A-613-88
The Queen, Attorney General of Canada, Secre
tary of State for External Affairs, Minister for
International Trade, Minister for National Reve
nue (Appellants) (Defendants)
v.
Teal Cedar Products (1977) Ltd. (Respondent)
(Plaintiff)
INDEXED AS: TEAL CEDAR PRODUCTS (1977) Lm. v. CANADA
(CA.)
Court of Appeal, Pratte, Heald and Mahoney
JJ.—Vancouver, September 7; Ottawa, December
6, 1988.
Judicial review — Equitable remedies — Injunctions —
Amendment to Export Control List causing closure of forest-
products manufacturer — Interlocutory injunction sought —
Whether allegation Governor in Council acted on basis of
misleading information raising serious issue as to validity of
amendment — Where enabling provision empowers Governor
in Council to act where "deems it necessary" for certain
purposes, does not matter whether opinion right or wrong —
Insufficient evidence to contradict purpose expressly stated in
Order in Council.
Foreign trade — Red cedar boards — Added to Export
Control List by Governor in Council under Export and Import
Permits Act — Causing unemployment, closure of business —
Interlocutory injunction granted — Set aside on appeal as
irrelevant whether or not Governor in Council misled by
Regulatory Impact Analysis Statement.
The respondent, a British Columbia forest products manu
facturer, had been exporting red cedar boards to the United
States. In February 1988, the Governor in Council, acting
pursuant to the Export and Import Permits Act, amended the
Export Control List to include boards as well as blocks and
bolts of red cedar, thereby requiring the respondent to obtain
an export permit for its products. The effect of that Order in
Council was to cause the closure of the respondent's business,
putting its employees out of work.
The respondent attacked the amendment and sought an
interlocutory injunction prohibiting the appellants from inter
fering with the export of short cedar boards until the trial of an
action in which a declaration, injunction and damages were
claimed. The Trial Division granted the interlocutory injunc
tion, having found that there was a serious issue to be tried and
that both the irreparable harm and balance of convenience tests
favoured the respondent. This is an appeal from that decision.
Held, the appeal should be allowed.
The respondent's action brought into question the validity of
the Order in Council amending the List. The Order in Council
was adopted pursuant to sections 3 and 6 of the Act which
authorized the Governor in Council to establish and amend a
list of goods the export of which the Governor in Council deems
it necessary to control for certain purposes. In this case, two
purposes were invoked, one of which was paragraph 3(c): "to
ensure that there is adequate supply and distribution of such
article in Canada for defence or other needs". The Judge of
first instance interpreted "other needs" according to the ejus-
dem generis rule and, finding that there was no national
emergency of a defence nature, appears to have concluded that
the Governor in Council acted on the basis of a wrong interpre
tation of the Act. The Judge's interpretation was clearly wrong.
"Other needs" refers to needs other than those related to
defence.
The Judge of first instance based his conclusion that there
was a serious issue to be tried on the finding that the Governor
in Council acted on the basis of misleading information. It is
clear, however, that whether or not the Governor in Council's
opinion, that the Order in Council was necessary for the
purposes mentioned in section 3, was based on accurate or
misleading information was not relevant to the determination of
the validity of that Order in Council. If the Governor in
Council deemed the Order in Council necessary for those
purposes, it matters not that this opinion be right or wrong.
Since the Order in Council expressly stated the purposes for
which it was made, there is no real prospect of being able to
prove, on the material available at this time, that the Order in
Council was adopted in bad faith in that it was adopted for
purposes other than those specified in section 3.
There is no validity to the proposition that opinions or
objectives of individual ministers or their staff, which in this
case are alleged to be unauthorized, should or could be attribut
ed to the Governor in Council.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Export and Import Permits Act, R.S.C. 1970, c. E-17, ss.
3 (as am. by S.C. 1974, c. 9, s. 1; 1987, c. 15, s. 26),
(a.1),(c), 6, 7, 13.
Export Control List, C.R.C., c. 601, item 2003 (as added
by SOR/86-710; SOR/88-140).
CASES JUDICIALLY CONSIDERED
APPLIED:
Manitoba (Attorney General) v. Metropolitan Stores
Ltd., [1987] I S.C.R. 110; American Cyanamid Co. v.
Ethicon Ltd., [1975] A.C. 396 (H.L.); McEldowney v.
