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Newsletter > July 2010

In this issue: 1. Firm and Industry News 2. Adjusters’ Reports and Litigation Privilege 3. The “Forever Lost” 4. Harbour Dues Do Not Constitute Unlawful Tax

The three masted schooner Empire Sandy at the Harbour Front in Toronto for the January 2017 newsletter.

1. Firm and Industry News

  • August 11, 2010: AIMU Field trip
  • September 1, 2010: CBMU Gold Tournament, Deer Creek Golf Club, Ont.
  • September 12-15, 2010: IUMI Conference, Zurich Switzerland
  • September 19-21, 2010: Houston Marine Insurance Seminar
  • September 22-24, 2010: International Marine Claims Conference, Dublin, Ireland
  • September 23-25, 2010: Canadian Transport Lawyers’ Association, Vancouver. Rui FernandesGordon Hearn and Kim Stoll will be attending.
  • November 30th, 2010: CBMU Annual Conference and Dinner, Toronto
  • Rui Fernandes and Gordon Hearn have again been named to the Who’s Who of Shipping Law.
Fernandes Hearn LLP Named One of Top 6 Maritime Boutique Firms in the Country. “This boutique came on the scene in 1996, when Rui Fernandes and Gordon Hearn left Cassels Brock & Blackwell LLP. Maritime law is a major component of its general transportation law practice, which also deals with matters involving aviation, trucking, and rail carriage. Its nine lawyers serve key clients such as Royal & Sun Alliance Insurance, Allianz Insurance, Chubb Group of Insurance Companies, JEVCO Insurance Co., NYK Logistics, Quik X Transportation Inc., and Whirlpool Jet Boat Tours. Fernandes has helped solidify the firm’s strong reputation by publishing five texts on transportation law.” – Canadian Lawyer Magazine May 2010

2. Adjusters’ Reports and Litigation Privilege:When are Reports from an Independent Adjuster to an Insurance Company Privileged?

The recent decision of the Ontario Superior Court of Justice in Kavanagh v. Peel Insurance Company provides an interesting update on the approach of the courts as concerns the application of “litigation privilege”.

“Litigation privilege” is a basis upon which a litigant may assert that he or she is not required to produce a relevant document to an opponent – notwithstanding the over-arching policy of our Rules of Court calling for the full and timely disclosure of, and presumptive production of, relevant documents in a law suit. A document’s existence will have to be disclosed in litigation, but will it necessarily have to be produced? One exception to this rule concerns “litigation privilege”. Just what is “litigation privilege”? In the interesting set of facts which follow, the defendant insurer sought to assert the privilege and not produce certain reports from an independent adjuster who was investigating matters.

The Facts

The plaintiff Mrs. Kavanagh owned a vehicle involved in a motor vehicle accident on October 7, 2007. Her son was also an occasional user of the vehicle. At the time of the accident the operator of the vehicle ran a red light and in the process struck another vehicle. The Kavanagh vehicle was still operable and was driven away from the scene, later found damaged in the plaintiff’s driveway. Both the plaintiff and her son denied operating the vehicle at the time in question. A claim was filed on the defendant for damages sustained to the vehicle with the insured asserting that it was stolen at the time of the accident.

A couple days after the accident, a claims examiner from the defendant was verbally advised by police officials that following the accident an independent witness had observed the vehicle being parked in the driveway of the plaintiff’s home – with both airbags deployed – and that Christopher Kavanagh (the son) was observed to have had a red burn mark across his face, consistent with the deployment of an airbag. Naturally suspicious, the defendant appointed an independent adjuster to investigate the loss.

Both the plaintiff and her son were interviewed a couple of weeks later. Following this interview, the adjuster informed the defendant that he suspected that the plaintiff and/or her son were privy to the alleged theft. A week later, a forensic locksmith reported to the insurer that the vehicle lock had not been tampered with. In addition, a couple days later, the independent adjuster reported to the defendant that he had learned that the son’s driver’s license had been suspended for driving under the influence of alcohol. After further investigation, the independent adjuster submitted a detailed summary report of all of his findings to date to the defendant insurer, bringing “all the facts home”, commenting that he was of the belief that there had been an intent by the plaintiff and her son to ‘mislead him’. The date of this report was November 12, 2007. This date and report will take on importance, later in this case analysis.

In accordance with the terms of the insurance policy, the plaintiff and her son were requested to attend on an Examination Under Oath. The plaintiff attended, but her son did not and, accordingly, the defendant denied coverage on the basis that the son, who might qualify as an insured person under the policy, failed to submit to an examination constituting a violation under the insurance policy.

