Judgments

[1993] 1 F.C. 60

A-1111-91

Laurentian Pilotage Authority (Defendant) (Appellant)

v.

Sam Vézina Inc. (Plaintiff) (Respondent)

and

Croisières Navimar Inc. (Defendant) (Respondent)

and

Attorney General of Canada and Attorney General of Quebec (Mis en cause)

Indexed as: Sam Vézina Inc. v. Laurentian Pilotage Authority (C.A.)

Court of Appeal, Hugessen, MacGuigan and Desjardins, JJ.A.—Montréal, September 16 and 18, 1992.

Maritime law — Pilotage — Pilot boat service at Port of Québec — Laurentian Pilotage Authority authorized by statute to award contract for service — Pilot boat service “closely linked” to operation of pilotage service, essential to its maintenance — Meaning of words “for its use”.

For several years, respondent Sam Vézina Inc. had a contract with the Laurentian Pilotage Authority (LPA) for the pilot boat service at the Port of Québec. But in 1988, pursuant to a call for tenders, the contract was awarded to another.

The Trial Division set the contract aside on the ground that the Pilotage Act did not give LPA the capacity to provide this service to pilots and apprentice pilots who were not employees of LPA An appeal was brought from this decision.

Held, the appeal should be allowed with costs.

The arguments of Sam Vézina Inc. that there was a disguised expropriation and that the Pilotage Act was unconstitutional were without foundation.

The LPA was authorized by the Act to award a contract for the pilot boat service at the Port of Québec. Such service was both “closely linked” to the operation of a pilotage service and essential to its maintenance. The authority responsible for establishing and operating the service had a duty to ensure that a pilot boat service was in place and available to pilots. The words “for its use” in section 19 of the Act did not prevent the LPA from purchasing or leasing boats intended for transporting pilots who were not its own employees. A contrary interpretation might make Parliament’s objectives impossible to carry out. The words “for its use” taken in isolation do not necessarily imply a direct physical connection between the thing and the person who uses it. A service which allows the Pilotage Authority to carry out its objects, and which it arranges by means of a contract, is a service “for its use”.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Pilotage Act, R.S.C., 1985, c. P-14, ss. 15(2), 18, 19.

CASES JUDICIALLY CONSIDERED

APPLIED:

Abbott Laboratories v Portland Retail Druggists Asso. (1976), 47 L Ed 2d 537 (U.S.S.C.); Life Underwriters Assn. of Canada v. Provincial Assn. of Quebec Life Underwriters, [1990] 3 F.C. 500 (1990), 49 B.L.R. 225; 33 C.P.R. (3d) 293; 112 N.R. 34 (C.A.).

DISTINGUISHED:

Manitoba Fisheries Ltd. v. The Queen, [1979] 1 S.C.R. 101; (1978), 88 D.L.R. (3d) 462; [1978] 6 W.W.R. 496; 23 N.R. 159.

AUTHORS CITED

Hogg, Peter W. Constitutional Law of Canada, 2nd ed., Toronto: Carswell Co. Ltd., 1985.

APPEAL from Trial Division judgment (T-663-88, Pinard J., judgment dated 1/11/91, not yet reported) allowing in part action by respondent Sam Vézina Inc. and invalidating contract relating to pilot boat service at the Port of Québec. Appeal allowed.

COUNSEL:

Guy P. Major for appellant (Laurentian Pilotage Authority).

Gérald P. Barry for respondent (Croisières Navimar Inc.).

Guy Vaillancourt for respondent (Sam Vézina Inc.).

Ben Bierbrier for intervener (Attorney General of Canada).

Alain Gingras for intervener (Attorney General of Quebec).

SOLICITORS:

Guy P. Major, Montréal, for appellant (Laurentian Pilotage Authority).

Barry & Associés, Montréal, for respondent (Croisières Navimar Inc.).

Vaillancourt, St-Pierre, Sainte-Foy, Québec, for respondent (Sam Vézina Inc.).

Deputy Attorney General of Canada for intervener (Attorney General of Canada).

Rochette, Boucher & Gagnon, Québec City, for intervener (Attorney General of Quebec).

The following is the English version of the reasons for judgment of the Court delivered orally by

Hugessen J.A.: This is an appeal by the defendant Laurentian Pilotage Authority (hereinafter referred to as “LPA”) from a judgment of the Trial Division [T-663-88, Pinard J., judgment dated 1/11/91, not yet reported] allowing the action of the defendant Sam Vézina Inc. in part, and declaring a contract between LPA and the defendant Croisières Navimar Inc. (hereinafter referred to as “Navimar”) for pilot boat service in the Port of Québec to be void.

The Trial Division judgment was based on the Trial Judge’s interpretation of the sections of the Pilotage Act[1] dealing with the objects and powers of the LPA, a Crown corporation which is not an agent of Her Majesty. According to the Judge, the Act does not give LPA the power it would need to operate a transport service by boat for pilots who are not employed by LPA.

Before examining the legal basis of the Trial Judge’s decision, we should briefly dispose of two questions of an entirely secondary nature.