Forde, [1971] A.C. 632 (H.L.); Reference as to the
Validity of the Regulations in relation to Chemicals,
[1943] S.C.R. 1; Attorney-General for Canada v. Hallet
& Carey Ld., [1952] A.C. 427 (P.C.).
DISTINGUISHED:
Attorney General of Canada v. Inuit Tapirisat of Canada
et al., [1980] 2 S.C.R. 735.
COUNSEL:
J. R. Haig, Q. C. for appellants.
J. Gary Fitzpatrick for respondent.
SOLICITORS:
Deputy Attorney General of Canada for
appellants.
Davis & Company, Vancouver, for respon
dent.
The following are the reasons for judgment
rendered in English by
PRATTE J.: This is an appeal from an order of
the Trial Division [ [ 1989] 1 F.C. 135] (Muldoon
J.) granting an interlocutory injunction prohibiting
the appellants from interfering with the respon
dent's exportation of red cedar boards. That order,
in effect, enjoined the appellants not to enforce an
order in council adopted under the Export and
Import Permits Act,' a statute which forbids the
exportation without a special ministerial permit of
goods that the Governor in Council has included in
a list called the Export Control List. 2
1 R.S.C. 1970, c. E-17.
2 For the purposes of this case, it is sufficient to have in mind
the following provisions of that statute [ss. 3 (as am. by S.C.
1974, c. 9, s. 1; 1987, c. 15, s. 26), (a.l),(c), 6, 7, 13]:
3. The Governor in Council may establish a list of goods,
to be called an Export Control List, including therein any
article the export of which he deems it necessary to control
for any of the following purposes, namely:
(a.1) to ensure that any action taken to promote the
further processing in Canada of a natural resource that is
produced in Canada is not rendered ineffective by reason
of the unrestricted exportation of that natural resource;
(Continued on next page)
On June 26, 1986, the Governor in Council
amended the Export Control List [SOR/86-710]
by adding the following item:
2003. Blocks and bolts of red cedar.
(All destinations, including the United States)
That amendment was apparently made in order to
stop the massive exportation of unprocessed red
cedar to the United States which would have
otherwise resulted from the imposition by the Gov
ernment of that country of a 35% tariff on the
importation of Canadian red cedar shakes and
shingles.
The respondent is a corporation incorporated
under the laws of British Columbia where it manu
factures from red cedar a product called short red
cedar board. A short red cedar board is a kiln
dried machine cut cedar board of uniform thick
ness having the same length and width as a red
cedar shingle. It is common ground that by a
diagonal saw cut over the length of its thickness, a
short red cedar board can easily be made to pro
duce two wedge-shaped shingles.
In 1987, the respondent exported its short cedar
boards to the United States without any hin
drance. Early in January 1988, however, it was
notified by Canada Customs officials, acting on
instructions from high authority, that a permit was
required for the exportation of short red cedar
boards since that product was considered to come
(Continued from previous page)
(c) to ensure that there is an adequate supply and distri
bution of such article in Canada for defence or other
needs.
6. The Governor in Council may revoke, amend, vary or
re-establish any ... Export Control List ....
7. The Minister may issue to any resident of Canada
applying therefor a permit to export goods included in an
Export Control List ... in such quantity and of such quality,
by such persons, to such places or persons and subject to such
other terms and conditions as are described in the permit or
in the regulations.
13. No person shall export or attempt to export any goods
included in an Export Control List ... except under the
authority of and in accordance with an export permit issued
under this Act.
within item 2003 of the Export Control List
("Blocks and bolts of red cedar"). The respondent
disagreed with that view and immediately com
menced an action against the appellants in the
Trial Division seeking a declaration that short
cedar boards were not included in the Export
Control List and could, as a consequence, be
exported without a permit. 3 The respondent also
sought an interlocutory injunction prohibiting the
appellants from interfering with the export of short
cedar boards. That application for an interlocutory
injunction was about to be heard when, on Febru-
ary 12, 1988, the respondent learned that the
directive previously given to Customs officials with
respect to the requirement of a permit for the
export of short red cedar boards had been can
celled. The respondent could then resume its
exportation to the United States. That situation,
however, did not last long.
