Supreme Court of Canada
Her Majesty in right of the Province of Alberta v. Canadian Transport Commission, [1978] 1 S.C.R. 61
Date: 1977-02-22
Her Majesty in right of the Province of Alberta (Appellant);
and
Canadian Transport Commission (Respondent).
1976: October 13 and 14; 1977: February 22.
Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.
ON APPEAL FROM THE FEDERAL COURT OF APPEAL
Jurisdiction—Aeronautics—Acquisition by Alberta of controlling interest in Pacific Western Airlines—Whether subject to approval of Canadian Transport Commission—Whether Crown a “person”—Whether Crown can be bound by “necessary implication”—Aeronautics Act, R.S.C. 1970, c. A-3, ss. 9(2) and 14(1)(d), (e), (f) and (1)—Air Carrier Regulations, SOR/72‑145, Part III, ss. 19 and 20—National Transportation Act, R.S.C. 1970, c. N-17, ss. 27 and 55—Interpretation Act, R.S.C. 1970, c. I-23, ss. 16, 28—Royal Style and Titles Act, R.S.C. 1970, c. R-12.
Section 14 of the Aeronautics Act authorises the Canadian Transport Commission to make regulations relating to the licensing and operation of commercial air carriers. By virtue of that Act the Commission promulgated Air Carrier Regulations 19 and 20 requiring parties involved in the transfer of ownership of a commercial air service to notify it, to conform with the provisions of the National Transportation Act and to apply for the Commission’s approval of the transaction. The Government of Alberta contested the right of the Commission to require it to comply with these regulations and the question of its authority to require compliance was put to the Federal Court of Appeal, which found in favour of the Commission.
Held: The appeal should be allowed.
Per Laskin C.J. and Martland, Judson, Ritchie, Pigeon, Dickson and Beetz JJ.: Apart from the question as to the meaning of “person” in regulations 19 and 20, other difficulties arise in construing the terms of regulation 19, in particular, the meaning of “control” and of the phrase “commercial air services”. [These are dealt with in the judgment of Spence J.]
The principal issue to be decided herein is whether the Federal Court of Appeal was right in concluding that
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the Crown in right of Alberta was bound by the Air Carrier Regulations by necessary implication. The Crown, not being expressly mentioned, cannot be a “person” under the regulations unless it can be found that it is included by necessary implication. The common law position is that the Crown is bound by necessary implication where the purpose of legislation would be wholly frustrated if it were not but this cannot be said to be the case under the Aeronautics Act.
Section 16 of the Interpretation Act, R.S.C. 1970, c. I-23, provides that “no enactment is binding on Her Majesty or affects Her Majesty… except only as therein mentioned or referred to.” Section 28 of the Act defines Her Majesty as “the Sovereign of the United Kingdom, Canada and Her other Realms and Territories, and Head of the Commonwealth”. It was contended by counsel that s. 28 confines the definition to the Crown in right of Canada only and that there was, accordingly, no ground for giving the Crown in respect of a Province any preferred position by excluding it from subjection to federal legislation. The definition does not however establish such limitation of the reference to “Her Majesty” as being a reference only to the Crown in right of Canada. Although the definition referred to “Canada”, the reference is in the context of a recital, substantially, of the Royal Style and Titles, as prescribed by the Royal Style and Titles Act, R.S.C. 1970, c. R-12. If the definition were so limited, it would be by reason of the constitutional organization of the Canadian federal system. There may be something to be said for the view that, having regard to the federal system, the notion of indivisibility should be abandoned. Decisions of the Courts, however have treated a general reference to the Crown in provincial legislation and in federal legislation as referring to the Crown indivisible. In the present case it is unnecessary to come to any conclusion on whether the definition of “Her Majesty” in s. 28 should be limited, for constitutional reasons, to the Crown in right of Canada. It is enough to proceed on the traditional view that it covers the Crown in whatever aspect its subjection to federal legislation arises. The Alberta Government, if not entitled to the shelter provided by s. 16 of the Interpretation Act, is entitled to rely on the common law in Bombay Province v. Bombay Municipal Corporation, [1947] A.C. 58, and on either view is not bound by ss. 19 and 20 of the Air Carrier Regulations.
Per Martland, Judson, Ritchie, Spence, Dickson, Beetz and de Grandpré JJ.: The Canadian Transport Commission relies on Air Carrier Regulations 19 and 20 enacted by virtue of s. 14 of the Aeronautics Act. The
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Federal Court has held that Alberta is a “person” within the meaning of these regulations by necessary implication, that the 1967 rewording of s. 16 of the Interpretation Act allows the Crown to be bound by necessary implication and that regulations 19 and 20 were intra vires Parliament and therefore binding on the Crown in right of Alberta. Dealing with the construction of those regulations, since the work “control” cannot mean anything more in the regulations than it does in the Act, regulation 19 must refer to the control of the use of aircraft for hire or reward. The Government of Alberta was involved in the transfer of shares in an air carrier operating a commercial air service and the control of the use of aircraft is therefore not in issue. The view that regulation 19 is intended to govern the service provided rather than the ownership of the carrier is supported by the fact that it refers to the control of commercial services and not to the control of the carrier as do other air carrier regulations. Since regulations 19 and 20 do not have any bearing on the present situation, it is not necessary to decide whether the Crown in right of Alberta is bound by them.