The plaintiff commenced the subject lawsuit on the basis that the defendant was in breach of its indemnity obligations, which conduct amounted to bad faith. In the ensuing litigation, the defendant resisted producing the adjuster’s reports on the investigation on the basis that they were ‘litigation privileged”; that is, that they were documents generated with litigation in mind (the gathering storm clouds on the coverage issue) and accordingly they ought not be produced but should be withheld. The plaintiff wanted production of the reports, with a view to asserting its bad faith claim and her position that the vehicle indemnity claim should be paid.

The Litigation and the Question of “Litigation Privilege”

Litigation privilege finds its origin in long standing case law going back to the 1881 decision of Wheeler v. Le Marchant, culminating in modern era commentary where one judge has commented as follows:

These cases, no doubt, established that … documents are protected where they have come into existence after litigation commenced or is in contemplation, and where they have been made with a view to such litigation, either for the purpose of obtaining advice as to such litigation, or of obtaining evidence to be used in such litigation, or of obtaining information which might lead to the obtaining of such evidence.

The rationale behind litigation privilege has been outlined in the leading text “The Law of Evidence in Canada” by Sopinka, Lederman & Bryant:

…it was founded upon our adversary system of litigation, by which counsel control fact presentation before the Court and decide for themselves which evidence and by what manner of proof they will adduce facts to establish their claim or defence, without any obligation to make prior disclosure of the material acquired in preparation of the case.

In other words, how can there be an adversarial system, and how can people run law suits, if they cannot solicit legal opinions, or get them, or conduct investigations, if all paperwork – likely, by definition ‘relevant’ – would have to be produced to the other side? The policy compromise, between preserving a meaningful adversary system, and likewise giving practical effect to the resolution of disputes through the timely and full production of documents to the other side, is captured in the requirement that for a document to be withheld on the basis of ‘litigation privilege’ that it be motivated, or generated for the purpose of litigation. That is, that it might be used in, or surface in litigation in and of itself will not create the privilege if there were other non-litigious purposes for the document in the first place.

The availability of, or application of ‘litigation privilege’ in Ontario is set out in the case of General Accident Assurance Co. v. Chrusz. This case held that in order for a document to fall into the ambit of litigation privilege, that litigation – actual or contemplated – must be the dominant purpose for which the document was created. Note that it need not be the exclusive or only purpose, but as indicated, it must be the pressing or the “major” reason for the document being created.

In this case the insurer had various documents from the independent adjuster generated from the “get-go” in the nature of reports and correspondence that it sought to keep to itself by virtue of being litigation privileged, with the insurer asserting that the truthfulness – or lack thereof – of the insured and her son were in issue from the very beginning, thus involving the spectre of a claim denial, and, with that, future litigation.

The court had difficulty with the insurer’s argument that all the documents from claim inception from the adjuster were privileged. Citing the fact that litigation privilege cannot be founded on a mere suspicion of the possibility of litigation, the court noted that the privilege would rather only come into play “at some point in between suspicion and a conclusion that litigation will result”. The Chrusz decision refers to this as “something as arising to give reality to litigation”. In other words, litigation need not be definite or an immediate positive threat as a means to claim litigation privilege over a document, but something more is needed than the mere “suspicion of a possibility”. In essence this speaks to the first requirement from the Chrusz case above that there be actual or contemplated litigation.

There was also another dimension at play, relating to the second Chrusz requirement: the anticipated litigation must have been the “dominant purpose” for the creation of the document. The courts have not allowed blanket assertions by insurers that documents be litigation privileged as having their dominant purpose in the contemplation of litigation when at the same time there existed the good faith and normal course obligation to adjust a claim and to investigate the claim. The purpose for the document – or a coincidental purpose – may have been in the simple adjustment of the claim, or investigation without a view to litigation. Accordingly ‘litigation privilege’ will not be available to withhold production of a document if it was not generated with litigation in mind, or, if it was only one – but not the dominant – consideration at the time of its creation.

Bad Faith Claims in Insurance and Litigation Privilege

The judge in this case noted that an insurer has the good faith obligation to deal with its insured’s claim thoroughly in investigating and assessing the claim and the decision whether or not to pay the claim. The above general principles all notwithstanding, what is the effect of a claim by an insured of bad faith against an insurer? Would this in and of itself remove any “litigation privilege” protection as otherwise would exist? That is, if the management of the claim by the insurer was in and of itself now ‘under the microscope’ would the insurer still be able to assert ‘litigation privilege’ in the appropriate circumstances?

