Diane Roy Vice President, Regulatory Affairs

Gas Regulatory Affairs Correspondence

Email: gas.regulatory.affairs@fortisbc.com

Electric Regulatory Affairs Correspondence Email: electricity.regulatory.affairs@fortisbc.com

FortisBC

16705 Fraser Highway

Surrey, B.C. V4N 0E8

Tel: (604) 576-7349

Cell: (604) 908-2790

Fax: (604) 576-7074

Email: diane.roy@fortisbc.com

www.fortisbc.com

October 11, 2016 British Columbia Utilities Commission 6th Floor, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Ms. Laurel Ross, Acting Commission Secretary and Director Dear Ms. Ross: Re: British Columbia Hydro and Power Authority (BC Hydro) 2015 Rate Design

Application (the Application)

Project No. 3698781

FortisBC Energy Inc. and FortisBC Inc. (collectively FortisBC) Final Argument Submission

In accordance with Exhibit A-39 setting out the Regulatory Timetable for the Argument Phase of the Application, FortisBC attaches its Final Argument Submission. If further information is required, please contact the undersigned. Sincerely, FORTISBC ENERGY INC. FORTISBC INC. Original signed:

Diane Roy Attachments cc (email only): Registered Parties

259 Pages

TAB 1

COURT FILE NO.: 273/07 DATE: 20080516

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

KITELEY, CUMMING, AND SWINTON JJ.

B E T W E E N: ) ) ADVOCACY CENTRE FOR TENANTS-ONTARIO and INCOME SECURITY ADVOCACY CENTRE on behalf of LOW-INCOME ENERGY NETWORK

Appellant - and - ONTARIO ENERGY BOARD

Respondent

)))))))))))))))))))

Paul Manning and Mary Truemner, for the Appellant Michael Miller, for Ontario Energy Board Fred Cass and David Stevens, for Enbridge Gas Distribution Inc. Robert Warren, for Consumers Council of Canada

) ) HEARD at Toronto: February 25, 2008 KITELEY and CUMMING JJ. The Appeal [1] The Respondent Ontario Energy Board (the “Board”) is the provincial economic regulator for the natural gas and electricity sectors. The Board exercises its jurisdiction within the statutory authority established by the Legislature, being the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Schedule B (the “Act”).

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[2] By a majority (2:1) decision dated April 26, 2007, the Board determined that the Act does not explicitly grant to the Board jurisdiction to order the implementation of a low income affordability program: Enbridge Gas Distribution Inc. (April 26, 2007), EB-2006-0034 (Ont. Energy Bd.) (the “Board Decision”). The Board also found that the Board does not gain the requisite jurisdiction through the doctrine of necessary implication.

[3] Enbridge Gas Distribution Inc. (“EGD”) sought approval by the Board of EGD’s 2007 gas distribution rates based simply upon the Board’s traditional, standard “cost of service” rate-making principles. The Appellant Low Income Energy Network (“LIEN”) had intervened in the application before the Board. LIEN argues that without a rate affordability program, the interests of low-income consumers are not protected. LIEN proposed that the Board accept as an issue in the EGD proceeding the following matter:

Should the residential rate schedules for EGD include a rate affordability assistance program for low-income consumers? If so, how should such a program be funded? How should eligibility criteria be determined? How should levels of assistance be determined?

[4] LIEN seeks from the Board the introduction of a rate affordability assistance program to make natural gas distribution rates affordable to poor people. The underlying premise of the proposal of LIEN is that low income consumers (estimated to be about 18% of households in Ontario) should pay less for gas distribution services than other consumers. LIEN emphasizes that the supply of natural gas (or other source of energy) serves to meet basic human needs such as warmth from heating and the generation of power. Those who cannot afford to use natural gas as a source of energy may be placed at a significant disadvantage. LIEN submits that the Board can consider ability to pay in setting rates if it is necessary to meet broad public policy concerns. Access to an essential service is arguably such a concern. The supply of natural gas can be considered a necessity that is available from a single source with prices set by the Board in the public interest.

[5] The majority of the Board held that the LIEN proposal amounted to an income redistribution scheme. The Board noted that such a scheme would require a consumer rate class based upon income characteristics and would implicitly require subsidization of this new class by other rate classes. It is undisputed that a common, if not universal, historical feature of rate-making for a natural monopoly is the application of the same charges to all consumers within a given consumer classification based upon cost of service, that is, cost causality.

[6] Section 33 of the Act provides for an appeal to this Court on a question of law or jurisdiction. LIEN seeks a declaration that the Board has the jurisdiction to order a “rate affordability assistance program” for low income consumers of the utility, EGD, within its franchise areas as the distributor of natural gas.

[7] The position of EGD, the Board and the intervenor, the Consumers Council of Canada, is that LIEN’s quite understandable and commendable concern is an issue of public policy to be dealt with by the Legislature and falls outside the jurisdiction of the Board.

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The Standard of Review

[8] The issue is whether the Board is correct in its determination that it does not have jurisdiction to implement a low income affordability program.

[9] There is common ground that the standard of review is correctness. That is, this Court will interpret the statutory grant of authority on the basis of its own opinion as to a statute’s construction, rather than deferring to the Board’s determination of the issue. A tribunal’s determination that it has no jurisdiction will be set aside as a “wrongful declining of jurisdiction” if the Court is of the view that the tribunal’s decision is wrong. Donald J.M. Brown and John M. Evans, Judicial Review of Administrative Action in Canada, looseleaf (Toronto: Canvasback Publishing, 1998) at 14-3 to 14-4.

Analysis of the Board’s Jurisdiction

A. Applicable Principles

[10] The Court is to be guided by the principles of statutory interpretation as set forth in Ruth Sullivan, Driedger on the Construction of Statutes, 3rd ed., (Toronto: Butterworths, 1994) at 131:

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.

[11] The words of the Act are to be read in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme and object of the legislation and the Legislature’s intent. ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), [2006] 1 S.C.R. 140 at para. 37 [Atco].

[12] The statute shall be interpreted as being remedial and given such “fair, large and liberal interpretation as best ensures the attainment of its objects.” Legislation Act, S.O. 2006, c. 21, Schedule F, s. 64 (1).

[13] A statutory administrative tribunal obtains its jurisdiction from two sources: explicit powers expressly granted by statute, and implicit powers by application of the common law doctrine of jurisdiction by necessary implication. Atco, supra, at para. 38.

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[14] The Court must apply a “pragmatic or functional” analysis in determining the issue of jurisdiction, by considering the wording of the Act conferring jurisdiction upon the Board, the purpose of the Act creating the Board, the reason for the Board’s existence, the area of expertise of its members and the nature of the problem before the Board. Union des employés de Service, local 298 v. Bibeault, [1988] 2 S.C.R. 1048 at 1088.

B. The Wording of the Act

[15] Section 36 of the Act confers the Board’s jurisdiction:

36. (1) No gas transmitter, gas distributor or storage company shall sell gas or charge for the transmission, distribution or storage of gas except in accordance with an order of the Board, which is not bound by the terms of any contract.

….

(2) The Board may make orders approving or fixing just and reasonable rates for the sale of gas by gas transmitters, gas distributors and storage companies, and for the transmission, distribution and storage of gas.

(3) In approving or fixing just and reasonable rates, the Board may adopt any method or technique that it considers appropriate.

[16] LIEN submits that the Board’s authority to fix “just and reasonable rates” by adopting “any method or technique it considers appropriate”, conferred by s. 36 (2) and (3) of the Act is very broad and the statutory language must be given its ordinary meaning.

