputes between ordinary persons or be
tween the Sovereign and an ordinary person. 35 It is
a jurisdiction to decide disputes as between politi
cal entities and not as between persons recognized
as legal persons in the ordinary municipal courts. 36
Similarly, in my view, this legislation creates a
jurisdiction differing in kind from international
courts or tribunals. It is a jurisdiction to decide a
dispute in accordance with some "recognized legal
principle" 37 (in this case, a provision in the legal
constitution of Canada, which is, vis-Ã -vis inter
national law, Canadian municipal law).
34 I can see that, on the view that Her Majesty as part of
each of the respective executive and legislative arms of govern
ment combined, is a separate legal person, the Federal Court
might have jurisdiction under section 17 of the Federal Court
Act where the claim is for a transfer of administration of
Crown property (which would include a payment of money)
from one executive arm to another. I cannot see how such a
view would permit a realistic interpretation of a constitutional
obligation such as that under consideration. It is not the
executive or legislative arms of government that are the true
sufferers or delinquents. It is the particular public (group of
people) represented by such arms of government.
35 Even in such courts, the Sovereign can only be impleaded
as "provided by statute". See Young v. SS. "Scotia" [1903]
A.C. 501 at pp. 504-505.
36 Compare Sloman v. The Governor and Government of
New Zealand (1876) L.R. 1 C.P.D. 563.
37 Dominion of Canada v. Province of Ontario [1910] A.C.
637, per Lord Loreburn L.C. at p. 645. I take "legal" in this
phrase to exclude the application of ideas of abstract justice
and "recognized" to require recognition as part of the munic
ipal law of Canada.
The effect of the enactment of the original
forerunner of section 19, 3 B once the "agreeing"
provincial legislation was passed, was, as I see it,
to convert a legal (statutory) right of a "province"
without a legal remedy into a legal right with a
remedy, albeit a remedy that can be nothing more
than a judicial declaration. 39
On this view of the nature of a proceeding under
section 19, the parties thereto are the political
entities, in this case the Province and Canada,
which cannot be described any more accurately, as
I conceive them, than the peoples or public for the
time being of the geographical areas involved. In
effect, it is a claim by the people for the time being
of Prince Edward Island against the people for the
time being of all Canada. In my view, it does not
matter whether such parties are referred to in the
proceedings by the geographical names or by ref
erence to the executive governments that represent
the inhabitants of the geographical areas and that
must be their spokesmen for the purposes of the
dispute. 40
38 See section 54 of the Supreme and Exchequer Courts Act,
c. 11 of the Statutes of Canada of 1875.
39 This is not to be taken as depreciatory of the remedy. A
judicial remedy against the Sovereign (Government) in right of
Canada has always been by declaration. See section 10 of the
Petition of Right Act, R.S.C. 1970, c. P-12, and Rule 605 of
the Federal Court Rules, which reads:
Rule 605. A judgment against the Crown shall be a declara
tion that the person in favour of whom the judgment is given
is entitled to the relief to which the Court has decided that he
is entitled, either absolutely or upon such terms and condi
tions, if any, as are just.
The Government will not, of course, ignore the Court's deci
sion. "It is the duty of the Crown and of every branch of the
Executive to abide by and obey the law" (Eastern Trust
Company v. McKenzie, Mann and Co., Ltd. [l915] A.C. 750,
at p. 759).
4° While describing the executive government as "Her Majes
ty in right of" may or may not be particularly appropriate,
there is no question, reading the proceedings in the light of
section 19, that it is the Province and Canada that are the true
parties to the dispute and so there is, in my view, no defect in
the proceeding. (See Her Majesty in Right of the Province of
Alberta v. Canadian Transport Commission [1977] per Laskin
C.J.C. (unreported).) Furthermore, the practical result of the
proceeding, if successful, will probably be a declaration that the
Province is entitled to be paid $x by Canada which would mean
a transfer from the Government of Canada to the Government
of Prince Edward Island of money that would then become
(Continued on next page)
In considering the judgment of this Court that
would flow, if the conclusion that I have reached is
adopted by the Court, consideration must be given
to that part of the learned Trial Judge's reasons,
which reads [at page 7211:
In seeking a trial date counsel for the parties agreed that the
trial, in the first instance, should be limited to the question of
liability and that the question of damages should be deferred to
a subsequent time depending upon the resolution of the ques
tion of liability. Accordingly both parties waived examination
for discovery respecting the quantum of damages to a time
prior to the trial of that issue, should it become necessary.
Having regard thereto, my conclusion would be
that the appeal should be dismissed with costs and
the cross-appeal should be allowed with costs, that
the judgment of the Trial Division should be set
aside and that the matter should be referred back
for further proceedings in accordance with the
arrangement between the parties pursuant to
which the matter went to trial.
(Continued from previous page)
subject to appropriation by the Legislature of Prince Edward
Island. Section 57(3) of the Federal Court Act would not seem
to apply to authorize payment, in which event, it would seem
that special Parliamentary authority would be necessary. In
such a proceeding, Rule 5—the "Gap Rule"—would, I should
have thought, solve most procedural problems, as, for example,
the problem that arose in 1960 in the unreported judgment of
Thorson P. in Government of the Province of Newfoundland v.
Government of Canada.
I should add that, as far as this appeal is concerned, as I have
already indicated, it does not seem to me to make any differ
ence whether the parties to this proceeding are conceived to be
(a) the "Governments" of Canada and Prince Edward
Island, respectively,
(b) Her Majesty in right of Canada and Her Majesty in
right of Prince Edward Island, regarded as two separate legal
personalities, or
(c) Canada and Prince Edward Island regarded as political
entities (rather than ordinary legal personalities) upon whom
the Constitution imposes rights and obligations that may give
rise to disputes for which section 19 creates a remedy differ
ent in kind juristically from the ordinary remedies in munic
ipal courts.
No matter which is the more accurate analysis, as it seems to
me, the learned Trial Judge erred in not holding that there was
a right to compensation for breach of the particular provision in
the terms of union. However, the damages to be assessed during
the second stage of the trial may vary substantially depending
upon the correct view as to who is the party who is to be
compensated.
However, my tentative conclusion that the
matter should be referred back to the Trial Divi
sion for further proceedings raises a question as to
the validity of section 19 of the Federal Court Act
in so far as it purports to confer jurisdiction on the
Trial Division in respect of this claim by the
Province against Canada. The parties indicated,
through their counsel on the argument in this
Court, that they were satisfied that the Trial Divi
sion has jurisdiction. There have, moreover, been
various decisions on appeal in proceedings initiated
under the predecessors of section 19 by which the
Supreme Court of Canada and the Judicial Com
mittee have dealt with such matters without cast
ing any doubt on the jurisdiction created by such
provisions. 41 Two recent decisions of the Supreme
Court of Canada—Quebec North Shore Paper
Company v. Canadian Pacific Limited [1977] 2
S.C.R. 1054 and McNamara Construction (West-
ern) Limited v. The Queen [ 1977] 2 S.C.R. 654—
have, however, cast new light on the ambit of
section 101 of The British North America Act,
1867 which requires consideration of the question
of jurisdiction because the Court should "take
objection where the absence of jurisdiction is
apparent on the face of the proceedings". 42 It
follows, in my view, that this Court should not
refer the matter back to the Trial Division for
further proceedings if it is apparent on the face of
the proceedings that the Trial Division has no
jurisdiction.
After giving the two recent decisions of the
Supreme Court of Canada concerning the ambit of
section 101 the best consideration that I can, I
have concluded that they do not make it "appar-
ent" that the Trial Division has no jurisdiction in
this claim by Prince Edward Island against
Canada so as to justify or require this Court to
take cognizance of such absence of jurisdiction
when the matter has not been put in issue between
the parties. One of those cases deals with a dispute
"' See, for example, Attorney-General of British Coumbia v.
Attorney-General of Canada (1889) 14 App. Cas. 295;
Dominion of Canada v. Province of Ontario [1910] A.C. 637;
The King v. Attorney-General of British Columbia [1924]
A.C. 213; and Attorney-General of British Columbia v. Attor-
ney-General of Canada [1924] A.C. 222.
42 See Westminster Bank, Ld. v. Edwards [1942] A.C. 529,
per Viscount Simon L.C. at p. 533.
between ordinary persons. The other deals with a
claim by Her Majesty against an ordinary person.