In Davies v. American Home Assurance Co. (Ont. Div. Ct., 2002), the court addressed the issue in overturning an earlier ruling of a ‘motion judge’ who had ordered the production of what was otherwise ‘litigation privileged’ file contents of the insurer’s file on the basis that the plaintiff would not be able to prove bad faith without those documents. On appeal from that ruling, the Divisional Court stated that “Litigation privilege, when properly asserted, trumps relevance in almost all circumstances… there is no “bad faith insurance claim” exception to litigation privilege… that creates a special rule for bad faith claims against insurers and consigns the normal rules respecting privilege to other claims. The same rules apply in all cases”.


The insurer submitted to the court for its review those documents that it sought to be protected by litigation privilege. These included the communications between the independent adjuster and the defendant from the onset of the former’s retainer. Applying the dominant purpose test, the court reviewed the documents to determine whether the dominant purpose behind the creation of the document was for investigation and claim determination as distinct from anticipated litigation. The insurer argued that litigation was contemplated from the very beginning, as early on it had word from the police authorities that the plaintiff’s vehicle had been observed being parked in the driveway with the airbags deployed, or, if not from the ‘get go’, at least early on in the investigation process, when other factual ‘nuggets’ slowly emerged serving to create some factual suspicion in the mind of the defendant’s claims examiner.

The court however ruled that litigation privilege can not be based on the mere suspicion of possible litigation. Accordingly, during the early development of information about the claim there was “no reality to any litigation”. The insurer was still then under the good faith obligation to investigate and adjust the claims and there was nothing to suggest that the dominant purpose of the communications was an anticipation of litigation and not the purpose of fulfilling this obligation.

However, as time went on, the court noted that there would necessarily and properly be a shift in the thinking of the insurer. At some point, the sum total of information, and the apprehension of the situation would amount to more than a ‘mere suspicion of the possibility of litigation’, at least growing to something “between suspicion and a conclusion that litigation will result”.

On its review of the file chronology, the court found that the “reality of litigation had crystallized” on the November 12th 2007 date that the independent adjuster submitted a written report summarizing the various facts as determined by that point. At that point, the court reasoned that litigation was reasonably foreseeable. Accordingly, documents generated before that point in time were to be produced. Documents since then were considered to have been made for the dominant purpose of dealing with something more than the mere suspicion that litigation would occur.

The above illustrates the fact that while general rules and principles would at first blush seem to dictate exactly when ‘litigation privilege’ would apply, the analysis is necessarily fact specific in the application of those principles.

Gordon Hearn


3. Federal Arrest, Provincial Divorce and the Tale of the FOREVER LOST: Ricci v. Tully on Addressing Conflicts between Federal Maritime and Provincial Matrimonial Jurisdiction

Before Claudia Ricci married John Tully, she was a single mother of three who earned a modest living but owned her home mortgage free. Within two years, John had convinced Claudia to go deep into debt to buy a $100,000 sailboat and then left her, and the debt, behind when he moved into the sailboat with another woman.

Claudia fought to get the sailboat back and brought an action in Federal Court to do so, and soon after, divorce proceeding began in the Ontario Superior Court. John’s Counsel argued at the Federal Court hearing that splitting the couple’s legal dispute between two courts conferred on Claudia an “illegitimate juridical advantage” by further draining John’s meagre resources.

The matter was heard by Prothonotary Aalto (a prothonotary is akin to a minor Federal Court judge) who had a difficult decision to make. Should he exercise the power of the Federal Court to give ownership of the sailboat back to Claudia, who was by now was in serious financial trouble, when doing so meant removing John from his current home? Or should he decline to decide and instead stay the matter, as John’s Counsel argued for, to allow the Family Court to decide all of the divorcing couple’s property matters?

These were the circumstances that faced Aalto P.: John had owned 10 boats in his life and was a dedicated sailor, but nearing the end of his working life, John was not married and no longer had a boat. In May 2004, he met Claudia Ricci, an early childhood educator living in Bolton, Ontario with her three grown children, and by August John’s love of the sea had convinced Claudia, who had nominal experience with boating, that the couple should retire together to a sailboat in the Caribbean.