[17] The Board argues that the word “rates” is in the plural form in s. 36 (2) to allow the Board to set different rates for different classes of consumers based upon the costs of serving those consumers. For example, large industrial users are typically considerably more expensive to serve than residential consumers. Separate rate classes are a necessity to ensure that consumers reimburse for the actual costs of the service they receive.

[18] The majority opinion in the Board Decision is of the view that the words “any method or technique” cannot reasonably be interpreted to mean “a fundamental replacement of the rate making process based on cost causality with one based on income level as a rate grouping determinant.” (p.9)

[19] The phrase “approving or fixing just and reasonable rates” in the present s. 36 (2) was first introduced by s. 17 (1) of Bill 38, An Act to Establish the Ontario Energy Board, 1st Sess., 26th Leg., Ontario, 1960 by the then Minister of Energy Resources, the Hon. Robert Macaulay. He outlined for the Legislature the philosophy underlying rate setting (Legislature of Ontario Debates, 9 (8 February 1960) at 199 (Hon. Macaulay)):

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First, why are there rate controls? There are rate controls because, in effect, the distribution of natural gas is a monopoly, a public utility. Secondly…it is fair that whatever rate is charged should be one designated, not only in the interests of the consumer, but also in the interests of the distributor…[O]ne really should have in mind 3 basic objectives: First, the rate should be low enough to secure to the user a fair and just rate. Second, the rate should be adequate to pay for good service and replacement and retirement of the used portion of the assets. Third, it should be high enough to attract a sufficient return on capital….

[20] He went on to explain the purpose of the Government’s policy (at 205):

“[F]irst, to protect the consumer, and to see that he pays a fair and just rate, not more or less, and that is competitive with other fuels. Second, to make sure the rate is sufficient to provide adequate service, replacements and safety for the company providing the service. Third, it is that the company should be able to charge a rate which is sufficient to attract the necessary capital to expand.

[21] The present s.36 (3) replaced s.19 of the old Ontario Energy Board Act, R.S.O. 1980, c. 332, which required a traditional cost of service analysis in very prescriptive terms:

19 (2) In approving or fixing rates and other charges under subsection (1), the board shall determine a rate base for the transmitter, distributor or storage company, and shall determine whether the return on the rate base …is reasonable.

The rate base …shall be the total of,

(a) a reasonable allowance for the cost of the property that is used or useful in serving the public, less an amount considered adequate by the Board for depreciation, amortization and depletion;

(b) a reasonable allowance for working capital; and

(c) such other amounts as, in the opinion of the Board, ought to be included.

[22] The authority was granted in s. 36 (3) to use “any method or technique it considers appropriate” in approving “just and reasonable rates” i.e., employing methods other than simply on a traditional cost of service basis as proscribed in the repealed s. 19 to set rates for the gas sector. This aligned the approach for natural gas with the non-prescriptive authority seen governing Ontario Hydro as a Crown corporation in rate setting for electricity distributors.

[23] Thus, under the former Act the phrase “just and reasonable rates” was limited to the cost of service basis articulated in prescriptive detail in s. 19. The change in repealing s. 19 and allowing the Board to “adopt any method or technique it considers appropriate” provides greater flexibility to the Board to employ other methods of rate making in approving and fixing “just and

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reasonable rates” rather than simply the traditional cost of service regulation seen in the former s. 19.

[24] Subsection 36 (3) allows the Board to adopt “any method or technique that it considers appropriate” in fixing “just and reasonable rates.” The majority Board Decision view is that this provision, considered within the context of the Act as a whole, allows the Board to employ flexible techniques and methods for cost of service analyses in determining rates, for example, the incentive rate mechanisms currently used for the major gas utilities.

[25] In the same rate setting proceeding that is under review, EGD reportedly asked the Board to approve two fuel-switching programs to enable residential consumers to shift from electric-water heaters to gas-water heaters, given that the latter promote conservation inasmuch as there is greater energy efficiency. The programs are identical except that there is a subsidy offered for the low income group of $800 per participant but a subsidy of only $600 for other consumers. Vice Chair Kaiser in dissenting points out that none of the parties have objected to this proposal and no one has argued that the Board does not have jurisdiction to approve different subsidies based upon income levels.

[26] Indeed, the majority opinion in the Board Decision allows that the Board has ordered that specific funding be channeled aimed at low income consumers for “Demand Side Management Programs.”

[27] As well, the Board on occasion has reduced a significant rate increase because of so-called “rate shock” by spreading the increase over a number of years. Although this does not in itself suggest an unequal approach as between residential consumers it does indicate that the Board considers it has jurisdiction to take “ability to pay” into account in rate setting.

[28] EGD, like other utilities, makes annual contributions to enable emergency financial relief through the so-called “Winter Warmth Program” which provides funds as a subsidy to some low income consumers, enabling them to be able to heat their homes in winter months. These subsidies are taken into account as costs of the utility in the approval and fixing of rates by the Board. Although the program is funded by all consumers, to some extent there is indirect cross-subsidization within the residential consumer class.

[29] The Board points out that this is a relatively small program in the nature of a charitable objective, involving the United Way, which is specific to individual consumers in a financial crisis situation. But the fact remains that its implementation means that some residential consumers are paying less for the distribution and purchase of natural gas than other residential consumers are paying. If the Board has jurisdiction to approve utilities paying subsidies to the benefit of low income consumers then it arguably has jurisdiction to order utilities to provide special rates on a low income basis.

[30] Section 79 of the Act explicitly authorizes the Board to provide rate protection for rural or remote consumers of an electricity distributor. The majority decision argues that it is a reasonable inference that the Legislature, by virtue of the explicit singling out of a single

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category of consumers in s. 79, did not intend this benefit to apply to other categories of consumers. The Board argues that if s. 36 (2) and (3) are intended to allow for differential rate setting for subsets of residential consumers, then s. 79 is unnecessary. The majority decision considers the existence of s. 79 as indicating that the Legislature has been explicit on issues that it considers warrant special treatment through a subsidy. The majority decision argues that the existence of s. 79 implicitly excludes any intent to confer jurisdiction to depart from simply the cost of service approach employed to implement the mandate given to the Board by s. 36.

[31] Moreover, the majority decision points out that rural rate assistance through s. 79 does not consider income level as an eligibility determinant. Rather, eligibility is based upon location and the inherent higher costs of service related to density levels. The assistance from the program is conferred upon all consumers within a given geographical area irrespective of their income level. Hence, this program arguably serves simply to mitigate the effect of the cost differential related to geography and remains consistent with a rate making process based upon cost causality. Nevertheless, “rate protection” through s. 79 operates as a subsidy paid by some of Ontario’s residential electricity consumers for the benefit of others and represents a departure from the principle of cost causality being applied on the same basis to all consumers within a given class (i.e., residential, commercial and industrial).

[32] As pointed out in the dissent by Board Vice Chair Gordon Kaiser, s. 79 was introduced in 1999 when the authority to regulate rates for electricity distributors was transferred to the Ontario Energy Board. Prior thereto, electricity distributors were regulated by Ontario Hydro, a Crown corporation which had established the policy of setting special rates in remote and rural areas through the now repealed s. 108 of the Power Corporation Act, R.S.O. 1990, c. P. 18. The inference can be made, as Vice Chair Kaiser asserts, that s. 79 was introduced into the Act to expressly indicate to the Board that this significant historical policy must continue.