[Bombay Province v. Bombay Municipal Corporation, [1947] A.C. 58; Dominion Building Corporation v. The King, [1933] A.C. 533; The Queen v. Murray, [1967] S.C.R. 262; Gauthier v. The King (1918), 56 S.C.R. 176; Attorney General of British Columbia v. Attorney General of Canada, [1924] A.C. 222; Attorney General of Quebec v. Nipissing Central Railway, [1926] A.C. 715; The Queen in right of Ontario v. Board of Transport Commissioners, [1968] S.C.R. 118; Toronto Transportation Commission v. The King, [1949] S.C.R. 510; and In re Silver Bros. Ltd., [1932] A.C. 514 referred to.]
APPEAL from a judgment of the Federal Court of Appeal[1] on a case stated by the Canadian Transport Commission. Appeal allowed.
J.C. Major, Q.C., and W. Henkel, Q.C., for the appellant.
G.W. Ainslie, Q.C., and G. St. John, for the respondent.
T.H. Wickett, for the Attorney General for Ontario.
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The judgment of Laskin C.J. and Martland, Judson, Ritchie, Pigeon, Dickson and Beetz JJ. was delivered by
THE CHIEF JUSTICE—I have had the advantage of seeing the reasons prepared by my brother Spence in this matter before turning to my own, and although I reach the same result as he does I come to it in a different way. Two issues which lurk in the facts of this case may, as conceded by both parties to this litigation, be put to one side. The first is that no question is raised as to the legality of the incorporation of Pacific Western Airlines Ltd. under provincial authority. The second is that the appellant Crown in right of Alberta (in fact, the Government of Alberta) does not contest the obligation of Pacific Western Airlines Ltd. to comply with the Aeronautics Act, R.S.C. 1970, c. A-3, and the Air Carrier Regulations made pursuant thereto, so far as concerns licensing of air carriers and operation of its aircraft, routes and route schedules, and rates and rate schedules and related matters. The narrow point raised by this appeal is whether the Government of Alberta was obliged to notify the Canadian Transport Commission and, indeed, seek its approval of that Government’s acquisition of control of Pacific Western Airlines Ltd. through purchase of over 99 per cent of its issued common shares and all of its preferred shares.
Pacific Western Airlines Ltd. remains a public company incorporated under the laws of British Columbia notwithstanding the share acquisition by the Government of Alberta. Formally, it is the same entity that it was before, but it is understandable that being a commercial air carrier enjoying certain domestic and international air carrier privileges, the identity, integrity and solvency of those in actual charge of its operations would be a matter of concern for the Canadian Transport Commission as the regulatory authority under the Aeronautics Act.
That Act purports to authorize the making of regulations in that connection by the Commission, as well as giving the Commission wide regulation-making authority in respect of licences to operate
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commercial air services. Section 14(1) (e), (f) and (I) of the Act is as follows:
14. (1) The Commission may make regulations
…
(e) requiring any person to furnish information respecting the ownership or any existing or proposed control, transfer, consolidation, merger or lease of commercial air services;
(f) requiring copies of agreements respecting any control, transfer, consolidation, merger or lease referred to in paragraph (e), copies of contracts and proposed contracts and copies of agreements affecting c
…
(I) prohibiting the change of control transfer, consolidation, merger or lease of commercial air services except subject to such conditions as may by such regulations be prescribed;
Acting under the powers so conferred the Commission promulgated ss. 19 and 20 of the Air Carrier Regulations, which constitute Part III thereof under the heading Changes of Control, Consolidation, Mergers, Leases and Transfers. Sections 19 and 20 read as follows:
19. No person shall enter into a transaction that is intended to or would result in a change of control, consolidation, merger, lease or transfer of any commercial air service unless he complies with section 20.
20. (1) Any person who proposes to enter into a transaction described in section 19 shall give notice of such proposed transaction to the Committee.
(2) Subject to subsection (4), where section 27 of the National Transportation Act applies to a transaction described in section 19, the provision of that Act shall be complied with.
(3) Subject to subsection (4), where section 27 of the National Transportation Act does not apply to a transaction described in section 19, the provisions of section 27 of that Act shall be complied with as though that section did apply to that transaction, subject to such modifications as the circumstances require, except that the Committee may proceed to investigate the transaction even if no objection is received.
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(4) The Committee may, following receipt of notice of a transaction described in section 19, require the person referred to in subsection (1) to file with the Secretary such information and documents as will enable the Committee to determine whether the transaction will unduly restrict competition or otherwise be prejudicial to the public interest.