In both cases, the matter was to be resolved by
application of provincial law 4 3 There was no occa
sion in those cases for the Court to address itself to
the question whether the application of a part of
the Constitution of Canada (as found in or under
United Kingdom legislation) to resolve a dispute
between Canada and one of its provinces fell
within the words "Administration of the Laws of
Canada" in section 101 of The British North
America Act, 1867. 44
My conclusion is, therefore, that the appeal
should be dismissed with costs and the cross-
appeal should be allowed with costs, that the judg
ment of the Trial Division should be set aside and
that the matter should be referred back to the
Trial Division for further proceedings in accord
ance with the arrangement between the parties
pursuant to which the matter went to trial.
APPENDIX "A"
DISCUSSION OF TERMS AND CONDITIONS UPON
WHICH PRINCE EDWARD ISLAND WAS ADMITTED
TO CONFEDERATION
The Imperial order-in-council of June 26, 1873,
after reciting the terms of section 146 of The
43 In the Quebec North Shore Paper Company case, the
Chief Justice of Canada (delivering the judgment of the Court)
pointed out [at page 10631 "that the law respecting the Crown
came into Canada as part of the public or constitutional law of
Great Britain, and there can be no pretence that that law is
provincial law". The passage in which this appears was quoted
by him, when giving judgment on behalf of the Court in the
McNamara case.
44 if the matter comes to be argued, there are other aspects
that may require to be considered. It may be that, properly
considered, section 19, like the old section 20 of the Exchequer
Court Act, creates a legally enforceable right as well as confer
ring jurisdiction on the Court. (See The King v. Armstrong
(1908) 40 S.C.R. 229 at p. 248; The King v. DesRosiers (1908)
41 S.C.R. 71, at p. 78; and The Queen v. Murray [1967]
S.C.R. 262, per Martland J. (delivering the judgment of the
Court) at p. 269.) It may, on the other hand, be that, in so far
as claims against Canada are concerned, section 19 is legisla
tion, under the introductory words of section 91, conferring
arbitral powers on the Court and authorizing it to accept
similar powers, in so far as claims against provinces are con
cerned, from provincial legislatures on the principle applied, in
a different context, in P.E.1. Potato Marketing Board v. 11.B.
Willis Inc. 119521 2 S.C.R. 392.
British North America Act, 1867, and referring to
the Addresses of the Houses of Parliament and the
Legislative Council and House of Assembly of
Prince Edward Island, ordered that Prince Edward
Island be admitted into and become part of
Canada upon the terms and conditions set forth in
such addresses. 45
The terms and conditions that were set forth in
each of such addresses read as follows:
[A] That Canada shall be liable for the debts and liabilities
of Prince Edward Island at the time of the Union;
[B] That in consideration of the large expenditure author
ized by the Parliament of Canada for the construction of
railways and canals, and in view of the possibility of a
re-adjustment of the financial arrangements between
Canada and the several Provinces now embraced in the
Dominion, as well as the isolated and exceptional condi
tion of Prince Edward Island, that Colony shall, on
entering the Union, be entitled to incur a debt equal to
fifty dollars per head of its population, as shewn by the
Census Returns of 1871, that is to say: four millions
seven hundred and one thousand and fifty dollars;
[C] That Prince Edward Island not having incurred debts
equal to the sum mentioned in the next preceding Reso
lution, shall be entitled to receive, by half-yearly pay
ments, in advance, from the General Government, inter
est at the rate of five per cent. per annum on the
difference, from time to time, between the actual
amount of its indebtedness and the amount of indebted
ness authorized as aforesaid, viz., four millions seven
hundred and one thousand and fifty dollars;
[D] That Prince Edward Island shall be liable to Canada
for the amount (if any) by which its public debt and
liabilities at the date of the Union, may exceed four
millions seven hundred and one thousand and fifty
dollars and shall be chargeable with interest at the rate
of five per cent. per annum on such excess;
[E] That as the Government of Prince Edward Island holds
no lands from the Crown, and consequently enjoys no
revenue from that source for the construction and main
tenance of local works, the Dominion Government shall
pay by half-yearly instalments, in advance, to the Gov
ernment of Prince Edward Island, forty-five thousand
dollars per annum, less interest at five per cent. per
annum, upon any sum not exceeding eight hundred
thousand dollars which the Dominion Government may
advance to the Prince Edward Island Government for
the purchase of lands now held by large proprietors;
[F] That in consideration of the transfer to the Parliament
of Canada of the powers of taxation, the following sums
shall be paid yearly by Canada to Prince Edward Island,
45 It also made certain provisions concerning the representa
tion of Prince Edward Island in Parliament to which it is
unnecessary to refer for present purposes.
for the support of its Government and Legislature, that
is to say, thirty thousand dollars, and an annual grant
equal to eighty cents per head of its population, as
shown by the Census returns of 1871, viz., 94,021, both
by half-yearly payments in advance such grant of
eighty cents per head to be augmented in proportion to
the increase of population of the Island as may be shown
by each subsequent decennial Census, until the popula
tion amounts to four hundred thousand, at which rate
such grant shall thereafter remain it being understood
that the next Census shall be taken in the year 1881;
[G] That the Dominion Government shall assume and
defray all the charges for the following services, viz.:—
The salary of the Lieutenant Governor;
The salaries of the Judges of the Superior Court and
of the District or County Courts when established;
The charges in respect of the Department of Customs;
The Postal Department;
The protection of the Fisheries;
The provision for the Militia;
The Lighthouses, Shipwrecked Crews, Quarantine
and Marine Hospitals;
The Geological Survey;
The Penitentiary;
Efficient Steam Service for the conveyance of mails
and passengers, to be established and maintained be
tween the Island and the mainland of the Dominion,
Winter and Summer, thus placing the Island in contin
uous communication with the Intercolonial Railway and
the railway system of the Dominion;
The maintenance of telegraphic communication be
tween the Island and the mainland of the Dominion;
And such other charges as may be incident to, and
connected with, the services which by the "British North
America Act, 1867," appertain to the General Govern
ment, and as are or may be allowed to the other
Provinces;
[H] That the railways under contract and in course of
construction for the Government of the Island, shall be
the property of Canada;
[I] That the new building in which are held the Law
Courts, Registry Office, etc., shall be transferred to
Canada, on the payment of sixty-nine thousand dollars.
The purchase to include the land on which the building
stands, and a suitable space of ground in addition, for
yard room, etc;
[J] That the Steam Dredge Boat in course of construction,
shall be taken by the Dominion, at a cost not exceeding
twenty-two thousand dollars;
[K] That the Steam Ferry Boat owned by the Government
of the Island, and used as such, shall remain the prop
erty of the Island;
[L] That the population of Prince Edward Island having
been increased by fifteen thousand or upwards since the
year 1861, the Island shall be represented in the House
of Commons of Canada by six Members; the representa
tion to be readjusted, from time to time, under the
provisions of the "British North America Act, 1867;"
[MI That the constitution of the Executive Author
ity and of the Legislature of Prince Edward Island,
shall, subject to the provisions of the "British North
America Act, 1867," continue, as at the time of the
Union, until altered under the authority of the said Act,
and the House of Assembly of Prince Edward Island
existing at the date of the Union shall, unless sooner
dissolved, continue for the period for which it was
elected;
[NI That the Provisions in the "British North America Act,
1867," shall, except those parts thereof which are in
terms made, or by reasonable intendment, may be held
to be especially applicable to, and only to affect one and
not the whole of the Provinces now composing the
Dominion, and except so far as the same may be varied
by these resolutions, be applicable to Prince Edward
Island, in the same way and to the same extent as they
apply to the other Provinces of the Dominion, and as if
the Colony of Prince Edward Island had been one of the
Provinces originally united by the said Act.
A preliminary observation is that, in my view,
this document must be understood having regard
to the fact that it is obviously a political document
prepared by politicians and is not a statute drafted
by professional draftsmen. This appears particu
larly from the organization of the subject matter—
or lack of any such organization. The document
plunges immediately into the financial arrange
ments (paragraphs marked A to F) and concludes
with the principal term, concerning which there
could have been no controversy, that the provisions
of The British North America Act, 1867 appli
cable to all the other provinces would apply to
Prince Edward Island except as varied by the
terms and conditions themselves (paragraph
marked N). In my view, this obvious lack of
attention to scientific arrangement of the docu
ment is particularly evident in the paragraph
where one finds the provision that has to be con
strued in this appeal (paragraph marked G).