C. The Purpose of the Act and the Reason for the Board’s existence

[33] The objectives for the Board with respect to natural gas regulation are set forth in s. 2 of the Act:

(2) The Board, in carrying out its responsibilities under this or any other Act in relation to gas, shall be guided by the following objectives: 1. To facilitate competition in the sale of gas to users. 2. To protect the interests of consumers with respect to prices and the reliability and quality of gas service. 3. To facilitate rational expansion of transmission and distribution systems. 4. To facilitate rational development and safe operation of gas storage. 5. To promote energy conservation and energy efficiency in a manner consistent with the policies of the Government of Ontario.

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5.1To facilitate the maintenance of a financially viable gas industry for the transmission, distribution and storage of gas.

6. To promote communication within the gas industry and the education of consumers.

[34] The Board is charged under s. 2 of the Act with protecting “the interests of consumers with respect to prices ….” The Board argues that this provision speaks to consumers as a single class, not to a particular subset of consumers. The majority decision of the Board says the Board’s mandate is to balance the interests of consumers as a single group with the interests of the regulated utility in the setting of “just and reasonable rates.”

[35] The Divisional Court has emphasized in the past that the Board’s mandate to fix just and reasonable rates “is unconditioned by directed criteria and is broad; the board is expressly allowed to adopt any method it considers appropriate.” Natural Resource Gas Ltd. v Ontario Energy Board, [2005] O.J. No. 1520 at para. 13 (Div. Ct.). The Divisional Court also stated in Enbridge Gas Distribution Inc. v. Ontario Energy Board (2005), 75 O.R. (3d) 72, [2005] O.J. No. 756 at para.24:

…[T]he legislation involves economic regulation of energy resources, including setting prices for energy which are fair and reasonable to the distributors and the suppliers, while at the same time are a reasonable cost for the consumer to pay. This will frequently engage the balancing of competing interests, as well as consideration of broad public policy.

[36] Writing for the majority of the Supreme Court of Canada in Atco, supra, at para. 62 Bastarache J. stated that “[r]ate regulation serves several aims – sustainability, equity and efficiency – which underlie the reasoning as to how rates are fixed.”

D. The Area of Expertise of its Members and the Nature of the Problem before the Board

[37] The Board was asked to consider the application of the utility to establish rates. In that context, an intervenor asked the Board to consider whether, as a factor in rate-setting, the Board could consider the interests of low-income consumers and establish a rate affordability program. That issue of rate-setting is squarely within the jurisdiction of the Board.

[38] The majority opinion in the Board Decision correctly states that the Board’s mandate for economic regulation is “rooted in the achievement of economic efficiencies, the establishment of fair returns for natural monopolies and the development of appropriate costs allocation methodologies”.. However, that does not answer the question as to the full scope of the Board’s jurisdiction in approving or fixing “just and reasonable rates” and adopting “any method or technique that it considers appropriate” in so doing.

[39] The Board’s regulatory power is designed to act as a proxy in the public interest for competition in view of a natural gas utility’s geographical natural monopoly. Absent the intervention of the Board as a regulator in rate-setting, gas utilities (for the benefit of their

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shareholders) would be in a position to extract monopolistic rents from consumers, in particular, given a relatively inelastic demand curve for their commodity. Clearly, a prime purpose of the Act and the Board is to balance the interests of consumers of natural gas with those of the natural gas suppliers. The Board’s mandate through economic regulation is directed primarily at avoiding the potential problem of excessive prices resulting because of a monopoly distributor of an essential service.

[40] In performing this regulatory function, it is consistent for the Board to seek to protect the interests of all consumers vis-a-vis the reality of a monopoly. The Board must balance the respective interests of the utility and the collective interest of all consumers in rate setting. Re Union Gas Ltd. and Ontario Energy Board et al. (1983), 1 D.L.R. (4th) 698 (Div. Ct.), (1983) 43 O.R. (2d) 489 at 501. The Board’s regulatory power is primarily a proxy for competition rather than an instrument of social policy. Dalhousie Legal Aid Service v. Nova Scotia Power Inc., (2006), 268 D.L.R. (4th) 408 at para. 33 [Dalhousie].

[41] Dalhousie dealt with a request for a low income affordability program like that advanced by LIEN. However, it involved a consideration of rate setting under s. 67 (1) of the Nova Scotia Public Utilities Act ,R.S.N.S. 1989, c. 380, which is very different in wording with respect to jurisdiction to that seen in s. 36 of the Act at hand. The Nova Scotia provision expressly provides that “rates shall always, under substantially similar circumstances and conditions in respect of service of the same description, be charged equally to all persons and at the same rate ….” Hence, the Nova Scotia Utility and Review Board found that it did not have jurisdiction to order low income affordability programs.

[42] Section 36 of the Act has broad language, empowering the Board to set “just and reasonable” rates for the distribution of natural gas. The supply of natural gas can be considered a necessity that is available from a single source with prices set by the Board in the public interest. The Board has traditionally set rates on a “cost of service” basis, that is, on the basis of cost causality and employing a complex cost allocation exercise. In brief, this approach first looks to the utility’s capital investments and maintenance costs including a fair rate of return to determine revenues required. The revenue requirement is then divided amongst the utility’s rate paying consumers on a rate class basis (i.e., residential, commercial, industrial, etc.).

[43] The rates have been traditionally designed with the principled objective of having each rate class pay for the actual costs that class imposes upon the utility. That is, the Board has sought to avoid inter-class and intra class subsidies. See RP-2003-0063 (2005) at 5. Consistent with this approach, the Board has refused the establishment of a special rate class to provide redress for aboriginal consumers. Decision with Reasons EBRO493 (1997) (O.E.B.). In that case, the Ontario Native Alliance (“ONA”) requested the Board to order a utility to evaluate the establishment of a rate class for the purpose of providing a special rate class for aboriginal peoples. At 316-17, the Board stated:

The Board is required by the legislation to “fix just and reasonable rates”, and in doing so it attempts to ensure that no undue discrimination occurs between rate classes, and that

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the principles of cost causality are followed in allocating the underlying rates. While the board recognizes ONA’s concerns, the Board finds that the establishment of a special rate class to provide redress for aboriginal consumers of Centra does not meet the above criteria and it is not prepared to order the studies requested by ONA.

[44] This decision would be within the Board’s jurisdiction and a like response to LIEN in the case at hand would arguably be consistent and reasonable. However, the Board in dealing with the ONA request did not decline on the basis of jurisdiction. Rather, it said that it should not exercise its jurisdiction as requested by ONA for the reasons given.

[45] A low income rate affordability program would necessarily lead to treating consumer groups on a differentiated basis with higher prices for a majority of residential consumers and subsidization of the low-income subset by the majority group and/or other classes of consumers.

[46] If the Board were to reduce the rates for one class of consumers based upon an income determinant, the Board would have to increase the rates for another class or classes of consumers. In effect, such a rate reduction would impose a regressive indirect tax upon those required to pick up the shortfall. Such an approach would arguably be a dramatic departure from the Board’s regulatory function as implemented to date, which has been to protect the collective interest of consumers dealing with a monopoly supplier through a “cost of service” calculation and then to treat consumers equally through determining rates to pay for the “cost of service” on a cost causality basis for classes of consumers.

[47] The Board’s mandate has not been directed to the public interest in social or distributive justice through a differentiation of rates on the basis of income. That need is seen to be met through other mechanisms and programs legislated by the provincial Legislature and/or Parliament, for example, by refundable tax credits and social assistance.

[48] Indeed, the provincial income tax legislation previously provided for public tax expenditures to assist low income consumers with rising electricity costs. This was done through an “Ontario home electricity payment” by reference to income levels. Income Tax Act, R.S.O. 1990, c.1.2, s. 8.6.1, as rep. by Income Tax Amendment Act (Ontario Home Electricity Relief), 2006, S.O. 2006, c. 18, s. 1. As well, Parliament has provided a one-time relief for energy costs to low income families and seniors in Canada through the Energy Costs Assistance Measures Act, S.C. 2005, c. 49.