Since the Government of Alberta contested the authority of the Canadian Transport Commission to require it to comply with ss. 19 and 20 aforesaid in respect of its acquisition of the shares of Pacific Western Airlines Ltd., the Commission stated the following question to the Federal Court of Appeal, pursuant to s. 55 of the National Transportation Act, R.S.C. 1970, c. N-17:
Is Her Majesty in Right of the Province of Alberta a person subject to the provisions of sections 19 and 20 of the Air Carrier Regulations and the jurisdiction of the Commission concerning the acquisition of controlling interest in Pacific Western Airlines Ltd.?
That Court answered the question in the affirmative, reasons for judgment being delivered by Heald J.A. and concurred in by Ryan and LeDain JJ.A.
Apart from the key question which was before the Federal Court of Appeal and is now before us, concerning the meaning of “person” in ss. 19 and 20 of the Air Carrier Regulations, there are other difficulties in construing the terms of s. 19, difficulties which are indicated in the reasons of my brother Spence. There is the fact that “control” is not defined, either in the Regulations or in the Aeronautics Act, and that in the French version of s. 19 the words contrôle financier are used although the plural word contrôles appears alone in the authorizing provisions of s. 14(1)(e) of the Aeronautics Act. Another difficulty in construing s. 19 arises from the phrase “commercial air services” used in both the authorizing s. 14(1) of the Act and s. 19 of the Regulations and defined in s. 9(1) of the Act to mean “any use of aircraft in or over Canada for hire or reward”, the same definition being carried into the Regulations under s. 2 thereof. If the definition is transferred to s. 19, an obvious awkwardness results because of the word “use” in the definition. The governing words in s. 19 “control, consolidation, merger, lease or trans-
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fer” have obvious reference to air carriers in respect of their commercial air services. This is clearer if attention is directed to the phrase “change of control” in s. 19, rather than “control” alone. I am reinforced in this view by s. 27 of the National Transportation Act which is referred to in s. 20(2) of the Regulations, and I refer particularly to s. 27(1) which reads as follows:
27. (1) A railway company, commodity pipeline company, company engaged in water transportation, or person operating a motor vehicle undertaking or an air carrier, to which the legislative jurisdiction of the Parliament of Canada extends, that proposes to acquire, directly or indirectly, an interest, by purchase, lease, merger, consolidation or otherwise, in the business or undertaking of any person whose principal business is transportation, whether or not such business or undertaking is subject to the jurisdiction of Parliament, shall give notice of the proposed acquisition to the Commission.
The words of s. 19 sit uneasily if literally applied to mean “control of the use of aircraft” or “consolidation of the use of aircraft” or “merger of the use of aircraft”. Despite the definition of “commercial air services”, I do not think that I would be justified in applying it to deny efficacy either to s. 14(1)(e) of the Act or to s. 19 of the Regulations. The thrust of each is clear enough, still leaving, however, difficulty with the meaning of control, especially when s. 19 seeks to embrace intended transactions that would result in a change of control.
However, the situation in the present case admits of no doubt on the question of control, and so I think it necessary to address myself to the issue put before the Federal Court of Appeal. In answering in the affirmative, Heald J.A., speaking for the Court, concluded that the Aeronautics Act and the Air Carrier Regulations bound the Crown in right of Alberta (and also, I take it, the Crown in right of the other Provinces as well as in right of Canada) by necessary implication. He rejected a submission that a distinction could be made between the application of the licensing and allied provisions of the Act and Regulations to the
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Crown and the non-application of ss. 19 and 20 of the Regulations. He felt that the entire scheme and purpose of the Act would be frustrated if provincial Governments were not subject to its provisions.
It was not indicated to us that any provincial Government, as such, engaged or proposed to engage in the business of a commercial air carrier. In view of the fact that jurisdiction in relation to aeronautics resides exclusively in the Parliament of Canada, it would not be likely that there would be any disposition for entry into that field for commercial purposes by provincial Governments. In any other character, as, for example, through an ordinary public corporation, subjection to applicable regulatory authority would be automatic. Any apprehension by the Government or Parliament of Canada that any provincial Government would attempt to engage in air carrier business without compliance with federal regulatory provisions could easily be allayed by appropriate legislation.
It is urged here, however, that no such express legislation is needed, that a comprehensive regime is already in place. One indicator, suggested in argument by counsel for the Attorney General of Canada, appearing on behalf of the respondent Canadian Transport Commission, was said to be s. 9(2) of the Aeronautics Act, which provides that Part II (dealing with the Commission and its licensing and other powers) “does not apply to aircraft that are used by Her Majesty’s Forces or by any armed forces cooperating with Her Majesty’s Forces and bear the insignia or markings of Her Majesty’s Forces or any such forces”. I do not see how this exclusion of defence forces from the scope of the Aeronautics Act can have any bearing on the question whether the Crown in right of a Province or in right of Canada is subject to the Act and to the jurisdiction of the Canadian Transport Commission. Section 9(2) is, to me, a provision ex abundanti cautela, and nothing more.
