Citation:	Canada (A.G.) v. Canadian Pacific Ltd.	Date: 20020827
		Docket: CA027336/CA027337
	2002 BCCA 478	CA027338/CA027339/CA027400CA027401/CA027402/CA027403
COURT OF APPEAL FOR BRITISH COLUMBIA
BETWEEN: CA027336
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (PLAINTIFF)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)

BETWEEN:	CA027337
JOE MATHIAS, on his own behalf and on behalf of the members of the Squamish Indian Band, and the SQUAMISH INDIAN BAND
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)
AND:
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (DEFENDANT)
AND:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (THIRD PARTY)

BETWEEN:	CA027338
LEONARD GEORGE as CHIEF, MATTHEW THOMAS, JOE THOMAS and CARLEEN THOMAS, and Councillors on their own behalf and on behalf of the members of the Burrard Indian Band and the said BURRARD INDIAN BAND
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)
AND:
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (DEFENDANT)
AND:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (THIRD PARTY)

BETWEEN:	CA027339
CHIEF WENDY A. GRANT, JOSEPH R. BECKER, ERNEST CAMPBELL, MARY CHARLES, JOANNA CRAWFORD, A. GEORGE GUERIN, MARILYN POINT, N. ROSE POINT, SUSAN POINT, LEONA M. SPARROW, the elected councillors of the Musqueam Indian Band, suing on their own behalf and on behalf of all other Members of the Musqueam Indian Band
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)

AND:

THE ATTORNEY GENERAL OF CANADA on behalf of

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

RESPONDENT

(DEFENDANT)

AND:

HER MAJESTY THE QUEEN IN RIGHT OF CANADA

RESPONDENT

(THIRD PARTY)

BETWEEN:	CA027400
JOE MATHIAS, on his own behalf and on behalf of the members of the Squamish Indian Band, and the SQUAMISH INDIAN BAND
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)
AND:
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (DEFENDANT)
AND:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (THIRD PARTY)

BETWEEN:	CA027401
CHIEF WENDY A. GRANT, JOSEPH R. BECKER, ERNEST CAMPBELL, MARY CHARLES, JOANNA CRAWFORD, A. GEORGE GUERIN, MARILYN POINT, N. ROSE POINT, SUSAN POINT, LEONA M. SPARROW, the elected councillors of the Musqueam Indian Band, suing on their own behalf and on behalf of all other Members of the Musqueam Indian Band
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)
AND:
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (DEFENDANT)
AND:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (THIRD PARTY)

BETWEEN:	CA027402
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
RESPONDENT (PLAINTIFF)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)

BETWEEN:	CA027403
LEONARD GEORGE as CHIEF, MATTHEW THOMAS, JOE THOMAS and CARLEEN THOMAS, and Councillors on their own behalf and on behalf of the members of the Burrard Indian Band and the said BURRARD INDIAN BAND
RESPONDENTS (PLAINTIFFS)
AND:
CANADIAN PACIFIC LIMITED
APPELLANT (DEFENDANT)
AND:
THE ATTORNEY GENERAL OF CANADA on behalf of HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (DEFENDANT)
AND:
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
APPELLANT (THIRD PARTY)

Before:	The Honourable Mr. Justice Esson
	The Honourable Madam Justice Newbury
	The Honourable Madam Justice Huddart
	The Honourable Mr. Justice Hall
	The Honourable Mr. Justice Hollinrake

J.E. Gouge, Q.C., K.C. Bourchier		Counsel for the Appellant Canadian Pacific Limited
D.G. Cowper, Q.C., H. Frankson		Counsel for the Appellant Attorney General of Canada
J. Rich, F.M. Kirchner		Counsel for the Respondent Squamish Indian Band
S.H. Ashcroft, C. Sweet		Counsel for the Respondent Burrard Indian Band
M. MacLean		Counsel for the Respondent Musqueam Indian Band
Place and Date of Hearing:	Vancouver, British Columbia
October 22, 23, 24, 25, 2001
Place and Date of Judgment:	Vancouver, British Columbia
August 27, 2002

Written Reasons by:

The Honourable Mr. Justice Esson

Concurred in by:

The Honourable Madam Justice Newbury

The Honourable Madam Justice Huddart

The Honourable Mr. Justice Hall

The Honourable Mr. Justice Hollinrake

Reasons for Judgment of the Honourable Mr. Justice Esson:

[1] These reasons apply to eight appeals which have arisen in four actions heard together. All concern entitlement to some 10.6 acres of land in the City of Vancouver comprised in two contiguous parcels referred to as Lot J and Block I. Lot J was acquired by the Canadian Pacific Railway for railway purposes in 1886 and Block I, in 1902.

