IN THE SUPREME COURT OF BRITISH COLUMBIA No. A9807338 Vancouver Registry BETWEEN: JERRY HAAGSMAN PETITIONER AND: MINISTER OF FORESTS, ATTORNEY GENERAL OF BRITISH COLUMBIA and J. DAVID LAWSON, District Manager, Fort St. John Forest District RESPONDENTS AND Nos. A981602, A981605, A981606, A981604, A981603, A981647 A981648 and A981649 Vancouver Registry BETWEEN: TERRENCE WILLIAM QUAITE and J.S. JONES TIMBER LTD. PETITIONERS AND: HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA, THE ATTORNEY GENERAL OF BRITISH COLUMBIA, THE DISTRICT MANAGERS OF THE SQUAMISH FOREST DISTRICT, THE CLEARWATER FOREST DISTRICT, THE KAMLOOPS FOREST DISTRICT, and THE SALMON ARM FOREST DISTRICT OF THE MINISTRY OF FORESTS OF THE PROVINCE OF BRITISH COLUMBIA, THE REGIONAL MANAGER OF THE VANCOUVER FOREST REGION OF THE PROVINCE OF BRITISH COLUMBIA, REVIEW OFFICIAL OF THE PROVINCE OF BRITISH COLUMBIA,and an APPEAL BOARD APPOINTED PURSUANT TO THE FOREST ACT, R.S.B.C. 1979, c. 140 RESPONDENTS REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE SIGURDSON Counsel for the Petitioner, Murray B. Blok Haagsman: Counsel for the Petitioners D. Ross Clark Quaite and J.S. Jones Timber Ltd. Counsel for the Respondents George H. Copley, Q.C. Place and Dates of Hearing: Vancouver, B.C. 7 & 31 August 1998 1 September 1998 INTRODUCTION [1] Several logging contractors bring these petitions under the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 for certiorari and to recover deposits that they contend were retained by the Ministry of Forests under a Forest Act regulation that was declared invalid in an earlier judicial proceeding. [2] The petitioners say that an earlier decision of this court quashing the decision of a forestry official, declaring the regulation invalid and ordering the return of a deposit, is binding in these proceedings in all respects. The respondents, while not contesting the invalidity of the regulation, assert that the earlier decision is not binding on the deposit issue because the issue of the deposit's return was never argued, the decision on that point was not considered and there are factual and legal reasons why these deposits should not be returned. The respondents make a preliminary objection that the claim is for damages or restitution and, as such, cannot be brought in a judicial review proceeding. [3] The preliminary issues that I must decide are: whether I am bound by the prior decision in this court and must order return of the deposits; whether this proceeding, insofar as it claims the return of monies, is properly brought under the Judicial Review Procedure Act; and if not, whether I should convert the petitions into actions and treat the applications as summary trial claims for the return of the deposits. BACKGROUND [4] There are nine petitions that were heard together: one brought by Jerry Haagsman; one by Terrence William Quaite and the other seven by J.S. Jones Timber Ltd. [5] After a tendering process, each petitioner or its assignor entered into a timber sales licence with Her Majesty the Queen in Right of the Province of British Columbia (the Crown) to log particular volumes of timber in certain areas. In each instance the licensee was required to lodge a cash deposit. The facts of each situation are slightly different, but for present purposes I need only refer to the facts in the Haagsman petition. [6] On October 31, 1993, after a tendering process, the Crown granted to Mr. Haagsman timber sales licence number A47389 for a two year term. Pursuant to the licence, Mr. Haagsman lodged a cash deposit of $50,747.38 as security for his performance. In the two seasons following the granting of the licence, he logged 13,000 of the estimated 17,068.6 cubic metres of timber. But by early 1995 the timber market had plummeted and continued logging became uneconomical. [7] Mr. Haagsman could not obtain a market for the remaining 4,000 cubic metres. The stumpage payable by him under his successful bid was $90.07 per cubic metre and the logging costs were about $30 a cubic metre, but by 1995 Mr. Haagsman could sell at only $75 per cubic metre. He apparently would have lost $180,000, i.e. about $45 per cubic metre for the 4,000 cubic metres of remaining timber if he had completed the logging under the licence. [8] The term of the licence was extended, but by letter of January 29, 1997, the district manager of the Fort St. John forest district gave notice to Mr. Haagsman that he had made a determination to cancel the licence and notified Mr. Haagsman that the deposit of $50,747.38 was forfeited to the Crown. [9] Between December 7, 1995 and December 13, 1996, various district managers ordered forfeiture of each of the other petitioners' deposits under their timber sales licences. [10] I now turn to the case that the petitioners say that I must follow as a matter of stare decisis - Hayes Forest Services Ltd. v. Minister of Forests et al. (26 November 1997), Vancouver A972427 (B.C.S.C.). Hayes Forest Services Limited brought a petition for judicial review to set aside a district forest manager's decision that a deposit it had lodged under a timber sales licence be forfeited. [11] In Hayes the question was whether