3 In its statement of claim, the respondent merely alleged
that it manufactured short red cedar boards which it used to
export to the United States; that it was notified by Canada
Customs officials, on January 4, 1988, that short cedar boards
could no longer be exported without a permit since the conclu
sion had been reached that they were included in item 2003 of
the Export Control List; that short cedar boards were not, in
fact, included in item 2003, first, because they were neither
"blocks" nor "bolts" of red cedar and, second, for the reason
stated in paragraph 8 of the statement of claim:
8. Further, short cedar boards cannot be considered within
the definition of "blocks and bolts of red cedar" which were
added to the Export Control List because that addition was
specifically stated to have been made pursuant to paragraph
3(A.1) of the Export and Import Permits Act. Section
3(A.1) is directed toward the elimination of exporting of jobs
from Canada by way of natural resources being exported
without further processing in Canada. The manufacturing
process of the short cedar boards involves the same amount
of labour, if not more, as goes into the manufacture of
shingles in Canada. The export of short cedar boards does
not fall within the purview of what Section 3(A.1) was
designed to prevent.
The respondent finally alleged that its inability to export its
product to the U.S. had forced it to shut down its business.
On February 22, 1988, the Governor in Council
amended the Export Control List by adopting
Order in Council P.C. 1988-288 [SOR/88-140],
the text of which reads as follows:
Whereas the Governor in Council deems it necessary to
control the export of blocks, bolts, blanks, boards and any other
material or product of red cedar suitable for use in the manu
facture of shakes or shingles in order to:
(a) ensure that any action taken to promote the further
processing in Canada of red cedar that is produced in
Canada is not rendered ineffective by reason of the unre
stricted exportation of red cedar; and
(b) in order to ensure that there is an adequate supply and
distribution of red cedar materials and products in Canada
for the manufacture of shakes and shingles.
Therefore, Her Excellency the Governor General in Council,
on the recommendation of the Secretary of State for External
Affairs, pursuant to paragraphs 3(a.1) and (c) and section 6 of
the Export and Import Permits Act, is pleased hereby to amend
the Export Control List, C.R.C., c. 601, in accordance with the
schedule hereto.
SCHEDULE
1. Item 2003 of the Export Control List is revoked and the
following substituted therefor:
"2003. Blocks, bolts, blanks, boards and any other ma
terial or product of red cedar suitable for use in the manufac
ture of shakes or shingles.
(All destinations, including the United States)"
That order in council was published in the Canada
Gazette [Part II, Volume 122, No. 5, at pages
1251-1253] together with a document entitled
"Regulatory Impact Analysis Statement" which
gave information about the background and
anticipated effect of the new regulation. The rele
vant parts of that statement read thus:
Description
Goods requiring export permits for reasons of national secu
rity or domestic policy are listed on the Export Control List
(ECL). In June, 1986, the United States imposed a 35% import
tariff on shakes and shingles. The Canadian Government
responded by placing bolts and blocks of red cedar, which can
be further processed into shingles and shakes, on the export
control list in order to prevent their export to the U.S. This
action was taken to prevent the loss of Canadian jobs in the
shakes and shingles manufacturing industry.
Canadian firms are exploiting a loophole in the ECL by
exporting red cedar blanks, not explicitly identified on the
Export Control List, suitable for the manufacture of shingles
and shakes.
The measure will amend the ECL by adding red cedar
blanks, boards and any other material or product of red cedar
suitable for use in the manufacture of shakes or shingles,
thereby fulfilling the original intent of the regulation. Control
ling the export from Canada of these goods supports the
Canadian and British Columbian Government programs to
promote the further processing of red cedar materials into
shingles and shakes within Canada. Legal authority for this
action is provided by the Export and Import Permits Act.
Anticipated Impact
DRIE in Vancouver estimates that the further establishment
of shakes and shingles manufacturing facilities in the U.S.
using Canadian red cedar, as a result of the existing loophole,
would result in the loss of 10 to 20% of the 12,000 jobs in the
shakes and shingles manufacturing industry. These jobs and the
newly created U.S. industry may be difficult to re-transfer to
Canada when the 35% duty on shakes and shingles is eventually
removed. As a result of the amendment to the Export Control
List, all semi-processed materials of red cedar will require an
export permit, which would normally be refused for the reasons
stated above.