[2] I will refer to the parties in the first action as "Canada" and "CPR". That action was brought by Canada in 1989 after it learned that CPR, having decided that the land was no longer required for railway purposes, had offered it for sale. Canada sued for a declaration that, upon the cessation of railway uses, the "right, title and interest in the land has determined and/or reverted to ... Canada". The basis for that claim was that the land had been transferred by Canada to CPR under the Railway Act as it stood from time to time but which in all its versions provided that:

The company may not alienate any such lands so taken, used or occupied.

The case authority primarily relied on by Canada is the decision of this court in what is familiarly referred to as "the Kettle Valley case" (Canada (A.G.) v. Canadian Pacific Limited, [1986] B.C.J. No. 407 (Q.L.)). In that judgment, this court upheld the decision of Mr. Justice Meredith which is reported at [1986], 1 C.N.L.R. 1 (B.C.S.C.). The essence of the decision is that, because of the restraint on alienation in the Railway Act, Crown land taken under that Act for railway purposes must, once it ceases to be used for railway purposes, be restored to Canada.

[3] The other three actions were brought by the Squamish, Burrard and Musqueam Bands against Canada and CPR claiming that, because the lands were reserve lands at the time of taking, they revert to Canada for the benefit of the Bands. The issues between the three Bands are the subject of litigation in the Federal Court. The trial judgment delivered on October 5, 2000 (Part I) and April 2, 2001 (Part II) is reported as Squamish Indian Band v. Canada (Mathias v. the Queen), [2000] F.C.J. No. 1568; 2001 FCT 480 (Q.L.).

[4] Madam Justice Saunders (now J.A.) found in this case at trial, in reasons reported at (2000), 79 B.C.L.R. (3d) 62, 2000 BCSC 933, in favour of Canada against CPR and in favour of the Bands against Canada and CPR. The formal judgments entered in each of the four actions read as follows:

THIS COURT ORDERS AND DECLARES that:

1. The Defendant, Canadian Pacific Limited, has ceased to use the lands and premises more particularly known and described as:

City of Vancouver

Lot J, District Lot 3610, Plan 20765

Parcel Identifier: 003-480-674

("Lot J")

and

Block I (Reference Plan 6311), except portions in Plan 13996 and 19948

District Lot 3610

Parcel Identifier 015-875-822

("Block I")

and

That part of Lot 91, False Creek Plan 19948, Parcel Identifier 006-935-273, which was formerly a portion of Block "I" (reference plan 6311) District Lot 3610 ("Lot 91")

2. All right, title and interest of Canadian Pacific Limited in Lot J, Block I, and Lot 91 has determined by operation of law, with the result that Canadian Pacific Limited has no right, title or interest in Lot J, Block I and Lot 91.

3. Lot J, Block I, and Lot 91 are hereby vested in Her Majesty the Queen in Right of Canada ("Canada") and are revived as reserve lands within the meaning of the Indian Act, R.S.C. 1985, c. I-5 and shall be held by Canada for the use and benefit of the Indian band or bands found to be so entitled in the proceedings now pending before the Federal Court of Canada in actions #T-1631-81, #T-956-93 and #T-3150-92.

(Note: Lot 91 was originally part of Block I.)

[5] In each action, CPR has appealed the decision in favour of Canada and Canada has appealed the decision in favour of the Bands.

LOCATION AND HISTORY OF THE RESERVE

[6] The reserve, sometimes called the Kitsilano Indian Reserve and sometimes the False Creek Reserve, was located at the mouth of False Creek where it flows into English Bay. The trial judge outlined its history as follows:

[11] In 1869, before the Terms of Union, the colony of British Columbia had reserved about 37 acres on Kitsilano Point as the Kitsilano Indian Reserve. This reserve was enlarged by the Joint Indian Reserve Commission in 1887 to about 80 acres. It was further enlarged by accretion to about 86.25 acres. The Kits Wye is within the boundaries of that reserve.