A dream was born. Beginning in August 2004 John and Claudia traveled together to various ports in the United States to find that gem of a sailboat that would become their matrimonial escape to a life of white sand beaches, calm blue seas and brilliant orange sunsets flashed across purple skies. By November John and Claudia found their sailboat, the CELESTRIS. By January the couple was married.

At the time, John was involved in proceedings under the Bankruptcy and Insolvency Act, and could not provide any purchase money for the sailboat. To make the couple’s dream a reality, Claudia mortgaged her home and purchased the boat. However, for two years John did manage to make contributions to the mortgage payments.

Unfortunately the dream soured and in December 2006 John moved out of Claudia’s home and moved into the only remaining reminder of the former couple’s shared dream, the boat John had renamed the FOREVER LOST. For her part, Claudia also retained a reminder of the couple’s broken dream: $100,000 outstanding on the mortgage of the matrimonial home (which, until the purchase of the boat, Claudia had had mortgage free since 1998), a $1000 monthly deficit between her earnings and expenses, and $40,000 in outstanding fines and penalties levied against the sailboat.

As it turned out John had failed to complete all of the administrative duties related to the boat, which lead to the $40,000 in outstanding fines and levies. Although John forgot to pay the duties to bring the boat in from the U.S., failed to pay any of the docking fees, and failed to properly complete the necessary customs declaration, John had remembered to have the title to the sailboat registered; however, he registered the boat in his name alone!

Determined that the value of the boat would not remain forever lost to her, on April 22, 2008 Claudia Ricci commenced an action in Federal Court for a declaration that Claudia had 100% ownership and permanent possession of the sailboat, or, alternatively, an equitable share in the title of the boat commensurate with her total investment in the boat. On April 23, the Federal Court issued a warrant and arrested the boat.

When the couple first appeared before Aalto P. in August 2008, divorce proceedings had commenced between the time of the commencement of the Federal Court action and the time of this first hearing. At this hearing, Aalto P. mediated a negotiated peace, and ordered, amongst other things, that John could maintain control of the sailboat as long as he contributed to the mortgage payments and took our insurance on the boat until the completion of the divorce proceedings.

Unfortunately, John defaulted on the mortgage payments and let the insurance on the boat lapse. Even worse, John tried to elude the Court’s control of the arrested boat by changing the ownership into the name of his current girlfriend.

Claudia returned before Aalto P. for an order to sell the boat and apply the proceeds to her outstanding debts.

Counsel for John argued that having a hearing in Federal Court to determine the disposition of the sailboat and any future proceeds of sale was improper given the on-going divorce proceedings. It was argued that to allow part of the matrimonial estate to be disposed of by Federal Court would confer an `illegitimate juridical advantage` and would encourage other spouses with greater resources to wage concurrent legal battles in Federal and Provincial Courts over the family boat in order to deplete the other’s resources and gain a tactical advantage.

As a result of these circumstances, Aalto P. had to consider the legal question of whether it was appropriate in the circumstances to grant a stay of proceedings in Federal Court to allow all matters of this couple’s matrimonial property to be addressed by the Provincial Family Court.

Some legal context: the Federal Court is a court of limited jurisdiction. The Federal Court can only act when it is expressly granted power to do so by the Federal government. The ability of the Federal government to confer power is in turn circumscribed by the Canadian Constitution. Whereas, Provincial Superior Courts, like the Superior Court of Ontario, are courts of unlimited jurisdiction and largely have unfettered power to hear any type of dispute. What this means is that the Federal Court is somewhat yielding and has developed a test for when it should step aside to allow Provincial Courts to adjudicate a matter. This is accomplished by ordering a stay of proceedings over the Federal Court proceeding.

To get a stay, defendants must meet a two part test: (1) the stay may not be prejudicial to the plaintiff; and (2) continuing in Federal Court must cause prejudice to the defendant. The evidentiary threshold that the defendant must meet is one of clarity, which is to say that the evidence must clearly establish both point 1 and point 2.

John’s Counsel argued that it would not prejudice Claudia to stay the Federal Court proceeding because the issues of property division would be dealt with in the Provincial Family Court proceeding and so she would ultimately still get her “day in court”. John’s Counsel also argued that John would be prejudiced because John could not afford dual court actions. Expanding the argument beyond just this couple, John’s Counsel argued that not granting a stay would set a dangerous precedent and encourage spouses with more resources to grind the opposing spouse into submission by waging expensive legal battles on two fronts whenever the family boat was at issue.

