T-5970-78
A. M. Smith & Company Limited (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Walsh J.—Halifax, May 16;
Ottawa, May 23, 1980.
Crown — Compensation — Loss of goodwill following
establishment of Canadian Saltfish Corporation — Whether
plaintiff's claim for compensation time-barred by virtue of s. 2
of The Statute of Limitations of Nova Scotia — Whether
claim based on "specialty" or "taking away of property" —
The Statute of Limitations, R.S.N.S. 1967, c. 168, s. 2(1)(c),
(e) — Saltfish Act, R.S.C. 1970 (1st Supp.), c. 37, Part III —
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 38.
The plaintiff, who owned and operated a fish exporting
business in Nova Scotia, claims compensation for the taking
away of its goodwill on the basis set out in the Supreme Court
decision Manitoba Fisheries Ltd. v. The Queen rendered on
June 22, 1978. As a result of the establishment in 1970 of the
Canadian Saltfish Corporation pursuant to the Saltfish Act,
plaintiffs operations became redundant and by the end of 1971
plaintiff ceased to carry on its fish exporting business and lost
the goodwill of that business. The question is whether plaintiffs
claim for compensation is time-barred by virtue of section 2 of
The Statute of Limitations of Nova Scotia. Plaintiff, who relies
on paragraph 2(1)(c) of the statute which provides for a
twenty-year limitation period, argues that its action is based on
"a bond or other specialty" pursuant to said paragraph and
hence, is based on "an obligation arising under a statute".
Defendant contends that the claim comes under paragraph
2(1)(e) of the statute (which provides for a six-year limitation
period) as an action for the taking away of property, hence is
now time-barred. As its secondary argument, plaintiff, going
into the history of The Statute of Limitations of Nova Scotia,
submits that the words "actions for the taking away or conver
sion of property" of paragraph 2(1)(e) were never intended to
apply to a cause of action for the loss of goodwill resulting from
a statutory interference with marketing arrangements.
Held, the action is time-barred. With respect to plaintiffs
first argument, the Saltfish Act does not establish any obliga
tion on the Crown to compensate. However, the finding by the
Supreme Court in the Manitoba Fisheries Limited case that
there is a right of action since the statute does not specifically
take away the right to compensate, applies here. Plaintiffs
right of action is not on a statute, hence not on a specialty, but
merely flows from the statute. With respect to plaintiffs second
argument, the fundamental rule of interpretation of statutes is
that they should be given their literal interpretation based on
the words used: there is no need to go into the historical
background or make any attempt to determine what was the
intention of the legislature when the statute was adopted. There
is no difficulty in interpreting paragraph 2(1)(e) on its literal
wording, nor is there anything harsh or absurd or contrary to
common sense in the result. While there was no physical taking
away from plaintiff by defendant of property, the Supreme
Court having found that goodwill is property, plaintiff is en
titled to compensation from defendant for taking of same. The
matter is thus clearly within the wording of paragraph 2(1)(e)
with its six-year prescriptive period.
Manitoba Fisheries Ltd. v. The Queen [1979] 1 S.C.R.
101, applied. Cork and Bandon Railway Co. v. Goode
(1853) 13 C.B. 826, referred to. Thomson v. Lord Clan-
morris [1900] 1 Ch. 718, referred to. Dominion Distillery
Products Co. Ltd. v. The King [1937] Ex.C.R. 145
affirmed by [1938] S.C.R. 458, considered.
ACTION.
COUNSEL:
K. E. Eaton, Q.C. and D. Pink for plaintiff.
Eileen M. Thomas, Q.C. and H. Gordon for
defendant.
SOLICITORS:
Kitz, Matheson, Green & MacIsaac, Halifax,
for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
WALSH J.: This action was set down for hearing
on a preliminary determination of a question of
law pursuant to Rule 474(2) of the Rules of this
Court. At the same time action No. T-118-79
Zwicker & Company, Limited v. The Queen
[[1980] 2 F.C. 159] was set down for hearing on
the same question of law, the issues in the two
cases being identical. The question set down read
as follows:
Is the claim of the Plaintiff time-barred by virtue of the
provisions of Section 2 of the Statute of Limitations
R.S.N.S. 1967, Chapter 168?
