Date: 19990617 Docket: 98 0873 Registry: Victoria IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: NANAIMO COMMUNITY BINGO ASSOCIATION and NANAIMO IMMIGRANT SETTLEMENT SOCIETY PLAINTIFFS AND: HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE HUTCHISON Counsel for the Plaintiffs: J. J. Arvay, Q.C. and M. G. Underhill Counsel for the Defendant: E. C. Chiasson, Q.C. and B. W. Dixon Place and Dates of Hearing: Victoria, B.C. 28 and 29 April 1999 [1] This matter was previously before the court January 11, 1999 and in reasons handed down January 19, 1999, I ordered that the certification hearing be divided into two parts. Firstly, pursuant to s. 4(a) of the Class Proceedings Act ("the Act"), to determine whether the pleadings disclosed a cause of action. Secondly, pursuant to s. 4(d) of the Act to determine whether a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues. [2] A brief history of the matter is necessary. The plaintiffs commenced their action March 5, 1998 on their own behalf and, under the Act, on behalf of a class of charitable and religious organizations who manage and conduct charitable bingos in British Columbia. An amended statement of claim was filed May 26, 1998, further amended under Rule 24(1) of the Rules of Court July 31, 1998, and again, under the Rule on April 22, 1999. Yet a further amendment was sought at the April hearing to add additional plaintiffs, one Gerry Coutu, a bingo player, and the Sooke Marine Rescue Society, a charitable organization said to represent licensees of charitable casinos. [3] Paragraph 1 of the statement of claim as amended is as follows: 1. The Plaintiff, Nanaimo Community Bingo Association (the "Plaintiff NCBA"), is a non- profit society incorporated under the provisions of the Society Act, R.S.B.C. 1996, c. 433, and whose registered address is 10 Esplanade Street, Nanaimo, B.C. V9R 4Y7. The members of the Plaintiff NCBA consist of approximately 78 religious and charitable organizations who hold charitable bingo licences. [4] The NCBA, along with its co-plaintiffs, in its latest amended statement of claim seeks the following relief: (a) A declaration that the "licence fees" imposed by the Province on Charitable Gaming are without lawful authority, and accordingly, are ultra vires the Province; (b) A further declaration that the "licence fees" imposed by the Province on Charitable Gaming in British Columbia exceed the Province's constitutional authority under sections 92(9) and 92(2) of the Constitution Act, 1867, and are accordingly ultra vires the Province; (c) A further declaration that the "licence fees" imposed by the Province on Charitable Gaming in British Columbia are contrary to sections 53 and 90 of the Constitution Act, 1867, and are accordingly ultra vires the Province; (d) A further declaration that the "licence fees" imposed by the Province on Charitable Gaming in British Columbia are not authorized by section 7(2) of the Lottery Act, R.S.B.C. 1996, c. 278, and are accordingly ultra vires the Province; (e) A further declaration that the "licence fees" imposed by the Province on Charitable Gaming in British Columbia authorize the Province to receive the proceeds of gaming that is managed and conducted by charitable and religious organizations contrary to section 207(1)(b) of the Criminal Code, R.S.C. 1985, c. C-46, and are therefore ultra vires or inoperative the Province; (f) An order that the Province pay to the Plaintiffs NCBA and Settlement Society and the Charitable Class the amount of revenue collected by the licence fees imposed on Charitable Gaming in British Columbia since 1977, with interest; (g) costs; and (h) such further and other relief as this honourable Court may deem just. [5] The major and significant relief sought is, of course, contained in paragraph (f), the claim for return of licence fees and interest, which would follow if the declaratory relief is well-founded. [6] As can be seen, the NCBA is an umbrella society representing, as paragraph 1 of the statement of claim says, some "... 78 religious and charitable organizations". The NCBA itself has never been licenced to carry on gaming in the Province of British Columbia. It acts as an agent for some 78 charities, some, if not all, of which have in fact been licenced from time to time to carry on charitable bingos. The plaintiff, Nanaimo Immigrant Settlement Society, is one such organization and pleads the following under paragraph 2 of the statement of claim: 2. The Plaintiff, Nanaimo Immigrant Settlement Society (the "Plaintiff Settlement Society") is a non-profit society incorporated under the provisions of the Society Act, R.S.B.C. 1996, c. 433, and whose registered address is #1801 - 1 Chapel Street, Nanaimo, BC, V9R 5H1. The Plaintiff Settlement Society is a member of the Plaintiff NCBA and holds a charitable bingo licence. [7] Prior to the introduction of the Act into the jurisprudence of British Columbia it is probable that the NCBA could have, and probably still could if not invoking the Act, brought this action as the authorized agent of the 78 charitable organizations it represents. It does not follow, however, that the NCBA may bring this action under the Act and plead under paragraph 3 of its statement of