In this case, it is important to know that Federal Court and Provincial Court have concurrent jurisdiction over maritime matters in Canada. That is to say that a dispute, like this one, over ownership of a boat may be decided in either Federal or Provincial Court. Conversely, matrimonial law is the exclusive purview of the Provincial Courts.

John’s Counsel’s arguments on their face appeared to meet the test to stay the action. John’s cause was helped by the fact that the Provincial Court was the venue with the apparent jurisdiction to address this matrimonial property dispute. Would this mean that John could continue living the sailboat that Claudia had paid for?

Aalto P. refused to grant the stay. He explained that the jurisdiction of the Federal Court need not be displaced by the Provincial Court in this case. Whereas the Provincial Court was concerned with dividing the property between the couple, the Federal Court was interested in preserving the sailboat as an asset.

Aalto P. expressed concern that allowing John to maintain control of the sailboat would only lead to its seizure by some other creditor, in turn the depriving the matrimonial estate of the value of the sailboat. Aalto P. found that granting the stay, despite the arguments to the contrary of John’s Counsel, would have prejudiced Claudia greatly as she stood to lose not only her fair share of the value of the sailboat, but also her home because the mortgage that remained was beyond her ability to pay.

Ultimately, Aalto P. ordered the sailboat to be sold and the sale proceeds applied to pay off the mortgage on the matrimonial home. Any remaining funds would be split between the couple by the Provincial Court, whose mandate would be to divide the matrimonial estate as it sought fit. In other words, the Federal Court did not decide who really owned the boat, but it made sure that the value of the boat did not disappear while the couple waited for the Provincial Court to decide.

The FOREVER LOST was lost to this erstwhile couple, but, as a result of the intervention of the Federal Court, Claudia Ricci’s home was not lost as well.

Christopher Afonso


4. Harbour Dues Do Not Constitute Unlawful Tax

In the recent decision of Algoma Central Corporation v. Canada, 2009 FC 1287 the ship owners challenged the levying of harbour dues at certain Ontario ports by the federal government of Canada. Algoma Central Corporation and Upper Lakes Group Inc. are corporations carrying on business in Canada and are the owners of vessels trading on the Great Lakes and St. Lawrence Seaway system. The plaintiff Seaway Marine Transport is a partnership of these two corporations. The plaintiffs engage in the carriage of bulk cargo such as grain, iron ore, aggregates, salt and other commodities between ports in Canada and between ports in Canada and the United States. The ports to which the plaintiffs travel include the Ontario ports of Kingsville, Sarnia and Sault Ste. Marie, and it is harbour dues at these three ports that the plaintiffs challenged.

The plaintiffs claimed that, pursuant to the 1995 National Marine Policy and the coming into force of the Canada Marine Act, the Government of Canada intended to divest itself of these three ports and no longer provides services at Kingsville or Sault Ste. Marie, yet the Minister continues to levy harbour fees against Canadian ships that use these ports. This they said, has transformed the harbour dues from what was formerly a fee for a service into an unlawful tax.

For its overall stated objectives, the National Marine Policy intended to:

1. Ensure affordable, effective and safe marine transportation services; 2. Encourage fair competition based on transparent rules applied consistently across the marine transport system; 3. Shift the financial burden for marine transportation from the Canadian taxpayer to the user; 4. Reduce infrastructure and service levels where appropriate, based on user needs; and 5. Continue the Government of Canada’s commitment to safe transportation, a clean environment and service to designated remote communities.

The policy also intended to reflect the broad principle of commercialization.

The port of Kingsville is located on the north shore of Lake Erie, approximately 45 kilometres southeast of Windsor, Ontario. It was declared a public harbour by Order-In-Council on November 29, 1938. On July 8, 1999, the Crown transferred the public port facilities to the town of Kingsville and the Kingsville Port Users Association (KPUA). Pursuant to the transfer, it was agreed that Kingsville and the KPUA would operate and maintain the port and facilities. As part of the privatization agreement, the Government contributed $400,000 to the ongoing maintenance of the port and Transport Canada retained rights and responsibilities with respect to compliance with conditions associated with the contribution. Following the privatization of the port, the record indicates that a harbour master continued in his position until August 2000 and has not been replaced since. The Crown retains ownership of the harbour beds at the port of Kingsville.