Paragraphs (c) and (e) of subsection (1) of the
said section 2 which give to the issue raised in the
present actions read as follows:
2 (1) The actions in this Section mentioned shall be com
menced within and not after the times respectively in such
Section mentioned, that is to say:
(c) actions for rent upon an indenture of demise, actions
upon a bond or other specialty, actions upon any judgment or
recognizance, within twenty years after the cause of any such
action arose, or the recovery of such judgment;
(e) all actions grounded upon any lending, or contract,
expressed or implied, without specialty, or upon any award
'where the submission is not by specialty, or for money levied
by execution; all actions for direct injuries to real or personal
property; actions for the taking away or conversion of prop
erty, goods and chattels; actions for libel, malicious prosecu
tion and arrest, seduction, criminal conversation; and actions
for all other causes which would formerly have been brought
in the form of action called trespass on the case, except as
herein excepted, within six years after the cause of any such
action arose;
The question was submitted on an agreement on
issues and facts. Both plaintiffs are companies
incorporated in the Province of Nova Scotia with
head offices in that Province. The A. M. Smith &
Company Limited action was instituted on Decem-
ber 21, 1978 and that of Zwicker & Company,
Limited on January 4, 1979, but nothing turns on
this. In both actions the Deputy Attorney General
of Canada on behalf of the defendants filed a
statement of defence on February 28, 1979, plead
ing section 2 of the said The Statute of Limita
tions of Nova Scotia. The facts are set out in
paragraphs (2) to (9) of the agreement on issues
and facts and are identical in both cases save for
the fact that in paragraph (7) the amount
approved for payment to plaintiff A. M. Smith &
Company Limited was $60,000 while in the case of
Zwicker & Company, Limited it was $46,000.
These paragraphs read as follows:
2. It is further agreed that those questions of law be determined
on the following facts:
(1) The plaintiff is a company incorporated in the province
of Nova Scotia with its head office at Lunenburg in that
province.
(2) Until the year 1971 the Plaintiff owned and operated a
fish exporting business, in the course of conducting which the
Plaintiff bought salt cured fish in Newfoundland, stored,
prepared and processed it in Nova Scotia, from where it was
sold to purchasers located in other parts of Canada and to
purchasers located outside of Canada.
(3) On the 25th day of March, 1970, the Salt-fish [sic] Act
(hereafter called "the Act") established the Canadian Salt-
fish [sic] Corporation (hereafter called "The Corporation")
and declared that the Corporation is for all purposes of that
Act an agent of the Defendant.
(4) Part III of the Act prohibited the Plaintiff from carrying
on its business of buying and conveying cured fish from
Newfoundland and delivering it to Nova Scotia unless it was
issued a licence by the Corporation, and no such licence has
been issued to the Plaintiff.
(5) The Act empowered the Governor in Council to exempt
the Plaintiff from the application of Part III of the Act but
the Governor in Council did not so exempt the Plaintiff.
(6) The Act empowered the Minister responsible thereunder,
with the approval of the Governor in Council and on behalf
of the Government of Canada, to enter into an Agreement
with the Government of Nova Scotia providing for the
undertaking by the Province of arrangements for the pay
ment to the owner of any plant or equipment used in storing,
processing or otherwise preparing fish for market, of com
pensation for any such plant or equipment that would or
might be rendered redundant by reason of any operations
authorized to be carried out by the Corporation under the
said Part III, but the Province of Nova Scotia declined to
enter into any such agreement.
(7) By letter dated the 7th day of September, 1971, the
Minister of Fisheries advised the Plaintiff that the Govern
ment of Canada had approved payment of the sum of
$60,000 to the Plaintiff on an ex gratia basis for the loss of
its operations resulting from the enactment of the Act, and
that amount was subsequently received by the Plaintiff.