First, the plaintiff contended at trial that even if LPA had the power to award a contract for the pilot boat service, its primary argument being that LPA did not have such power, the contract awarded to Navimar was a sort of disguised expropriation of the plaintiff’s property, with the result that there should be compensation in accordance with the principles set out in Manitoba Fisheries Ltd. v. The Queen.[2] The Trial Judge did not accept this argument and it is clearly unfounded. For several years before 1988 the plaintiff had itself provided a pilot boat service to LPA on a contractual basis. However, in December 1987, LPA decided to call for bids for that service, and the result of that process was that the contract was awarded to Navimar, the lowest bidder. In our view, there is absolutely no analogy between this situation and the situation in Manitoba Fisheries and the plaintiff was not the victim of a disguised expropriation.

Second, the plaintiff contended that if the Pilotage Act gave LPA the power to contract with Navimar, as LPA did, the Act would itself be unconstitutional in that respect. According to the plaintiff, transporting pilots in the Port of Québec constitutes intra-provincial transport, which the province has exclusive jurisdiction to regulate; an agency under federal jurisdiction cannot be empowered to enter into contracts in this sphere. In our view, this proposition is untenable. A clear distinction must be drawn between the power to create a corporation and endow it with the capacity to engage in an activity and the power to regulate that activity. The right of the federal Parliament to give LPA the capacity to enter into a contract cannot be challenged solely on the ground that the contract relates to a sphere which could be subject to regulation by the provincial government.[3]

That brings us to the only real question raised in this appeal: is LPA authorized by the Pilotage Act to award a contract for pilot boat service in the Port of Québec?

The objects and powers of a Pilotage Authority such as LPA are set out in sections 18 and 19, which read as follows:

OBJECTS AND POWERS

18. The objects of an Authority are to establish, operate, maintain and administer in the interests of safety an efficient pilotage service within the region set out in respect of the Authority in the schedule.

19. (1) An Authority may, for its use, purchase, lease or otherwise acquire

(a) land, buildings, wharves or other structures;

(b) pilot boats;

(c) radio and other communication equipment; and

(d) such other equipment, supplies and services as may be necessary for the operation of an efficient and economical pilotage service.

(2) An Authority may sell or lease any land, buildings, wharves, structures, pilot boats or equipment and supplies acquired pursuant to subsection (1).

With respect to the objects of LPA, the Trial Judge agreed that awarding a contract for a pilot boat service was “closely linked” to the operation of an “efficient pilotage service”. In our view, he was certainly correct on that point, but he could have gone further. From the practical point of view, it is difficult to imagine how an efficient pilotage service could operate in the Port of Québec unless there were a service to transport pilots by boat between dry land and the ships. This being the case, we would be disposed to say that the pilot boat service is essential to the maintenance of the pilotage service and that the Authority which is responsible for establishing and operating the pilotage service has a duty to ensure that a pilot boat service be in place and available to pilots.

However, the Trial Judge found that the words used in section 19 limited the powers conferred on LPA. Inter alia, he interpreted the words “for its use” (“pour en faire usage”) as imposing a restriction on LPA the effect of which was to prevent it from purchasing or leasing boats intended for transporting pilots other than its own employees. Because the status of pilots in the Port of Québec is that they are independent contractors, LPA could not enter into a contract with Navimar to transport them between dry land and the ships.

With due regard for the contrary opinion, we are all of the view that this approach is much too restrictive. First, it appears obvious to us that the powers set out in section 19 must be interpreted in the light of the objects stated in section 18 and in such a way as to permit them to be carried out. If a pilot boat service is necessary and essential to the operation of a pilotage service, and if the pilots themselves are entitled to choose “not to become employees of the Authority”,[4] the Trial Judge’s interpretation may make it impossible to carry out Parliament’s objectives.

Moreover, we are also of the view that even if we were to read section 19 in isolation, which would of course be contrary to the rules of interpretation, the words “for its use” do not have the effect given to them by the Trial Judge. It could be said that someone uses something if, at the request of and in accordance with the intention of that person, the thing is used to attain that person’s objectives. It is not necessary for there to be a physical or direct connection between the thing and the person who uses it. For example, it could be said of a business person who charters a bus to transport his or her customers, or of a hospital which does the same thing for transporting its patients or their doctors (who are, it might be noted in passing, independent contractors), that they use the bus. On this point, we find support in the decision of the Supreme Court of the United States in Abbott Laboratories v. Portland Retail Druggists Asso.[5] The Court held that the expression “for their own use” in reference to a hospital included any use that “is a part of and promotes the hospital’s intended institutional operation in the care of persons who are its patients”.[6] In that case, it was held that a hospital which purchased medications for the benefit of a whole range of people who were not its employees, including doctors, students and chaplains, did so for its own use.

Finally, as we noted above, it seems to us that the wording of section 18 imposes a duty on LPA to arrange transportation for pilots between dry land and the ships. In the circumstances that exist in the Port of Québec, that necessarily involves a prompt and available pilot boat service. A service which allows LPA to carry out its objects, and which it arranges by means of a contract, is a service “for its use”.

To summarize, transporting pilots between dry land and the ships is essential to the operation of the pilotage service which is at the very heart of the objects of LPA. A contract, the purpose of which is to provide such transportation by means of/through a pilot boat service, is a contract for the acquisition of either pilot boats or other services, which are all necessary to the operation of the pilotage service. These pilot boats and services are made available to pilots, whether they are LPA employees or not, for the use of LPA.

The appeal will be allowed with costs, the judgment a quo will be quashed and the plaintiff’s action will be dismissed with costs. The cross-appeal by Navimar will be allowed with costs but with counsel fees for one half-day of hearing only. No costs will be awarded with respect to the mis en cause Attorney General of Canada and Attorney General of Quebec.

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