In my view, having regard to the fact that the
terms of this document are obviously the direct
result of political negotiations, the introductory
words of this paragraph (paragraph marked G)
must be read flexibly according to the particular
item in relation to which they are read. Where the
item is in terms (and in substance) a disbursement
(i.e., a charge on government funds), it would
seem to me that the words "for the following
services" must be ignored. In such cases, the spe
cific items would all seem to fall within the terms
of the concluding item "... charges ... incident to,
and connected with, the services which by the
`British North America Act, 1867,' appertain to
the General Government ..."—e.g., section 60,
section 100, section 91(2) and (3), section 91(5),
section 91(12), and section 91(7). Certain items,
however, appear to contemplate that the Dominion
Government will "assume" and "defray all the
charges for" certain services (i.e., branches of the
public service) theretofore operated by the Colo-
ny—e.g., "the Department of Customs", "The
Postal Department", "The protection of the Fish
eries", "the Militia", "The Geological Survey"
and "The Penitentiary". The item here in ques-
tion—"Efficient Steam Service"—in my view, is
different in character from either of those two
classes of item. It refers to a service "to be estab
lished and maintained ... Winter and Summer
..". It does relate to a service but it does not
provide for a mere assumption of operations there-
tofore operated by the Colony to be integrated into
the respective national services but it is a require
ment that a theretofore non-existent service be
"established" and "maintained" in the future.
I am, therefore, of the view that this item in the
paragraph in question is different in kind from the
other items in that paragraph (with the possible
exception of the "telegraphic communication"
item). It is neither the repetition, for greater cer
tainty, of what would follow from entry of the
Province into Confederation on the same terms as
apply to the other provinces nor is it a taking over
of staff and facilities previously operated by the
Colony. It must, in my view, be read (once incor
porated by reference in the Order in Council) as a
legal obligation imposed on the Dominion Govern
ment to establish and maintain a new service.
Furthermore, reading the document realistically,
as one directly worked out in political negotiations,
in my view, it must be read as an obligation
imposed in favour of "Prince Edward Island" in
the same way as the financial terms ("C", "E" and
"F") and the property terms ("K") where Prince
Edward Island was expressly made the beneficiary
of the obligation.
In my opinion, it would be unrealistic to put
these provisions, which were obviously the result of
hard bargaining, in the same class as either
(a) a limitation on legislative power—e.g., the
provision in question in Attorney General for
Saskatchewan v. Canadian Pacific Railway
Co. 46— which operates of its own force, or
(b) a provision imposing on government service
agencies a legal duty to provide services to the
public, where, at least until recently, the sanc
tion for failure has been political action alone.
In my view, notwithstanding its position in the
document, the "Efficient Steam Service" item is of
the same nature as the financial provisions and the
provisions dividing public property and created a
statutory obligation as between Canada and the
Province once it was incorporated in the Order in
Council under section 146.
APPENDIX "B"
Maitland—Selected Essays (1936) Cambridge
University Press
The Crown as Corporation 47
The medieval king was every inch a king, but just for this
reason he was every inch a man and you did not talk nonsense
about him. You did not ascribe to him immortality or ubiquity
or such powers as no mortal can wield. If you said that he was
Christ's Vicar, you meant what you said, and you might add
that he would become the servant of the devil if he declined
towards tyranny. And there was little cause for ascribing to him
more than one capacity. Now and then it was necessary to
distinguish between lands that he held in right of his crown and
lands which had come to him in right of an escheated barony or
vacant bishopric. But in the main all his lands were his lands,
and we must be careful not to read a trusteeship for the nation
into our medieval documents. The oft-repeated demand that the
king should "live of his own" implied this view of the situation.
I do not mean that this was at any time a complete view. We
may, for example, find the lawyers of Edward II's day catching
up a notion that the canonists had propagated, declaring that
the king's crown is always under age, and so co-ordinating the
corona with the ecclesia. But English lawyers were not good at
work of this kind; they liked their persons to be real, and what
we have seen of the parochial glebe has shown us that even the
church (ecclesia particularis) was not for them a person. As to
the king, in all the Year Books I have seen very little said of
46 [1953] A.C. 594.
47 Published in 1901 in 17 L.Q.R. 131.
him that was not meant to be strictly and literally true of a
man, of an Edward or a Henry.
Then, on the other hand, medieval thought conceived the
nation as a community and pictured it as a body of which the
king was the head. It resembled those smaller bodies which it
comprised and of which it was in some sort composed. What we
should regard as the contrast between State and Corporation
was hardly visible. The "commune of the realm" differed
rather in size and power than in essence from the commune of a
county or the commune of a borough. And as the conritatus or
county took visible form in the comitatus or county court, so
the realm took visible form in a parliament. Every one, said
Thorpe C.J. in 1365, "is bound to know at once what is done in
Parliament, for Parliament represents the body of the whole
realm." For a time it seems very possible, as we read the Year
Books, that so soon as lawyers begin to argue about the nature
of corporations or bodies politic and clearly to sever the Bor
ough, for example, from the sum of burgesses, they will defi
nitely grasp and formulate the very sound thought that the
realm is "a corporation aggregate of many". In 1522 Fineux
C.J. after telling how some corporations are made by the king,
others by the pope, others by both king and pope, adds that
there are corporations by the common law, for, says he, "the
parliament of the king and the lords and the commons are a
corporation." What is still lacking is the admission that the
corporate realm, besides being the wielder of public power, may
also be the "subject" of private rights, the owner of lands and
chattels. And this is the step that we have never yet formally
taken.
The portrait that Henry VIII painted of the body politic of
which he was the sovereign head will not be forgotten:
Where by divers sundry old authentic histories and chroni
cles it is manifestly declared and expressed that this realm of
England is an Empire, and so hath been accepted in the
world, governed by One supreme Head and King, having the
dignity and royal estate of the Imperial Crown of the same,
unto whom a Body Politick, compact of all sorts and degrees
of people and by names of Spirituality and Temporally been
bounden, and owen to bear, next to God, a natural and
humble obedience....
It is stately stuff into which old thoughts and new are woven.
"The body spiritual" is henceforth to be conceived as "part of
the said body politick" which culminates in King Henry. The
medieval dualism of Church and State is at length transcended
by the majestic lord who broke the bonds of Rome. The
frontispiece of the Leviathan is already before our eyes. But, as
for Hobbes, so also for King Henry, the personality of the
corporate body is concentrated in and absorbed by the person
ality of its monarchical head. His reign was not the time when
the king's lands could be severed from the nation's lands, the
king's wealth from the common wealth, or even the king's
power from the power of the State. The idea of a corporation
sole which was being prepared in the ecclesiastical sphere might
do good service here. Were not all Englishmen incorporated in
King Henry? Were not his acts and deeds the acts and deeds of
that body politic which was both Realm and Church?
A certain amount of disputation there was sure to be over
land acquired by the king in divers ways. Edward VI, not being
yet of the age of twenty-one years, purported to alienate land
which formed part of the duchy of Lancaster. Did this act fall
within the doctrine that the king can convey while he is an
infant? Land had been conveyed to Henry VII "and the heirs
male of his body lawfully begotten". Did this give him an estate
tail or a fee simple conditional? Could the head of a body
politic beget heirs? A few cases of this kind came before the
Court soon after the middle of the sixteenth century. In Plow-
den's reports of these cases we may find much curious
argumentation about the king's two "bodies", and I do not
know where to look in the whole series of our law books for so
marvellous a display of metaphysical—or we might say meta-
physiological—nonsense. Whether this sort of talk was really
new about the year 1550, or whether it had gone unreported
until Plowden arose, it were not easy to say; but the Year Books
have not prepared us for it. Two sentences may be enough to
illustrate what I mean:
So that he [the king] has a body natural adorned and
invested with the estate and dignity royal, and he has not a
body natural distinct and divided by itself from the office and
dignity royal, but a body natural and a body politic together
indivisible, and these two bodies are incorporated in one
person and make one body and not divers, that is, the body
corporate in the body natural et e contra the body natural in
the body corporate. So that the body natural by the conjunc
tion of the body politic to it (which body politic contains the
office, government and majesty royal) is magnified and by
the said consolidation hath in it the body politic.
"Which faith," we are inclined to add, "except every man
keep whole and undefiled, without doubt he shall perish ever-
lastingly." However, a gleam of light seems sometimes to
penetrate the darkness. The thought that in one of his two
capacities the king is only the "head" of a corporation has not
been wholly suppressed.
The king has two capacities, for he has two bodies, the one
whereof is a body natural ... the other is a body politic, and
the members thereof are his subjects, and he and his subjects
together compose the corporation, as Southcote said, and he
is incorporated with them and they with him, and he is the
head and they are the members, and he has the sole govern
ment of them.
Again, in that strange debate occasioned by the too sudden
death of Sir James Hales, Brown J. says that suicide is an
offence not only against God and Nature, but against the King,
for "he, being the Head, has lost one of his mystical members".