After that amendment to the Export Control
List, representatives of the appellants took the
position that the respondent's short cedar boards
came within the terms of the new item 2003. This
prompted the respondent to amend its statement of
claim so as to allege that item 2003 of the Export
Control List had been amended and to seek, in the
prayer for relief, a declaration that the amendment
was ultra vires.
The respondent then presented its motion for an
interlocutory injunction prohibiting the appellants,
until the trial of the action, from interfering with
the export of short cedar boards. In support of that
motion, the respondent filed affidavits attesting,
inter alia, that:
1. Short cedar boards are neither blocks nor
bolts of red cedar;
2. There is no less labour involved in the pro
duction of short cedar boards than in the pro
duction of shingles;
3. The export of short cedar boards will not, in
the affiant's belief, endanger there being an
adequate supply or distribution of red cedar for
defence or other needs in Canada;
4. That, in January, 1988, before item 2003 of
the Export Control List was amended, a Special
Assistant to the Minister of International Trade
declared to a lawyer representing the respondent
during a meeting held for the purpose of discuss
ing these proceedings, that the Minister "was
concerned that all mills in the shake and shingle
industry should be carrying on their business 'on
a level playing field' and that no mills should
have an unfair advantage over others and for
these reasons legislation was required to prohibit
the export of short cedar boards."
5. That the inability of the respondent to export
short cedar boards forced it to lay off its 75
employees.
Mr. Justice Muldoon heard that application and
granted the interlocutory injunction. He first cor
rectly stated that the various questions to be con
sidered by a court that is asked to suspend tem
porarily the application of a legislation or
regulatory provision until the court has ruled on
the validity of that provision are those mentioned
by Mr. Justice Beetz in Manitoba (Attorney Gen
eral) v. Metropolitan Stores Ltd., 4 namely:
(a) The seriousness of the plaintiffs claim.
(b) Will there be irreparable harm to the applicant for the
injunction if the injunction is not granted?
(c) The balance of convenience.
Mr. Justice Muldoon found that the last two ques
tions were to be answered in favour of the respon
dent on this appeal (the applicant for the injunc
tion). Counsel for the appellants expressly
refrained from contesting these findings. He raised
only one ground of appeal, namely, that Mr. Jus
tice Muldoon had erred in answering the first one
of those three questions and deciding that the
respondent's action raised a serious question.
4 [1987] 1 S.C.R. 110.
The question raised by the respondent's action
was that of the validity of the Order in Council
amending the Export Control List. That Order in
Council was adopted pursuant to sections 3 and 6
of the Export and Import Permits Act which
authorized the Governor in Council to establish
and amend "a list of goods ... the export of which
he [the Governor in Council] deems it necessary to
control for any" of the purposes enumerated in
section 3. The Order in Council here in question
specified that it was adopted because the Governor
in Council deemed it necessary to control the
export of product of red cedar suitable for use in
the manufacture of shakes and shingles for two of
the purposes mentioned in the Act, namely:
3....
(a.1) to ensure that any action taken to promote the further
processing in Canada of a natural resource that is produced
in Canada is not rendered ineffective by reason of the
unrestricted exportation of that natural resource;
(c) to ensure that there is an adequate supply and distribu
tion of such article in Canada for defence or other needs.
As I read the reasons of Muldoon J., he held
that the question of the validity of the Order of
Council was a "serious question" because the
respondent had adduced evidence showing that the
Governor in Council, when it had amended item
2003 of their Export Control List, had acted on
the basis of "misleading information" to the effect
that the amendment to the List would save
Canadian jobs and was necessary to ensure an
adequate supply and distribution of red cedar ma
terial in Canada. The Judge expressed himself as
follows on this subject [at pages 148-149 and
151-152].
In a nutshell, the plaintiff alleges that the Governor in
Council was misled about the regulation's devastating impact
on the jobs of its employees, and since paragraph 3(a.1) of the
Act is aimed at preserving jobs in Canada, then the passing of
P.C. 1988-288 was ultra vires of the Governor in Council. It
claims the right to the Court's aid in enjoining the government
from enforcing the Export Control List's impugned item 2003
against it until the outcome of this litigation be adjudged.