[49] The Board is an economic regulator, rather than a formulator of social policy. While no doubt the Board must take into account broad policy considerations, rate-setting is at the core of the Board’s jurisdiction. Garland v. Consumers’ Gas Company (2000), 185 D.L.R. (4th) 536 at paras. 17, 45-46 (Ont. S.C.J.). Special rates for low income consumers would not be based upon economic principles of regulation but rather on the social principle of ability to pay. Any program to subsidize low income consumers would require a source of funding which is a matter of public policy. See generally Re Rate Concessions to Poor Persons and Senior Citizens, 14 Pub. Util. Rep. 4th 87 at 94 (Or. 1976).

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[50] This view of the nature and limit of the regulatory function is generally accepted as the norm in other jurisdictions. See for example Washington Gas light Co. v. Public Service Commission of the District of Columbia (1982), 450 A.2d 1187 at para. 38 (D.C. Ct. App.); State of Louisiana v. the Council of the City of New Orleans and New Orleans Public Service, Inc. (1975), 309 So. 2nd 290 at 294 (La. Sup. Ct.).

[51] The historical common law approach for public utility regulation has been that consumers with similar cost profiles are to be treated equally so far as reasonably possible with respect to the rates paid for services. See, for example, St. Lawrence Rendering Co. Ltd. v. The City of Cornwall, [1951] O.R. 669-685 at 683; Chastain et al. v. British Columbia Hydro and Power Authority (1972), 32 D.L.R. (3d) 443 at 454 (B.C.S.C); Canada (Attorney General) v. Toronto (City) (1893), 23 S.C.R. 514 at 519-520.

Conclusions on the Board’s Jurisdiction

[52] We agree that the traditional approach of “cost of service” is the root principle underlying the determination of rates by the Board because that is necessary to meet the fundamental, core objective of balancing the interests of all consumers and the natural monopoly utility in rate/price setting.

[53] However, the Board is authorized to employ “any method or technique that it considers appropriate” to fix “just and reasonable rates.” Although “cost of service” is necessarily an underlying fundamental factor and starting point to determining rates, the Board must determine what are “just and reasonable rates” within the context of the objectives set forth in s. 2 of the Act. Objective #2 therein speaks to protecting “the interests of consumers with respect to prices.”

[54] The “cost of service” determination will establish a benchmark global amount of revenues resulting from an estimated quantity of units of natural gas or electricity distributed. The Board could use this determination to fix rates on a cost causality basis. This has been the traditional approach.

[55] However, in our view, the Board need not stop there. Rather, the Board in the consideration of its statutory objectives might consider it appropriate to use a specific “method or technique” in the implementation of its basic “cost of service” calculation to arrive at a final fixing of rates that are considered “just and reasonable rates.” This could mean, for example, to further the objective of “energy conservation”, the use of incentive rates or differential pricing dependent upon the quantity of energy consumed. As well, to further the objective of protecting “the interests of consumers” this could mean taking into account income levels in pricing to achieve the delivery of affordable energy to low income consumers on the basis that this meets the objective of protecting “the interests of consumers with respect to prices.”

[56] The Board is engaged in rate-setting within the context of the interpretation of its statute in a fair, large and liberal manner. It is not engaged in setting social policy.

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[57] This is not, of course, to imply any preferred course of action in rate setting by the Board. The Board in its discretion may determine that “just and reasonable rates” are those that follow from the approach of “cost causality” once the “cost of service” amount is determined. That is, the principle of equality of rates for consumers within a given class (e.g., residential consumers) may be viewed as the most just and reasonable approach. A determination by the Board that all residential gas consumers (with relatively minor deviations through such programs as the “Winter Warmth Program”) pay the same distribution rates is not in itself discriminatory on a prohibited ground. Indeed, it can be seen as a non-discriminatory policy in terms of prices paid.

[58] Nor is it to suggest that as a matter of public policy, objectives of distributive justice or conservation in respect of energy consumption are best achieved by rate setting as compared to, for instance, tax expenditures or social assistance devised and implemented by the Legislature through mechanisms independent of the operation of the Act. It is noted that the Minister is given the authority in s. 27 of the Act to issue policy statements as to matters that the Board must pursue; however, the Minister has not issued any policy statement directing the board to base rates on considerations of the ability to pay. Moreover, the power granted to a regulatory authority “must be exercised reasonably and according to the law, and cannot be exercised for a collateral object or an extraneous and irrelevant purpose, however commendable.” Re Multi Malls Inc. et al. and Minister of Transportation and Communications et al (1977), 14 O.R. (2d) 49 at 55 (C.A.). As we have said, cost of service is the starting point building block in rate setting, to meet the fundamental concern of balancing the interests of all consumers with the interests of the natural monopoly utility.

[59] Nor does our conclusion presume as to what methods or techniques may be available in determining “just and reasonable rates.” Efficiency and equity considerations must be made. Rather, this is to say only that so long as the global amount of return to the utility based upon a “cost of service” analysis is achievable, then the rates/prices (and the methods and techniques to determine those rates/prices) to generate that global amount is a matter for the Board’s discretion in its ultimate goal and responsibility of approving and fixing “just and reasonable rates.”

[60] The issue before the Court is that of jurisdiction, not how and the manner by which the Board should exercise the jurisdiction conferred upon it.

[61] In our view, and we so find, the Board has the jurisdiction to take into account the ability to pay in setting rates. We so find having taken into account the expansive wording of s. 36 (2) and (3) of the statute and giving that wording its ordinary meaning, having considered the purpose of the legislation within the context of the statutory objectives for the Board seen in s. 2, and being mindful of the history of rate setting to date in giving efficacy to the promotion of the legislative purpose.

[62] We also find that that interpretation is appropriate taking into account the criteria articulated in Driedger, above, namely it complies with the legislative text, it promotes the legislative purpose and the outcome is reasonable and just.

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[63] As indicated above, a statutory administrative tribunal obtains its jurisdiction from explicit powers or implicit powers. Having found that the jurisdiction to consider ability to pay in rate setting is explicitly within the Act, we need not consider the doctrine of necessary implication or the related principle of implied exclusion.

The issue of the Canadian Charter of Rights and Freedoms

[64] Before concluding, it is appropriate to mention the submission made on behalf of LIEN in respect of s. 15 (1) of the Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act, 1982 (U.K.), c. 11 (the “Charter”).

[65] LIEN says it raises the Charter simply within the context of it being an interpretive tool in discerning the meaning of an asserted ambiguous s. 36 of the Act. LIEN says it does not raise any issue that the Act or the Board’s actions or inactions are contrary to the Charter.

[66] LIEN argues that in the absence of clear statutory provisions, the requirement for “just and reasonable rates” must be interpreted to comply with s. 15. The Charter applies to provincial legislation and can be used as an interpretive tool. R. v. Rogers, [2006] 1 S.C.R. 554, [2006] S.C.J. No. 15 at para. 18. In our view, as stated above, the Act provides the Board with the requisite jurisdiction without having to look to the Charter.

[67] While we heard submissions from LIEN, we declined to hear from counsel for the respondents on this issue. We agree with our colleague Swinton J. that such an argument requires a full evidentiary record.

Disposition

[68] For the reasons given, the appeal is allowed and it is declared that the Board has the jurisdiction to establish a rate affordability assistance program for low income consumers purchasing the distribution of natural gas from the utility, EGD.

