Indexed as:

Authorson (Litigation guardian of)

 v. Canada (Attorney General)

PROCEEDINGS UNDER the Class Proceedings Act 1992

Between

Authorson, plaintiff, and

Attorney General of Canada, defendant

[2000] O.J. No. 3768

53 O.R. (3d) 221

[2000] O.T.C. 719

84 C.R.R. (2d) 211

100 A.C.W.S. (3d) 229

100 A.C.W.S. (3d) 690

Court File No. 99-GD-45963

 Ontario Superior Court of Justice

Brockenshire J.

Heard: September 8, 11-15, 18-20, 2000.

 Judgment: October 11, 2000.

(111 paras.)

Counsel:

Raymond G. Colautti and David G. Greenaway, for the plaintiff.

John Spencer, Dale Yurka, William A. Knights and Mr. Peter Hajecek, for the respondent.

1 BROCKENSHIRE J.:-- In this class action, motions for summary judgment - by the plaintiff, for declarations fixing the Crown with liability, and by the defence, for a dismissal of the action, were argued before me for many days. I have decided to grant the plaintiff's motion for summary judgment, and dismiss the defence cross-motion. These are my reasons for those decisions.

I Background

2     This is a class action, so certified on October 26, 1999. Mr. Authorson, and the others in the class he represents, were disabled veterans whose pensions or allowances were being administered by the Department of Veterans' Affairs. Their claim is that while so administered, their money was not invested and they received no interest. The Crown admits that there were funds being administered, that funds that came from government pensions and allowances were not invested, and that for a lot of administrations covering long periods of time interest was not paid or credited. The Crown, however, says that these plaintiffs had no right to claim for such interest, because of legal propositions and statutory bars. The plaintiffs disagree with the legal position taken by the Crown and say that if the statutory bars would otherwise be applicable, they are of no force and effect because of the Bill of Rights and the Charter.

3     It should be clarified that the defendant in this action is Her Majesty the Queen in Right of Canada (the Crown). The statement of claim names the Attorney General of Canada as the defendant but this is because of paragraph 23 (2) of the Crown Liability Act R.S.C. 1985 Ch. C-50 which provides that proceedings against the Crown are to be taken in that name. This point becomes important because the statement of claim seeks declarations that the Department of Veterans' Affairs (the DVA) or alternately Her Majesty the Queen breached fiduciary duties; and the suggestion raised in the amended statement of defence, and amplified greatly in the defence factum on this motion, that it would be the Department of Finance and particularly the minister thereof that had discretion to award interest and not the DVA; and that the DVA in acting as the named administrator was simply carrying out the directives of the Canada Pension Commission (CPC). The CPC is an administrative tribunal whose actions could be exclusively judicially reviewed in the federal court. There is no suggestion by the plaintiff of any wrong doing by the CPC and its predecessor tribunals, and although the DVA is named in the claims for relief in the statement of claim, it was clearly understood in argument that the claim is against the Crown herself, with the DVA and its officers and servants, and for that matter the Minister of Finance all being treated as emanations of the Crown.

4     Since this case began, the Crown has been diligently going through the minutia of government files and records and making production to the plaintiff, on CD-ROMs (except for reactions because of claimed privilege) of the materials found. Thousands of documents have so far been produced, and the Crown says, and I do not doubt, that it is far from finished its task. However plaintiff's counsel felt they had enough to bring their motion, which is in part factually based on those productions. The Crown position is that while it has made production of anything and everything that seemed relevant found to date, much of the material would be either inadmissible as evidence or should be accorded no weight.

5     Despite that caveat, it is clearly common ground that since the First World War, the government of Canada has recognized an obligation to provide pensions and allowances for veterans who suffered physical or mental disabilities as a result of service. Authority to make these payments were contained in various statutes administered by the Department of Veterans' Affairs (DVA). Entitlement was generally determined by an independent administrative tribunal. Some veterans were unable to handle their own affairs and the tribunal had authority to so determine, and to direct that itself, the DVA or a third party be named as administrator, with pensions or allowances to be paid to the administrator. The administrator was to, either explicitly or implicitly, handle the pension or allowance monies for the benefit of the veteran or his or her dependents.

6     It seems that in the 70's or 80's there were something like 10,000 of these administered accounts being handled by the DVA. The passage of time, and a change of policy under which third party administrators were sought out, has reduced a number of accounts to something like 1,000 now.

7     It is also clear and undisputed that through the years a number of these accounts were for veterans who were living independently, but simply could not handle their own money, so someone in a district office would take care of receiving in the monthly pension cheque, paying the veteran's bills, and turning over what was left. These accounts, while active, did not grow. On the other hand, there were accounts for disabled veterans who were hospitalized, whose cost of living was in effect taken care of by the hospital, and who needed little if anything for personal comforts. Those accounts grew steadily. Thus Mr. Authorson, who had been largely confined to veteran's hospitals since the Second World War, had some $260,000. accumulated in his account.

8     The DVA would also take in money from outside sources, such as inheritances and add it to the funds being administered for the veteran, and would also continue administrations after the death of the veteran, so that there were, and may still be, administrations with spouses and children as the beneficiaries.

9     A government study done in 1986, the accuracy of which was not tested, indicated that 29% of the administered accounts were in the $50,000 to $100,000 range, 20% were in the $100,000 to $150,000 range and 2% were in the $150,000 to $200,000 range. In addition, it noted there were 430 estates of deceased veterans under administration with a total value of nearly $2,000,000. While untested as evidence, these, and other figures like these, cause plaintiff's counsel to estimate that the amount of interest being claimed in this action may be in the one billion dollar range.

10     It appears clear that within the governmental scheme of things, the DVA had not been given authority to pay interest. Neither had the tribunal been vested with authority, when dealing with pensions and allowances and the administration thereof, to direct whether or not interest be paid, much less fix the amount thereof. In the governmental scheme of things, the DVA felt it was obliged to pay funds under administration into a special account in the consolidated revenue fund. The general rule, by statute, is that no interest is paid on money in the consolidated revenue fund. However, parliament, at least since the Financial Administration Act 1951, had specifically delegated to the Minister of Finance the discretion to pay interest on special accounts. There are indications from studies by bureaucrats that interest in fact was paid, at least on treatment allowances, until the 1960's or 1970's. There are some indications that interest would be paid if a veteran or his family asked for it. There is no indication of a general authority being sought by DVA from the Minister of Finance to pay interest on all accounts until Mr. Gorbet, Deputy Minister of Finance, wrote on December 18, 1990 to Mr. David Broadbent, Deputy Minister DVA, saying that he had approved on behalf of the Minister of Finance the payment of interest on veterans' administered accounts being are held in the Consolidated Revenue Fund. It is not disputed that thereafter interest was duly paid. It is also clear that by special approval given by the Minister of Finance in 1982, apparently with the concurrence or at the direction of the Treasury Board, interest was credited on the accounts of all of the veterans at St. Anne de Bellevue Hospital. This was a veteran's hospital in Quebec, described in a 1985 report as having 953 patients.

11     Finally the general issue of liability for interest on administered accounts had been litigated before, in Callie v. Canada [1991] 2 F.C. 379 (F.C.T.D.). In that case Mr. Justice Joyal concluded that the federal government was under no obligation to pay interest on pension money it held under administration for Mr. Callie or others.

II The Specific Issues

12     The notices of motion, especially the Crown's, listed many issues. Those lists were changed in the factums, and again in argument before me. All of the changes were consented to by counsel.

13     Although all of the various foregoing points in these lists were at least touched on, and in some instances gone into exhaustively in argument, to my mind all of those issues are subsumed into and summed up in the following:

1. Did the veterans have a property interest in the pensions and allowances that went into administration?

2. Did the setting up of these administrations put the Crown in the position of a trustee or fiduciary?

3. If the answer to 1 and 2 is yes, was the Crown obliged to invest and/or pay interest on the money under administration?

4. If the answer to 3 is yes, does s. 9 of the Crown Liabilities and Proceedings Act and/or s. 5.1(4) of the Department of Veterans' Affairs Act, bar the claims of such veterans to damages and/or interest?

5. If the answer to 4 is yes, is such a bar invalid or inoperative by reason of the provisions of the Charter and/or the Bill of Rights?

III Were the pension and allowance funds under administration the property of the veterans?