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The main support for the contention that the Crown in right of the Province was bound, although there is nothing express in that respect, lay in the assertion that the Aeronautics Act and the Air Carrier Regulations were embracive of all entrants or would be entrants into the business of commercial air carriers or in the control, or participation in the control, of corporations engaged in such business. This, however, is an argument that is applicable to any piece of general regulatory legislation and proves too much, unless it be taken that where the Crown engages in ordinary commercial activities it is equally subject to the regime of control of those activities. This has not hitherto been the rule followed by the Courts, nor is it supported by the expression of principle as to Crown subjection to legislation found in s. 16 of the Interpretation Act, R.S.C. 1970, c. I-23.
Prima facie, the Crown, whether in right of Canada or in right of a Province, is not a “person” under the Aeronautics Act or under the Air Carrier Regulations. “Person” is not defined in either of them, and the definition in s. 28 of the federal Interpretation Act is simply that “person” includes a corporation. The Crown can be a “person” for the purposes of the Act and Regulations only if it can be found that it is included in the regulatory scheme by necessary implication. The common law position as to such inclusion is stated in Bombay Province v. Bombay Municipal Corporation[2], where Lord du Parcq said this (at p. 61):
…The general principle to be applied in considering whether or not the Crown is bound by general words in a statute is not in doubt. The maxim of the law in early times was that no statute bound the Crown unless the Crown was expressly named therein… But the rule so laid down is subject to at least one exception. The Crown may be bound, as has often been said, “by necessary implication”. If, that is to say, it is manifest from the very terms of the statute, that it was the intention of the Legislature that the Crown should be bound, then the result is the same as if the Crown had been expressly named…
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Pertinent to the point last mentioned in this passage is his further observation (at p. 63):
…If it can be affirmed that, at the time when the statute was passed and received the royal sanction, it was apparent from its terms that its beneficent purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound. Their Lordships will add that when the court is asked to draw this inference, it must always be remembered that, if it be the intention of the legislature that the Crown shall be bound, nothing is easier than to say so in plain words.
If the matter rested entirely on the common law as stated in the Bombay case, I do not see how it could be said that there would be total frustration of the purpose of the Aeronautics Act unless the Crown were bound. Can it be said, however, that the matter rests on the common law alone in the face of s. 16 of the federal Interpretation Act?
That section, as enacted by 1967-68 (Can.), c. 7, s. 16 reads as follows:
16. No enactment is binding on Her Majesty or affects Her Majesty or Her Majesty’s rights or prerogatives in any manner, except only as therein mentioned or referred to.
“Her Majesty” is defined in s. 28 of the present federal Interpretation Act in these words:
…
“Her Majesty”, “His Majesty”, “the Queen”, “the King”, or “the Crown” means the Sovereign of the United Kingdom, Canada and Her other Realms and Territories, and Head of the Commonwealth;
It was contended by counsel for the respondent that s. 28 confines the definition to the Crown in right of Canada only, and that there was, accordingly, no ground for giving the Crown in respect of a Province any preferred position by excluding it from subjection to federal legislation.
I cannot agree with this submission. Although the definition above-quoted refers to “Canada”, the reference is in the context of a recital, substantially, of the Royal Style and Titles, as prescribed by the Royal Style and Titles Act, R.S.C. 1970, c. R-12. I do not think that the definition itself
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establishes a limitation of the reference to “Her Majesty” as being a reference only to the Crown in right of Canada. If it is so, it would be by reason of the constitutional organization of our federal system.
Counsel for the respondent did not, however, carry his submission that far. There may be something to be said for the view that, having regard to the nature of Canada’s federal system, the notion of the indivisibility of the Crown should be abandoned. The Constitution of Canada distributes legislative power between a central Parliament and provincial Legislatures and prerogative or executive power (which is formally vested in the Queen) is similarly distributed to accord with the distribution of legislative power, thus pointing to different executive authorities. Decisions of the Courts, including decisions of the Privy Council, have, however, treated a general reference to the Crown in provincial legislation and in federal legislation as referring to the Crown indivisible. It is enough to refer in this respect to the judgment of the Judicial Committee in Dominion Building Corporation v. The King[3], where the definition of “His Majesty” in the Ontario Interpretation Act was applied to the Crown in right of Canada, and that Crown was held in the circumstances of that case, to be bound by a provincial statute making the equitable rule respecting stipulations in contracts as to time being of the essence the rule to be applied in all Courts in the Province. I would note, however, that the case originated in the Exchequer Court and involved a claim against the federal Crown for damages for breach of contract which was referred to that Court under statutory authority, and the question of the applicable law governing the contract, if there was one, would be one of the questions before the Exchequer Court. I do not think that the Dominion Building Corporation case can be taken beyond its special facts.