[69] All parties agree that there is not to be any award of costs in respect of this appeal.

___________________________ KITELEY J.

___________________________ CUMMING J.

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Released: May , 2008

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Swinton J. (dissenting): [70] The sole issue in this appeal is whether the Ontario Energy Board (the “Board”) erred in holding that it had no jurisdiction, when setting residential rates for gas distribution, to order a rate affordability program for low income consumers. In my view, the majority of the Board was correct in concluding that the Board lacked jurisdiction to make such an order.

[71] The majority of the Board predicated its decision on the understanding that the appellants’ proposal contemplated the establishment of a rate group for low income residential consumers that would be funded by general rates. I, too, proceed on that assumption. While there were no details of a specific program put forth by the appellants during the hearing, it is inevitable that the Board, in setting lower rates for the economically disadvantaged, would have to impose higher rates on other consumers.

The Board’s Practice in Setting Rates [72] Pursuant to the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Schedule B (the “Act”), the Board has authority to set rates for both gas and electricity. It has traditionally set rates for gas through a “cost of service” assessment, in which it seeks to determine a utility’s total cost of providing service to its customers over a one year period (the “test year”). According to the Board’s factum, these costs include the rate base (which is essentially the net book value of the utility’s total capital investments) and the utility’s operational and maintenance costs for the test year, among other things. The utility’s total costs for the test year (usually including a rate of return on the rate base portion) forms the revenue requirement. The revenue requirement is then divided amongst the utility’s ratepayers on a rate class basis (that is, residential, small commercial, industrial, etc.).

[73] With respect to gas, it has always been the Board’s practice to allocate the revenue requirement to the different rate classes on the basis of how much of that cost the rate class actually causes (“cost causality”). To the greatest extent possible, the Board has striven to avoid inter-class subsidies (see, for example, Decision with Reasons, RP-2003-0063 (2005), p. 5).

The Proper Approach to Statutory Interpretation [74] To determine the issue in this appeal, it is necessary to consider the powers conferred on the Board by its constituent legislation, the Ontario Energy Board Act. That Act must be interpreted using the modern principles of statutory interpretation described by Professor Ruth Sullivan in Driedger on the Construction of Statutes (3rd ed.) (Toronto: Butterworths, 1994) as follows:

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the

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legislation, the consequences of proposed interpretations, the presumptions of special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just. (at p. 131)

[75] The words of a statute are to be read in their entire context and in their grammatical and ordinary sense, harmoniously with the scheme of the Act, its objects, and the intent of the Legislature (ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), [2006] 1 S.C.R. 140 at para. 37).

The Words of the Provision in Issue [76] Subsection 36(2) of the Act gives the Board the broad authority to approve or fix “just and reasonable” rates for the distribution of gas. On its face, those words might encompass the power to set rates according to income. However, the words do not explicitly confer the power to do so, and the Supreme Court of Canada commented in ATCO, supra that a discretionary grant of authority to a tribunal cannot be viewed as conferring unlimited discretion. A regulatory tribunal must interpret its powers “within the confines of the statutory regime and principles generally applicable to regulatory matters, for which the legislature is assumed to have had regard in passing that legislation” (at para. 50).

[77] The appellants also rely on s. 36(3), which states that in approving or fixing just and reasonable rates, the Board may adopt “any method or technique that it considers appropriate”. These words were added to the Act in 1998. Examples of methods or techniques used by the Board for setting gas distribution rates are cost of service regulation and incentive regulation.

[78] On its face, the words of s. 36(3) do not confer the jurisdiction to provide special rates for low income customers. The subsection replaced an earlier provision of the Act which required a traditional cost of service analysis in setting rates. I agree with the conclusion of the Board majority as to the meaning of s. 36(3) (Reasons, p. 10):

It gives the Board the flexibility to employ other methods of ratemaking in fixing just and reasonable rates, such as incentive ratemaking, rather than the traditional costs of service regulation specified in section 19 of the old Act. The change in the legislation was coincident with the addition of the regulation of the electricity sector to the Board’s mandate. The granting of the authority to use methods other than cost of service to set rates for the gas sector was an alignment with the non-prescriptive authority to set rates for the electricity sector. The Board is of the view that if the intent of the legislature by the new language was to include ratemaking considering income level as a rate class determinant, the new Act would have made this provision explicit given the opportunity

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at the time of the update of the Act and the resultant departure from the Board’s past practice.

The Regulatory Context [79] According to longstanding principles governing public utilities developed under the common law, a public utility like the respondent Enbridge Gas Distribution Inc. (“Enbridge”) must treat all its customers equally with respect to the rates they pay for a particular service (Attorney General of Canada v. The Corporation of the City of Toronto (1892), 23 S.C.R. 514 at 519-20; St. Lawrence Rendering Co. Ltd. v. Cornwall, [1951] O.R. 669 (H.C.J.) at 683; Chastain v. British Columbia Hydro and Power Authority (1972), 32 D.L.R. (3d) 443 (B.C.S.C.) at 454).

[80] As noted in the Board’s majority reasons, the Board is, at its core, an economic regulator (Reasons, p. 4). Rate setting is at the core of its jurisdiction (Garland v. Consumer’s Gas Company (2000), 185 D.L.R. (4th) 536 (Ont. S.C.J.) at para. 45). I agree with the majority’s description of economic regulation as being “rooted in the achievement of economic efficiencies, the establishment of fair returns for natural monopolies and the development of appropriate cost allocation methodologies” (Reasons, p. 4).

[81] Historically, in setting rates, the Board has engaged in a balancing of the interests of the regulated utility and consumers. The Board has not historically balanced the interests of different groups of consumers. As the Divisional Court stated in Union Gas Ltd. v. Ontario (Energy Board) (1983), 43 O.R. (2d) 489 at p. 11 (Quicklaw):

… it is the function of the O.E.B. to balance the interest of the appellant in earning the highest possible return on the operation of its enterprise (a monopoly) with the conflicting interest of its customers to be served as cheaply as possible.

See, as well, Northwestern Utilities v. The City of Edmonton, [1929] 1 S.C.R. 186 at 192. [82] In a similar vein, the Supreme Court in ATCO, supra spoke of a “regulatory compact” which ensures that all customers have access to a utility at a fair price. The Court went on to state (at para. 63):

Under the regulatory compact, the regulated utilities are given exclusive rights to sell their services within a specified area at rates that will provide companies the opportunity to earn a fair rate of return for all their investors. In return for this right of exclusivity, utilities assume a duty to adequately and reliably serve all customers of their defined territories, and are required to have their rates and certain operations regulated…

The Court described the object of the Act “to protect both the customer and the investor” (at para. 64).

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[83] The Legislature, in conferring power on the Board, must be taken to have had regard to the principles generally applicable to rate regulation (ATCO, supra at paras. 50 and 64). I agree with the submission of Enbridge that those principles are the following:

(a) customers of a public utility must be treated equally insofar as the rate for a particular service or class of services is concerned; and (b) the Legislature will be presumed not to have intended to authorize discrimination among customers of a public utility unless it has used specific words to express this intention.

[84] Thus, the considerations of justice and reasonableness in the setting of rates have been and are those between the utility and consumers as a group, not among different groups of consumers based on their ability to pay.

Other Provisions of the Act [85] In applying s. 36(2), the Board must be bound by the objectives set out in s. 2 of the Act, which includes

2. To protect the interests of consumers with respect to prices and the reliability and quality of gas service.

[86] The appellants submit that these words are broad enough to permit the Board to order a rate affordability assistance program. However, that is not obvious from the words used, which refer to “consumers” as a whole, and not to any particular subset of consumers. Indeed, it can be argued that any low income rate affordability program would run counter to the stated objective, given that such a program must almost certainly be funded through higher rates paid by other consumers. The result would be to provide benefits to one group of consumers at the expense of others.