14     There was much niggling over the details, but no dispute over the basic facts that the government recognized an obligation to veterans who were mentally or physically disabled. It passed statutes providing for the payment of pensions and allowances to such veterans. It set up independent tribunals to determine in the case of individual veterans whether or not they were entitled, and if so to how much - the latter being commonly answered by fitting the veteran into a specific place in a schedule of different amounts, differing according to the extent of the disability. It had authority to vary, suspend or end such a pension of allowance. It also had the power to make a finding that a veteran was unable to manage his or her pension or allowance and direct that it be administered by among others the DVA. The DVA was required by statute to carry out the rulings of a tribunal. At least in Mr. Authorson's case, and presumably in the case of others, as standard printed forms were used, the tribunal would be quite specific in its directions to the DVA as to how much was to be banked and how much could be spent for sundries and comforts. In Mr. Authorson's case, and presumably with others, the DVA looked to the tribunal to give specific authority for the withdrawal of money for vacations, travel to relative's homes, etc. Documents relating to this are exhibited to an affidavit of Peter Clark.

15     Robert Robinson, the Director of Financial Policy Planning and Systems within DVA, deposed in an affidavit as to the actual administrative steps that would occur within DVA when an administration was set up. The financial officers in that department would become involved only after the actual decision to set up an administration had been taken. In a typical situation the department would receive notice that an administrator had been appointed and would receive a direction to change the name of the payee on future cheques to the name of the newly appointed administrator. If the DVA was appointed, that direction would name as the payee a position held by a public officer within the DVA. Those cheques would be received and deposited in the "government accounts" at a chartered bank. On his understanding that would constitute deposit into a Receiver General account. Under s. 2 of the Financial Administration Act the consolidated revenue fund is simply the "aggregate of all public monies that are on deposit at the credit of the Receiver General". While the money would in his view be part of the general consolidated revenue fund, it would for accounting purposes be shown as in a special purpose account in the name of the veteran. There would be annual reconciliations between the account records in the DVA and the accounts and balances shown by the Department of Finance.

16     From all of this it appears plain and obvious to me that once a veteran was granted a pension or allowance, cheques would start to flow in that veteran's name. If the pension or allowance was put under administration with the DVA, the cheques continued to flow but the name of the payee was changed to an officer within the DVA. The money would be deposited in an account with his name on it and would be treated throughout as money to his credit. If a determination was made that the veteran had become capable of handling his or her monies, the subsequent cheques would again name the veteran and the money held to his or credit would be turned over to the veteran. If a third party administrator was appointed, the cheques would go to that administrator during the administration.

17     Clearly, to my mind, the initial award of a pension or allowance started an income stream which would continue until stopped, which was to or for the benefit of the veteran. Each of the cheques which were issued, whether in the name of a veteran or in the name of the administrator on his or her behalf, was property in which the veteran had a legal and/or equitable interest.

18     The government created the pension and allowance regime. It could have structured it differently. It could for instance have provided that if a veteran was incapable of handling his or her pension or allowance, it be suspended until such time as the veteran became capable. Or, it could have provided that when a veteran was hospitalized or institutionalized, with room and board and necessities all provided, then pensions and allowances would decrease to an amount sufficient to cover comforts and sundries. Clearly the government did not choose options like this. It specifically chose instead to provide that pensions and allowances, previously granted, were to continue while the veteran was incapable, with such pensions or allowances to be administered for the benefit of the veteran and his or her dependants.

19     The Crown argues that pensions and allowances being administered by the DVA became "public money". The Consolidated Revenue and Audit Act and its successor, the Financial Administration Act, included a definition of "public monies" as:

"all monies ... from any ... source whatsoever, whether such monies belong to Canada or are collected by officers of Canada for or on account of special purposes or in trust for any person ... or otherwise."

When any officer of Canada received such funds, he or she was obliged to deposit them to the credit of the account of the Receiver General where they would become part of the consolidated revenue fund. All of this is true, and is in accordance with the internal financial management scheme of the federal government. However, in my opinion, this method of banking the funds did not change the nature of the funds.

20     According to Mr. Robinson's affidavit, actual cheques would issue, in the name of the veteran, but payable to the administrator within the DVA who would deposit the cheques in the local Receiver General's account, where the funds would again be in the consolidated revenue fund. It was suggested by the Crown in argument that this complex and expensive process may have been short circuited into simple bookkeeping entries, at least for some veterans. However clearly what was done was not the equivalent of cancelling or stopping payment on the cheque. The payments were paid into or credited to special purpose accounts within the consolidated revenue fund and they could at all times be traced into such account. Indeed on the veteran being found capable, or on a third party administrator being appointed in place of the DVA, the DVA was apparently able to pay out to the penny the amount paid into its administration - apparently in one cheque to Mr. Authorson, and per the decision of Mr. Justice Joyal in the Callie v. Canada case at p. 3, in two cheques to Mr. Callie's niece and new administrator - one for $34,028.52 being the balance held in the district office and another for $157,822.79 being the balance held at head office. I reject the suggestion made that the system of banking used by the federal government somehow changed the nature of these pension and allowance amounts from being the property of the veteran to being the property of the government of Canada. The banking system is, in my mind, completely consistent with the typical trust situation, where the trustee holds the legal title to the trust property, but holds it subject to the equitable title of the beneficiary or true owner.

IV Was a trust or fiduciary relationship created?

21     A well known definition of a trust is:

"the relationship which arises whenever a person is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons, of whom he may be one, or for some object permitted by law in such a way that the real benefit of the property accrues, not to the trustee but to the beneficiaries or other objects of the trust."

See Elgin Loan etc. Co. v. National Trust Co. (1903), 7 O.L.R. 1; affirmed 10 O.L.R. 41 (C.A.).

22     The plaintiff's case is that the Crown became a trustee or at least a fiduciary of the pensions and allowances it had under administration, and so was bound in equity to invest the money, and pay or credit interest thereon.

23     The crux of this case of course is whether the principles laid down by the Supreme Court of Canada in Guerin et al. v. The Queen [1984] 2 S.C.R. 335, 13 D.L.R. (4th) 321 apply to this fact situation. In that well known case, part of an Indian reserve was leased out to a golf club. To facilitate that lease, the Indian tribe surrendered the lands to the federal government, based on a certain understanding of the lease terms. The federal government completed the lease on less favourable terms and when the band found out about it, it sued the government. All eight judges who took part in the judgment found the Crown liable. Estey J. found the Crown to be an agent and in breach of its agency duties. Wilson J., with whom Ritchie and MacIntyre JJ. concurred found there was an express trust of specific land for a specific purpose and that the Crown had breached its duty. The majority decision of Dickson J., with Beetz, Chouinard and Lamer JJ. concurring found there was a fiduciary relationship between the Crown and the Indian band which had been breached. He found, at p. 342 of the D.L.R. report that an express trust requires a settler, a beneficiary, a trust corpus, words of settlement, certainty of object and certainty of obligation. He concluded that not all of those elements were present. However, further down on p. 342 he says:

"To say as much is not to deny that the obligation is trust-like in character. As would be the case with a trust, the Crown must hold surrendered land for the use and benefit of the surrendering band. The obligation is thus subject to principles very similar to those which govern the law of trusts concerning, for example, the measure of damages for breach."

He found at the top of p. 341 that:

"... where by statute, agreement, or perhaps by unilateral undertaking, one party has an obligation to act for the benefit of another, and that obligation carries with it a discretionary power, the party thus empowered becomes a fiduciary. Equity will then supervise the relationship by holding him to the fiduciary's strict standard of conduct."

24     Later case law emphasized the necessity of vulnerability of the beneficiary at the hands of the fiduciary. See the discussion by Binnie J. in Cadbury Schweppes v. FBI Foods Ltd., (1999) 167 D.L.R. (4th) 577 (S.C.C.) at 587-593. In this case, of course, vulnerability was independently determined by a tribunal for each veteran affected.