the automatic deposit forfeiture provision in s. 8(3)(a) of the Advertising, Deposits and Disposition Regulation, 552/78 as am. B.C. Reg. 331/89, was valid. The regulation read: Where a licensee fails or refuses to comply with the terms and conditions of an agreement and the licence is cancelled, (a) the deposit is forfeited to the Crown, and (b) the licensee, if a small business forest enterprise, shall be disqualified under s. 61.1(d) and (e) of the Act. [12] On November 26, 1997, in a judicial review proceeding, Mr. Justice J.T. Edwards granted a declaration that s. 8(3), the deposit forfeiture provision, was ultra vires and of no force and effect. He said: With respect to both the forfeiture and the disqualification, the Regulation abrogates rights created by the statute because s. 78 of the Forest Act entitles the licensee to the benefit of an exercise of discretion on the part of a district manager, whereas the regulation purports to remove that discretion by making mandatory that which is discretionary under s. 78 of the Forest Act. Thus, I conclude that the decision of the district manager and the reviewer were both made under the purported authority of the regulation. In the event that the provisions in question are found to be ultra vires it follows that the order by which the petitioner's deposit was forfeited cannot stand and the deposit must be returned. It must also follow that any reviewer's decision to have the district manager impose mandatory periods of disqualification must also be quashed. [13] In the result, Edwards J. quashed the decision of the forestry official and granted an ancillary order directing the Minister of Forests to repay the deposit. [14] After Hayes, the petitioners commenced these legal proceedings and demanded return of their deposits that had earlier been forfeited in similar circumstances to the Crown. [15] Hayes was not appealed. In these proceedings the Crown does not dispute the invalidity of the regulation, but contends that the order in Hayes that the deposit be returned should not be followed because the issue was not argued at all. Mr. Copley submits that there are binding authorities that were not addressed and on the question of the ancillary relief it was not a considered judgment. [16] The Crown's position is that the decision of the district forester under the invalid regulation, even if quashed, should not, after a full consideration by this court, lead to a return of the deposits for a number of reasons. [17] First, a procedural reason: Mr. Copley argues that there is no jurisdiction in a Judicial Review Procedure Act proceeding to order return of the deposits. [18] The respondents also say that there are legitimate procedural reasons why the petitioners' claims should be advanced in an action, not in a petition: (i) the legal basis for return of the deposits is unclear and the respondents are entitled to receive pleadings and have an opportunity to file a defence; and (ii) the respondents should be able to conduct examinations for discovery to demonstrate that there has not been an unjust enrichment; [19] Second, Mr. Copley argues that there are substantive defences to the claim for return of the deposits: (i) under the licences there are contractual grounds to retain the deposits other than the impugned regulation; (ii) there is a rule against recovery of levies or taxes under unconstitutional or invalid legislation; (iii) the ministry is entitled to retain the forfeited deposit by operation of the de facto doctrine; and (iv) the payment was voluntary and is not recoverable. [20] I sent a memorandum to counsel concerning the respondents' preliminary objection that the Judicial Review Procedure Act proceeding was inappropriate for a restitutionary claim. I asked for submissions on the appropriateness of converting the petition into an action and dealing with the petitioners' claims as ones for summary trial for return of the deposits. [21] The petitioners maintain that the relief was appropriately sought under the Judicial Review Procedure Act, but argue that I could convert the petition into an action and treat the petition as an application for summary trial or judgment. The respondents maintain that the claim was improperly brought under the Judicial Review Procedure Act and that I should not convert it into an action or summary trial proceeding without requiring pleadings disclosing the grounds for the relief sought and giving the respondents an opportunity to conduct discoveries. STARE DECISIS [22] Re Hansard Spruce Mills Limited (1954), 13 W.W.R (N.S.) 285 (B.C.S.C.) is the leading authority on when a judge may refuse to follow a colleague's decision. Wilson J., as he then was, said this about stare decisis at p. 286: I will only go against a judgment of another judge of this court if: (a) Subsequent decisions have affected the validity of the impugned judgment; (b) It is demonstrated that some binding authority in case law or some relevant statute was not considered; (c) The judgment was unconsidered, a nisi prius judgment given in circumstances familiar to all trial judges, where the exigencies of the trial require an immediate decision without