claim in this way: 3. The Plaintiffs NCBA, Settlement Society brings this action on their own behalf and under the Class Proceedings Act, R.S.B.C. 1996, c. 50 as representatives of the class of charitable and religious organizations who manage and conduct, or have managed and conducted since 1977, charitable bingos and casinos in British Columbia ("the Charity Class"). There are approximately 5500 members in the Class. [8] While I am aware pursuant to s. 2(4) of the Act that the court can certify a person not a member of the class if necessary in order to avoid substantial injustice to the class, counsel for the NCBA has in fact joined the Nanaimo Immigrant Settlement Society a member of the NCBA, one holding a charitable bingo licence, and now seeks to add a representative of charitable casinos, the Sooke Marine Rescue Society and Gerry Coutu, a bingo player. [9] In their proposed amended statement of claim, in paragraph 5, they plead as follows: 5. On or about June 1, 1998, the Defendant Her Majesty the Queen in Right of the Province of British Columbia (the "Province"), either directly or through her agents, servants, officers or employees, ceased to issue licences for charitable casinos. The Plaintiff Rescue Society is a representative of the subclass of charitable and religious organizations who have held, at least at one point in time since 1977, a licence to manage and conduct charitable casinos (the "Subclass"). [10] They further plead in the proposed amended statement of claim under paragraph 6 in joining Mr. Coutu the following: 6. In the alternative, the Plaintiff Gerry Coutu brings this action on his own behalf and under the Class Proceedings Act, R.S.B.C. 1996, c. 50 as a representative of the class of bingo players who have played bingo at charitable bingo halls in British Columbia since 1977 (the "Bingo Player Class"), and seeks judgment in favour of himself and the Bingo Player Class to be assigned to and for the exclusive use and benefit of the Charity Class. [11] This proposed amendment to join the bingo players as a class arises out of one of the Crown's arguments that licence fees were not paid by the plaintiff societies, but by the bingo players themselves in the form of an increased fee to obtain bingo cards to play the game. [12] Thus, in an alternative claim, the bingo players seek recompense from the Crown who, it is alleged, improperly overstepped their legal parameters in charging the charities a fee to carry on charitable bingo, and increased the cost of play to them. This claim is made even though it is conceded that in many cases the charities did not pass the fee on to the bingo players. [13] If the licence fee was, as argued, a disguised indirect tax and thus ultra vires the Province, or, alternatively, a direct tax and ultra vires as infringing on the federal gaming scheme set forth in the Criminal Code, the bingo players do not, in my view, have a cause of action and should not be and cannot properly be plaintiffs. Accordingly, I would dismiss the application to amend the statement of claim by adding Gerry Coutu as a plaintiff to represent the so-called bingo player class. The players claim is inconsistent with the charities'. [14] Similarly, the NCBA, never having paid a licence fee or alleged indirect or direct tax to Her Majesty, is not an appropriate plaintiff to bring action against Her Majesty for return of such licence fees and/or taxes for others. The society does not have a cause of action as required under s. 4(a) of the Act for compensatory relief. The Act is not designed, in my view, for declaratory relief not tied to compensatory relief. [15] Accordingly, the remaining issues for the court are whether or not the Nanaimo Immigration Settlement Society and the Sooke Marine Rescue Society have a cause of action and can seek to be certified, pursuant to the Act, to claim on their own and as representatives of a class, the return of "licence fees" allegedly illegally imposed by Her Majesty. To clarify the issues I repeat paragraphs 4 and 5 of my January reasons: [4] Much of the background and the rationale for this law suit is set forth in the judgment of Owen-Flood J., In the Matter of the Judicial Review Procedure Act; Nanaimo Community Bingo Association v. Attorney General of British Columbia (14 January, 1998), Victoria 97/4779, [now reported (1998), 52 B.C.L.R. (3rd) 284.] [5] Shortly after the Owen-Flood J. judgment was handed down, the Lottery Act, R.S.B.C. 1996, c. 278, was amended in an attempt to bring the licensing scheme into compliance with the Criminal Code. The amendments of the Lottery Act were part of Bill 50, Miscellaneous Statutes Amendment Act (No.3), 1998, S.B.C. 1998, c.37. Among the amendments is s. 42 (1) which reads as follows: 42 (1) No action lies, and an action or other proceeding must not be brought or continued, against the government, the British Columbia Gaming Commission or any other person, for compensation, damages or any other remedy, because of anything done or omitted, between May 27, 1986 and the coming into force of this subsection, in the exercise or performance or intended exercise or performance of a discretion, duty or function of the government or of the British Columbia Gaming