In any event, I need not decide in the present case whether Dominion Building Corporation v. The King is still good law any more than it was necessary for my brother Martland to do so in giving the reasons of this Court in The Queen v.
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Murray[4]. However, in view of such decisions as Gauthier v. The King[5], denying provincial competence to impose a contractual liability upon the Crown in right of Canada (where the provincial legislation changed the common law and purported to embrace the Crown in the change), it becomes pertinent to ask whether a general reference to Her Majesty or to the Crown in a provincial Interpretation Act should embrace the Crown in right of Canada and, similarly, whether a general reference to “Her Majesty” or to the “Crown” in a federal Interpretation Act should embrace the Crown in right of a Province. It is, of course, open to the federal Parliament to embrace the provincial Crown in its competent legislation if it chooses to do so: see, for example, Attorney General of British Columbia v. Attorney General of Canada[6]; Attorney General of Quebec v. Nipissing Central Railway[7]. A recent particular illustration of the subjection of the Crown in right of a Province to federal regulatory jurisdiction is seen in the judgment of this Court in The Queen in right of Ontario v. Board of Transport Commissioners[8], where it was held that the operation by the Government of Ontario of a commuter rail service over tracks of the Canadian National Railway company by agreement with that Company brought that service within the jurisdiction of the Board of Transport Commissioners with respect to tolls.
The point that I raise, namely whether Her Majesty or the Crown, where generally referred to in federal or provincial legislation should be taken to mean the Crown in right of Canada or of a Province, as the case may be, is influenced by the fact that a Provincial Legislature cannot in the valid exercise of its legislative power, embrace the Crown in right of Canada in any compulsory regulation. This does not mean that the federal Crown may not find itself subject to provincial legislation where it seeks to take the benefit thereof: see Toronto Transportation Commission v.
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The King[9]; The Queen v. Murray[10].
The Privy Council was compelled to confront the issue directly in In re Silver Bros. Ltd.[11] where the Crown in right of Canada claimed priority for excise tax against the estate of a bankrupt as against a competing claim for priority by the Crown in right of Quebec for corporation taxes. The sums realized from the estate were insufficient to pay both claims. The federal claim was based on competent federal legislation providing that
Notwithstanding the provisions of the Bank Act and the Bankruptcy Act, or any other statute or law, the liability to the Crown of any person, firm or corporation for the payment of excise taxes… shall constitute a first charge on the assets of such person, firm or corporation and shall rank for payment in priority to all other claims… save and except only the judicial costs, fees and lawful expenses of an assignee or other public officer charged with the administration or distribution of such assets.
It was clear that Crown in this provision could mean only the Crown in right of Canada. The Quebec claim for priority was founded on a Quebec statute providing that all sums due to the Crown for the tax claimed here from the bankrupt “shall constitute a privileged debt ranking immediately after law costs”. This provision, similarly, could only refer to the Crown in right of Quebec.
Although not directly considered, the power of Parliament to give priority to the federal claim, at least in relation to bankruptcy administration, was not doubted. What the case turned on was the effect of s. 16 of the federal Interpretation Act, R.S.C. 1906, c. 1, which then read as follows:
16. No provision or enactment in any Act shall affect, in any manner whatsoever, the rights of His Majesty, his
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heirs or successors, unless it is expressly stated therein that His Majesty shall be bound thereby.
The Privy Council accepted Quebec’s contention that to give effect to the federal assertion of priority would mean that the Crown in right of Quebec would be bound to the detriment of one of its rights (arising under Quebec legislation) although not expressly stated to be so bound. The Privy Council acted therefore on the premise that the Crown under s. 16 aforesaid covered the Crown in right of the Province as well as of Canada but found it necessary to make a differentiation for the purposes of the particular case. This is made evident from the following passage of its reasons (at p. 523):
The next point made was that the provisions of s. 16 do not apply when what is being done is not to affect the Crown prejudicially, but to give a benefit to the Crown, and along with this it is urged that there is only one Crown, and reference is made to the case of Att.-Gen. for Quebec v. Nipissing Central Ry. Co. [1926] A.C. 715. It is quite true that the section refers to cases where the Crown would be “bound,” i.e., subjected to liability, and not to those where the Crown is benefited. But the fallacy lies in the application of this truth to the case in question. Quoad the Crown in the Dominion of Canada the Special War Revenue Act confers a benefit, but quoad the Crown in the Province of Quebec it proposes to bind the Crown to its disadvantage. It is true that there is only one Crown, but as regards Crown revenues and Crown property by legislation assented 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…
The Privy Council rejected the argument of “necessary implication” advanced on behalf of the federal Crown’s position, holding it to be ruled out by s. 16 of the Interpretation Act. It said this on the point (at p. 523):
Next it was said that inasmuch as the Bank Act and Bankruptcy Act not only dealt with preferences, but (inter alia) with Crown preferences, there is an “irresistible implication” that the Act was meant to deal with all Crown preferences. The simple answer to this is to fix one’s eyes on s. 16, and it becomes apparent that it is a
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contradiction in terms to hold that an express statement can be found in an “irresistible implication.”