opportunity to fully consult authority. [23] In Hayes, the argument before Edwards J. focussed on the validity of the regulation mandating forfeiture of the deposit and the availability of certiorari when there was an alternative remedy by way of appeal. The issue of whether the Ministry of Forests should return the deposit was, it appears, not argued at all. [24] I think that it has also been clearly demonstrated that there are binding authorities on different aspects of this very interesting issue that were not considered by the court for the simple reason that the ancillary order made by Edwards J. was not contested. The argument before me demonstrates that if the question had been argued, there are several serious issues, including: the appropriateness of such a remedy under the Judicial Review Procedure Act; whether there is an applicable rule that prevents recovery of levies under invalid legislation; whether the de facto doctrine provides a defence against repayment; and whether the deposits are not returnable as voluntary payments. [25] As a matter of stare decisis I am clearly bound by Hayes on the question of the validity of the regulation but for the reasons I have expressed, in these circumstances, it is not binding authority that the deposit should be returned. JUDICIAL REVIEW PROCEDURE ACT [26] The respondents argue that the petitioners cannot bring a claim for return of the deposits in this proceeding. They make two related arguments. They argue that under the Judicial Review Procedure Act, the court's jurisdiction is limited and does not include exercising any discretionary powers which are vested in the district forest manager. Further, they argue that a claim for damages or restitution is not appropriate in judicial review proceedings. [27] The Judicial Review Procedure Act provides: 2(1) An application for judicial review is an originating application and must be brought by petition. (2) On an application for judicial review, the court may grant any relief that the applicant would be entitled to in any one or more of the proceedings for: (a) relief in the nature of mandamus, prohibition or certiorari; (b) a declaration or injunction, or both, in relation to the exercise, refusal to exercise, or proposed or purported exercise, of a statutory power. [28] The respondents argue that when a court is considering an application for judicial review it does not sit on appeal and is not empowered to substitute its own order for that which the tribunal below could have made. The respondents' position is that the reviewing judge's jurisdiction is limited to sending the matter back to the official with directions as to the applicable law. The respondent relies on Henson v. Agricultural Land Commission (1981), 31 B.C.L.R. 65 (B.C.S.C.) where Ruttan J. said at 66: I agree that under s. 2 of the Judicial Review Procedure Act I may grant relief in the nature of certiorari in the present case if I find there has been an error in law on the face of the record. However, I do not agree that power goes beyond quashing the order made by the commission...By quashing the order I am merely directing them to exercise their jurisdiction in reconsidering their decision. But I cannot make any order which I think they should have made. The land is still within the reserve, and the board can reconsider the matter, in view of any comments that I may make as to the error involved, and giving both parties the opportunity to make further representations. [29] In these circumstances, the respondents argue that the district forest manager may retain the deposit under other provisions in the timber sales licence regardless of the validity of the impugned regulation. If I simply order the return of the deposit, the respondents argue that I will, in effect, be exercising the discretion and jurisdiction which is vested in the district manager under the licence. [30] The order that the petitioners seek is a return of deposits. What is the nature of the plaintiffs' claim? It is not a claim in the nature of mandamus, certiorari or prohibition. It is a restitutionary claim rooted in unjust enrichment or perhaps a claim for money had and received. Can a claim of this type be brought in a judicial review proceeding? [31] In Administrative Law, 6th ed. (Oxford: Clarendon Press, 1989), H.W.R. Wade addressed the traditional distinction between prerogative and private law remedies. At p. 584 he writes: Until not long ago anomalies used to be caused by the fact that the remedies employed in administrative law belong to two different families. There is the family of ordinary private law remedies such as damages, injunction, and declaration; and there is a special family of public law remedies, principally certiorari, prohibition and mandamus, collectively known as the prerogative remedies... Within the "ordinary" and "prerogative" families the various remedies could be sought separately or together or in the alternative. But each family had its own distinct procedure. Damages, injunctions, and declarations were sought in an ordinary action, as in private law; but prerogative remedies had to be sought by a procedure of their own, which could not