25     In coming to the conclusion that the Crown could be and was a fiduciary, Dickson J. in Guerin had to deal with the concept of a "political trust" which concept was relied upon by LeDain J. in the Court of Appeal below. The two leading political trust cases quoted in Guerin, supra, by Dickson J. are Kinloch v. Secretary of State for India in Council (1882), 7 App. Cas. 619 (H.L.) and Tito v. Waddell, (No. 2, [1977] 3 All E.R. 129 (Ch.). The first case dealt with a royal warrant that "granted" booty of war to the respondent Secretary of State for India "in trust" for the officers and men of certain forces. The second case dealt with whether property owners could claim that certain royalties payable to the local government commissioner as a result of mining operations on their land gave rise to trusts in their favour. Both cases, and others, were distinguished briefly by Wilson J. at p. 359. They were implicitly distinguished by Dickson J. from pp. 335 to 339, on the basis that the Indian band did in fact have an aboriginal title to the lands. As I see it, in Kinloch and in Tito v. Waddell, and in the other political trust type cases, the money or property was the Crown's, and its disposition was awaiting action by the Crown. In my view, Dickson J. was at pains to explain the nature of the underlying aboriginal title in order to deal with s. 18 (1) of the Indian Act which provided that:

"... reserves shall be held by Her Majesty for the use and benefit of the respected bands for which they were set apart; and subject to this act and to the terms of any treaty or surrender, the Governor in Council may determine whether any purpose for which such lands in the reserve are used or are to be used is for the use and benefit of the band."

LeDain J.A. in the court below, saw the lands as being held by the government to be used as it saw best, subject to a "political trust". Dickson J. saw the aboriginal title, and the necessity of a surrender by the band before the government could act, as together putting the lands past the exclusive jurisdiction of the government.

26     This reasoning leads me to reject the Crown argument that these administrations were political trusts, and not trust-like fiduciary arrangements subject to the supervision of a court of equity.

27     Joyal J. in Callie v. Canada viewed the pensions and allowances as government funds, subject to government discretion. As I hope I have clearly indicated earlier, obviously when parliament would appropriate funds to the DVA to be used for pensions and allowances, the actual allocation of those funds was left to the discretion of the department and more particularly to the tribunal. At that stage, it could be said the appropriation was subject to a "political trust". However, once the allocation was made and the pension or allowance granted, then each and every payment of that particular pension or allowance was the property of the veteran. The discretion to be exercised in the administration of those pensions and allowances for disabled veterans was no longer simply the discretion of the Crown but was a discretion to be used in accordance with equitable principles governing a fiduciary acting on behalf of the veteran and his or her dependents. (I was advised by counsel that Joyal J. may have been misinformed as to the premise on which the second part of his judgment, re a set-off, was based.) I am not bound by, and disagree with the findings and result in Callie v.Canada.

28     Guerin established that the Crown could be a fiduciary or trustee. In Guerin the court had to wrestle with the difficulties of a factual and statutory situation, from which a fiduciary arrangement could be inferred. Here we are looking at wording in a statute, such as:

".... be administered for the benefit of the pensioner or any person that the pensioner has a legal obligation to maintain, or both ..."

(Pension Act R.S.C. 1970) or

"... be held and administered ... for the benefit of the recipient or any person he has a legal responsibility to maintain, or both".

(War Veteran' Allowance Act) or

"... the pension be paid to such person as it may appoint in order that the money be expended by him for the benefit of the pensioner and members of his family"

(Pension Act R.S.C. 1927). These words themselves create a fiduciary obligation between the administrator and the pensioner and/or his family and dependents. I have concluded that the veterans were beneficially entitled to the pensions and allowances granted to them. I therefore find that the Crown, in undertaking to administer those funds on behalf of veterans and their dependants, became at least a fiduciary, subject to the obligations imposed upon individuals in that capacity by the law of equity.

V Was the Crown obliged to invest and/or pay interest on the money under administration?

29     Mr. Greenaway, in argument, took the obligation to invest money held in trust back to the 1600's, citing Halsbury's Laws of England, (4th) Vol. 48, para. 835, and cases therein cited going back to 1746. Halsbury puts the rule as:

"... a trustee ... must duly and promptly invest all capital trust money coming into his hands, and all income which cannot be immediately applied for the purposes of the trust, and he is liable for any loss which may result from its being improperly invested or being left uninvested for an unreasonable length of time, and for interest during the period of it being so left."

Waters, Law of Trust in Canada, 2d at p. 4, puts the roots of trust concepts in English law back into the middle ages, and notes at pp. 14-16 that the same concepts have developed, although differently, in civil law. Mr. Colautti, in argument, went back to the parable of the unfaithful servant who buried his master's money in the ground, found in the gospel of St. Matthew. The obligations to invest and to pay interest are fundamental to the law governing trustees. This point was not contested by the Crown.

30     Does this duty extend to fiduciaries? The Oxford Encyclopedic English Dictionary, 1991 defines "fiduciary" as meaning, "of a trust, trustee, or trusteeship ... held or given in trust ... a trustee". Ellis, Fiduciary Duties in Canada, 2000 p. 1-1 says that a fiduciary duty is one that arises in the context of trust. A fiduciary individual is someone who stands in a position of trust to another individual. A true "trust" relationship need not underlie a fiduciary relationship.

31     Madam Justice Southin, of the British Columbia Court of Appeal, in Jostens Canada Ltd. v. Gibsons Studio Ltd., (1997) 99 B.C.A.C. 35, para. 19, states:

"the word itself [fiduciary] is of Latin origin - from the noun fiducia' meaning trust' which is related to the noun fidilitas' from which we derive the word fidelity' through, if not a common descent, then association with the word fides' (faith) which turns up in the phrase bona fida', and which itself is closely linked to the word fidere' (to trust), which brings us back to fiducia'."

32     It is obvious to me that the words "fiduciary" and "trustee" are largely interchangeable. If the word "trust" without more, is limited as some authors do, to a formal document in which a specific conveyance of funds or property is given to a named person to hold and deal with on specific terms for the benefit of another, then the word fiduciary would be broader than that of trustee. However I have no doubt whatsoever that a fiduciary, who has funds on hand to administer for another, is under the obligation of a trustee to invest and/or pay interest as above set out in Halsbury and the ancient English cases.

33     Mr. Spencer for the Crown argued that the DVA was relieved of a responsibility to invest or pay interest because of a statutory provision requiring funds on hand to be paid into the consolidated revenue fund, a general provision that interest not be paid on money in the consolidated revenue fund, and statutory provisions that he said put the power of making an exception and paying interest in the hands of the Minister of Finance, not the DVA. This position is contradicted in the narrow sense by information that for many years interest in fact was paid on these accounts, that more recently interest was paid on the accounts of all of the veterans in the St. Anne's Hospital, and by the information from the Public Accounts of Canada that there were in fact investments held in special accounts for veterans.

34     In the wider sense, that position is contradicted by the Minister apparently always having authority to pay interest, which was acted on generally in 1990, and could have been acted on at any earlier time. Further, the Crown is the defendant here, and could have, and under the rules of equity should have, made whatever statutory or regulatory provisions might have been necessary to invest and to pay interest. It is I suggest, common knowledge to every tax payer in Canada that if he or she overpays income tax, a refund comes back with interest, and if he or she wishes to make a safe investment, the government of Canada is happy to receive the money and issue a bond paying interest for the time the money is held. It is also I suggest, commonly known that Canada Pension Plan deductions have been invested since inception in provincial securities and are now to be invested at least in part in the stock market. The point is that the Crown had the power and authority, and the failure to exercise it does not absolve the Crown. If such absolution is sought, it must be sought under statutes which bar the claims.

VI Crown Liability Act

35     Section 9 of the Crown Liability Act provides:

"no proceedings lie against the Crown or a servant of the Crown in respect of a claim if a pension or compensation has been paid or is payable out of the consolidated revenue fund or out of any funds administered by an agency of the Crown in respect of the death, injury, damage or loss in respect to which the claim is made."

It is the position of the Crown that his section bars this action as all of the members of the class would be persons to or on behalf of whom, a pension or compensation had been paid out of the consolidated revenue fund.

36     In support of that contention, the Crown relies upon four cases - Langille v. Canada (Minister of Agriculture) [1992] F.C.J. No. 139, Vona v. Canada (Minister of Agriculture) [1994] O.J. No. 2485, upheld [1996] O.J. No. 3621 (Ont. C.A.), Sarvanis v. Canada [2000] F.C.J. No. 12 (F.C.A.) and Arsenault v. Canada et al. (1995) 131 D.L.R. (4th) 105 (F.C.).