Since at least the time of the decision of the Supreme Court
of Canada in Attorney General of Canada v. Inuit Tapirisat of
Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1,
if not long before, it cannot be said to be unthinkable that
decisions of the Governor in Council could be and are subject to
judicial review. Mr. Justice Estey who expressed the Supreme
Court's judgment is reported at pages 748 S.C.R.; 11 D.L.R.,
thus:
Let it be said at the outset that the mere fact that a
statutory power is vested in the Governor in Council does not
mean that it is beyond review. If that body has failed to
observe a condition precedent to the exercise of that power,
the court can declare that such purported exercise is a
nullity.
So it is, that the defendants herein except for Her Majesty the
Queen, are not immune from being temporarily restrained by
means of an interlocutory injunction if it appears that they
failed to observe the provisions of paragraph 3(a.1) of the Act
by considering misleading information. That is a serious ques
tion to be tried.
In so far as the Supreme Court of Canada in the Metropoli
tan Stores case approves the test (page 128) of "a serious
question to be tried as opposed to a frivolous or vexatious
claim" for "constitutional case where ... the public interest is
taken into consideration in the balance of convenience", it is
apparent from what has already been reviewed herein that this
present case passes that test.
It must be acknowledged that the result would be different if
the test were that of a prima facie case. The plaintiff does not
challenge Parliament's power to enact section 3 of the Act, but
one must still consider whether the actual emplacement of the
new item 2003 in the Export Control List be a lawful or
otherwise proper exercise of the powers conferred on the Gover
nor in Council .... Here, the plaintiff avers it has evidence and
argument in law to show that without the demonstrable misin
formation which apparently misled the Governor in Council,
there was no statutory basis for promulgating item 2003, which
has been deadly to the plaintiffs business, and, the defendants
tender their contradictory affidavit.
With respect to the question whether the
making of the Order in Council was authorized by
paragraph 3(c) of the Act, the Judge of first
instance, in addition to finding that the Governor
in Council had possibly acted on the basis of
erroneous information, expressed the view that the
Governor in Council had possibly misconstrued
that paragraph of the statute and, for that reason,
failed to form the required belief. Indeed, the
Judge expressed the opinion that the words "other
needs" in that paragraph were to be interpreted by
applying the "ejusdem generis" rule as referring
only to needs related to defence. As we are not in a
state of war, and as red cedar is clearly not
necessary for the defence of the country, it would
follow, if I understand the Judge's reasons, that
the Governor in Council acted on the basis of a
wrong interpretation of the statute as well as of
misleading information.
I may say immediately that this interpretation
of paragraph 3(c) of the Act appears to me to be
wrong. The words "other needs" in that paragraph
clearly mean what they say, namely, needs other
than those related to defence. I do not see any
reason to restrict the normal meaning of those
words in the manner suggested. I am of the opin
ion, therefore, that it cannot be seriously argued
that the Governor in Council, in making the Order
in Council in question, acted on a wrong interpre
tation of the statute.
The question remains, however, whether, for
other reasons, the respondent's claim could be said
to raise a serious issue. Before answering that
question, a few general observations are in order:
1. When Mr. Justice Beetz said in the Metropoli
tan Stores cases that the test to be applied in a
case like the present one in order to assess the
merit of the plaintiff's case is whether there is a
serious question to be tried, he clearly meant to
adopt the test formulated by Lord Diplock in
American Cyanamid Co. v. Ethicon Ltd. 6 It may,
therefore, be helpful to have in mind what Lord
Diplock said in that case: 7
The grant of an interlocutory injunction is a remedy that is
both temporary and discretionary. It would be most exceptional
for your Lordships to give leave to appeal to this House in a
case which turned upon where the balance of convenience lay.
In the instant appeal, however, the question of the balance of
convenience, although it had been considered by Graham J. and
decided in Cyanamid's favour, was never reached by the Court
of Appeal. They considered that there was a rule of practice so
well established as to constitute a rule of law that precluded
them from granting any interim injunction unless upon the
5 [1987] 1 S.C.R. 110.
6 [1975] A.C. 396 (H.L.).
7 At pp. 405, 407 and 408.
evidence adduced by both the parties on the hearing of the
application the applicant had satisfied the court that on the
balance of probabilities the acts of the other party sought to be
enjoined would, if committed, violate the applicant's legal
rights. In the view of the Court of Appeal the case which the
applicant had to prove before any question of balance of
convenience arose was "prima facie" only in the sense that the
conclusion of law reached by the court upon that evidence
might need to be modified at some later date in the light of
further evidence either detracting from the probative value of
the evidence on which the court had acted or proving additional
facts. It was in order to enable the existence of any such rule of
law to be considered by your Lordships' House that leave to
appeal was granted.