[87] The reason for this conclusion lies in the Board’s historical approach to rate setting, as described earlier in these reasons. The Board sets a revenue requirement for utilities before allocating those costs to the different rate classes. The only way the utility could recover its revenue requirement, given a rate class with lower rates for low income consumers, would be to increase the rates charged to other classes. Therefore, such higher prices can not be seen as protecting the interests of consumers with respect to prices, as set out in objective 2.

[88] Moreover, the Act contains an explicit provision in s. 79 that allows the Board to provide rate protection for rural and remote customers of electricity distributors. Subsection 79(1) provides:

The Board, in approving just and reasonable rates for a distributor who delivers electricity to rural or remote consumers, shall provide rate protection for those consumers

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or prescribed classes of those consumers by reducing the rates that would otherwise apply in accordance with the prescribed rules.

Section 79 also provides grandfathering for those who had a subsidy prior to the change in the Act. As well, it explicitly allows the distributor to be compensated for the subsidized rates through contributions from other consumers, as provided by the regulations. [89] This section was added to the Act in 1998, when the Board was given the authority over electricity rate regulation. Section 79 ensured the ongoing protection of rural rates put in place when electricity distribution was regulated by Ontario Hydro.

[90] One of the principles of statutory interpretation is “implied exclusion”. As Professor Sullivan has stated, this principle operates “whenever there is reason to believe that if the legislature had meant to include a particular thing within its legislation, it would have referred to that thing expressly” (supra, p. 186). While the purpose of s. 79 of the Act was to protect a pre-existing policy to assist rural and remote residential consumers, nevertheless, it is telling that there is no similar explicit power to order special rates or rate subsidies for other groups elsewhere in the Act.

The Significance of Ordering Rate Affordability Programs [91] An appropriate interpretation can be justified in terms of its promotion of the legislative purpose and the reasonableness of the outcome (see Sullivan, quoted above at para. 5).

[92] The ability to order a rate affordability program would significantly change the role that the Board has played – indeed, the majority of the Board stated a number of times that the proposal to base rates on income level would be a “fundamental” departure from its current practice. In the past, the Board has acted as an economic regulator, balancing the interests of the utility and its shareholders against the interests of consumers as a group. Were it to assume jurisdiction over rate affordability programs, it would carry out an entirely different function. It would enter into the realm of social policy, weighing the interests of low income consumers against those of other consumers. This is not a role that the Board has traditionally played. This is not where its expertise lies, nor is it well-suited to taking on such a role.

[93] An examination of the particular case before the Board illustrates this. The appellants seek a rate affordability assistance program for gas in response to Enbridge’s application for a rate increase for gas distribution – that is, for the delivery of natural gas. Customers can make arrangements for the purchase of the commodity of natural gas with a variety of suppliers in the competitive market. Therefore, were the Board to assume jurisdiction to order a rate affordability assistance program here, it could address only one part of the problem that low income consumers face in meeting their heating costs – the cost of distribution of gas.

[94] In addition, the Board would have to consider eligibility criteria for a rate affordability assistance program that reasonably would take into account existing programs for assistance to

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low income consumers. Obviously, this would include social assistance programs. As well, Enbridge, in its factum, has identified other programs which provide assistance for low income consumers. For example, the Ontario government has implemented a program to assist low income customers with rising electricity costs through amendments to income tax legislation (Income Tax Act, R.S.O. 1990, c. I.2, s. 8.6.1, as amended S.O. 2006, c.18, c.1). At the federal level, there was one-time relief for low income families and senior citizens provided by the Energy Costs Assistance Measures Act, S.C. 2005, c. 49.

[95] Moreover, in order to cover the lower costs, the Board would have to increase the rates of other customers in a manner that would inevitably be regressive in nature, as it is difficult to conceive how the Board would be able to determine, in a systematic way, the ability of these other customers to pay.

[96] Clearly, the determination of the need for a subsidy for low income consumers is better made by the Legislature. That body has the ability to consider the full range of existing programs, as well as a wide range of funding options, while the Board is necessarily limited to allocating the cost to other consumers. The relative advantages of a legislative body in establishing social programs of the kind proposed are well described in the following excerpt from a decision of the Oregon Public Utility Commissioner (Re Rate Concessions to Poor Persons and Senior Citizens (1976), 14 PUR 4th 87 at p. 94):

Utility bills are not poor persons’ only problems. They also cannot afford adequate shelter, transportation, clothing or food. The legislative assembly is the only agency which can provide comprehensive assistance, and can fund such assistance from the general tax funds. It has the information and responsibility to deal with such matters, and can do so from an overall perspective. It can determine the needs of various groups and compare those needs to existing social programs. If it determines a special program is needed to deal with energy costs, it can affect all energy sources rather than only those the commissioner regulates. With clear authority to establish social welfare policy, the legislative assembly also can monitor all state and federal welfare programs and the sources and extent of aid given to different groups. Without such overview, as independent agencies aid various segments of society, the total aid given each group is unknown, and unequal treatment of different groups becomes likely.

[97] Where the issue of rate affordability programs has arisen in other jurisdictions, courts and boards have ruled that a public utilities board does not have jurisdiction to set rates based on ability to pay (see, for example, Washington Gas Light Co. v. Public Service Commission of the District of Columbia (1982), 450 A. 2d 1187 (D.C. Ct. App.) at para. 38; Dalhousie Legal Aid Service v. Nova Scotia Power Inc. (2006), 268 D.L.R. (4th) 408 (N.S.C.A.) at 419; Alberta Energy and Utilities Board Decision 2004-066, Section 9.2.6 at 161, as well as the Oregon case, supra).

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[98] The appellants distinguish the Dalhousie Legal Aid case because the Nova Scotia legislation is different from Ontario’s. Specifically, s. 67(1) of the Public Utilities Act, R.S.N.S. 1989, c. 380 provides that “[a]ll tolls, rates and charges shall always, under substantially similar circumstances and conditions in respect of service of the same description, be charged equally to all persons and at the same rate”.

[99] While the language of the two statutes does differ, nevertheless, the reasons of the Nova Scotia Court of Appeal make it clear that the Board’s role is not to set social policy. At para. 33, Fichaud J.A, observed, “The Board’s regulatory power is a proxy for competition, not an instrument of social policy.”

[100] Moreover, the principle in s. 67(1) of the Nova Scotia Act requiring that rates be charged equally is a codification of the common law, set out earlier in these reasons. The Ontario Board has long operated according to the same principles.

[101] The appellants submit that the recent decision in Allstream Corp. v. Bell Canada, [2005] F.C.J. No. 1237 (C.A.) assists their case. There, the Federal Court of Appeal upheld a decision of the Canadian Radio-Television and Telecommunications Commission (the “CRTC”) approving special facilities tariffs submitted by Bell for the provision of optical fibre services pursuant to certain customer-specific arrangements. All but one related to a Quebec government initiative aimed at supporting the construction of broadband networks for rural municipalities, school boards and other institutions. The Court determined that the Commission’s decision approving the tariffs was not patently unreasonable, given the exceptional circumstances of the case that justified a deviation from the normal practice of rate determination. The Court noted that the Commission considered matters that were not purely economic, but noted that such considerations were part of the Commission’s wide mandate under s. 7 of the Telecommunications Act, S.C. 1993, c. 38 (at paras. 34-35).