37     In Langille, the plaintiffs' diseased cattle were destroyed by Crown agents per a statute and compensation was paid. The plaintiffs sued, claiming the compensation covered the value of the cows, but the delays by the agents in getting the payment to them caused them to go bankrupt, and claimed damages therefore. Mr. Justice Stone in the Federal Court of Appeal struck out the claim for general damages in the statement of claim on the basis that the words "in respect of" in s. 9 are words of very broad import, compensation was earlier paid in respect of "damage or loss" resulting from the destruction of the animals and the purported claim in the action was in respect of the same "damage or loss".

38     Vona was also a case where a herd had been destroyed and compensation paid. Here too the payment was delayed and the plaintiffs allege they lost a restaurant as a result. Madam Justice MacDonald of this court applied the reasoning of Mr. Justice Stone in Langille and struck the claim. The Ontario Court of Appeal dismissed an appeal from that decision.

39     Sarvanis was a claim by an inmate in a federal penitentiary for injuries suffered while working there. The inmate claimed for and received disability benefits under the Canada Pension Plan (CPP), which benefits are paid out of the consolidated revenue fund. The Federal Court of Appeal noted that in the CPP claim the prisoner had identified the cause of his injury as the accident, and concluded the pension had been paid out in respect of the injury sustained so that a further action was barred.

40     In Arseneault, the plaintiff sued the Crown and three military doctors for alleged malpractice in performing back surgery on him while he was in the armed forces. The Federal Court declined jurisdiction in the personal action against the three doctors and found the claim against the Crown was barred as he had claimed and received a pension which was directly connected to his back problem and his military service.

41     I accept the contention of plaintiff's counsel that in each of these cases, the plaintiffs therein were attempting to get something more - in effect a double recovery, on the same claim.

42     In my view the words of the section are self-explanatory. No proceedings lie if the pension or compensation has been or is payable in respect of the death, injury, damage or loss in respect to which the claim is made. Here, the pension or compensation had been paid in respect of mental or physical disability arising while in military service. That pension or allowance was in each case "in pay". The present claim has nothing whatever to do with the original reasons for granting the pension or allowance. The present claim has to do with the alleged breach of fiduciary obligation in managing that money while a veteran was incapable of doing so personally. I find that the claims herein are not barred by s. 9 of the Crown Liability Act.

VII Section 5.1(4) of the Veterans' Affairs Act.

43     This subsection provides as follows:

" no claim shall be made after this subsection comes into force for or on account of interest on monies held or administered by the minister during any period prior to January 1, 1990 pursuant to subsection 41(1) of the Pension Act, subsection 15(2) of the War Veterans' Allowance Act or any regulation made under s. 5 of this Act."

The three references in the subsection are to the authorities under which the pensions and allowances were paid on which interest is claimed. The foregoing subsection is on its face an absolute bar to this action.

44     The statute was assented to on December 17, 1990. Section 64 deals with the coming into force of its various sections and provides in ss. 2 that "ss. 5.1(4) ... shall be deemed to have come into force on October 12, 1990" thus not only is the statutory bar made retroactive by 111/2 months, the passage of it is made retroactive more than a month from the date of the assent to the statute. The courts, as I understand it, tend to give close scrutiny to retroactive legislation, but recognize the power of governments to pass such laws. (See Hogg Constitutional Law of Canada (3d) p. 48-27)

45     As this claim is being advanced on the basis of fiduciary obligations, I could not help wondering whether in the case of the Crown, taking steps to prevent a beneficiary for claiming against her as a fiduciary is not in itself a breach of the fiduciary obligation to act in the best interest of her beneficiary. However that was not specially pleaded nor was it specifically argued before me. What was argued was whether the subsection could be attacked under the Charter or the Bill of Rights.

VIII The evidentiary issue

46     Before proceeding to discussion of the arguments under the Charter and the Bill of Rights, I wish to deal with the arguments raised for and against a consideration by this court of the mass of materials brought before it by plaintiff's counsel. The moving party's motion record is in six volumes, consisting of affidavits by Mr. Sengbusch, the solicitor for Mr. Authorson, and others, to which are appended documents which Mr. Sengbusch located in his own research and documents which were part of the productions made to date by the Crown. It was the position of Mr. Colautti, who argued this part of the plaintiff's case, that this material, which included realms of documentary hearsay that would not fit within recognized exceptions to that rule, in addition to considerable materials of the "public record" variety, would all be admissible as "constitutional facts" going to the context in which parliament enacted the measure under constitutional attack.

47     While there were six volumes of evidentiary material filed by the plaintiff, there was no evidence in response filed by the defence and there was therefore no question of a conflict in evidence that had to be resolved by the hearing of witnesses at trial. There was no dispute over the admissibility and accuracy of the public records produced by plaintiff's counsel and the only dispute was over the admissibility of and a weight to be given to other materials which the plaintiff contended were being produced not for the truth of the statements therein contained but merely to give context to the disputed legislation and to indicate the "state of mind" of the government in passing the legislation.

48     The basis for the "constitutional fact" argument was a learned paper on "the use of evidence in constitutional cases" prepared by Ian Binnie Q.C. (as he then was) for a presentation at a Law Society of Upper Canada continuing legal education seminar on constitutional litigation given on October 23 and December 8, 1990. That paper traces the history of broad acceptance of background materials to the "Brandeis brief" filed by Louis D. Brandeis (as he then was) as counsel for the State of Oregon in a case before the U.S. Supreme Court in 1908, which brief contained a wide range of social science data from books, articles, congressional committees, reports of state and municipal officers, etc. That type of material subsequently became, says the author, a regular feature of U.S. constitutional litigation.

49     Mr. Binnie indicated the Canadian Supreme Court had repeatedly searched for "factual underpinnings". He quoted Dickson J. in Reference re Residential Tenancies Act [1981] 1 S.C.R. 714 at 721 where he stated that the court:

"... should be loath, it seems to me, to enunciate any inflexible rule governing the admissibility of extrinsic materials in constitutional references. The effect of such a rule might well be to exclude logically relevant and highly probative evidence."

He also referred to the Ontario Court of Appeal in R. v. Seo (1986) 27 D.L.R. (4th) 496 at pp. 505-520, considering seven volumes of material submitted by Crown counsel including accounts of American and British policy measures and an Organization for Economic Cooperation and Development report on controlling drinking drivers.

50     The Crown response to this by Ms. Yurka was that all of the documents relied on by the plaintiff class were hearsay although some, like public accounts, auditor general's reports, debates, orders in counsel, etc. were clearly within exceptions to the hearsay rule; and that a number of the materials referred to by Mr. Binnie in his paper - speeches, parliamentary committee reports, law reform commission reports, etc. were all documents that had a public aspect to them. A great deal of the material put before me in the motion record was very private material, much of it marked as confidential or secret. It included memos and minutes of meetings of bureaucrats considering the problem of not paying interest and what to do about it.

51     I certainly do not take the statements of bureaucrats recorded in that context as admissions of liability binding on the Crown.

52     These materials were put before me, in part, in an attempt to demonstrate the intent of 5.1(4). I accept the statement of Peter W. Hogg in the fourth edition of his text Constitutional Law of Canada at p. 15-14 that:

"a statute cannot have an intention, and a deliberative body such as a legislature is likely to have as many intentions (or purposes) as there are members."

However this material certainly gives some indication of the context in which the legislation was drafted.

53     The material indicates that from the 1970's forward group after group of bureaucrats looked at the "problem" of non-payment of interest and potential liability therefore. While we do not know from the materials gathered to date just who the people were at these various meetings, and while they certainly have not been subjected to cross-examination to test what they had to say, the repetition over and over by one bureaucrat after another and one study group after another that there was a problem and there could be liability for it gives credence to the view that the senior levels of the DVA must have felt there was a problem, and that there was a potential of liability arising from it.

54     In 1985, the Auditor General's Report, which is acknowledged to be a public document, noted that:

"at the 31st of March 1985, more than $53,000,000 was being held in trust on behalf of veterans. We found that there were inadequacies in the controls over veterans trust accounts by the department and the Canadian Pension Commission and in the policy guidance to those responsible for administering these trust accounts for veterans ... ."