But, for reasons that lie for the more part outside the history of
law, this thought fell into the background. The king was left
with "two bodies"; one of them was natural, the other non-
natural. Of this last body we can say little; but it is "politic",
whatever "politic" may mean.
Meanwhile the concept of a corporation sole was being
fashioned in order to explain, if this were possible, the parson's
relation to the glebe. Then came Coke and in his masterful
fashion classified Persons for the coming ages. They are natural
or artificial. Kings and parsons are artificial persons, corpora
tions sole, created not by God but by the policy of man.
Abortive as I think the attempt to bring the parson into line
with corporations aggregate—abortive, for the freehold of the
glebe persists in falling into abeyance whenever a parson dies—
the attempt to play the same trick with the king seems to me
still more abortive and infinitely more mischievous. In the first
place, the theory is never logically formulated even by those
who are its inventors. We are taught that the king is two
"persons", only to be taught that though he has "two bodies"
and "two capacities" he "hath but one person". Any real and
consistent severance of the two personalities would naturally
have led to "the damnable and damned opinion", productive of
"execrable and detestable consequences", that allegiance is due
to the corporation sole and not to the mortal man. In the second
place, we are plunged into talk about kings who do not die, who
are never under age, who are ubiquitous, who do no wrong and
(says Blackstone) think no wrong; and such talk has not been
innocuous. Readers of Kinglake's Crimea will not have forgot
ten the instructive and amusing account of "the two kings" who
shared between them control of the British army: "the personal
king" and "his constitutional rival". But in the third place, the
theory of the two kings or two persons stubbornly refuses to do
any real work in the case of jurisprudence.
We might have thought that it would at least have led to a
separation of the land that the king held as king from the land
that he held as man, and to a legal severance of the money that
was in the Exchequer from the money that was in the king's
pocket. It did nothing of the sort. All had to be done by statute,
and very slowly and clumsily it was done. After the king's lands
had been made inalienable, George Ill had to go to Parliament
for permission to hold some land as a man and not as a king,
for he had been denied rights that were not denied to "any of
His Majesty's subjects". A deal of legislation, extending into
Queen Victoria's reign, has been required in order to secure
"private estates" for the king. "Whereas it is doubtful", says an
Act of 1862. "And whereas it may be doubtful", says an Act of
1873. Many things may be doubtful if we try to make two
persons of one man, or to provide one person with two bodies.
The purely natural way in which the king was regarded in
the Middle Ages is well illustrated by the terrible consequences
of what we now call a demise of the Crown, but what seemed to
our ancestors the death of a man who had delegated many of
his powers to judges and others. At the delegator's death the
delegation ceased. All litigation not only came to a stop but had
to be begun over again. We might have thought that the
introduction of phrases which gave the king an immortal as
well as a mortal body would have transformed this part of the
law. But no. The consequences of the old principle had to be
picked off one after another by statute. At the beginning of
Queen Victoria's reign it was discovered that "great incon
venience had arisen on occasion of the demise of the Crown
from the necessity of renewing all military commissions under
the royal sign manual". When on a demise of the Crown we see
all the wheels of the State stopping or even running backwards,
it seems an idle jest to say that the king never dies.
But the worst of it is that we are compelled to introduce into
our legal thinking a person whose personality our law does not
formally or explicitly recognize. We cannot get on without the
State, or the Nation, or the Commonwealth, or the Public, or
some similar entity, and yet that is what we are professing to
do. In the days when Queen Elizabeth was our Prince—more
often Prince than Princess her secretary might write in Latin
De republica Anglorum, and in English Of the Commonwealth
of England: Prince and Republic were not yet incompatible. A
little later Guy Fawkes and others, so said the Statute Book,
had attempted the destruction of His Majesty and "the over
throw of the whole State and Common wealth". In 1623 the
Exchequer Chamber could speak of the inconvenience that
"remote limitations" had introduced "in the republic". But the
great struggle that followed had the effect of depriving us of
two useful words. "Republic" and "Commonwealth" implied
kinglessness and therefore treason. As to "the State", it was a
late comer but little known until after 1600—and though it
might govern political thought, and on rare occasions make its
way into the preamble of a statute, it was slow to find a home
in English law-books. There is wonderfully little of the State in
Blackstone's Commentaries. It is true that "The people" exists,
and "the liberties of the People" must be set over against "the
prerogatives of the King"; but just because the King is no part
of the People, the People cannot be the State or
Commonwealth.
But "the Publick" might be useful. And those who watch the
doings of this Publick in the Statute Book of the eighteenth
century may feel inclined to say that it has dropped a first
syllable. After the rebellion of 1715 an Act of Parliament
declared that the estates of certain traitors were to be vested in
the king "to the use of the Publick". Whether this is the first
appearance of "the Publick" as cestui que trust of a part of
those lands of which the king is owner I do not know; but it is
an early example. Then we come upon an amusing little story
which illustrates the curious qualities of our royal corporation
sole. One of the attainted traitors was Lord Derwentwater, and
the tenants of his barony of Langley had been accustomed to
pay a fine when their lord died: such a custom was, I believe,
commoner elsewhere than in England. But, says an Act of
1738, the said premises "being vested in His Majesty, his heirs
and successors in his politick capacity, which in consideration
of law never dies, it may create a doubt whether the tenants of
the said estates ought ... to pay such fines ... on the death of
His present Majesty (whom God long preserve for the benefit
of his People) or on the death of any future King or Queen". So
the tenants are to pay as they would have paid "in case such
King or Queen so dying was considered as a private person only
and not in his or her politick capacity". Thus that artificial
person, the king in his politick capacity, who is a trustee for the
Publick, must be deemed to die now and then for the benefit of
cestui que trust.
But it was of "the Publick" that we were speaking, and I
believe that "the Publick" first becomes prominent in connex-
ion with the National Debt. Though much might be done for us
by a slightly denaturalized king, he could not do all that was
requisite. Some proceedings of one of his predecessors, who
closed the Exchequer and ruined the goldsmiths, had made our
king no good borrower. So the Publick had to take his place.
The money might be "advanced to His Majesty", but the
Publick had to owe it. This idea could not be kept off the
statute book. "Whereas", said an Act of 1786, "the Publick
stands indebted to" the East India Company in a sum of four
millions and more.
What is the Publick which owes the National Debt? We try
to evade that question. We try to think of that debt not as a
debt owed by a person, but as a sum charged upon a pledged or
mortgaged thing, upon the Consolidated Fund. This is natural,
for we may, if we will, trace the beginnings of a national debt
back to days when a king borrows money and charges the
repayment of it upon a specific tax; perhaps he will even
appoint his creditor to collect that tax, and so enable him to
repay himself. Then there was the long transitional stage in
which annuities were charged on the Aggregate Fund, the
General Fund, the South Sea Fund, and so forth. And now we
have the Consolidated Fund; but even the most licentious
"objectification" (or, as Dr James Ward says, "reification")
can hardly make that Fund "a thing" for jurisprudence. On the
one hand, we do not conceive that the holders of Consols would
have the slightest right to complain if the present taxes were
swept away and new taxes invented, and, on the other hand, we
conceive that if the present taxes will not suffice to pay the
interest of the debt more taxes must be imposed. Then we speak
of "the security of an Act of Parliament", as if the Act were a
profit-bearing thing that could be pledged. Or we introduce
"the Government" as a debtor. But what, we may ask, is this
Government? Surely not the group of Ministers, not the Gov
ernment which can be contrasted with Parliament. I am happy
to think that no words of mine can affect the price of Bank
Annuities, but it seems to me that the national debt is not a
"secured debt" in any other than that loose sense in which we
speak of "personal security", and that the creditor has nothing
to trust to but the honesty and solvency of that honest and
solvent community of which the King is the head and "Govern-
ment" and Parliament are organs.
One of our subterfuges has been that of making the king a
trustee (vel quasi) for unincorporated groups. Another of our
subterfuges has been that of slowly substituting "the Crown"
for King or Queen. Now the use which has been made in
different ages of the crown —a chattel now lying in the Tower
and partaking (so it is said) of the nature of an heirloom
might be made the matter of a long essay. I believe, however,
that an habitual and perfectly unambiguous personification of
the Crown—in particular, the attribution of acts to the
Crown—is much more modern than most people would believe.
It seems to me that in fully half the cases in which Sir William
Anson writes "Crown", Blackstone would have written "King".