be combined with an ordinary action. [32] Section 2(2) of the Judicial Review Procedure Act clearly alters this and allows a petitioner to seek a declaration or injunction in judicial review proceedings, but is silent on the issue of damages. The following passage from D.P. Jones and A.S. de Villars, Principles of Administrative Law, 2d ed. (Toronto: Carswell, 1994) at 500 addresses this issue: In addition to statutory appeals and prerogative remedies, redress for illegal government actions may sometimes be achieved by using private law actions for damages, injunctions or declarations. Although these private law remedies could historically only be sought by an action, applications for an injunction or a declaration (but not damages) can now be included in an "application for judicial review", either on their own or in combination with an application for a prerogative remedy. (emphasis added) [33] My review of the authorities indicates that in the absence of a specific rule allowing it, a claim for damages or restitution cannot be made in a judicial review proceeding. No such rule exists in British Columbia, though it is interesting to note that one has been enacted in England: Supreme Court Act 1981 (U.K.), 1981, c. 54, s. 31(4) and Rules of the Supreme Court (U.K.), Order 53, r. 7. [34] For example, it has been held that claims for arbitrational misconduct or common law claims of damages for tortious conduct cannot be brought under the Judicial Review Procedure Act. In Montgomery v. Atmore, (14 January 1988) Vancouver CA007383 (B.C.C.A), Locke J.A. said: The claims advanced by Mr. Montgomery break down into two categories: first, that the arbitrator's decision ought to be set aside because the arbitrator was biased and did not properly conduct himself by way of hearing the parties. This is known as arbitrational misconduct. Second, a claim for damages for tortious conduct. These are both perfectly recognizable categories of action. However, when one goes to the Judicial Review Procedure Act and looks at s. 2, it reads as follows: [quoted earlier] ... Neither of the categories of claims, first for arbitrational misconduct, or second, for common law claims for damages lie within the scope of those words. This decision was applied in Clubb v. Saanich (District), (1996) 35 Admin. L.R. (2d) 309 (B.C.S.C.). [35] In Graduate Students' Assn. of University of Alberta v. University of Alberta (1991), 80 Alta. L.R. (2d) 280 (Alta. C.A.), the applicant began judicial review proceedings in relation to certain fees which had been collected by the university. Pursuant to statute, ministerial approval was required before the university could impose new fees, but the respondent had not received such approval in respect of the fees in question. The applicant sought an order declaring that those fees had been invalidly levied and, further, that the monies be returned. [36] The chambers judge held that the fees required prior ministerial approval and ordered that they be returned. [37] The Court of Appeal addressed the issue of restitution and noted that R. 753.04(1) of the Alberta Rules of Court (which is, in its effect, identical to s. 2(2) of our Judicial Review Procedure Act) sets out the type of relief that a court may grant on such a judicial review application. The court said at p. 285: The board submits that damages and restitution were neither pleaded nor argued. It further argues that in any event, an action for damages or restitution cannot be joined with an action for judicial review, as was initiated by the respondents in this case. We agree. Under Pt. 56.1 of the Rules of Court, an action for damages or restitution cannot be joined with an application for judicial review. Rule 753.04(1) sets forth the type of relief a court may grant on an application for judicial review. An order for damages or restitution is not included. The respondents assert that such relief is merely ancillary to any declaration that a disputed fee is a "fee for instruction" and that such relief is expressly contemplated in R. 753.06. However, this rule does not have the scope the respondents contend. It permits the court which sets aside a decision (in this case, the decision by the board to increase the post-program fee) to direct a reconsideration and determination by the person who made the decision (again in this case, the board). But relief of this kind was not granted by the chambers judge. Instead, he went further than the rule either contemplates or permits and directed the repayment or crediting of all disputed fees paid by graduate students. [38] What is the rationale for not permitting claims for damages or restitution to be advanced in judicial review proceedings? In Klymchuk v. Cowan (1964), 45 D.L.R. (2d) 587 at 589 (Man. Q.B.), Smith J. addressed the common law status of prerogative writs and stated: [R]elief by way of certiorari was of a type distinct from that obtainable in an action, and other remedies were not joined to certiorari. The nature of certiorari has not been changed by the abolition of the writ and substitution for it of an order of certiorari by the Court ... In England it is also well established that other