(8) By reason of the failure of the Corporation to grant any
licence to the Plaintiff and the failure of the Governor in
Council to exempt the Plaintiff from the application of Part
III of the Act the Plaintiff, by the end of 1971, ceased to
carry on its fish exporting business and lost the goodwill of
that business.
(9) On October 3, 1978 the Supreme Court of Canada gave
judgment in Manitoba Fisheries Limited v. The Queen
(1978) 23 N.R. 159, 2 and a copy of the reasons for judg
ment, delivered by the Honourable Mr. Justice Ritchie for
the Court, is attached to this Agreement.
It is common ground that the Saltfish Act 3
which is the statute in issue in the present actions
is not substantially different in its effects from the
Freshwater Fish Marketing Act 4 which was in
issue in the Manitoba Fisheries Limited case. The
action of the plaintiff in the Manitoba Fisheries
Limited case for a declaration that it was entitled
to compensation for the loss suffered by reason of
the said Act was dismissed at trial and also on
appeal to the Federal Court of Appeal although it
was conceded that the implementation of the legis
lation had the effect of putting the appellant out of
business without adequate compensation having
been received from the federal authorities which
' In the case of Zwicker & Company, Limited v. The Queen,
this figure was $46,000.
2 Supreme Court Report reference [1979] 1 S.C.R. 101 is
used in these reasons.
3 R.S.C. 1970 (1st Supp.), c. 37.
4 R.S.C. 1970, c. F-13.
had brought it about. The lower courts held that
while the effect of the legislation was to extinguish
appellant's goodwill it had nevertheless not been
taken away by the Federal Crown or the Corpora
tion. It was held by the Supreme Court that the
legislation in question and the Corporation created
thereunder had the effect of depriving the appel
lant of its goodwill as a going concern and conse
quently rendering its physical assets virtually use
less, and the goodwill so taken away constituted
property for the loss of which no compensation
whatsoever had been paid. Since there was nothing
in the Act providing for the taking of such prop
erty without compensation and since the Court
found that there was such a taking it was conclud
ed that this was unauthorized on the basis that
"unless the words of the statute clearly so demand,
a statute is not to be construed so as to take away
the property of a subject without compensation"
(per Lord Atkinson in Attorney-General v. De
Keyser's Royal Hotel Ltd. [1920] A.C. 508).
In rendering the judgment of the Court Ritchie
J. stated at page 110:
Once it is accepted that the loss of the goodwill of the
appellant's business which was brought about by the Act and
by the setting up of the Corporation was a loss of property and
that the same goodwill was by statutory compulsion acquired
by the federal authority, it seems to me to follow that the
appellant was deprived of property which was acquired by the
Crown.
Although in these actions plaintiffs claim com
pensation on the same basis, the origin of their
claims cannot be considered as commencing from
the date of the Supreme Court judgment on June
22, 1978. All that such a judgment does is decide
definitively how the law should be interpreted, and
whether a claimant only realized for the first time
upon the rendering of such a judgment that he had
a right of action, or whether such a judgment
merely confirmed what the claimant had believed
to be his right all along, with which view the lower
courts had disagreed, the right cannot be said to
have been created by the said judgment. In the
present cases a right to compensation for the
taking away of plaintiffs' goodwill must be deemed
to have always existed from the time such goodwill
was taken following the adoption of the Saltfish
Act and the failure to issue licences to plaintiffs to
continue their operations. It is from that date that
the right of action originated and if proceedings
were not commenced within the period fixed for
bringing them by The Statute of Limitations they
would have to be considered as time-barred, not
withstanding the judgment of the Supreme Court
of Canada in the Manitoba Fisheries Limited
case. Since it is agreed that both plaintiffs ceased
to carry on their fish exporting business and lost
their goodwill by the end of 1971, both actions
would be time-barred if the six-year limitation in
section 2(1)(e) of The Statute of Limitations of
Nova Scotia (supra) applies. On the other hand, if
section 2(1)(c) on which plaintiffs rely applies
then the limitation period is twenty years and the
actions were brought in time. Plaintiffs also have a
secondary argument that if neither paragraph
applies, nor can the limitation be brought within
any other section of the Act, then there is no
prescriptive period for the actions as brought.