Whether it would have accepted an argument of “necessary implication” apart from s. 16 aforesaid is another matter. As I already indicated, I am unable to accept it in the present case under the common law rule, nor do I think it arises here under the present s. 16 of the Interpretation Act.
The Federal Court of Appeal stated that it found significance in the change in s. 16 as it now reads as compared with the text of that provision in the superseded s. 16 of the Interpretation Act that was considered in In re Silver Bros. Ltd., supra. Heald J.A. did not, however, elaborate how the change restored the doctrine of necessary implication. In my opinion, the present s. 16, if it is to be considered as referring to the Crown in right of a Province as well as to the Crown in right of Canada, goes farther than the superseded provision to protect the Crown from subjection to legislation in which it is not clearly mentioned. Whereas the section considered in In re Silver Bros. Ltd., supra, and in Dominion Building Corporation v. The King, supra, spoke only of affecting the rights of the Crown (a point that was taken in respect of the similar Ontario section in the Dominion Building Corporation case and which appeared to control the decision there arrived at), the present s. 16 goes beyond “rights” alone and is express that, in addition, “no enactment is binding on Her Majesty or affects Her Majesty… except only as therein mentioned or referred to”. I am unable to agree with the conclusion of the Federal Court of Appeal that the substitution of the words “except only as therein mentioned or referred to” for the words “unless it is expressly stated therein that Her Majesty shall be bound” restores “necessary implication”. It seems to me, on the contrary, that “necessary implication” is excluded if it is necessary that the Crown be mentioned or referred to in legislation before it becomes binding on the Crown.
In the present case, I find it unnecessary to come to any conclusion on whether the definition of “Her Majesty” in s. 28 of the federal Interpre-
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tation Act should be limited, for constitutional reasons, to the Crown in right of Canada. I am content to proceed on the traditional view that it covers the Crown in whatever aspect its subjection to federal legislation arises.
I would add, however, a further word on the matter. It may be argued that if the general reference above-noted should be limited to the Crown in right of Canada, it ought not necessarily to follow that the common law rule expressed in the Bombay case must govern the position of the Crown in right of a Province in respect of federal legislation. Why, it may be asked, should that rule, developed in unitary England, apply at all in a federal state? There are, in my opinion, two answers. First, if the Crown in right of a Province was unable to rely on its immunity, unless bound expressly or by necessary implication, automatic subordination of a provincial Government to federal legislation would result, and this would offend the mutually independent positions of the Crown in right of Canada and in right of a Province which obtain under our constitutional arrangements in the absence of valid legislation to the contrary. Second, the common law rule as part of what I may call Crown law is an historic principle that was part of the law of this country from its beginning; and it remained part of our law under the federal structure brought into force in 1867, both for the advantage of the Crown in right of Canada and of the Crown in right of a Province. In my view, the Alberta Government, if not entitled to the shelter provided by s. 16 of the federal Interpretation Act, is entitled to rely on the common law expressed in the Bombay case. In either case, I hold it not to be bound by ss. 19 and 20 of the Air Carrier Regulations.
In the result, I would allow the appeal and declare that the question propounded by the Canadian Transport Commission should be answered in the negative. This is not a case for costs.
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Martland, Judson, Ritchie, Dickson, Beetz and de Grandpré JJ. also concurred in the judgment of
SPENCE J.—This is an appeal from the decision of the Federal Court of Appeal pronounced on February 19, 1976.
Pacific Western Airlines Limited, hereinafter referred to as PWA, is a company incorporated under the laws of British Columbia and although first incorporated as a private company under the name of Central British Columbia Airways Limited changed its name to that used presently and, in the month of August 1955, was converted into a public company. It carried on business as a commercial air carrier serving the Northwest Territories, the State of Washington, and the Provinces of British Columbia and Alberta on a regularly scheduled basis and, in addition, operated an international charter service. By the month of August 1974, the Government of the Province of Alberta had acquired 99.3 per cent more or less of the issued common shares in that company and all of the issued preferred shares.
On August 9, 1974, the Secretary of the respondent commission telexed the Premier of Alberta as follows:
NEWSPAPERS REPORTS ALLEGE CHANGE OF CONTROL OF P.W.A. COMMERCIAL AIR SERVICE TO ALBERTA GOVERNMENT STOP I AM DIRECTED TO INVITE YOUR ATTENTION TO THE AIR CARRIER REGULATIONS (SOR/72145, PUBLISHED IN PART II OF THE SPECIAL EDITION OF THE CANADA GAZETTE DATED MAY 5, 1972,) PARTICULARLY SECTIONS 19 AND 20 THEREOF AND TO THE SECTION OF THE NATIONAL TRANSPORTATION ACT REFERRED TO IN SAID SECTION 20 STOP YOUR SUBMISSIONS AND COMMENTS ARE RESPECTFULLY REQUESTED.
