Federal Court Decisions

     T-1171-97

BETWEEN:

     BRITISH COLUMBIA HYDRO and POWER

     AUTHORITY,

     Respondent

     (Applicant),

     - and -

     THE ATTORNEY GENERAL OF CANADA and

     THE MINISTER OF FISHERIES AND OCEANS,

     Appellants

                                             (Respondents).

     REASONS FOR ORDER

     Appeal from Decision of Prothonotary not to Convert

     Judicial Review to an Action

     [Delivered from the Bench at Vancouver, B.C.,

     Wednesday, October 1, 1997, as edited]

ROTHSTEIN J.:     

     This is an appeal by the respondents of the decision of Prothonotary Hargrave dated July 25, 1997, refusing the respondents' application under subsection 18.4(2)¹ of the Federal Court Act to convert this judicial review into an action. On an appeal from a discretionary decision of the Prothonotary, the Court must first ascertain whether the decision was "clearly wrong" in the sense that his exercise of discretion was based upon a wrong principle or upon a misapprehension of the facts, or that the Prothonotary improperly exercised his discretion on a question vital to the final issue of the case (see Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 463). If the exercise of the Prothonotary's discretion is neither clearly wrong nor concerns a question vital to the final issue of the case, the Court will summarily dismiss the appeal without reconsidering it on its merits. [SEAN: I am still not satisfied with this last sentence]

     This judicial review concerns a May 2, 1997 order of the Acting Director General, Pacific Region, of the Department of Fisheries and Oceans on behalf of the Minister of Fisheries and Oceans (Minister), ordering the release of water from the Daisy Lake Dam located on the Cheakamus River. The dam was constructed and is operated by the applicant. The order contains a specified water release schedule and is referred to as a minimum flow order. According to the decision, the release of water is required for the protection of fish in the Cheakamus River below the Daisy Lake Dam.

     The applicant has challenged the validity of the order on a number of grounds, but the one of significance on this appeal is the allegation that the Minister is estopped from making the May 2, 1997 minimum flow order. Generally, the applicant's position is that when the Daisy Lake Dam was to be constructed in the 1950s, the Government of Canada represented that no minimum flow order would be issued and that in reliance on that representation the applicant constructed the dam.

     The applicant says that the minimum flow order will adversely affect the operation of the dam by considerably reducing the amount of electricity the applicant can generate during the winter months when power is most needed but when inflows are generally lowest. It is said the minimum flow order will force the applicant to generate more electricity during the spring and summer snow melt season when electricity demand is relatively low.

     It was primarily in respect of the estoppel issue (and certainultra vires arguments that have now been withdrawn) that the respondents sought to convert this judicial review into an action. The respondents say that in refusing to convert the judicial review to an action the learned Prothonotary erred in failing to recognize that the applicant is required to prove detriment as an essential element of the estoppel claim, that for the applicant to invoke the equitable principle of estoppel, it must come to court with clean hands and that this case is so controversial and complex, involving questions of credibility, that the matter should be allowed to proceed as an action.

     The Prothonotary wrote a thorough nineteen-page decision. The decision analyzes the leading cases dealing with the issue of conversion under subsection 18.4(2) (Vancouver Island Peace Society v. Canada (1992), 53 F.T.R. 300,Prince Edward Island Potato Board v. Canada (1992), 56 F.T.R. 150 andMacInnis v. Canada (1994), 166 N.R. 57 (F.C.A.). The excerpts he quoted from these cases set forth the relevant principles respecting conversion. After citing these decisions the learned Prothonotary went on to set forth his understanding of the established key test:

It is not whether evidence through a trial might be superior, but whether the affidavit evidence heard on judicial review would be inadequate.

     He then went on to refer toVancouver Island Peace Society for the well-known proposition that it is not the function of the court on judicial review to decide whether the decision under attack is right or wrong, but rather whether the decision was made in accordance with law. Hargrave P. then distinguishedDel Zotto v. The Minister of National Revenue et al. (1995), 104 F.T.R. 150 because in that case Charter issues were involved. Finally, he referred toDrapeau v. Canada (1995), 179 N.R. 398 to point out that subsection 18.4(2) does not place limits on the considerations to be taken into account in deciding whether a judicial review ought to be converted into an action. He specifically noted that the desirability of facilitating access to justice and avoiding unnecessary cost and delay was just one factor to take into account.

     The respondents do not take serious issue with the learned Prothonotary's analysis of the relevant law on the question of converting a judicial review to an action and I cannot see an error with respect to it. However, notwithstanding the Prothonotary's correct approach to the question before him under subsection 18.4(2), the respondents say that with respect to the applicant's plea of estoppel, he failed to recognize that the applicant is required to show that it suffered detriment as a result of its reliance on the alleged representation of the Government of Canada. The reasons of the Prothonotary do not refer to detriment. He states:

To my mind the only issues in the estoppel argument are whether DFO made the alleged representations and if that is the case, whether BC Electric as predecessor to BC Hydro, reasonably relied upon them. Any issue as to the economics of the project are irrelevant.