It is common ground that it is The Statute of
Limitations of Nova Scotia which applies in both
actions as a result of the provisions of section 38 of
the Federal Court Act 5 .
In deciding the question of law raised the Court
has had the advantage of extensive written submis
sions by counsel for both parties as well as oral
argument.
Plaintiffs' principal argument is that these
actions are based upon "a bond or other specialty"
pursuant to paragraph (c). Plaintiffs state that
specialty is clearly defined as a contract under
seal—such as a bond or mortgage: a "specialty
debt" is an obligation secured by such a contract.
A specialty is, also, an obligation arising under a
statute (see Stroud's Judicial Dictionary, 4th Edi
tion, Vol. 5, p. 2592). Clearly there was no con
tract under seal here so plaintiffs are forced to rely
on the argument that their claims are based on "an
obligation arising under a statute". Quite aside
from the fact that it could perhaps be argued that
the wording of the statute in associating "special-
ty" with "bond" indicates that it is specialties
similar to bonds—that is to say contracts under
5 R.S.C. 1970 (2nd Supp.), c. 10.
seal—to which paragraph (c) is intended to refer,
and not to obligations arising under a statute,
defendant contends that for an obligation to arise
under a statute there must be clear words in the
statute creating the obligation. Plaintiffs refer to
the case of The Cork and Bandon Railway Co. v.
Goode 6 but as defendant points out it was made
clear that an action to recover a debt in respect of
a liability created by a statute is an action on a
specialty but that the judgment distinguishes the
situation where a statute enables an action to be
brought, which, nevertheless is not an action on
the statute and therefore not an action on a spe
cialty. Reference was made by defendant to the
case of Thomson v. Lord Clanmorris 7 in which at
page 728 Vaughan Williams L.J. made a distinc
tion between an action which is given by a statute
and an action on the statute. In the first instance it
would be an action on the case and the second
would be an action on the statute or founded on
the obligation therein established. Of particular
interest is the case of Dominion Distillery Prod
ucts Company Limited v. The Kings where it was
argued that the claim for a refund of taxes paid on
goods exported from the country, which refund
was provided for in these circumstances in the
statute that imposed the tax, was an action on the
statute. After reviewing the cases however it was
held that it was an action for monies had and
received and not for a liability created by a statute.
This action was affirmed on appeal in the Supreme
Court of Canada 9 where it was determined that
the action which arose as a result of the statute
was an action for monies had and received and not
an action on a specialty. Defendant's counsel con
tended that in these cases the distinctions were
argued because of similar prescriptive periods as
exist in The Statute of Limitations of Nova
Scotia.
6 (1853) 13 C.B. 826.
7 [ 1900] 1 Ch. 718.
8 [1937] Ex.C.R. 145.
9 [1938] S.C.R. 458.
The Saltfish Act did not establish any obliga
tion on the Crown to compensate. Defendant con
tends that the action is a common law action for
compensation flowing from the effects of the stat
ute and is not an action on the statute, and there
fore not a specialty. Plaintiffs' counsel contends
there was no common law right of action. The
Supreme Court decision in the Manitoba Fisheries
Limited case however has indicated that there is a
right of action since the statute did not specifically
take away the right to compensate. I conclude that
plaintiffs' right of action is not on the statute,
hence not on a specialty, but merely flows from it
as the Supreme Court has found.
Defendant's contention is that the claim comes
under paragraph (e) as an action for the taking
away of property, hence is now time-barred.