Sault Ste. Marie is located in northern Ontario and is a transit point between Lake Huron and Lake Superior. The port of Sault Ste. Marie was established by Order-In-Council dated March 21, 1912 and was privatized on May 14, 1998. The Government no longer provides any services at Sault Ste. Marie, although it retains ownership of the harbour beds. There is currently a harbour master at Sault Ste. Marie whose only role, by all accounts, is to prepare invoices for harbour dues owing.

The plaintiffs’ claim alleged that the Minister acted beyond the scope of his statutory authority. The plaintiffs brought an action in the Federal Court. The judge was quite harsh on the plaintiffs holding that they were trying to do by way of an action that which should have been done by judicial review. Justice O’Keefe stated:

“The alleged invalidity of the Minister’s decision is at the heart of this action and is the basis for all of the relief sought by the plaintiffs. The plaintiffs are not entitled to disregard the statutory regime governing judicial review and thereby circumvent its prescribed procedures and time limitations by attacking the lawfulness of a decision in the guise of an action. The Federal Court of Appeal has stated definitively and repeatedly that to permit a plaintiff to proceed by action in order to have decisions of federal tribunals declared invalid is to compromise the finality of decisions, the principle which underlies the relatively short, 30 day time limit for the commencement of judicial review applications.”

At the hearing, the parties were prepared to argue the merits of the case even though the Crown submitted arguments that the matter should have proceeded as a judicial review. Justice O’Keefe held that despite his determination that the plaintiffs improperly brought the matter as an action, he allowed the case to move forward nonetheless. He was prepared to hear the summary judgment application.

The Court then reviewed the legislation and noted that under s. 67 of the Canada Marine Act the Minister has a broad authority to set fees and wide discretion when fixing the fees.

The Court noted that the Act authorizes the Minister to fix a fee for a ship entering a public port. This part of the section does not contemplate, much less require, any service being provided to the vessel. It could be a fee for entering the harbour as opposed to a fee for services being provided to the vessel. The Court concluded that the Act authorized the dues. The next issue was whether such dues were lawful.

“It is agreed that the harbour dues in question are not user fees, even though this may have been the origin of harbour dues. Thus, the only question is whether the harbour dues are in pith and substance a regulatory charge or a tax.” per O”Keefe (paragraph 86).

The Court noted that pursuant to section 53 of the Constitution Act, 1867, only Parliament may impose a tax. “If the harbour dues are in pith and substance a tax, they will be ultra vires and beyond the jurisdiction of the Minister to impose despite the Minister’s authority pursuant to the CMA. On the other hand, if the dues are in pith and substance a regulatory charge existing within a regulatory scheme, they may validly be imposed.” (at paragraph 87)

The Supreme Court of Canada in an earlier decision established a two-step approach to determine if a governmental levy is connected to a regulatory scheme. The first step is to identify the existence of a relevant regulatory scheme. To do so a court should look for the presence of some or all of the following indicia of a regulatory scheme: (1) a complete, complex and detailed code of regulation; (2) a regulatory purpose which seeks to affect some behaviour; (3) the presence of actual or properly estimated costs of the regulation; (4) a relationship between the person being regulated and the regulation, where the person being regulated either benefits from, or causes the need for, the regulation.

Provided that a relevant regulatory scheme is found to exist, the second step is to find a relationship between the charge and the scheme itself. This relationship will exist when the revenues are tied to the costs of the regulatory scheme, or where the charges themselves have a regulatory purpose, such as the regulation of certain behaviour.

Justice O’Keefe noted that:

“The regulation of public ports under the CMA constitutes a national system and this system clearly constitutes a regulatory scheme. The relevance of the regulatory scheme to the plaintiffs, if not abundantly obvious, is evidenced through the plaintiffs’ use of the public ports and their surrounding waters and Transport Canada’s services at many of those ports as well as Transport Canada’s continuing responsibilities concerning safety and navigation. These factors demonstrate that the plaintiffs benefit from the regulation of public ports. This leaves only the final factor; the existence of a relationship between the harbour dues and the national system of public ports.”

With respect to this final factor the Court noted that the most relevant evidence presented was that which established that Transport Canada only covered a portion of the total costs incurred by Transport Canada in relation to public ports.

Justice O’Keefe concluded:

“The individual public ports in Canada, it is agreed, form a system and this system falls under the regulation of Transport Canada. It is also a fact that Transport Canada expends more funds for the system than it collects from the various fees. Following the above jurisprudence, the harbour dues can hardly be considered a tax, as the Crown only recovers a portion of the total costs it expends on the public port regulatory system.”

The fees were not an unlawful tax.

Rui Fernandes

This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

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