Your Lordships should in my view take this opportunity of
declaring that there is no such rule. The use of such expressions
as "a probability," "a prima facie case," or "a strong prima
facie case" in the context of the exercise of a discretionary
power to grant an interlocutory injunction leads to confusion as
to the object sought to be achieved by this form of temporary
relief. The court no doubt must be satisfied that the claim is not
frivolous or vexatious; in other words, that there is a serious
question to be tried.
It is no part of the court's function at this stage of the
litigation to try to resolve conflicts of evidence on affidavit as to
facts on which the claims of either party may ultimately depend
nor to decide difficult questions of law which call for detailed
argument and mature considerations. These are matters to be
dealt with at the trial. One of the reasons for the introduction
of the practice of requiring an undertaking as to damages upon
the grant of an interlocutory injunction was that "it aided the
court in doing that which was its great object, viz. abstaining
from expressing any opinion upon the merits of the case until
the hearing": Wakefield v. Duke of Buccleugh (1865) 12 L.T.
628, 629. So unless the material available to the court at the
hearing of the application for an interlocutory injunction fails
to disclose that the plaintiff has any real prospect of succeeding
in his claim for a permanent injunction at the trial, the court
should go on to consider whether the balance of convenience
lies in favour of granting or refusing the interlocutory relief
that is sought.
The question that the Court of first instance had
to answer therefore, in assessing the merit of the
respondent's case, was whether the material avail
able to the Court at the hearing of the application
for an interlocutory injunction disclosed that the
respondent had any real prospect of succeeding in
his claim that the Order in Council was ultra
vires.
2. My second observation is that, since an inter
locutory injunction is a discretionary remedy, a
court of appeal is normally reluctant to intervene
and set aside a decision granting or refusing to
grant an injunction. However, a court of appeal
must intervene if it appears that the court of first
instance acted on a wrong view of the law.
3. My last observation is that the respondent chal
lenges the validity of the Order in Council amend
ing the Export Control List on only one ground,
namely, that it is not the kind of Order in Council
which the Governor in Council was empowered to
make under section 3 of the Export and Import
Permits Act. In testing the accuracy of that con
tention, one should have in mind the very words of
section 3 which require, for the validity of the
Order in Council, not that it be really necessary
for the purposes stated in the section but, rather,
that the Governor in Council be of opinion that it
is necessary for those purposes. In McEldowney v.
Forde, 8 Lord Diplock had this to say about the
validity of regulations adopted under enabling
legislation of that kind:
The relevant characteristic of subordinate legislation so
described in the words of delegation is the belief of the person
empowered to make it that it will achieve the effect described.
If he does so believe it is valid. It is only if he does not that it is
ultra vires and void. The relevant inquiry which the court has to
make when subordinate legislation made under words of dele
gation of this kind is challenged is not whether his belief was
justified but whether it existed. The absence of such belief may
connote mala rides on the part of the maker of the subordinate
legislation, i.e., that he has used the delegated power with the
deliberate intention of achieving an effect other than that
described in the words of delegation, but it does not necessarily
do so. He may have honestly misconstrued the words of the
statute describing the effect to be achieved and for this reason
have failed to form the relevant belief. These are two of the
grounds referred to by Viscount Radcliffe in Attorney-General
for Canada v. Hallett & Carey Ltd. [1952] A.C. 427, 444, 445,
as invalidating subordinate legislation made under words of
delegation in which the belief of the subordinate authority in
the effect to be achieved by the subordinate legislation is
expressly stated to be the characteristic of the legislation which
he is empowered to make. But in practice it is seldom possible
to distinguish between these two grounds. The subordinate
authority is not normally compellable to disclose his own
mental processes and the court is powerless to declare the
subordinate legislation invalid unless, in the words of Viscount
Radcliffe, at p. 450, it is not "capable of being related to one of
the prescribed purposes" so that its very terms give rise to the
inference that the subordinate authority whether deliberately or
8 [1971] A.C. 632 (H.L.), at p. 660.
as a result of his misconstruing the statute cannot have formed
the relevant belief.