In strictness, however, "the Crown" is not, I take it, among the
persons known to our law, unless it is merely another name for
the King. The Crown, by that name, never sues, never prose
cutes, never issues writs or letters patent. On the face of formal
records the King or Queen does it all. I would not, if I could,
stop the process which is making "the Crown" one of the names
of a certain organized community; but in the meantime that
term is being used in three or four different, though closely
related, senses. "We all know that the Crown is an abstrac
tion", said Lord Penzance. I do not feel quite sure of knowing
even this.
The suggestion that "the Crown" is very often a suppressed
or partially recognized corporation aggregate is forced upon us
so soon as we begin to attend with care to the language which is
used by judges when they are freely reasoning about modern
matters and are not feeling the pressure of old theories. Let us
listen, for example, to Blackburn J., when in a famous opinion
he was explaining why it is that the Postmaster-General or the
captain of a man-of-war cannot be made to answer in a civil
action for the negligence of his subordinates. "These cases were
decided upon the ground that the government was the principal
and the defendant merely the servant.... All that is decided by
this class of cases is that the liability of a servant of the public
is no greater than that of the servant of any other principal,
though the recourse against the principal, the public, cannot be
by an action." So here the Government and the Public are
identified, or else the one is an organ or agent of the other. But
the Postmaster-General or the captain of a man-of-war is
assuredly a servant of the Crown, and yet he does not serve two
masters. A statute of 1887 tells us that "the expressions
`permanent civil service of the state', `permanent civil service of
Her Majesty', and `permanent civil service of the Crown', are
hereby declared to have the same meaning". Now as it is
evident that King Edward is not (though Louis XIV may have
been) the State, we seem to have statutory author
ity for holding that the State is "His Majesty". The way out of
this mess, for mess it is, lies in a perception of the fact, for fact
it is, that our sovereign lord is not a "corporation sole", but is
the head of a complex and highly organized "corporation
aggregate of many"—of very many. I see no great harm in
calling this corporation a Crown. But a better word has lately
returned to the statute book. That word is Commonwealth.
Even if the king would have served as a satisfactory debtor
for the national debt, some new questions would have been
raised in the course of that process which has been called the
expansion of England; for colonies came into being which had
public debts of their own. At this point it is well for us to
remember that three colonies which were exceptionally impor
tant on account of their antiquity and activity, namely Massa-
chusetts, Rhode Island, and Connecticut, were corporations
duly created by charter with a sufficiency of operative and
inoperative words. Also we may notice that the king was no
more a corporator of Rhode Island than he was a corporator of
the city of Norwich or of the East India Company, and that the
Governor of Connecticut was as little a deputy of the king as
was the Governor of the Bank of England. But even where
there was a royal governor, and where there was no solemnly
created corporation, there was a "subject" capable of borrow
ing money and contracting debts. At least as early as 1709, and
I know not how much earlier, bills of credit were being emitted
which ran in this form:
This indented bill of shillings due from the Colony
of New York to the possessor thereof shall be in value equal
to money and shall be accepted accordingly by the Treasurer
of this Colony for the time being in all public payments and
for any fund at any time in the Treasury. Dated, New York
the first of November, 1709, by order of the Lieutenant
Governor, Council and General Assembly of the said Colony.
In 1714 the Governor, Council and General Assembly of
New York passed a long Act "for the paying and discharging
the several debts and sums of money claimed as debts of this
Colony". A preamble stated that some of the debts of the
Colony had not been paid because the Governors had misap
plied and extravagantly expended "the revenue given by the
loyal subjects aforesaid to Her Majesty and Her Royal Prede
cessors, Kings and Queens of England, sufficient for the hon
ourable as well as necessary support of their Government here."
"This Colony", the preamble added, "in strict justice is in no
manner of way obliged to pay many of the said claims";
however, in order "to restore the Publick Credit", they were to
be paid. Here we have a Colony which can be bound even in
strict justice to pay money. What the great colonies did the
small colonies did also. In 1697 an Act was passed at Montser-
rat "for raising a Levy or Tax for defraying the Publick Debts
of this His Majesty's Island".
The Colonial Assemblies imitated the Parliament of Eng-
land. They voted supplies to "His Majesty"; but they also
appropriated those supplies. In Colonial Acts coming from
what we may call an ancient date and from places which still
form parts of the British Empire, we may see a good deal of
care taken that whatever is given to the king shall be marked
with a trust. For instance, in the Bermudas, when in 1698 a
penalty is imposed, half of it is given to the informer, "and the
remainder to His Majesty, His Heirs and Successors, to be
imployed for and towards the support of the Government of
these Islands and the contingent charges thereof'. If "the old
house and kitchen belonging to their Majesties [William and
Mary] and formerly inhabited by the Governors of these
Islands" is to be sold, then the price is to be paid "into the
Publick Stock or Revenue for the Publick Uses of these Islands
and the same to be paid out by Order of the Governor, Council
and a Committee of Assembly". It would, I believe, be found
that in some colonies in which there was no ancestral tradition
of republicanism, the Assemblies were not far behind the
House of Commons in controlling the expenditure of whatever
money was voted to the king. In 1753 the Assembly of Jamaica
resolved "that it is the inherent and undoubted right of the
Representatives of the People to raise and apply monies for the
services and exigencies of government and to appoint such
person or persons for the receiving and issuing thereof as they
shall think proper, which right this House hath exerted and will
always exert in such manner as they shall judge most conducive
to the service of His Majesty and the interest of his People." In
many or most of the colonies the treasurer was appointed, not
by the Governor but by an Act of Assembly; sometimes he was
appointed by a mere resolution of the House of Representa
tives. In the matter of finance, "responsible government" (as
we now call it) or "a tendency of the legislature to encroach
upon the proper functions of the executive" (as some modern
Americans call it) is no new thing in an English colony.
We deny nowadays that a Colony is a corporation. The three
unquestionably incorporated colonies have gone their own way
and are forgotten of lawyers. James L.J. once said that it
seemed to him an abuse of language to speak of the Governor
and Government of New Zealand as a corporation. So be it,
and I should not wish to see a "Governor" or a "Government"
incorporated. But can we—do we really and not merely in
words—avoid an admission that the Colony of New Zealand is
a person? In the case that was before the Court a contract for
the conveyance of emigrants had professedly been made be
tween "Her Majesty the Queen for and on behalf of the Colony
of New Zealand" of the first part, Mr Featherston, "the
agent-general in England for the Government of New Zea-
land", of the second part, and Sloman & Co. of the third part.
Now when in a legal document we see those words "for and on
behalf of we generally expect that they will be followed by the
name of a person; and I cannot help thinking that they were so
followed in this case. I gather that some of the colonies have
abandoned the policy of compelling those who have aught
against them to pursue the ancient, if royal, road of a petition
of right. Perhaps we may not think wholly satisfactory the
Australian device of a "nominal defendant" appointed to resist
an action in which a claim is made "against the Colonial
Government", for there is no need for "nominal parties to
actions where real parties (such, for example, as a Colony or
State) are forthcoming. But it is a wholesome sight to see "the
Crown" sued and answering for its torts. If the field that sends
cases to the Judicial Committee is not narrowed, a good many
old superstitions will be put upon their trial.
In the British North America Act, 1867, there are coura
geous words. "Canada shall be liable for the debts and liabili
ties of each Province existing at the Union. Ontario and Quebec
conjointly shall be liable to Canada.... The assets enumerated
in the fourth schedule ... shall be the property of Ontario and
Quebec conjointly. Nova Scotia shall be liable to Canada....
New Brunswick shall be liable to Canada. ... The several
Provinces shall retain all their respective public property....
New Brunswick shall receive from Canada. ... The right of
New Brunswick to levy the lumber dues. ... No lands or
property belonging to Canada or any Province shall be liable to
taxation. ..." This is the language of statesmanship, of the
statute book, and of daily life. But then comes the lawyer with
theories in his head, and begins by placing a legal estate in
what he calls the Crown or Her Majesty. "In construing these
enactments, it must always be kept in view that wherever public
land with its incidents is described as 'the property of' or as
'belonging to' the Dominion or a Province, these expressions
merely import that the right to its beneficial use, or to its
proceeds, has been appropriated to the Dominion or the Prov
ince, as the case may be, and is subject to the control of its
legislature, the land itself being vested in the Crown." And so
we have to distinguish the lands vested in the Crown "for" or
"in right of Canada from the lands vested in the Crown "for"
or "in right of Quebec or Ontario or British Columbia, or
between lands "vested in the Crown as represented by the
Dominion" and lands "vested in the Crown as represented by a
Province". Apparently "Canada" or "Nova Scotia" is person
enough to be the Crown's cestui que trust and at the same time
the Crown's representative, but is not person enough to hold a
legal estate. It is a funny jumble, which becomes funnier still if
we insist that the Crown is a legal fiction.