The Government of Alberta took the position that it was prepared to co-operate and supply information to the Commission on a voluntary basis but that sections 19 and 20 of the Air Carrier Regulations were not applicable. The respondent
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expressed its dissent and, therefore, the Government of Alberta, at the request of the respondent and without prejudice, caused a notice of change of control to be published in certain newspapers. Following the publication of that notice of change of control, documents were filed with the respondent and served on the appellant by certain intervenors.
At the opening of the hearing by the respondent, the appellant objected to the jurisdiction of the respondent, the Commission, and at the request of the appellant the Commission, under the provisions of s. 55 of the National Transportation Act, R.S.C. 1970, c. N-17, stated, for the decision of the Federal Court of Appeal, the following question:
Is Her Majesty in Right of the Province of Alberta a person subject to the provisions of sections 19 and 20 of the Air Carrier Regulations and the jurisdiction of the Commission concerning the acquisition of controlling interest in Pacific Western Airlines Ltd.?
The Federal Court of Appeal, in its judgment aforesaid, by reasons given for the Court by Heald J. and concurred in by Ryan and LeDain JJ., answered that question in the affirmative. By its order pronounced on April 27, 1976, this Court allowed leave to appeal therefrom.
The respondent, in requiring the appellant to give notice to the Air Transport Committee and proceeding in accordance with s. 27 of the National Transportation Act, was relying on the provisions of regulations 19 and 20 of the Air Carrier Regulations. Those regulations were enacted by virtue of the provisions of s. 14(1) (d), (e), and (f) of the Aeronautics Act, R.S.C. 1970, c. A-3. The said section 14(1) (d), (e) and (f) provides:
14. (1) The Commission may make regulations
…
(d) requiring air carriers to file with the Commission returns with respect to their assets, liabilities, capitalization, revenues, expenditures, equipment, traffic, employees and any other matters to which this Part applies relating to the operation of commercial air services;
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(e) requiring any person to furnish information respecting the ownership or any existing or proposed control, transfer, consolidation, merger or lease of commercial air services;
(f) requiring copies of agreements respecting any control, transfer, consolidation, merger or lease referred to in paragraph (e), copies of contracts and proposed contracts and copies of agreements affecting commercial air services to be filed with the Commission;
The said regulations 19 and 20 provide:
19. No person shall enter into a transaction that is intended to or would result in achange of control, consolidation, merger, lease or transfer of any commercial air service unless he complies with section 20.
20. (1) Any person who proposes to enter into a transaction described in section 19 shall give notice of such proposed transaction to the Committee.
(2) Subject to subsection (4), where section 27 of the National Transportation Act applies to a transaction described in section 19, the provision of that Act shall be complied with.
(3) Subject to subsection (4), where section 27 of the National Transportation Act does not apply to a transaction described in section 19, the provisions of section 27 of that Act shall be complied with as though that section did apply to that transaction, subject to such modifications as the circumstances require, except that the Committee may proceed to investigate the transaction even if no objection is received.
(4) The Committee may, following receipt of notice of a transaction described in section 19, require the person referred to in subsection (1) to file with the Secretary such information and documents as will enable the Committee to determine whether the transaction will unduly restrict competition or otherwise be prejudicial to the public interest.
The points in issue as submitted by the appellant to this Court were as follows:
(a) The Federal Court decided that Alberta was a “person” under Sections 19 and 20 of the Air Carrier Regulations by “Necessary implication”.
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(b) The Federal Court decided that the change in the wording of Section 16 of the Interpretation Act, R.S.C. 1952, c. 158, by virtue of the Interpretation Act, S.C. 1967-68, c. 7 was a significant change and, as such allowed the Crown to be bound by “necessary implication”.
(c) The Federal Court decided that the application of Sections 19 and 20 of the Air Carrier Regulations is legislation in relation to the regulation of aeronautics and is therefore intra vires of Parliament.
It is, however, I believe, necessary to first examine in some detail the scope and the meaning of the said regulations 19 and 20.