55     In 1986 the Auditor General returned to the question of "veterans trust accounts" and commented extensively on these accounts and their administration. A few quotes from this document are germane to the issues here:

"Para. 13.43 - The duty to invest funds. One of the most basic duties of the trustee is to invest trust funds. He or she must use prudence in selecting good investments and ensuring they are suitable, given the terms of the trust and the interest of the true beneficiaries. The department does not invest or pay interest on money held in any trust account. Where veterans have raised the matter of receiving interest, they have been told by department officials that such arrangements are not possible.

Para. 13.44 - As a trustee, the department has a responsibility to invest funds in approved instruments and to account to the beneficiary regularly. The department is vulnerable to legal action by veterans to recover the difference between the amounts accumulated in the trust accounts and what would have been produced if the money had been properly invested. Given the amounts involved and the length of time that many of these accounts have been in existence, this liability could be large.

Para. 13.45 - Conflict of Interest and Duty - Crown self-dealing in trust funds. While there does not appear to be a conflict of interest problem with staff employed by the department, the Crown as trustee, may be viewed as being in a position where its interest and duty conflict. Technical self-dealing arises with respect to the Crown's failure to invest or pay interests on money held in trust accounts in the consolidated revenue fund.

Para. 13.46 - Implications. The department and the commissioner recognize that a trust relationship exists with their administered account clients. However neither has met the minimum obligations of the situation. Recipients whose affairs have been administered by the department, have, at best, had the benefit of its good intentions. However they have been deprived of the investment value of their funds."

These statements by an independent public body also do not constitute admissions binding on the Crown. The opinions expressed are untested, and are not binding on me.

56     However, predictably that report resulted in a flurry of memorandums, studies, task forces, etc. At Tab 111 of the moving party's motion record there is a copy of a letter from Pierre P. Sicard, the Deputy Minister of DVA to Mr. F. Iacobucci, Deputy Minister of Justice (as he then was) advising that at the suggestion of Mr. Paul Tellier, Clerk of the Privy Council, he is being invited to designate a senior official to participate in a working group directed to find an acceptable solutions of the problem of the non-payment of interest. That working group would include representatives from DVA, Finance, Treasury Board, Comptroller General and Justice. At Tab 114 is found a document headed "Trust Analysis" and further headed "Secret" apparently dated January 17, 1987 not bearing the name of any author but containing at para. 9.5, headed "Interior Departmental", the following:

"Concerns have been raised by Privy Council Office, Treasury Board, Finance and Office of the Comptroller General as to the potential liability of the Crown and on-going costs for payment of interest on portfolio trusts and the potential impact of such an initiative on trust relationships across the federal sector, estimated to be in excess of $1 billion."

57     This document and this paragraph is perhaps indicative of the state of mind within the various government departments at that time.

58     The 1986 Auditor General's report commented at paras. 13.35 and 13.36 that:

"... no training and (sic.) trust administration is provided ... knowledge of this area is not a basic requirement for a councillor's job and is not even included in the job description ... neither councillors nor employees dealing with the financial administration of trusts have any real knowledge of the responsibilities associated with trust accounting; further, there are no procedural guides and policies. The result is that persons who have no knowledge of the trustee's duties administer trusts as they see fit with virtually no formal guidance."

My reading of many pages of comments by one bureaucrat to another on "the problem", lead me to feel that for many of them, "law" meant only federal statutes and regulations. Indeed one of them, in a report, described "equity" as ... "mysterious".

59     In November of 1986 the DVA issued a directive that no new administrations (called in the document "trust relationships") were to be accepted without the approval of the Assistant Deputy Minister, after exhausting all other options.

60     At Tab 83 there is a letter from David Broadbent, the Deputy Minister of DVA to Mr. Stanley H. Hartt, Deputy Minister of the Department of Finance, speaking of the work being done in his department to clean up the administering of funds but saying further:

"the work we were doing did not seem to be getting far in eliminating the risk of litigation over failure to pay interest on accounts for which arguably we had the responsibility of a trustee."

He goes on to say that he is setting up a small task force to, among other things, develop options for the consideration by Cabinet in September 1988.

61     At Tab 122, is a document entitled "Trust Review Project Option Papers" dated March 15, 1988. This document generally recommends a new system but at p. 30 indicates the options in relation "to interest oweable prior to new system". Five options are listed.

"1. Let courts settle each case if and when it arises.

2. Keep quiet. Settle case out of court if and when it arises.

3. Devise standard settlement formula, to be used in lieu of old liability, if client agrees.

4. Devise standard settlement formula, to replace old liability, whether client chooses or not (ex post facto).

5. Eliminate old liability (ex post facto)."

62     Since the Deputy Minister had requested a study of available options, it is reasonable to assume that he got that option paper. It is also reasonable to assume that those options were part of the context in which the 1990 legislation was drafted. We do not know what materials were presented or discussed by Cabinet, and we probably will not know because of the s. 39 privilege on Privy Council documents in the Canada Evidence Act.

63     I conclude that in addition to the admissible public documents, the various documents above referred to, are admissible as constitutional evidence of the context in which this legislation may have been prepared. I find the correspondence at the Deputy Minister level to be much more important in that regard than the musings of unnamed lower level bureaucrats. I, however, conclude that none of these documents is of very much assistance in dealing with the ultimate issue.

64     I conclude, however, that what was said when the Bill containing s. 5.1(4) was introduced in the house, as reported in Hansard, is helpful. Perhaps even more helpful is what was not said. On second reading of the Bill, on November 8, 1990, the Minister spoke of the Bill as having three key elements. On the second element he said:

"For decades veterans' affairs has followed ordinary banking practices with regard to administered accounts. The assumption has been that the accounts were like checking accounts. A service was received and the costs of this service was provided through waiving interest on the account.

Well times have changed. Financial institutions pay interest on virtually every type of account and Bill C-87 will permit veterans' affairs to fall into line with modern practice. With the passage of this legislation, veterans' affairs will pay interest on administered accounts effective January 1, 1990. The interest this year will amount to approximately $3.5 million. That Mr. Speaker, is the type of change I had in mind when I said we want veterans and their dependants to receive 1990's service and treatment."

65     No mention was made that in fact the authority had existed for many, many years to pay interest but had not been used. No mention was made at all of s. 5.1(4), except by a general statement that the Bill contained a number of "housekeeping measures".

66     I was provided with only an excerpt from Hansard. It contains no explanation of the need for s. 5.1(4) - that is there is no statement that, for instance, it would be impossible to locate the old records on past interest claims going back many years, or that the government, in carefully balancing its financial priorities had concluded that it was better to spend its limited resources on pressing needs than hold them in reserve against a contingent liability. I was simply not shown any explanation at all. An extensive search of further Hansard reports does not show any mention of s. 5.1(4). If there was a policy explanation, it would have been up to the Crown, in putting its best foot forward on this motion, to have produced it, or evidence of it. Absent that and in the context of past history, the public documents and the concerns indicated among the bureaucrats, I can only conclude that the purpose of this section is to try do what it says it is going to do and no more - to prevent claims being made for or on account of interest on monies held or administered by the Minister during any period before January 1, 1990.

IX The Charter

67     Plaintiff's counsel did not include any argument under the Charter in their factum. They dealt with it orally and briefly, because the Crown had made reference to it. The reason for the brief treatment is of course that the right to property is not an enumerated right under the Charter. However, reference was made to the comment in Singh et al. v. M.E.I. [1985] 1 S.C.R. 177 at p. 207 where Wilson J. quotes the Law Reform Commission is saying that:

"the right to security of the person means not only protection of ones physical integrity but the provision of necessaries for its support"

and then goes on to say that:

"for purposes of the present appeal it is not necessary, in my opinion, to consider whether such an expansive approach to security of the person' and s. 7 of the Charter should be taken."

68     Reference is also made to Irwin Toy v. Quebec (A.G.) [1989] 1 S.C.R. 927 where Chief Justice Dickson at p. 1003 notes that economic rights as generally encompassed by the term "property" are not within the s. 7 guarantee but goes on to say:

"this is not to declare however that no right with an economic component can fall within security of the person' .... we do not at this moment choose to pronounce upon whether those economic rights fundamental to human life or survival are to be treated as though they are the same ilk as corporate commercial economic rights."