The following are the reasons for judgment
rendered in English by
PRATTE J. (dissenting in part): I agree with the
Chief Justice and my brother Le Dain that the
appeal should be dismissed. However, I do not
share their view in respect of the cross-appeal
which, in my opinion, should also be dismissed.
The Order in Council of June 26, 1873, imposed
on the Dominion Government the legal duty to
establish and maintain an efficient ferry service
between the mainland and Prince Edward Island.
The Dominion having failed in the performance of
that duty, is it under an obligation to compensate
the Province of Prince Edward Island for the
damage suffered as a consequence of that breach?
This is, in my view, the crucial question raised by
the cross-appeal. The Chief Justice and my broth
er Le Dain would answer it in the affirmative; I
would answer it in the negative.
I concede that, as a rule, an individual who has
been prejudicially affected by another person's
failure to perform a statutory duty has the right to
claim damages from that other person. But this is
not an absolute rule:
Notwithstanding the general rule, there are many cases in
which no action for damages will lie in respect of injuries
caused by the breach of a statutory duty. For there is no such
remedy unless the legislature, in creating the duty, intended
that it should be enforceable in this way. 48
While the Order in Council of June 26, 1873,
was adopted following an agreement between
Canada and Prince Edward Island, it did not
describe the duty imposed on the Dominion Gov
ernment relating to the ferry service as a duty
toward the new Province or its Government. It is,
therefore, possible to conceive of that duty as one
toward the public at large. In that perspective, in
case of a breach, the right to be compensated
should not be limited to the Government of the
Province; it should, in all logic, be granted to all
persons suffering damage as a result of the breach.
But this, I would find unacceptable. I cannot
48 Salmond on the Law of Torts, 15th ed., 1969, p. 312.
ascribe to a constitutional document of the nature
of the Order in Council the intention of imposing
on the Dominion Government, in addition to the
public duty to establish and maintain the ferry
service, the obligation to compensate all those who
might suffer damage as a consequence of a failure
in the performance of that obligation.
If, on the other hand, the duty in respect of the
ferry service is conceived of as an obligation
toward the new Province, the question, which
remains a question of interpretation, is whether it
was the intention of the Order in Council that the
Dominion Government, in case of breach, be liable
to the Province for the damage suffered as a
consequence of the breach. If the problem is
viewed in that light, the answer, in my view, must
remain negative and, this, for two reasons.
When the duty relating to the ferry was imposed
on the Dominion Government, it was not, even if it
is considered as a duty toward the Province, a duty
enforceable through legal means. There was then
no court before which the Dominion could be
brought to answer the claim of the Province (see
Duff J., as he then was, in Province of Ontario v.
Dominion of Canada (1910) 42 S.C.R. 1, at p.
119). I cannot imagine that an authority imposing
an obligation enforceable by purely political means
might intend to create liability in damages in case
of breach. In my view, the question of liability
resulting from a breach of an obligation can only
arise in respect of a legally enforceable obligation.
My second reason for reaching that conclusion
is that in case of failure of the Dominion Govern
ment to operate the ferry service, the Government
of the Island, as such, would not be likely to suffer
any direct damage. Those who would normally be
directly affected by an interruption of the ferry
service are those who, be they residents of the
Island or not, would otherwise have made use of
the ferry and I have already said that, in my view,
it was not the intention of the Order in Council
that the Dominion be liable toward them. I cannot
imagine that, at the same time, the Order in
Council intended to create a liability toward a
government which, as such, was not likely to suffer
any direct damage as a consequence of the failure
of the Dominion to perform its obligation.
I may add that my conclusion might have been
different if, on the one hand, the duty relating to
the ferry had been imposed as a duty toward the
inhabitants of the Island, and, on the other hand,
the Government of the Island had the right to sue
as the representative of those inhabitants. How
ever, neither of those two propositions is, in my
view, well founded.
For these reasons, I would dismiss both the
appeal and the cross-appeal. I would not make any
order as to costs.
The following are the reasons for judgment
rendered in English by
LE DAIN J.: This is an appeal and a cross-
appeal from a judgment of the Trial Division in an
action for damages brought under section 19 of the
Federal Court Act by Her Majesty the Queen, in
the right of Prince Edward Island, against Her
Majesty the Queen, in the right of Canada, for
alleged breach of a duty imposed on the Govern
ment of Canada by the Order in Council of June
26, 1873 49 which, pursuant to section 146 of The
British North America Act, 1867 5 °, admitted the
colony of Prince Edward Island into the Dominion
of Canada on July 1, 1873.
49 R.S.C. 1970, Appendices, p. 291.
50 146. It shall be lawful for the Queen, by and with the
Advice of Her Majesty's Most Honourable Privy Council, on
Addresses from the Houses of the Parliament of Canada, and
from the Houses of the respective Legislatures of the Colonies
or Provinces of Newfoundland, Prince Edward Island, and
British Columbia, to admit those Colonies or Provinces, or any
of them, into the Union, and on Address from the Houses of the
Parliament of Canada to admit Rupert's Land and the North
western Territory, or either of them, into the Union, on such
Terms and Conditions in each Case as are in the Addresses
expressed and as the Queen thinks fit to approve, subject to the
Provisions of this Act; and the Provisions of any Order in
Council in that Behalf shall have effect as if they had been
enacted by the Parliament of the United Kingdom of Great
Britain and Ireland.
The Terms of Union which are the subject of
the controversy in this case are those respecting
the ferry service to be established and maintained
between the Island and the mainland. They are
contained in a provision respecting the responsibil
ity of the Dominion for certain public services.
This provision, which appears in the Schedule to
the Order in Council, reads as follows:
That the Dominion Government shall assume and defray all
the charges for the following services, viz.:—
The salary of the Lieutenant Governor;
The salaries of the Judges of the Superior Court and of the
District or County Courts when established;
The charges in respect of the Department of Customs;
The Postal Department;
The protection of the Fisheries;
The provision for the Militia;
The Lighthouses, Shipwrecked Crews, Quarantine and
Marine Hospitals;
The Geological Survey;
The Penitentiary;
Efficient Steam Service for the conveyance of mails and
passengers, to be established and maintained between the
Island and the mainland of the Dominion, Winter and Summer,
thus placing the Island in continuous communication with the
Intercolonial Railway and the railway system of the Dominion;
The maintenance of telegraphic communication between the
Island and the mainland of the Dominion;
And such other charges as may be incident to, and connected
with, the services which by the "British North America Act,
1867," appertain to the General Government, and as are or
may be allowed to the other Provinces;
The Province's amended statement of claim con
tains the following allegations with respect to the
ferry service assumed by the Dominion in fulfil
ment of the Terms of Union and the breach of
duty which is the foundation of the action:
6. In fulfillment of the above term or condition, and subject
to the hereinafter mentioned breach, the Federal Government
established and maintained a ferry service between the Port at
Borden, Prince Edward Island, and the Port at Cape Tormen-
tine, New Brunswick, which said ferry service operates Winter
and Summer. The ferries plying between the two ports are
owned and operated by the Federal Government although
latterly they have operated through the agency of the Canadian
National Railways.
7. In violation of the obligation on the Federal Government
to assume and defray the cost of efficient and continuous
communication between Prince Edward Island and the main
land of the Dominion the ferry service between Borden and
Cape Tormentine ceased to operate from 6:00 a.m. on the 21st
day of August, A.D. 1973 until 6:00 a.m. at the 22nd day of
August, 1973 and also from the hour of 6:30 p.m. on the 23rd
day of August, A.D. 1973 to the hour of 3:00 a.m. on the 2nd
day of September, A.D. 1973.
This stoppage of some 10 days and 8' hours in
the ferry service resulted from a nation-wide strike
in the Canadian National Railway system.
The Province claims damage for loss and
expense specified in paragraphs 9 and 10 of its
amended statement of claim as follows:
9. The loss and expense incurred by the Province as a result
of the stoppage in the ferry service is as follows:
(a) wages and expenses for overtime employees of the Prov
ince in dealing with the emergency situation in handling the
large number of tourists stranded in the Province due to the
stoppage in ferry service;
(b) other and miscellaneous expenses of the Province
through the advertising media, telephone and telegram ser
vices in keeping the public abreast of the ferry situation;
(c) the Province is dependent on its tourist industry as a
major source of its revenue and as a result of the aforemen
tioned stoppage in the ferry service its tourist industry for the
1973 year came to an abrupt halt thereby causing the
Province to lose revenue from the following sources:
(i) loss of revenue from sales tax;
(ii) loss of revenue from gasoline tax;
(iii) loss of revenue from entertainment tax;
(iv) loss of revenue from the profits realized through the
sale of liquor in the Province.