In the Reference re Chemical Regulations, 9 the
Supreme Court of Canada had to consider the
validity of a regulation adopted under an enabling
statute of the same kind which empowered the
Governor in Council to make such regulations "as
he may .. . deem necessary" for the security of the
country. Chief Justice Duff expressed himself in
the following terms 10 which were later quoted with
approval by the Privy Council in Attorney-Gener
al for Canada v. Hallet & Carey Ld.: 11
... when Regulations have been passed by the Governor Gener
al in Council in professed fulfilment of his statutory duty, I
cannot agree that it is competent to any court to canvass the
considerations which have, or may have, led him to deem such
Regulations necessary or advisable for the transcendent objects
set forth. The authority and the duty of passing on that
question, are committed to those who are responsible for the
security of the country—the Executive Government itself,
under, I repeat, its responsibility to Parliament. The words are
too plain for dispute: the measures authorized are such as the
Governor General in Council (not the courts) deems necessary
or advisable.
In the light of this last observation, it is clear
that whether the Governor in Council based its
opinion that the Order in Council was necessary
for the purposes mentioned in section 3 on accu
rate or on misleading information is not relevant to
the determination of the validity of that Order in
Council. If the Governor in Council deemed the
Order in Council necessary for those purposes, it
matters not that this opinion be right or wrong.
Mr. Justice Muldoon based his conclusion that
there was a serious question to be tried in the
findings that the Governor in Council acted on the
basis of misleading information. His conclusion is,
therefore, tainted by an error of law. For that
reason, this is a case where the Court may inter
fere with his exercise of his discretion.
Counsel for the respondent argued that even if
Mr. Justice Muldoon was wrong on that point, his
9 Reference as to the Validity of the Regulations in relation
to Chemicals, [1943] S.C.R. 1.
10 At p. 12.
11 [1952] A.C. 427, at p. 445.
conclusion could be supported on other grounds.
First, said he, the respondent's claim is serious
because it may be able to establish at the trial that
the Governor in Council acted in bad faith and
adopted the Order in Council for purposes other
than those specified in section 3. This contention
is, in my view, without merit. I do not see how, in a
case like the present one, when the Order in
Council expressly states the purposes for which it
was made, one could prove that it was in fact made
for another purpose. In my view, the material
available to us at this time "fails to disclose that
the plaintiff has any real prospect of succeeding"
on this point.
Counsel also argued that, assuming that the bad
faith of the Governor in Council itself could not be
established, there is nevertheless a real possibility
that it could be proved at the trial that the Gover
nor in Council acted on the advice of civil servants
or officials who were pursuing objectives different
from those authorized by section 3 of the Act. The
intentions of those persons, according to counsel,
must be ascribed to the Governor in Council. In
support of that last proposition he referred to the
following passage of the reasons for judgment of
Estey J. in Attorney General of Canada v. Inuit
Tapirisat of Canada et al.: 12
The very nature of the body must be taken into account in
assessing the technique of review which has been adopted by
the Governor in Council. The executive branch cannot be
deprived of the right to resort to its staff, to departmental
personnel concerned with the subject matter, and above all to
the comments and advice of ministerial members of the Council
who are by virtue of their office concerned with the policy
issues arising by reason of the petition whether those policies be
economic, political, commercial or of some other nature.
I must say that I do not see anything in this
passage supporting counsel's view that the opinions
entertained and the objectives pursued by some
individual ministers or their staff should or could
be attributed to the Governor in Council. Coun
sel's last argument is founded, in my view, on an
untenable legal proposition.
12 [1980] 2 S.C.R. 735, at p. 753.
I would, therefore, allow the appeal, set aside
the order made by Mr. Justice Muldoon and dis
miss the respondent's motion for an interlocutory
injunction, the whole with costs in this Court as
well as in first instance.
Before parting with this matter, I must mention
that at the outset of the hearing of the appeal, the
respondent asked the Court to receive new evi
dence in the appeal. The Court then reserved its
decision on that motion. It should be dismissed.
The new evidence in question is a study prepared
by the Coopers and Lybrand consulting group at
the request of the federal Government after Mr.
Justice Muldoon had pronounced the injunction.
This study merely confirms the evidence already
put forward by the respondent in support of the
application for an injunction showing that the
Governor in Council had acted on the basis of
incorrect information. The inclusion of that new
evidence in the record could not serve any useful
purpose.
HEALD J.: I agree.
MAHONEY J.: I agree.
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.