forms of relief may not be sought in certiorari proceedings. To permit other forms of relief, e.g. damages, to be obtained in proceedings for certiorari might result in certiorari becoming a method of appeal in cases where no appeal is intended to exist. Though some inconvenience may result, leading to multiplicity of proceedings in some instances, this is a further reasons why certiorari has always stood separate and distinct from other forms of relief. [39] There is, however, some authority that the granting of consequential relief in the form of repayment of specific monies is an appropriate ancillary order under the injunction power in an application for judicial review. [40] In Re Collins and Pension Commission of Ontario (1986), 56 O.R. (2d) 274 (Ont. H.C.), the court heard an application for judicial review of an Ontario Pension Commission decision giving consent to an employer's removal of surplus funds from a pension plan. The court held that the employer had no right to surplus funds except on the termination of the plan and the Commission, at the very least, should have required that the employer give notice of its application to the employees. The Commission's consent was a statutory power of decision within s. 1(f) of the Ontario Judicial Review Procedure Act and under s. 2 a court could grant declarations and injunctions in respect of the exercise of a statutory power. As the employer had been a party throughout and held the funds without authority, the court held that it was an appropriate case for a mandatory order in the exercise of the court's discretion to grant an injunction requiring the return of the money with interest. The court held that an order simply quashing the consent would be a purely academic exercise and said at 295: If I correctly understand the argument put to us by [the company's] counsel, [the company] seeks, even if it has no right to the funds, to continue to enjoy them on the ground that this Court can do nothing about it. [41] The petitioners also rely on the The King ex rel. Lee v. Workmen's Compensation Board, [1942] 2 D.L.R. 665 (B.C.C.A.). In that case the Court of Appeal affirmed a decision of Manson J. granting mandamus to compel the Board to pay the applicant an old age pension and continue the payment of that pension. This case is distinguishable. It was not a claim for a remedy akin to common law damages or restitution but, rather, dealt with the enforcement of a statutory or public duty. [42] As these two cases demonstrate, there may be circumstances where orders for payment of monies can be made in judicial review proceedings when that relief is in the nature of mandamus or when they are "necessarily ancillary" orders, but those are not the circumstances here. [43] An order for the return of those deposits cannot be said to be "necessarily ancillary" when there are complex and substantive legal and factual issues which need to be addressed in relation to whether such a restitutionary order is appropriate in the circumstances. I conclude that the relief sought by the petitioners for return of the deposits cannot be granted in a petition under the Judicial Review Procedure Act. RULE 52 - CONVERT INTO A SUMMARY TRIAL PROCEEDING [44] Rule 52(11)(d) of the Rules of Court provides: (11) On an application the court may ... (d) order a trial of the proceeding, either generally or on an issue, and order pleadings to be filed and may give directions for the conduct of the trial and of pre-trial proceedings, and for the disposition of the application. [45] Given that counsel have made submissions with respect to the legal issues, I raised with counsel the possibility that the petitions be treated as actions and the applications be treated as summary trials. [46] Under Rule 52(11)(d) I have a discretion, in proper circumstances, to convert these petitions into actions and in appropriate situations, to treat them as claims for summary trial. What are the factors I should consider? In Del Zotto v. Minister of National Revenue (1995), 103 F.T.R. 150 at 157, the court described some of the factors which I think generally should be considered on an application to convert a petition to an action: (1) the undesirability of multiple proceedings; (2) the desirability of avoiding unnecessary costs and delays: (3) whether the particular issues involved require an assessment of demeanour and credibility of witnesses; and (4) the need for the court to have a full grasp of all the evidence. [47] In Montgomery, supra at 4-5, Locke J.A. discussed the refusal of Meredith J. to remit the matter to the trial list. The court, of course, has power to transform the nature of any proceedings which may be inappropriate; for instance, to order a petition to stand as a statement of claim and affidavits to stand as particulars of pleadings and to this respondents, transformed into defendants, often are able to plead and to file their statement of defence. ... One of the objects of the Supreme Court Rules, commented on by Mr. Montgomery, is that the trial, or hearing of a cause or matter, is to be rendered as simple as possible and with as few complexities as possible. In my view it is very