In addition to the above mentioned items of loss, the Prov
ince contends that its reputation in the tourist industry has
suffered severe reverses which will affect the number of tourists
coming to the Province in subsequent years thereby causing the
Province to lose revenue derived from the sources set out in
paragraph 9(c).
10. By reason of the loss already incurred and by reason of
the diminution in the Province's reputation as a tourist prov
ince, which will cause further loss, the Province has suffered
loss and expense and will suffer further loss.
At the trial it was agreed that the Court should
give judgment first on the question of liability by a
determination of the following issues:
1. Was there a breach of statutory duty on the part of the
Dominion Government?
2. Does the breach give rise to an action for damages?
and that the following questions should be reserved
for subsequent determination if the Court found
that there was liability:
3. Does the statute contemplate the type of damages com
plained of?
4. Quantification.
To facilitate the disposition of the action the
parties submitted an agreed statement of facts
concerning the establishment and maintenance of
the ferry service and the political settlement of
certain claims by the Province for alleged non-ful
filment of Canada's obligation with respect to the
service. The agreed statement of facts discloses,
among other things, that the Government of
Canada has for many years made the necessary
arrangements to provide a ferry service between
the Island and the mainland, and that on at least
two occasions claims by the Province for alleged
non-fulfilment of the Terms of Union respecting
the ferry service have been presented by memorial
to the Government of Canada and settled by
agreement between the two governments; and it
contains the following paragraphs with respect to
the two ferry services being operated between the
Island and the mainland when the strike occurred:
12. The Dominion has employed Northumberland Ferries Lim
ited to operate a ferry service on its behalf between Wood
Island, Prince Edward Island to Caribou, Nova Scotia and paid
a subsidy for such service.
13. The Dominion has since the year 1923, employed the
Canadian National Railway to operate a ferry service on its
behalf between Port Borden, Prince Edward Island and Port
Cape Tormentine, New Brunswick with vessels supplied by it.
From the year 1945 to the 2nd day of September, A.D. 1973,
there was a continuous service provided except for five stop
pages. For nine days in 1950, five days in 1966, and nine days
in 1973, there were stoppages due to strikes which occurred
after all of the steps that are required to be taken by the
Canada Labour Code had been taken. In the fall of 1969, for
eight hours, and again in April, 1973 for four hours, there were
stoppages which occurred when Deck Officers walked out for
study sessions. At the time of the strike which occurred during
the time mentioned in paragraph 7 of the Amended Statement
of Claim, which strike was a general railway strike, during
which no railway service was provided, the regular schedule, as
evidenced by Exhibit "F" attached hereto, was not in effect.
The schedule which was in effect both before and after the
stoppage complained of in paragraph 7 of the Amended State
ment of Claim provided an efficient service.
The parties further agreed upon the following
facts:
1. During the material time, there was a continuous air service
to and from Prince Edward Island, on a scheduled basis,
carrying passengers;
2. At all material times, there was a mail service to and from
the island;
3. The scheduled ferry service between Wood Island, Prince
Edward Island, and Caribou, Nova Scotia, was maintained
during all material times.
The Trial Division held that there was a breach
of statutory duty by the Government of Canada
but that it did not give rise to an action for
damages. It pronounced judgment in the following
terms:
The breach of the statutory duty upon Her Majesty the
Queen in the right of Canada does not give rise to an action for
damages for that breach at the suit of Her Majesty the Queen
in the right of the Province of Prince Edward Island.
The plaintiff is, therefore, not entitled to judgment for the
relief sought in Her statement of claim.
Each party shall bear its own costs.
Canada appeals against the determination that
there was a breach of statutory duty, and Prince
Edward Island cross-appeals against the determi
nation that it does not give rise to liability in
damages.
Prince Edward Island invokes the jurisdiction of
the Federal Court to determine a controversy be
tween Canada and a province which is conferred
by section 19 of the Federal Court Act in the
following terms:
19. Where the legislature of a province has passed an Act
agreeing that the Court, whether referred to in that Act by its
new name or by its former name, has jurisdiction in cases of
controversies,
(a) between Canada and such province, or
(b) between such province and any other province or prov
inces that have passed a like Act,
the Court has jurisdiction to determine such controversies and
the Trial Division shall deal with any such matter in the first
instance.
The Province adopted the necessary enabling
legislation for purposes of this jurisdiction in 1941
by the Judicature Act Amendments, 1941, S.P.E.I.
c. 16, s. 11. It is now contained in The Judicature
Act, R.S.P.E.I. 1951, c. 79, s. 40, as replaced by
S.P.E.I. 1973, c. 13, s. 5.
The constitution of Canada, of which the Order
in Council admitting Prince Edward Island into
the Union forms part, attributes rights and obliga
tions to Canada and the Provinces as distinct
entities, however these entities and their precise
relationship to such rights and obligations should
be characterized. Section 19 of the Federal Court
Act and the necessary provincial enabling legisla
tion create a jurisdiction for the determination of
controversies between these entities, involving such
rights and obligations among others. Like the
Chief Justice, I am, with respect, of the opinion
that neither the doctrine of the indivisibility of the
Crown nor that of Crown immunity, whether pro-
cessual or substantive, should be an obstacle to a
determination of intergovernmental liability under
this provision, which clearly contemplates that
Canada and the provinces are to be treated in law
as separate and equal entities for purposes of the
determination of a controversy arising between
them. The term "controversy" is broad enough to
encompass any kind of legal right, obligation or
liability that may exist between governments or
their strictly legal personification. It is certainly
broad enough to include a dispute as to whether
one government is liable in damages to another. It
is not clear whether the judicial power conferred
by section 19 includes the power to award conse
quential as well as declaratory relief, but I assume,
given the nature of the parties to a controversy,
that what was contemplated was a declaration.
The proceedings in the present case are brought as
an action for damages by Her Majesty the Queen
in the right of Prince Edward Island against Her
Majesty the Queen in the right of Canada but
since the proceedings are clearly intended to
invoke the jurisdiction of the Court under section
19 the style of cause and the nature of the relief
sought are in my respectful opinion matters of
form that should not be permitted to defeat the
substance and merits of the claim. I can see no
reason why the proceedings should not be treated
broadly as a claim for a determination or declara
tion by the Court that the Province is entitled to be
compensated in damages for the alleged breach of
duty by Canada.
In so far as the question of jurisdiction is con
cerned, I agree with the Chief Justice that it is not
such as to require the Court to raise it proprio
motu. On the appeal and cross-appeal there was no
issue raised with respect to the constitutional foun
dations of section 19 of the Federal Court Act and
the provincial enabling legislation, or with respect
to the assumption that, in so far as the validity and
scope off section 19 must, as federal legislation, rest
on section 101 of The British North America Act,
1867 (a matter that is not beyond argument), the
application of the jurisdiction in the present case
involves the administration of the laws of Canada
within the meaning of section 101. Like the Chief
Justice I am, with respect, of the opinion that
there is nothing in the decisions of the Supreme
Court of Canada in the Quebec North Shore 51 and
McNamara Construction 52 cases that prevents us
from proceeding on the assumption that the Trial
Division has jurisdiction under a statutory provi
sion which recognizes rights of action that would
otherwise be unenforceable, in a case which
involves the application of a provision of the con
stitution of Canada to the determination of the
liability of Canada.
The precise nature of the obligation with respect
to the ferry service is somewhat elusive. This is
partly because of the Terms of Union themselves
and partly because of the subsequent conduct of
the parties as disclosed by the agreed statement of
facts. On its face the obligation is to assume and
defray the expense of a ferry service of a certain
character. It is not clearly indicated which of the
two governments is to assume the initiative and
responsibility for establishing and maintaining the
service. It is, I think, however, a reasonable infer
ence, if not a necessary implication, that of the
two, that government which has assumed the
financial responsibility is to have the right, if not
the obligation, of making the necessary arrange
ments for the establishment and maintenance of
the service. That is, as the history shows, how the
Government of Canada has chosen to perform its
obligation, not only with the approval of, but at
51 Quebec North Shore Paper Co. v. Canadian Pacific Ltd.
[1977] 2 S.C.R. 1054.