Plaintiffs' secondary argument goes into the his
tory of The Statute of Limitations of Nova Scotia,
contending that the words "actions for the taking
away or conversion of property" of paragraph (e)
were never intended to apply to a cause of action
for the loss of goodwill resulting from a statutory
interference with marketing arrangements. It is
contended that the first limitations statute in Nova
Scotia (1738) 36 Geo. 3rd c. 24 provided a six-
year period for "all actions of trespass, detinue,
trover, and replevin for taking away of goods and
cattle" which is based on a similar provision in the
English Limitations Act of 1623. Similar wording
appeared in the Nova Scotia Limitations of
Actions Act in R.S.N.S. 1884, c. 112, but in The
Statute of Limitations R.S.N.S. 1900, c. 167,
references to "detinue, trover and replevin" were
replaced by the present reference to "actions for
the taking away or conversion of property". Plain
tiffs' counsel argues that this change was made to
reflect changes brought about by the Judicature
Act in respect of the old forms of action, the
intention being to encompass by the words
"actions for the taking away ... of property" the
subject matter of the old actions of detinue and
replevin and to substitute the modern term "con-
version" for the old action of trover. He then deals
with the action for replevin which lay to recover
damages for unlawfully taking away chattels, the
first step being to obtain redelivery to plaintiff on
his giving security to prosecute his claim for dam
ages. He points out that detinue was originally an
action for breach of a contract to deliver a specific
chattel which only lay against those affected with
the duty of delivery and it was eventually extended
to become an action against anyone who unlawful
ly detained goods from their owner without regard
to the means by which he obtained possession of
them. Certainly the present claim would not come
under any of these headings as defendant never
physically took away or removed any property
from plaintiffs' possession. In continuing this rea
soning plaintiffs' counsel submits that section
2(1)(e) of The Statute of Limitations therefore
cannot apply and, since section 2(1)(c) does not
apply either, therefore the cause of action does not
fall within any provision of section 2 and as there
are no other provisions of the Nova Scotia Statute
of Limitations which would be applicable the
action is not time-barred.
I am unable to agree with this line of reasoning.
The fundamental rule of interpretation of statutes
is-that they should be given their literal interpreta
tion based on the words used, and, unless there is
some difficulty in interpreting them on this basis,
this settles the matter and there is no need to go
into the historical background or make any
attempt to determine what was the intention of the
legislature when the statute was adopted (see
Maxwell on the Interpretation of Statutes, 12th
Edition, pages 28 and following). At page 29
Maxwell states:
Where, by the use of clear and unequivocal language capable of
only one meaning, anything is enacted by the legislature, it
must be enforced however harsh or absurd or contrary to
common sense the result may be.
I find no difficulty interpreting paragraph (e) on
its literal wording, nor is there anything harsh or
absurd or contrary to common sense in the result.
While there was no physical taking away from
plaintiffs by defendant of property the Supreme
Court has found that goodwill is property and that
they are entitled to compensation from defendant
for the taking of same. As Ritchie J. stated in the
passage cited (supra): "... the Appellant was
deprived of property which was acquired by the
Crown". This appears to me to bring the matter
clearly within the wording of section 2(1)(e) of
The Statute of Limitations of Nova Scotia with its
six-year prescriptive period. As Maxwell points out
at page 31 dealing with the rule of literal
construction:
One consequence of the rule of literal construction is that
wide language should be given a wide construction, however
restricted the scope of previous legislation dealing with the
same matter may have been.
Finally I would quote again from Maxwell at
page 29:
It was repeatedly decided at law that the statutes of limita
tion which enacted that actions should not be brought after the
lapse of certain periods of time from the accrual of the cause of
action barred actions brought after the time so limited, even
though the cause of action was not discovered, nor was practi
cably discoverable, by the injured party at the date of accrual,
and even though it was fraudulently concealed by the wrongdo
er until the expiry of the statutory period. The hardship of such
decisions was obvious, but the language was susceptible of no
other interpretation.
I regretfully am forced to conclude therefore
that the actions are time-barred and that the
question of law set down for decision must be
answered in the affirmative.
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.