69     In addition to those quotes indicating that claims for property rights may not be completely foreclosed by the wording of s. 7, a brief argument was raised under s. 15, noting particularly that the veterans entitled to pensions and allowances were within the enumerated classes of those with mental or physical disabilities, it being put that those that had their pensions and allowances administered for them were discriminated against because their money was not invested and did not earn interest as it would have if administered by any trustee or fiduciary except the government.

70     Although several of the documents included in the six volume motion record indicated that some veterans, in earlier days, were credited with interest while in latter days they were not, and that the patients at St. Anne's Hospital received interest credits while those in other veterans hospitals did not, no argument was developed on the basis of discrimination within the class.

71     The Crown responded to the argument under s. 7 by references to the decision of Mr. Justice Montgomery in Re Aluminum Co. v. The Queen (1986) 29 D.L.R. (4th) 583, to the effect that the joint committee on the patriation of the constitution had expressly rejected including the right to "property" from the Charter and his statement at p. 592 that:

"even adopting the purposive approach to s. 7 of the Charter, it is patently clear that s. 7 was not intended to include economic rights. The modern Fathers of Confederation expressly rejected that notion."

The Crown also referred to Filip et al. v. City of Waterloo et al. (1992) 98 D.L.R. (4th) 534 (C.A.) where Katzman J.A. for the court, in rejecting the Charter argument against the seven day notice requirement re ice and snow on a highway said the claim could not:

"prevail against the formidable array of authority, in this province and elsewhere, for the proposition that the right to security of the person under s. 7 does not embrace the civil right to bring an action for the recovery of damages for personal injury ...."

72     I am persuaded that the overwhelming weight of authority weighs against any property claim under s. 7, and conclude that no persuasive argument has been made out under s. 15. I reject the position that the Charter can provide relief against s. 5.1(4).

X The Bill of Rights

73     The plaintiff looks to the Bill of Rights as supporting its claim for a declaration that s. 5.1(4) is invalid, or at least inoperative as a defence to the plaintiff's claims in this action.

74     The plaintiff looks particularly to the portion of the preamble which says:

"... a Bill of Rights which shall reflect the respect of parliament for its constitutional authority and which shall ensure the protection of these rights and freedoms in Canada;"

and on parts of s. 1 and 2 as follows:

"1. It is hereby recognized and declared that in Canada there have existed and shall continue to exist without discrimination ... the following human rights and fundamental freedoms namely,

(a) the right of the individual to life, liberty, security of the person and enjoyment of property, and the right not to be deprived thereof except by due process of law;

2. Every law of Canada shall, unless it is expressly declared by an act of Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights, be so construed and applied as to not to abrogate, abridge or infringe or to authorize the abrogation, abridgement or infringement of any of the rights or freedoms herein recognized and declared, and in particular, no law of Canada shall be construed or applied so as to ...

(e) deprive a person of the right to a fair hearing in accordance with the principles of fundamental justice for the determination of his rights and obligations;"

75     It was the contention of plaintiff's counsel that the pensions or allowances that went under administration were property, and that interest receivable or damages in lieu thereof arising from the failure to invest the funds while under administration is also property, within the context of the Bill of Rights. On this point, in the context of the Bill of Rights argument, the plaintiff's position was not contested.

76     The Bill of Rights was of course a statute, passed by the Parliament of Canada, and assented to August 10, 1960. Its effect is limited to the "Law of Canada" which means acts of parliament and subservient legislation enacted before or after the coming into force of the Bill of Rights. As Dean Hogg points out in his Constitutional Law of Canada, (3d) at p. 32-2, the Bill of Rights lost most of its importance in 1982 with the adoption of the Charter of Rights because most of the rights and freedoms guaranteed by the Bill are now guaranteed by the Charter. However, the Bill of Rights was not repealed and two provisions of the Bill are not duplicated by the Charter, namely the Bill's "due process" clause - s. 1(a), which extends to the protection of property; and the Bill's guarantee in s. 2(e) of a fair hearing for the determination of rights and obligations. Dean Hogg puts it that:

"both these provisions go beyond the guarantees in the Charter, and will therefore continue to be operative restraints of federal (but not provincial) activity."

77     The lead case under the Bill of Rights is The Queen v. Drybones [1970] S.C.R. 282. The majority decision of the court was delivered by Ritchie J. Joseph Drybones, an Indian, was convicted of being intoxicated off a reserve in the Northwest Territories contrary to a section of the Indian Act. This conduct would not have been punishable if indulged in by any person who was not an Indian. Mr. Drybones had been fined $10 by the convicting Magistrate. The case went up through the appellate process to the Supreme Court of Canada as a matter of principle.

78     Ritchie J. dealt with the argument that the Bill of Rights is little more than a rule for the construction of federal statutes by saying, at p. 294:

".... s. 2 is intended to mean and does mean that if a Law of Canada cannot be sensibly construed and applied' so that it does not abrogate, abridge or infringe one of the rights and freedoms recognized and declared by the Bill, then such law is inoperative unless it is expressly declared by an Act of Parliament of Canada that it shall operate notwithstanding the Canadian Bill of Rights'.

I think a declaration by the courts that a section or portion of a section of a statute is inoperative is to be distinguished from the repeal of such a section and is to be confined to the particular circumstances of the case in which the declaration is made."

79     He dealt with the issue before the court that p. 297 as follows:

"I think that s. 1(b) means at least that no individual or group of individuals is to be treated more harshly than another under that law, and I am therefore of the opinion that an individual is denied equality before the law if it is made an offense punishable at law, on account of his race, for him to do something which his fellow Canadians are free to do without having committed any offence or having been made subject to any penalty.

It is only necessary for the purpose of deciding this case for me to say that in my opinion s. 94(b) of the Indian Act is a Law of Canada which creates such an offence and that it can only be construed in such manner that its application would operate so as to abrogate, abridge or infringe one of the rights declared and recognized by the Bill of Rights. For the reasons which I have indicated, I am therefore of opinion that s. 94(b) is inoperative."

80     In Hogan v. The Queen [1975] 2 S.C.R. 574, one of the early breathalyser cases, in which the Bill of Rights was raised as a defence, Ritchie J., speaking for the majority said at p. 584:

"the case of The Queen v. Drybones is authority for the proposition that any law of Canada which abrogates, abridges or infringes any of the rights guaranteed by the Canadian Bill of Rights should be declared inoperative and to this extent it accorded a degree of paramountcy to the provisions of that statute ...."

81     It was argued before me that s. 1(a) speaks of taking away rights "except by due process of law" and that the passage of s. 5.1(4) by Parliament would constitute due process. It is interesting to see that this concept was no where considered in Drybones. Ritchie J. for the majority of the court simply found that there was no way that s. 94(1) of the Indian Act could be interpreted so that it did not conflict with the equality rights in the Bill of Rights and so simply found s. 94(1) to be inoperative.

82     A case which does point to situations where legislative action is not to be interfered with is Canada (Attorney General) v. Lavell [1974] S.C.R. 1349. This case, like Drybones, involved the Indian Act and the majority decision was again written by Ritchie. However here, the impugned section, 12 (1)(b) of the Indian Act, which defined Indian status so as to exclude women of Indian birth who had married non-Indians, was not held to be inoperative.

83     At p. 16 Ritchie J. distinguished the case from Drybones, saying:

"the fundamental distinction between the present case and that of Drybones, however, appears to me to be that the impugned section in the latter case could not be enforced without denying equality of treatment in the administration and enforcement of the law before the ordinary courts of the land to a racial group, whereas no such inequality of treatment between Indian men and women flows as a necessary result of the application of s. 12(1)(b) of the Indian Act."

He goes on to say that:

"... equality before the law under the Bill of Rights means equality of treatment in the enforcement and application of the Laws of Canada before the law enforcement authorities and the ordinary courts of the land, and no such inequality is necessarily entailed in the construction and application of s. 12(1)(b)."

84     The view of the majority of the Supreme Court as expressed by Ritchie was that the British North America Act required the federal government to deal with "Indians and lands reserved for Indians". A necessary part of that process was to define who Indians were, and the result of the designation would determine the rights of designated persons living on Indian reserves to use and benefit of Crown lands - not how they were to be treated by law enforcement authorities and the courts.