52 McNamara Construction (Western) Ltd. v. The Queen
[1977] 2 S.C.R. 654.
the repeated insistence of, the Province. The same
is true of the nature of the ferry service to be
provided. In strict terms the obligation refers to
the conveyance of "mails and passengers" and not
vehicles. The evident purpose of the obligation,
however, is that the Island should be placed in
effective communication with the mainland, and
with the passage of time that object could only be
served by a ferry service that would convey not
only passengers but their vehicles as well. The
record shows that this is what the Government of
Canada judged to be necessary or appropriate in
the performance of its obligation.
I confess, however, to some difficulty in finding
a precise legal basis for an obligation of the nature
and scope of that which the Government of
Canada has apparently assumed. It may well be
that Canada has assumed, as a matter of political
or constitutional policy, a responsibility that
extends beyond the strictly legal limits of the one
that was imposed on it by the Terms of Union. I
am not certain that the principle of contemporanea
exposito properly applies to what has occurred.
Nor am I satisfied that the issue can be disposed of
by a broad assertion that the terms upon which
Prince Edward Island was admitted into the
Union, like other provisions of the constitution,
must be interpreted in the light of changing condi
tions so as to fulfil the evident purpose for which
they were designed. I am in agreement, however,
with the Chief Justice that the issue must be
considered to be concluded in the present case by
the manner in which the appeal must be disposed
of as a result of the basis on which the Attorney
General of Canada chose to attack the judgment
appealed from.
Under the heading "Errors in Judgment
Appealed From" in his memorandum of fact and
law the Attorney General of Canada formulated a
single ground of attack: "that the learned trial
judge erred in holding that a ferry service, which
was acknowledged to be an efficient service, had
become an inefficient service during a 10-day and
8 1 / 2 -hour period when there was a general strike by
the employees of the operator with the conse
quence that the services provided by the other
ferryman were inadequate". In the course of his
argument in support of this contention he did
make two submissions as to the nature and scope
of the obligation with respect to the ferry service.
The first was that the obligation is an obligation to
assume and defray the expense of a ferry service of
a certain character and not an obligation to oper
ate such a service. The second was that the service
required by the Terms of Union is one that would
place passengers in continuous communication
with the railway system of the Dominion rather
than one that would carry not only passengers but
their vehicles as well, and that since the railway
system was not operating during the period of the
strike there could not be a failure to perform this
obligation. But these submissions were not made
the basis of a clear and specific ground of attack
on the judgment appealed from. There was no
clearly formulated challenge to the conclusion of
the Trial Division that the obligation of the Gov
ernment of Canada, as construed in the light of the
manner in which Canada had chosen to perform
the obligation for many years, is to provide a ferry
service that will carry vehicles as well as passen
gers. In effect, the Attorney General of Canada
did not press these submissions. The essential
argument on the appeal, as I understood it, was
that Canada has an obligation to provide a service
of a certain general character but not an obligation
to operate such a service without interruption.
There is a sense in which a service may be general
ly efficient despite occasional stoppages or inter
ruptions. But "efficient" in the Terms of Union
does not simply mean a service that is so organized
as to be capable of maintaining continuous com
munication between the Island and the mainland.
It must in fact produce that result. The efficiency
of the service is to be judged with regard to its
operation. Whether a particular stoppage or inter
ruption of the service is such that the service
cannot for that period of time be considered to be
an efficient one within the meaning of the Terms
of Union is a question of fact a matter of degree.
The Trial Division held that in all the circum
stances the ferry service was wholly inadequate to
meet the requirements for transportation during
the period of the strike and as such had ceased to
be an efficient service for that period. Like the
Chief Justice I can see no basis for interfering with
that finding of fact.
The Attorney General of Canada contended
that the obligation with respect to the ferry service
is a political obligation. He relied particularly on
what was said by certain judges of the High Court
of Australia in The State of South Australia v.
The Commonwealth of Australia (1962) 108
C.L.R. 130. That was an action for a declaration
that there had been a breach of an intergovern-
mental agreement for the standardization of cer
tain lines of railway by conversion of their gauge.
A majority of the Court held that there had not
been a breach of the agreement. Certain members
of the Court expressed the view that the parties
had not intended to create legal obligations cogniz-
able in a court. I do not think the distinctions
reflected in these opinions have application to the
obligation created by the Order in Council which
admitted Prince Edward Island into the Union.
Although the Order in Council gave effect to an
agreement of a high political or constitutional
nature it was an enactment having the effect of a
statute. While the rights and obligations created
by it were attributed to the Dominion and the
Province, entities not recognized as having juridi
cal personality at common law, and the precise
nature of these rights and obligations and the
relationship of the federal and provincial govern
ments to them turn on concepts peculiar to our
monarchical form of constitution, it cannot be
doubted that they were intended to be legal rights
and obligations. The same is true of the provisions
in sections 102 and following of The British North
America Act, 1867, which attribute rights and
obligations to Canada and the provinces. A contro
versy involving such rights and obligations is justi-
ciable under section 19 of the Federal Court Act
since it is one that arises between Canada and a
province, and it can be determined on the basis of
recognized legal principles. See Dominion of
Canada v. Province of Ontario [ 1910] A.C. 637 at
p. 645. It is not a controversy that "requires for its
settlement the application of political as distin
guished from judicial considerations". See The
State of South Australia v. The State of Victoria
(1911) 12 C.L.R. 667 at pp. 674-675. The obliga
tion with respect to the ferry service is sufficiently
defined and is not one that involves the exercise of
political judgment, but is rather one that, as its
nature and the history show, can be carried out by
non-governmental enterprise.
The question, then, is whether we should ascribe
to the Order in Council an intention that the
Province is entitled to be compensated for damages
resulting from a breach of this legal obligation or
duty by the Government of Canada. There could
not, of course, have been any question at the time
of the Order in Council of an intention that a
breach of the duty should give rise to an action for
damages since there was no forum in which an
action could have been brought by the Province
against Canada. See Duff J., as he then was, in
Province of Ontario v. Dominion of Canada
(1910) 42 S.C.R. 1 at p. 119. But this distinction
between right and remedy is true of all the rights
and obligations attributed by constitutional provi
sion to these entities. I agree with the Chief Justice
that what is to be looked for is an intention to
create a legal right to compensation, however it is
to be enforced, rather than a right of action as
such. I think we are entitled to take this view since
it is clearly the intention of section 19 of the
Federal Court Act that rights and obligations that
would otherwise be unenforceable for lack of a
forum are now to be recognized as enforceable.
The right or liability may be thought of as an
inchoate or imperfect one which is perfected by the
creation of a forum in which it may be enforced.
Cf. Dixon J., as he then was, in Werrin v. Com
monwealth (1938) 59 C.L.R. 150 at pp. 167-168.
The cases, such as Cutler v. Wandsworth Stadi
um Ld. [ 1949] A.C. 398, which have considered
whether an individual affected by a breach of
statutory duty should have an action for damages,
are not really of direct application to the problem
in the present case, where the duty is clearly a
public one but the question is whether it is a public
duty imposed in favour of the Province. I agree
with the learned Trial Judge that it could not have
been intended that individuals should have an
action for damages for breach of the duty. But I
do not think it necessarily follows from this conclu
sion that it could not have been intended that the
Province, as distinct from individuals, should be
entitled to be compensated for a breach of the
duty. The Order in Council arose out of and gave
effect to an agreement between Canada and Prince
Edward Island. It clearly evidences an intention to
create legal rights and obligations as between the
two. It contains several provisions creating finan
cial liability. The obligation with respect to the
ferry service is also imposed in the context of
financial liability. It is clear that the establishment
and maintenance of the ferry service was an essen
tial condition of the Union—a practical necessity.
It was a matter of governmental responsibility, and
the purpose of the obligation was to establish
which of the two governments was to be respon
sible financially and otherwise for providing the
service. It must have been intended that in the
measure that Canada failed to perform this obliga
tion the Province would have a right to be compen
sated for any expense or loss directly caused to it
by such failure. The kind of damages that should
be held to be contemplated by the Order in Coun
cil is, of course, another question. It is a question
that was reserved for subsequent determination by
the Trial Division. While I should not express an
opinion on this question I must make it clear that
in my view the obligation or duty is to the govern
ment of the Province, and that the implied right to
compensation is for expense or loss to the govern
ment as a result of the breach of duty. I am unable
to conclude that it could have been intended that
there should be a claim for the adverse effects
which the Province as a whole might suffer from a
breach of the duty. These might well be the sub
ject of a claim for political relief, as they were in
the past, but they could not in my opinion have
been intended to be the subject of a legal right.
For the foregoing reasons I am of the opinion
that the appeal should be dismissed and the cross-
appeal should be allowed on the terms proposed by
the Chief Justice.
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.