Commission in relation to (a) a licence or purported license issued by the Provincial Secretary and Minister of Government Services, the Attorney General or the Public Gaming Control Branch, or by the British Columbia Gaming Commission, that authorizes, or purports to authorize, a person to conduct and manage a lottery scheme as defined in section 207 (4) of the Criminal Code, or (b) the imposition or purported imposition by the Provincial Secretary and Minister of Government Services, the Attorney General or the Public Gaming Control Branch, or by the British Columbia Gaming Commission of a licence fee in respect of or in relation to a lottery scheme as defined in section 207 (4) of the Criminal Code. [16] In its argument, the Crown in the April hearing took the position that it was not relying on s. 42 at this stage of the proceedings. Mr. Arvay argues the section is ultra vires and those submissions will have to await another day. At the April hearing, the Crown stressed s. 7(6) of the Lottery Act as amended by Bill 50 as curing one of the alleged defects pointed out by Owen-Flood J. in his judgment. The section reads as follows: (6) Every licence fee or purported licence fee, in respect of a lottery scheme, imposed or purported to have been imposed by (a) the Provincial Secretary and Minister of Government Services, the Attorney General or the Public Gaming Control Branch between May 27, 1986 and the end of March 31, 1987, or (b) the British Columbia Gaming Commission, between March 31, 1987 and the date of Royal Assent to the Miscellaneous Statutes Amendment Act (No. 3), 1998, is conclusively deemed to have been validly imposed by regulation under this section on the date of the licence or purported licence to which the licence fee or purported licence fee pertains. [17] The Crown takes the position that s. 7(6) in the words of Martland J. in The Executors of the Estate of Percival Archibald Woodward, Deceased v. The Minister of Finance, [1973] S.C.R. 120 (S.C.C.) "ratify and confirm" the actions previously taken by the Minister and/or his delegate, the Lottery Corporation, in imposing licencing fees. [18] The difficulty for the Crown, however, is that the plaintiffs take the position that the "licencing fees" are a form of indirect tax and rely upon the Supreme Court of Canada's recent decision in Re Eurig Estate (1998), 165 D.L.R. (4th) 1, which held that Ontario's scheme of an ad valorem levy on grants of letters probate or probate fees far exceeded the cost of administering the scheme and was a direct tax. Thus, it was ultra vires the regulations passed by government since direct taxation cannot be delegated away from the Legislature under the guise of levying fees to cover the costs of administration. While s. 7(6) as amended by Bill 50 may give the regulations legislative authority that does not cure the argued defect that the licence fees are but a form of taxation. [19] Mr. Arvay submits first, that the method used by government under the Lottery Act imposed an indirect tax and was thus unconstitutional. He goes on to argue, alternatively, that even if a direct tax, such tax clashes with Criminal Code s. 207(1)(b). In support Mr. Arvay relies upon the decision of Owen-Flood J., supra, (and see also Bauman J. in Re: British Columbia Charitable Gaming Funding Society (1999), 57 B.C.L.R. (3rd) 1 (B.C.S.C.)). Mr. Arvay also suggests that s. 42 of the Lottery Act is ultra vires, but as the Crown does not purport to argue that the section usurps the two representative charities from their cause of action, I need not comment further on that aspect of the matter. [20] Since the Act saddles me with the ongoing conduct of this case, it would be, in my view, inappropriate at this early stage to attempt any definitive answers concerning the arguments. [21] The test at this stage, under Rule 19(24) of the Supreme Court Rules, and as dictated by the case law, is this: "is it plain and obvious" that the plaintiff could not succeed? [22] I have concluded that it is not. Thus, the Nanaimo Immigrant Settlement Society and the Sooke Marine Rescue Society can proceed with their action and can seek certification under the Act. I do not think the NCBA nor Mr. Coutu can logically join in these proceedings under the Act. The NCBA is unable to reclaim licencing fees since it paid none and the declaratory relief is the same sought by the societies. The bingo players' claim is inconsistent with the claim of the two charities and therefore cannot be logically joined. [23] The statement of claim and writ should be amended and a notice of discontinuance by the NCBA entered, but no costs should be taxed by the Crown as against the NCBA. The application to join Gerry Coutu as a plaintiff is dismissed, similarly without costs, but the application to join the Sooke Marine Rescue Society is upheld and the amendments concerning it can be made. [24] Nothing in these reasons should be construed as holding that the plaintiffs have satisfied s. 4(d) of the Act or that the court, in making the finding under s. 4(a), is holding out that the plaintiffs may have their action certified under the Act. That must await a further hearing. "R.B.McD. Hutchison, J." The Honourable Mr. Justice Hutchison