[12] In 1886, when the CPR first entered Lot J for the purpose of railway construction, and in 1900 when the V&LI Railway entered Block I, proprietary title to the land lay with the Province of British Columbia. Likewise in 1902, when Letters Patent to Block I were issued, and in 1928 when Letters Patent to Lot J were issued, proprietary title to these reserve lands remained with British Columbia. Although the jurisdiction over Indian lands lay with Canada under s.91(24) of the Constitution Act, and British Columbia had agreed to convey title to Indian Reserve lands to Canada by article 13 of the Terms of Union, proprietary title to the Kitsilano Indian Reserve was not transferred to Canada until 1947, and then Canada acquired title to the lands only because they were reserved for use by Indians.

[7] The shape of the reserve, and of the two plots of land now in dispute, is shown in a plan prepared in 1925 for a re-survey. That plan is reproduced as an appendix at the end of these reasons.

[8] The land taken in 1886 and now known as Lot J is the area shown on the Plan as the "English Bay Branch CPR" running in a straight line from the shore of False Creek to Chestnut Street. The single punctuated line extending into False Creek indicates the location of the trestle built by CPR to connect the north and south shores of False Creek, the reserve being situate on the south shore.

[9] The Burrard Street Bridge, built in about 1930, crosses the disputed lands starting at a point slightly to the north of the trestle. Plans filed by CPR in 1886 with the Department of Railways show the English Bay Branch running westwards in a straight line to what is now known as Kitsilano Beach and then running along the south shore of English Bay for a further half-mile or so to about the north foot of the present Trafalgar Street. It seems that the line running from the trestle to Trafalgar Street may never have carried more than one CPR train and that the line west of Kitsilano Beach was effectively abandoned soon after being built. The straight section running across Kitsilano Point to Kitsilano Beach, after years of disuse, was leased in 1905 to the B.C. Electric Railway Co. (B.C.E.R.) which used it until about 1948 as the route of its No. 12 streetcar line which ran from downtown Vancouver across the trestle to Kitsilano Beach.

POSITION OF CPR

[10] At trial, CPR's position with respect to Lot J and Block I was that both were conveyed to CPR pursuant to the provisions of CPR's special act of 1881 and the CPR Contract confirmed and ratified by it. The submission was that, as those provisions include no restraint on alienation similar to that in the Railway Act, the title was a fee simple absolute. In this court, CPR abandoned that position in relation to Block I which it now concedes was expropriated by CPR's subsidiary, the Vancouver & Lulu Island Railway Company (V & LI), under the provisions of the Railway Act. The argument in respect of Block I is now confined to contending that the decision in Kettle Valley is wrong in holding that lands which are no longer necessary for the use of the railway must be restored to the Crown. The submission is that, even if CPR cannot alienate the land, it can retain it and use it for purposes, such as rental apartment blocks, other than railway purposes.

[11] If CPR did not receive a fee simple absolute to Block I, the question of alternate use must also be considered in relation to that parcel.

THE CPR ACT AND CONTRACT

[12] British Columbia entered Confederation on the basis of the Terms of Union, 1871. The most important term was Article 11 by which Canada undertook to complete construction of the transcontinental railway within ten years, i.e. by 1881. The government led by Sir John A. Macdonald, which had entered into the Act of Union, fell in November 1873, partly as a result of scandals surrounding the Pacific Railway. Little visible progress had been made by September 1878 when the Liberal government of Sir Alexander MacKenzie fell and the Conservatives returned to power, although Sir John suffered personal defeat in Kingston. That led to his becoming the member for Victoria to the great pleasure of Victorians who, for a time, had high hopes that their ambitions for their city being the terminus of CPR would come to pass. It was not to be. By 1880, it was clear that the railway would run to Burrard Inlet.

[13] The Federal government by 1880 had concluded that extraordinary measures would be required to satisfy British Columbia. As Girouard J. said in Canadian Pacific Railway Company v. James Bay Railway Company (1905), 36 S.C.R. 42 at p. 74:

As it may easily be understood from the past experience most extensive and, in fact, unprecedented powers were demanded and obtained. To do so the whole policy of the country, as expressed in the Railway Act of 1879, had to be set aside and a new and exceptional one adopted.