     Before me there was extensive argument as to whether, in the case of promissory estoppel, which is how the applicant qualifies its estoppel argument, proof of detriment is necessary (see for example Spencer, Bower and Turner,The Law Relating to Estoppel by Representation, Third Edition, at pp. 391-393,Maracle v. Travellers' Indemnity Company of Canada, [1991] 2 S.C.R. 50 at 57 andEngineered Homes Ltd. v. John Mason, [1993] 1 S.C.R. 641 at 646).

     The requirement to prove detriment, if indeed there is one in this case, has been explained more precisely inGrundt et al. v. The Great Boulder Proprietary Gold Mines Ltd. (1937), 59 C.L.R. 641 at 674 by Dixon, J.:

One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that lead to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment.

[emphasis added]

     I paraphrase the detriment requirement as a requirement to prove harm which would flow from the change of position resulting from the respondents' acting inconsistently with the original representation. In this case that would mean proof of the harm that would follow from the making of the minimum flow order, which the applicant says is contrary to the representations made to it and upon which it relied to alter its position by constructing the Daisy Lake Dam.

     Upon a proper understanding of the detriment to be proven, it will quickly be seen that the argument of the respondents, that proof of detriment requires a full scale analysis of the economics of the dam and its profitability over the years since commencement of its operation in 1958, is misconceived. It is the change of position that leads to the plea of estoppel that gives rise to the detriment to be proven. Seen in this light, it is obvious that a wide-ranging investigation into the economics of the dam and its profitability over the years is irrelevant. This is the conclusion to which the Prothonotary came in refusing to convert the judicial review to an action and in that respect he was correct.

     The learned Prothonotary then considered the respondents' arguments that oral evidence of representations and reliance was necessary. However, he concluded that the respondents had not convinced him of the existence, let alone the value of oral evidence of something that happened over forty years ago. The Prothonotary allowed that proceeding by way of judicial review may not be ideal, but concluded that the arguments for conversion to an action did not show the clearest of circumstances to do so. In coming to that conclusion he followed the tests for conversion as set forth in the cases. None of the considerations relating to the plea of estoppel, including the issue of detriment, as properly understood, suggest that the learned Prothonotary's decision not to convert was "clearly wrong" or was based on a misapprehension of the facts.

     The respondents then say that the applicant is seeking to invoke the equitable principle of estoppel and to do so must come to Court with clean hands. They say the applicant used water in amounts in excess of that allowed by its licence. The applicant says it paid for all the water it used. The Prothonotary found that there may have been an overreaching of the licence, but that it had no bearing on representations that may have been made and relied upon many years earlier. The respondents argue that the Prothonotary erred by failing to realize that the overuse of water was connected to the applicant's estoppel claim in that the alleged representation of the Government of Canada was made assuming the applicant would not use excess water and that the income gained from the excess use of water is a factor affecting detriment. The short answer here is that the Prothonotary did not accept the connection alleged by the respondents, not that he misapprehended the facts. The overuse of water has not been demonstrated to be connected to the alleged representation, reliance upon it by the applicant or the detriment flowing from minimum flow order. Further, as I have earlier indicated, the income gained from the excess use of water is not a factor for consideration respecting detriment.

     Next, the respondents say that the applicant represented to the Government of Canada that construction of the dam was urgent because of alleged power shortages in the Lower Mainland. They say that if such representations were inaccurate, the applicant is not entitled to rely on a plea of estoppel. Assuming that urgency representations by the applicant are relevant, the respondents lay no foundation for the suggestion that they were not properly founded. They seem to want to look ex-post facto at whether there were or could have been power shortages, but that is not the issue. If the applicant made representations to the Government of Canada and they were not made honestly and in good faith, that may be relevant. However, that is not a reason to convert the judicial review to an action or to enable the respondents to embark upon a fishing expedition when there is no foundation to support the concern they profess. I conclude that the learned Prothonotary made no error on this point.

     Finally, the respondents say that the learned Prothonotary made a determination vital to the final issue of this judicial review including decisions that:

(a) the elements of estoppel included only representations and reliance;

(b) the economics of power generation are not relevant;

(c) there is no connection between unlicenced overuse of water in the estoppel claim;

(d) the failure to consider the connection between the BC Electric representations regarding 1950s power shortages and the BC Hydro estoppel claim; and

(e) expert evidence will not play any substantial part in this judicial review proceeding.

     What seems to be lost sight of is that the learned Prothonotary was considering only whether to convert the judicial review into an action. In exercising his discretion not to do so in this case, he made findings respecting the irrelevance of the economics of power generation and the other findings cited by the respondents. However, any incidental findings made by him are not binding on the judge hearing the judicial review and therefore do not constitute determinations vital to the final issue of the judicial review.

     The respondents' argument is that it is necessary that this matter be converted to an action so they have full discovery rights and that witnesses appear to testifyviva voce on matters involving representations, reliance and detriment. The Prothonotary was of the opinion thatviva voce evidence of representations made over forty years ago and a wide-ranging investigation into the economics of the Daisy Lake Dam were unnecessary and in exercising his discretion against acceding to the respondents' position, his decision was not based on any wrong principle, misapprehension of the facts, nor did it raise a question vital to the final issue of the case.

     The appeal is dismissed.

                         ______________________________

                                 J U D G E

OTTAWA, ONTARIO

OCTOBER 10, 1997

__________________

     ¹      18.4( 2) The Trial Division may, if it considers it appropriate, direct that an application for judicial review be treated and proceeded with as an action.