Regulation 19 prohibits any person entering into a transaction that is intended to or would result in the change of control, consolidation, merger, lease or transfer of any commercial air service unless he complies with section 20. (The underlining is my own.) The Air Carrier Regulations do not contain any definition of “person” but section 28 of the Interpretation Act, R.S.C. 1970, c. I-23, provides that “‘person’ or any word or expression descriptive of a person includes a corporation”. This definition brings up the question of whether the Aeronautics Act and the Air Carrier Regulations were intended to bind the Crown in the right of Canada or in the right of any Province. That question I shall leave to be considered later, if such consideration should prove necessary. For the present purpose, the important words of regulation 19 are “control” and “commercial air service”. “Commercial air service” is defined in s. 2 of the Air Carrier Regulations as follows: “‘commercial air service’ means any use of aircraft in or over Canada for hire or reward”. “Control” is not defined in the said regulations. The regulation in French, the other official language, uses the words “contrôle financier” in place of the one word “control”. As I have said, the regulation was enacted under the power conferred in s. 14(1) (d), (e), and (f) of the Aeronautics Act. The word “control” appears alone in s. 14(1) (e) of the said statute and in both the English and French versions of the statute the word stands alone unmodified by any such adjective as “financier”. Since, of course, the only power to enact the regulation is that given by the provisions of the statute, any
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exceeding of that power in the regulations would be ultra vires and it is, therefore, proper, for the purposes of this appeal, to consider the scope and meaning of regulation 19 as applying to the “control” of commercial air service.
If one were to insert the definition of “commercial air service” into regulation 19, it would read:
No person shall enter into a transaction that is intended to or would result in the change of control, consolidation, merger, lease or transfer of any use of aircraft in or over Canada for hire or reward.
It would appear, therefore, that what is dealt with by regulation 19 is, inter alia, the control of the use of aircraft in or over Canada for hire or reward. It has always been the position of the appellant that its objection to comply with the requirement made by the Air Transport Committee was limited to its objection to that committee or the respondent exercising any jurisdiction in reference to the transfer of the shares of PWA and not to any control which the committee or the respondent should purport to exercise over the provision of air service. Paragraph 4 of the reply of the appellant to the intervention of the Government of British Columbia reads as follows:
4. In reply to the allegations or suggestions contained in paragraphs 3, 4, 6 and 9 in particular, Her Majesty further says that it cannot be inferred, nor has it been, that as a result of the proposed acquisition Pacific Western Airlines, Ltd. will not provide air service within its region which will continue to meet the requirement of public convenience and necessity and in particular to serve existing routes and develop new routes in an economic and efficient manner in the best interests of the public employing air services within its region.
The question submitted by the respondent and the judgment of this Court thereon should be limited to that issue. It is my view that that issue does not deal with the control of the use of aircraft in or over Canada for hire or reward and that the
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question of whether the Air Transport Committee or the respondent can control the use of aircraft by PWA, whether or not it be a corporation wholly-owned by the Government of the Province of Alberta, does not call for a decision upon the present appeal. My view upon this matter is confirmed when I consider the other air carrier regulations. Many of them deal with air carriers and in the regulations “air carrier” is defined as “any person who operates a commercial air service”. Section 19 of the regulations, however, speaks only as to the control of a commercial air service and not as to the control of an air carrier. In my opinion, it envisages such matters as change of routes, change of schedules, change of policy of operation, and many other matters integral to the operation of a commercial air service but not as to the identity of the shareholders of the air carrier which operates the commercial air service.
To give the interpretation to regulation 19 sought by the respondent would have very far reaching effect in corporate shareholding and dealing in corporate shares. PWA is a public company. Its shares, therefore, may be traded freely on the market whether or not its stock is listed. The shares in a very large number of air carriers are similarly traded. It would be impossible to determine whether any particular sale and purchase of shares in an air carrier would affect the control of that air carrier let alone the commercial air service which it operates. It is often said that one may control a company with very much less than a majority of the issued stock and a shareholder who held X thousand shares of a particular air carrier could not possibly determine whether he would control the company were he to purchase an additional thousand shares or even an additional one share. It surely was not intended by this regulation that every transfer of shares in a public company which was an air carrier should be subject to the submission to the respondent of an application for approval before the share transaction should be consummated.
It might be interesting to contemplate the number of applications which would have been
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required during the past year when one considers the many large public companies which are air carriers in Canada.
I am, therefore, of the opinion that regulations 19 and 20 of the Air Carrier Regulations simply do not deal with the present situation and that, therefore, the question submitted by the appellant to the Federal Court of Appeal should be answered in the negative. In view of this conclusion, I am of the opinion that it is unnecessary and unwise in the disposition of this appeal to express any view as to whether the appellant, Her Majesty in right of the Province of Alberta, would be bound by regulations 19 and 20. It may well be that such a question will have to be considered and decided in other litigation.
Upon the matter of costs, I note that the order of the Federal Court of Appeal pronounced on February 19, 1976 was simply confined to an answer to the question put and made no disposition of costs. The reasons given by Heald J. are similarly worded. The order of this Court pronounced on April 27, 1976 provided that the costs of the application should be costs in the cause. The appellant’s factum bore no request for costs.
I am of the opinion that this is not a proper matter for an order as to costs.
Appeal allowed without costs.
Solicitors for the appellant: Jones, Black & Company, Calgary.
Solicitor for the respondent: D.S. Thorson, Ottawa.