difficult, if not impossible, to simplify these documents and if the matter were to be referred to the trial list and the documents stand as a statement of claim it would be almost impossible for any defendant to file a statement of defence other than a denial, and then to ask for particulars. Mere denials are not always a satisfactory defence. This passage illustrates that in addition to the factors set out above, the court should consider whether it is in the interests of justice that there be pleadings and discovery in the usual way in order to resolve the dispute between the parties. [48] Counsel for the petitioners argues that the object of the Rules is to secure the just, speedy and inexpensive determination of every proceeding on its merits and a summary disposition, without further pleadings, is entirely appropriate given that the factual issues in dispute are minor and, arguably, only raised by the respondents with respect to the comparatively narrow issue of the discretionary nature of relief under the Judicial Review Procedure Act. [49] However, the petitioners' entitlement to the return of the deposits is not simply a straightforward legal question. The procedural question now is not just whether the petition should be treated as an action, but if so, whether it should be disposed of summarily. [50] I am persuaded that in these circumstances pleadings are necessary. I think it is in the interests of clarity that petitioners file a statement of claim, setting out with specificity their causes of action, and that the respondents file a defence. [51] A persuasive argument for not simply treating these petitions as summary trial applications, I think, is that the facts relating to the alleged unjust enrichment of the respondents are relevant and discovery is important. In Peel (Regional Municipality) v. Canada (1992), 98 D.L.R. (4th) 140 at 145 (S.C.C.), McLachlin J. emphasized the importance of facts in a restitutionary claim: As with most restitutionary claims, the particular facts of the case are of great importance to the ultimate decision of whether or not the courts will extend to the plaintiff the relief it seeks. [52] The respondents contend that Peel, supra, stands for the proposition that in any restitutionary claim there must be conferred on the defendant an "incontrovertible benefit" which McLachlin J. defined at 159: An "incontrovertible benefit" is an unquestionable benefit, a benefit which is demonstrably apparent and not subject to debate and conjecture. Where the benefit is not clear and manifest, it would be wrong to make the defendant pay, since he or she might have preferred to decline the benefit if given the choice. [53] The respondents say that the court, in assessing the equities between the parties, should not confine its attention to the initial payment and subsequent retention by the government, but should also look to the subsequent dealings between the parties under the timber sales licence contract which, the respondents say, governs their relationship. The respondents raise a number of factual allegations to support their argument that further investigations in the form of discoveries are necessary in order to establish whether full or partial restitution is warranted. These allegations include the following: there was cause for termination of the timber sales licence; a retention of some or all of the deposit was contemplated by the licence; the petitioner has likely profited from the sale of the 13,000 cubic metres of timber, which should be considered in a claim for restitution; the Crown will likely suffer losses in respect of the remaining timber and the petitioner may have engaged in "high-grading", a type of logging practice which the respondents argue may affect the balance of the equities between the parties. [54] I am persuaded that there are areas of investigation that may be relevant and the respondents should be entitled to discovery before trial or summary trial. [55] In terms of the preliminary objections, I have concluded that it is not appropriate to simply treat the applications that I have heard as summary trial applications. [56] There is no dispute that in these proceedings the various decisions of the district managers should be quashed to the extent that they were made on the basis of the regulation that was earlier declared invalid. That is not the end of the matter. The respondents have convinced me that there are legitimate issues that must be considered in relation to whether the deposits ought to be returned. [57] The order that I make is as follows: There will be a trial of this proceeding, in other words, the petition will be converted into an action; the petitioners will file a statement of claim within 14 days and the respondent shall file its statement of defence within 14 days. Thereafter, both sides are entitled to full pre-trial procedures as if this were an action commenced by writ of summons. [58] As I have already heard submissions on some of the legal issues, I am prepared, if available, to hear a summary trial application if and when that is brought on by the petitioners. [59] There will be no costs of these applications. "Sigurdson J."