85     Curr v. The Queen [1972] S.C.R. 889 was referred to by counsel on both sides. This was another breathalyser case, decided three years before Hogan. The Crown points to the passage in the judgment of Laskin J. at p. 899 where Laskin, speaking on behalf of himself, Abbott, Martland, Judson, Hall, Spence and Pigeon said in relation to the breathalyser sections:

"... I am like wise of the opinion that s. 1(a) of the Canadian Bill of Rights does not make it inoperative. Assuming that except by due process of law' provides a means of controlling substantive federal legislation - a point that did not directly arise in R. v. Drybones - compelling reasons ought to be advanced to justify the court in this case to employ a statutory (as contrasted with a constitutional) jurisdiction to deny operative effect to a substantive measure duly enacted by a parliament constitutionally competent to do so, and exercising its powers in accordance with the tenants of responsible government, which underlie the discharge of legislative authority under the British North America Act. Those reasons must relate to objective and manageable standards by which a court should be guided if scope is to be found in s. 1(a) due process to silence otherwise competent federal legislation. Neither reasons nor underlying standards were offered here. For myself I am not prepared in this case to surmise what they might be."

86     The Crown position was that those words should be taken to mean that the Bill of Rights should not be used to attack duly passed federal legislation. In my view, those words should be looked at in context. In the section quoted, Laskin J. was responding, as he said in the last paragraph on p. 897, to an argument by counsel to take the phrase "except by due process of law" beyond its antecedents in English legal history and to view it in terms that had been sanctioned in the United States. He briefly referred to the English antecedents, back to Magna Carta, and said in the middle of p. 898:

"I am unable to appreciate what more can be read into s. 1(a) from a procedural standpoint than is already comprehended by s. 2(e) ( fair hearing in accordance with the principles of fundamental justice') and by s. 2(f) ( a fair and public hearing by an independent and impartial tribunal'). I need not consider here whether the expressed concern of s. 2(f) with criminal charges indicates that s. 2(e) must infer non-criminal proceedings. I would not read those two provisions as pointing to different standards of procedural fairness in their respective applications (if that be the case) to non-criminal and criminal proceedings, save as those standard spring from the nature of the proceeding."

87     He follows the quote above relied on by the Crown with an analysis of a number of American cases on due process, in which he says federal guarantees of a fair criminal procedure have been imposed on the state courts and concludes by saying:

"there is no similar need to pour content into the Canadian due process clause when it is surrounded by the specific guarantees in the Bill of Rights that I have already mentioned."

In the end he disposed of the appeal on the basis of 2(d) and not 1(a).

88     In the same case Ritchie J., speaking for himself and Fauteux C.J. and Markland and Judson JJ. said as p. 916:

"I prefer to base this conclusion on my understanding that the meaning to be given to the language employed in the Bill of Rights is the meaning which it bore in Canada at time when the Bill was enacted, and it follows that, in my opinion, the phrase due process of law' as used in s. 1(a) is to be construed as meaning according to the legal processes recognized by Parliament and the courts in Canada'."

He too decided the case on the basis on s. 2(d).

89     In my view, while the case points to a reluctance to rely on an undefined "due process", it also points out that the 2(a) right to a fair hearing is independent of the 1(a) due process right.

90     The Crown also relies on R. v. Appleby (No. 2) 76 D.L.R. (3d) 110, (N.B.S.C.), (App. Div.). This case dealt with a provision in the National Library Act that required publishers to send two copies of their books to the library free of charge. The publisher of the New Brunswick Reports presumably created a test case to be brought before the Appellate Court. Chief Justice Hughes, in delivering the decision for the court in December 1976 dealt with the argument that the provision deprived the publisher of property (the two books) without compensation contrary to s. 1(a) of the Bill of Rights; by noting firstly that at common law governments can expropriate without compensation, the entitlement to compensation being purely statutory, and then concluded at p. 118:

"since the Bill of Rights creates no new rights and merely protects those which existed at the time of its enactment, I do not see how the Bill of Rights can be interpreted as guaranteeing to an individual protection against loss of his property without compensation if the loss is a consequence of legislation of the Parliament of Canada which has been validly enacted."

91     In my view, this decision is not helpful to the Crown's position. As I read it, the point being made was not that the Bill of Rights cannot interfere with federal legislation but instead that federal (or provincial) legislation providing for expropriation without compensation has always been regarded as lawful, and as the Library's Act predated the Bill of Rights, the Bill could not be looked to as independently creating a right which the plaintiff did not have before it was passed.

92     Both plaintiff's counsel and Crown counsel referred to Smith, Kline and French v. Attorney General of Canada [1986] 1 F.C. 274, where Strayer J. dealt extensively with arguments that the licensing provisions in the Patent Act breached the Charter and the Bill of Rights. The Federal Court of Appeal adopted his reasoning re the Bill of Rights and the Supreme Court of Canada refused leave to appeal. What was argued before me by the Crown were the paragraphs on pp. 301, 302 and 303 speaking generally of "due process" and whether it has a substantive content. On p. 303 he notes that:

"the lack of any standard in the Bill for judicial determination of the substantive propriety of legislation as referred to by Laskin J. is still very pertinent."

However, in my view, an understanding of the case requires an understanding of what was being argued. The Patent Act provided that the Commissioner could make a licensing decision on written submissions, without any right to the opposing parties to cross-examine on affidavits or make oral submissions. This had been upheld as a "fair hearing" in a number of decisions. The argument before Strayer was that "due process" must be wider than "fair hearing" and so despite the previous decisions, the licensing provision was open to attack. For that reason, Strayer J. looked to Laskin J.'s comment about the lack of standards in the Bill of Rights for determining what due process might mean. At p. 309 he says:

"in my view due process requires, in addition to a fair hearing, a total process which provides for the making of a decision authorized by law, a means for rationally relating the facts in the case to criteria legally prescribed, as in this case by parliament."

His conclusion on that part of the case, attacking s. 41(4) of the Patent Act was:

"I am unable to say that the procedure authorized by the section is irrational or unsuitable for making the necessary connection between such facts as are relevant and such conclusions as depend on those facts. I therefore conclude that as written and interpreted, ss. 41(4) does not deny due process of law."

93     The Crown referred to and relied upon R. v. Bryan [1999] M.J. No. 49 (Man. C.A.) Bryan was charged with exporting wheat from Canada to the U.S.A. without an export license from the Canadian Wheat Board contrary to the regulations under the Customs Act. He challenged the constitutionality of the Wheat Board Act, arguing it dealt with property and was within provincial, not the federal jurisdiction, and of interest here, argued that it deprived him of the enjoyment of property "except by due process of law" contrary to s. 1(a) of the Canadian Bill of Rights. Scott C.J.M., for the Court, dealt at length with the constitutional question, deciding the Act dealt with trade and commerce rather than property. In so deciding he indicated that paragraph 24(3), the export section, was one of the three supporting pillars of the Act and cannot be severed from the remainder of the legislation without severely destabilizing the overall statutory scheme. The Bill of Rights argument was dealt with in three paragraphs. He quoted Professor W.S. Tarnopolsky (as he then was) at p. 221 of The Canadian Bill of Rights, second revised edition 1975, where he said:

"... it is clear that whatever right one has to enjoyment of property' it is modified by the last clause, i.e., the right not to be deprived thereof except by due process of law'. Therefore as long as it does not exceed its legislative jurisdiction, and as long as it observed due process of law', parliament can interfere with the right of the individual to enjoyment of property'."

The decision in Bryan ends as follows:

"there is no suggestion that the Act and regulations thereunder were not validly enacted by parliament and the Governor in Council respectively. This, in my opinion, constitutes due process for the purposes of s. 1(a) of The Canadian Bill of Rights. There is no constitutional dimension to the question before us and, in any event, no breach of s. 1(a) of the Bill of Rights."

94     The blunt statement that the enactment of a statute constitutes due process appears, with respect, to be contrary to Drybones and to Singh et al. v. M.E.I. [1985] 1 S.C.R. 177. However, it can perhaps be understood when related back to the factual situation that this particular Act was passed by parliament under its clear mandate under the B.N.A. Act re trade and commerce, with the provision re exporting being an essential part of the legislative scheme. In that light, the decision could be seen as fitting within the particular comments on the Indian Act in Lavell (supra), and the general comments of Dickson C.J. at para. 67 of the Quicklaw version of Beauregard v. Canada, [1986] 2 S.C.R. 56.