[102] Section 7 of that Act, unlike s. 2 of the Ontario Energy Board Act, expressly includes the power “to respond to the economic and social requirements of users of telecommunications services” (s. 7(h)), as well as to enrich and strengthen the social and economic fabric of Canada and its regions (s. 7(a)). Moreover, while s. 27(2)(b) of that Act forbids unjust discrimination in rates charged, s. 27(6) explicitly permits reduced rates, with the approval of the Commission, for any charitable organization or disadvantaged person.

[103] In contrast to the broad mandate given to the CRTC, the objectives of the Board are much more confined. When the Board’s objectives go beyond the economic realm, specific reference has been made to other objectives, such as conservation and consumer education (s. 2 (5) and (6)). There is no reference to the consideration of economic and social requirements of consumers.

[104] The appellants have also pointed out that the Board has in the past authorized programs that transfer benefits to lower income customers. The Winter Warmth program is one in which individuals can apply for emergency financial relief with heating bills. It is triggered by an

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application from a particular customer, and the program is funded by all customers. The fact that the Board has approved this charitable program does not lead to the conclusion that it has jurisdiction to set rates on the basis of income level.

[105] With respect to the Demand Side Management (DSM) programs, the majority of the Board explained that this is not equivalent to a rate class based on income level. At p. 11 of its Reasons, the majority stated,

The Board is vigilant in ensuring that customer groups are afforded the opportunity to receive the benefits of the costs charged. In the case of Demand Side Management (DSM) programs, for example, the Board has ordered that specific funding be channeled for programs aimed at low income customers. It cannot be argued that this constitutes discriminatory pricing. Rather, the contrary. It is an attempt to avoid discrimination against low income customers who also pay for DSM programs but may not have equal opportunities to take advantage of these programs.

[106] Were the Board to assume jurisdiction to order a rate affordability assistance program, it would be taking on a significant new role as a regulator of social policy. Given the dramatic change in the role that it has historically played, as well as the departure from common law principles, it would require express language from the Legislature to confer such jurisdiction

Jurisdiction by Necessary Implication [107] In order to impute jurisdiction to a regulatory body, there must be evidence that the exercise of the power in question is a practical necessity for the regulatory body to accomplish the goals prescribed by the Legislature (ATCO, supra at paras. 51, 77). In this case, there is no evidence that the power to implement a rate affordability assistance program is a practical necessity for the Board to meet its objectives as set out in s. 2.

The Role of the Charter [108] The appellants submit that the values found in s. 15 of the Canadian Charter of Rights and Freedoms should be considered in the interpretation of the ratemaking provisions of the Act. However, the Charter has no relevance in interpretation unless there is genuine ambiguity in the statutory provision (R. v. Rodgers, [2006] 1 S.C.R. 554 at paras. 18-19). A genuine ambiguity is one in which there are “two or more plausible readings, each equally in accordance with the intentions of the statute” (at para. 18).

[109] In my view, there is no ambiguity in the interpretation of s. 36 of the Act, and therefore, there is no need to resort to the Charter.

[110] In any event, the appellants’ argument is, in fact, that the failure of the Board to order a rate affordability program is discriminatory on the basis of sex, race, age, disability and social assistance, because of the adverse impact on these groups (Factum, para. 43, as well as para. 47).

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Such an argument can not be made without a full evidentiary record, and the inclusion of statistical material in the Appeal Book is not a sufficient basis on which to address this equality argument.

Conclusion [111] For these reasons, I am of the view that the majority decision of the Board was correct, and that the Board has no jurisdiction to order rate affordability assistance programs for low income consumers. Therefore, I would dismiss the appeal.

Swinton J. Released: May 16, 2008

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COURT FILE NO.: 273/07 DATE: 20080516

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

KITELEY, CUMMING AND SWINTON JJ.

B E T W E E N: ADVOCACY CENTRE FOR TENANTS-ONTARIO and INCOME SECURITY ADVOCACY CENTRE on behalf of LOW-INCOME ENERGY NETWORK

Appellant - and - ONTARIO ENERGY BOARD

Respondent

REASONS FOR JUDGMENT _________________________________________

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TAB 2

140 [2006] 1 S.C.R.atco gas and pipelines v. alBerta

Ville de Calgary Appelante/Intimée au pourvoi incident

c.

ATCO Gas and Pipelines Ltd. Intimée/Appelante au pourvoi incident

et

Alberta Energy and Utilities Board, Commission de l’énergie de l’Ontario, Enbridge Gas Distribution Inc. et Union Gas Limited Intervenantes

Répertorié : ATCO Gas and Pipelines Ltd. c. Alberta (Energy and Utilities Board)

Référence neutre : 2006 CSC 4.

No du greffe : 30247.

2005 : 11 mai; 2006 : 9 février.

Présents : La juge en chef McLachlin et les juges Bastarache, Binnie, LeBel, Deschamps, Fish et Charron.

EN APPEL DE LA COUR D’APPEL DE L’ALBERTA

Droit administratif — Organismes et tribunaux ad‑ministratifs — Organismes de réglementation — Com‑pétence — Doctrine de la compétence par déduction nécessaire — Demande présentée à l’Alberta Energy and Utilities Board par un service public de gaz naturel pour obtenir l’autorisation de vendre des bâtiments et un terrain ne servant plus à la fourniture de gaz naturel — Autorisation accordée à la condition qu’une partie du produit de la vente soit attribuée aux clients du service public — L’organisme avait‑il le pouvoir exprès ou tacite d’attribuer le produit de la vente? — Dans l’affirmative, sa décision d’exercer son pouvoir discrétionnaire de pro‑téger l’intérêt public en attribuant aux clients une partie du produit de la vente était‑elle raisonnable? — Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A‑17, art. 15(3) — Public Utilities Board Act, R.S.A. 2000, ch. P‑45, art. 37 — Gas Utilities Act, R.S.A. 2000, ch. G‑5, art. 26(2).

Droit administratif — Contrôle judiciaire — Norme de contrôle — Alberta Energy and Utilities Board

City of Calgary Appellant/Respondent on cross‑appeal

v.

ATCO Gas and Pipelines Ltd. Respondent/Appellant on cross‑appeal

and

Alberta Energy and Utilities Board, Ontario Energy Board, Enbridge Gas Distribution Inc. and Union Gas Limited Interveners

Indexed as: ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board)

Neutral citation: 2006 SCC 4.

File No.: 30247.

2005: May 11; 2006: February 9.

Present: McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish and Charron JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ALBERTA

Administrative law — Boards and tribunals — Regu‑latory boards — Jurisdiction — Doctrine of jurisdiction by necessary implication — Natural gas public utility applying to Alberta Energy and Utilities Board to ap‑prove sale of buildings and land no longer required in supplying natural gas — Board approving sale subject to condition that portion of sale proceeds be allocated to ratepaying customers of utility — Whether Board had explicit or implicit jurisdiction to allocate proceeds of sale — If so, whether Board’s decision to exercise dis‑cretion to protect public interest by allocating proceeds of utility asset sale to customers reasonable — Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A‑17, s. 15(3) — Public Utilities Board Act, R.S.A. 2000, c. P‑45, s. 37 — Gas Utilities Act, R.S.A. 2000, c. G‑5, s. 26(2).