In October 1880, CPR and Canada entered into the agreement (the CPR Contract) for construction of the transcontinental railway. The CPR Act, the full title of which is An Act respecting the Canadian Pacific Railway, was assented to on February 15, 1881. It has three main components. The first is the Act consisting of six short sections. The second, annexed as a Schedule, is the CPR Contract approved and ratified in s. 1 of the Act. The third, annexed as Schedule "A", is the Articles of Incorporation referred to in the Contract, which set out the powers of the Company.

[14] Section 3 of the Act provides for a subsidy of $25 million and 25 million acres of land to be paid and conveyed on the terms and conditions in the Contract. Section 5 of the Act, which is one of the foundation stones of CPR's submissions, reads:

5. Pending the completion of the eastern and central sections of the said railway as described in the said contract, the Government may also transfer to the said Company the possession and right to work and run the several portions of the Canadian Pacific Railway as described in the said Act thirty-seventh Victoria, chapter fourteen, which are already constructed, and as the same shall be hereafter completed; and upon the completion of the said eastern and central sections the Government may convey to the Company, with a suitable number of station buildings, and with water service (but without equipment), those portions of the Canadian Pacific Railway constructed, or agreed by the said contract to be constructed by the Government, which shall then be completed; and upon completion of the remainder of the portion of the said railway to be constructed by the Government, that portion also may be conveyed by the Government to the Company, and the Canadian Pacific Railway defined as aforesaid shall become and be thereafter the absolute property of the company; the whole, however, upon the terms and conditions, and subject to the restrictions and limitations contained in the said contract.

[emphasis added]

[15] Clause 1 of the Contract defined the eastern section as extending from the western terminus of the Canada Central Railway at Callander Station (near Sudbury) to Selkirk (Winnipeg) and defined the central section as the portion from Selkirk to Kamloops. The western section was defined as the portion of the line from Kamloops to Port Moody. There was no provision in the Act or Contract for any extension beyond Port Moody although there were provisions in the Contract for extensions from Callander eastwards to the Atlantic seaboard.

[16] The words which I have underlined in s. 5 in the second line are of particular significance to CPR's case. It is common ground that "that portion" refers to the western section. It follows, in CPR's submission, that the government was obliged to convey to CPR the disputed lands which then became and were thereafter the absolute property of the Company.

[17] CPR also relies on Article 7 of the CPR Contract which has language similar to s. 5 of the Act providing that, upon completion by the government of the western section it should be conveyed to CPR. The article concludes with these words:

... and the Canadian Pacific Railway shall become and be thereafter the absolute property of the Company. And the Company shall thereafter and forever efficiently maintain, work and run the Canadian Pacific Railway.

OTHER STATUTORY PROVISIONS

[18] The general statute applicable in the 1880's to all federally incorporated railways was the Consolidated Railway Act, 1879 which I will call "the 1879 Act". The relationship between that statute and the CPR Act was defined in Clause 17 of Schedule A to the CPR Act:

17. "The Consolidated Railway Act, 1879," in so far as the provisions of the same are applicable to the undertaking authorized by this charter, and in so far as they are not inconsistent with or contrary to the provisions hereof, and save and except as hereinafter provided is hereby incorporated herewith.

The position of Canada and the Bands is that the disputed lands did not pass to CPR under its Act and Contract, but were taken under the 1879 Act.

[19] In that Act, the general power to take lands, other than Crown lands, is in s. 7(2):

7.  The Company shall have power and authority, —

* * *

  2.  To purchase, hold and take of any corporation or person any land or other property necessary for the construction, maintenance, accommodation and use of the railway, and also to alienate, sell or dispose of the same;

Section 7(3) conferred the power to take Crown lands. It is subject to important restrictions:

  3.  No railway company shall take possession of, use or occupy any lands vested in Her Majesty, without the consent of the Governor in Council; but with such consent any such company may take and appropriate for the use of their railway and works, but not alienate, so much of the wild lands of the Crown lying on the route of the railway, as have not been granted or sold, and as may be necessary for s