95     In Singh et al. v. M.E.I. [1985] 1 S.C.R. 177 the issue was whether the procedure for the adjudication of refugee status claims set out in the Immigration Act violated s. 7 of the Charter and s. 2(e) of the Bill of Rights. This case was also referred to in argument by both plaintiff's counsel and Crown counsel. An interesting aspect of this decision is that while the court was unanimous in granting the appeal, three justices based the decision on the Charter, three based it on the Bill of Rights, and the seventh took no part. I have previously mentioned this case in the discussion under the Charter. The decision under the Bill of Rights was delivered by Beetz J. on behalf of himself, Estey and McIntyre JJ. He notes at p. 224 that:

"The Canadian Bill of Rights retains all its force and effect, together with the various provincial Charters of Rights. Because these constitutional or quasi constitutional instruments are drafted differently, they are susceptible of producing cumulative effects for the better protection of rights and freedoms. But this beneficial result will be lost if these instruments fall into neglect. It is particularly so when they contain provisions not to be found in the Canadian Charter of Rights and Freedoms and almost tailor made for certain factual situations such as those in the cases at bar."

At p. 228 Beetz J. makes the following broad-reaching observations:

"... it seems clear to me that the ambit of s. 2(e) is broader than the list of rights enumerated in s. 1 which are designated as human rights and fundamental freedoms' whereas in s. 2(e) what is protected by the right to a fair hearing is the determination of ones rights and obligations', whatever they are and whenever the determination process is one which comes under the legislative authority of the Parliament of Canada. It is true that the first part of s. 2 refers to the rights or freedoms herein recognized and declared', but s. 2(e) does protect a right which is fundamental, namely, the right to a fair hearing in accordance with the principles of fundamental justice' for the determination of ones rights and obligations, fundamental or not. It is my view that, ... it is possible to apply s. 2(e) without making reference to s. 1 and that the right guaranteed by s. 2(e) is in no way qualified by the due process' concept mentioned in s. 1(a).

Accordingly the process of determining and re-determining appellants' refugee claims involves the determination of rights and obligations for which the appellants have, under s. 2(e) of the Canadian Bill of Rights, the right to a fair hearing in accordance with the principles of fundamental justice. It follows also that this case is distinguishable from cases where a mere privilege was refused or revoked ..."

96     In MacBain v. Lederman [1985] 1 F.C. 856 (F.C.A.) Heald J., speaking for the unanimous court on a review re federal human rights hearings, said at p.877 re the Singh case:

"I think it accurate to observe that most certainly one of the consequences of that landmark decision has been reinvigorate the Canadian Bill of Rights."

He says at p. 881:

"While the Supreme Court of Canada did not, to my knowledge, after Drybones, supra, declare any other laws inoperative pursuant to the bill until the Singh case, supra, the court nevertheless consistently affirmed the principle of Drybones insofar as the remedy for failure to comply with the provisions where the Bill is concerned."

He proceeded in the case before him to follow the directive in Drybones and declare inoperative certain sections of the Human Rights Act insofar as the complainant at bar was concerned.

97     I would summarize the principles in the foregoing as follows:

1. The Bill of Rights is still in full force, but because it relates only to Federal Legislation, and only empowers a court to declare a statutory provision to be inoperative in a particular factual situation, it has had a limited effect.

2. The Bill of Rights can protect rights that existed (or were declared by it to exist) when it was passed, but it does not create new rights.

3. Impugned legislation will be looked at in a general way to see if it was in pursuit of a valid federal legislative objective, and if so found, the courts will then look to see if the alleged discrimination or other breech is necessarily incidental to such objective, and if so found, may decline to declare the legislation inoperative. However, inequality before the courts will be looked at more stringently.

4. The right to a fair hearing in accordance with the principles of fundamental justice is a free standing right, not qualified by the due process concept.

98     Relating those principles to this case, I conclude that the Bill of Rights provides an effective remedy in this case. The general right to property is specifically recognized in s. 1(a) of the Bill of Rights. The right to require a trustee or fiduciary to invest funds on hand, and/or pay interest, has existed since the 1700's. The omnibus Bill was certainly passed in pursuit of a valid federal legislative objective, but the Bill as a whole is not impugned - just s. 5.1(4). That sub-section does not, on its face, have anything to do with improving the benefits, or the benefit system, of veterans - on its face, its only objective is to block legitimate potential claims by veterans. The Crown was well aware of those potential claims, both from its own studies and from the blunt reports of the Auditor General. No evidence at all of any higher purpose for this pernicious sub-section, buried in the Bill, that could come even close to objectives of general good for veterans, or for the country as a whole, has been put before this court, nor has any indication been given that s. 5.1(4) was necessary for, or even related to, the objectives of the Bill.

99     I appreciate the difficulty with the vague words "due process", and the great concern Laskin J. had over the American experience with those words. However, one thing is very clear to me - "due process" cannot mean "no process".

100     It is also clear to me that any beneficiary of any trust, or trust-like relationship in Canada, would be entitled to bring his or her trustee or fiduciary before the courts of Canada, so that a fair hearing could be held on any allegation of breach of trust or obligation. The outright denial of that right to the disabled veterans in this class is a denial of fundamental justice, and a clear breach of s. 2(e) of the Bill of Rights, calling for remedial action by this court.

101     I declare that s. 5.1(4) of the Department of Veterans' Affairs Act is inoperative in barring the claims raised by the plaintiff class in this action.

XI Conclusion

102     To put it in simple terms, I have found that the disabled veterans that make up the plaintiff class have a property interest in their pensions and allowances, and a property interest in their claims for investment returns or interest thereon, or alternately in their claims for damages in lieu thereof.

103     I have found that the Crown became a fiduciary to each of these veterans, when it accepted the administration of their funds.

104     I have found that the Crown was obliged to prudently invest funds so held, and not immediately used.

105     I have found the Crown breached its obligations, by taking in and using those funds as if they were the Crown's, by failing to invest the funds, and by failing to pay interest on the funds it held.

106     I have found that s. 5.1(4) of the Department of Veterans' Affairs Act, which would appear to bar this action, cannot do so because it offends the Bill of Rights, by infringing the right to the enjoyment of property, the right not to be deprived of property except by due process of law, and the right to a fair hearing in accordance with the Principles of Fundamental Justice.

107     I have found that s. 9 of the Crown Liability Act the other limitation provision, and the various technical defences raised by the Crown, cannot bar those disabled veterans from their claims.

108     I therefore dismiss the Crown motion, asking this court to dismiss the plaintiff's claims. The points of law raised by the Crown have been answered in the course of these reasons.

109     I grant the judgment sought by the plaintiff class, by declaring:

(a) The class members had a property interest in their pensions and allowances paid to and administered by the DVA;

(b) The Crown was a fiduciary to the class members during the time that the class members' funds were being paid to and administered by the DVA;

(c) The Crown breached its duty as fiduciary by failing to invest or pay interest on the funds under administration;

(d) Section 9 of the Crown Liabilities Act does not bar or exempt the claims of the class members;

(e) Section 5.1(4) of the Department of Veterans' Affairs Act does not bar or exempt the claims of the class members as it is inoperative as against them by reason of its conflict with both s. 1(a) and s. 2(e) of The Canadian Bill of Rights.

XII Post Script

110     The question of costs was not dealt with during the hearing of these motions. Counsel can arrange a time with me to address this issue generally, and if desired, the question of fixing costs. This should be dealt with fairly quickly.

111     I would expect that this decision will be carefully reviewed by the government, and may well be the subject of appellate review. If it is not overturned by an Appellate Court, or rendered of no force and effect by special federal legislation specifically passed notwithstanding the Bill of Rights, the questions of damage claims, and further steps in the action will have to be addressed in a case conference. I would now indicate, before hearing any representations or evidence, that perhaps the words "left uninvested for an unreasonable length of time" in the preceding quote from Halsbury should be kept in mind in evaluating individual claims, and so should the broad powers of the court under the Class Proceedings Act, ss. 24, 25 and 26, to among other things make aggregate, average or proportional assessments and direct payment for the general benefit of class members. As counsel well know, I will make myself available at any time, where ever I may be.

BROCKENSHIRE J.

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