Administrative law — Judicial review — Standard of review — Alberta Energy and Utilities Board — Standard

2006

SC

C 4

(C

anLI

I)

[2006] 1 R.C.S. 141atco gas and pipelines c. alBerta

— Norme de contrôle applicable à la décision de l’or‑ganisme concernant son pouvoir d’attribuer aux clients le produit de la vente des biens d’un service public — Norme de contrôle applicable à la décision de l’or‑ganisme d’exercer son pouvoir discrétionnaire en at‑tribuant le produit de la vente — Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A‑17, art. 15(3) — Public Utilities Board Act, R.S.A. 2000, ch. P‑45, art. 37 — Gas Utilities Act, R.S.A. 2000, ch. G‑5, art. 26(2).

ATCO est un service public albertain de distribu-tion de gaz naturel. L’une de ses filiales a demandé à l’Alberta Energy and Utilities Board (« Commission ») l’autorisation de vendre des bâtiments et un terrain situés à Calgary, comme l’exigeait la Gas Utilities Act (« GUA »). ATCO a indiqué que les biens n’étaient plus utilisés pour fournir un service public ni susceptibles de l’être et que leur vente ne causerait aucun préjudice aux clients. Elle a demandé à la Commission d’auto-riser l’opération et l’affectation du produit de la vente au paiement de la valeur comptable et au recouvrement des frais d’aliénation, et de reconnaître le droit de ses actionnaires au profit net. La ville de Calgary a défendu les intérêts des clients, s’opposant à ce que le produit de la vente soit attribué aux actionnaires comme le préco-nisait ATCO.

Convaincue que la vente ne serait pas préjudiciable aux clients, la Commission l’a autorisée au motif que « la vente ne risquait pas de leur infliger un préjudice fi-nancier qui ne pourrait faire l’objet d’un examen dans le cadre d’une procédure ultérieure ». Dans une deuxième décision, elle a décidé de l’attribution du produit net de la vente. Elle a conclu qu’elle avait le pouvoir d’autori-ser l’aliénation projetée en l’assortissant de conditions aptes à protéger l’intérêt public, suivant le par. 15(3) de l’Alberta Energy and Utilities Board Act (« AEUBA »). Elle a appliqué une formule reconnaissant que le profit réalisé lorsque le produit de la vente excède le coût historique peut être réparti entre les clients et les ac-tionnaires et elle a attribué aux clients une partie du gain net tiré de la vente. La Cour d’appel de l’Alberta a annulé la décision et renvoyé l’affaire à la Commission en lui enjoignant d’attribuer à ATCO la totalité du pro-duit net.

Arrêt (la juge en chef McLachlin et les juges Binnie et Fish sont dissidents) : Le pourvoi est rejeté et le pour-voi incident est accueilli.

Les juges Bastarache, LeBel, Deschamps et Charron : Compte tenu des facteurs pertinents de l’ana-lyse pragmatique et fonctionnelle, la norme de contrôle

of review applicable to Board’s jurisdiction to allocate proceeds from sale of public utility assets to ratepayers — Standard of review applicable to Board’s decision to exercise discretion to allocate proceeds of sale — Al‑berta Energy and Utilities Board Act, R.S.A. 2000, c. A‑17, s. 15(3) — Public Utilities Board Act, R.S.A. 2000, c. P‑45, s. 37 — Gas Utilities Act, R.S.A. 2000, c. G‑5, s. 26(2).

ATCO is a public utility in Alberta which delivers natural gas. A division of ATCO filed an application with the Alberta Energy and Utilities Board for approval of the sale of buildings and land located in Calgary, as required by the Gas Utilities Act (“GUA”). According to ATCO, the property was no longer used or useful for the provision of utility services, and the sale would not cause any harm to ratepaying customers. ATCO re-quested that the Board approve the sale transaction, as well as the proposed disposition of the sale proceeds: to retire the remaining book value of the sold assets, to recover the disposition costs, and to recognize that the balance of the profits resulting from the sale should be paid to ATCO’s shareholders. The customers’ interests were represented by the City of Calgary, who opposed ATCO’s position with respect to the disposition of the sale proceeds to shareholders.

Persuaded that customers would not be harmed by the sale, the Board approved the sale transaction on the basis that customers would not “be exposed to the risk of financial harm as a result of the Sale that could not be examined in a future proceeding”. In a second deci-sion, the Board determined the allocation of net sale proceeds. The Board held that it had the jurisdiction to approve a proposed disposition of sale proceeds subject to appropriate conditions to protect the public interest, pursuant to the powers granted to it under s. 15(3) of the Alberta Energy and Utilities Board Act (“AEUBA”). The Board applied a formula which recognizes profits realized when proceeds of sale exceed the original cost can be shared between customers and shareholders, and allocated a portion of the net gain on the sale to the ratepaying customers. The Alberta Court of Appeal set aside the Board’s decision, referring the matter back to the Board to allocate the entire remainder of the pro-ceeds to ATCO.

Held (McLachlin C.J. and Binnie and Fish JJ. dis-senting): The appeal is dismissed and the cross-appeal is allowed.

Per Bastarache, LeBel, Deschamps and Charron JJ.: When the relevant factors of the pragmatic and func-tional approach are properly considered, the standard of

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applicable à la décision de la Commission portant sur sa compétence est celle de la décision correcte. En l’es-pèce, la Commission n’avait pas le pouvoir d’attribuer le produit de la vente des biens de l’entreprise de servi-ces publics. La Cour d’appel n’a pas commis d’erreur de fait ou de droit lorsqu’elle a conclu que la Commission avait outrepassé sa compétence en se méprenant sur les pouvoirs que lui conféraient la loi et la common law. Cependant, elle a eu tort de ne pas conclure en outre que la Commission n’avait pas le pouvoir d’attribuer aux clients quelque partie du produit de la vente des biens. [21-34]

L’analyse de l’AEUBA, de la Public Utilities Board Act (« PUBA ») et de la GUA mène à une seule conclu-sion : la Commission n’a pas le pouvoir de décider de la répartition du gain net tiré de la vente d’un bien par un service public. Suivant le sens grammatical et ordinaire des mots qui y sont employés, le par. 26(2) de la GUA, le par. 15(3) de l’AEUBA et l’art. 37 de la PUBA sont si-lencieux en ce qui concerne le pouvoir de la Commission de décider du sort du produit de la vente. Le paragraphe 26(2) de la GUA lui conférait le pouvoir d’autoriser une opération, sans plus. La véritable portée du par. 15(3) de l’AEUBA, qui confère à la Commission le pouvoir d’assortir une ordonnance des conditions qu’elle juge nécessaires dans l’intérêt public, et celle de l’art. 37 de la PUBA, qui l’investit d’un pouvoir général, est occul-tée lorsque l’on considère isolément ces dispositions. En elles-mêmes, les dispositions sont vagues et sujet-tes à diverses interprétations. Il serait absurde d’accor-der à la Commission le pouvoir discrétionnaire absolu d’assortir ses ordonnances des conditions de son choix. La notion d’« intérêt public » est très large et élastique, mais la Commission ne peut se voir accorder le pouvoir discrétionnaire absolu d’en circonscrire les limites. Son pouvoir apparemment vaste doit être interprété dans le contexte global des lois en cause, qui visent à protéger non seulement le consommateur, mais aussi le droit de propriété reconnu au propriétaire dans une économie de libre marché. Il appert du contexte que les limites du pouvoir de la Commission sont inhérentes à sa prin-cipale fonction qui consiste à fixer des tarifs justes et raisonnables et à préserver l’intégrité et la fiabilité du réseau d’alimentation. [7] [41] [43] [46]

Ni l’historique de la réglementation des services pu-blics de l’Alberta en général ni les dispositions légis-latives conférant ses pouvoirs à l’Alberta Energy and Utilities Board en particulier ne font mention du pou-voir de la Commission d’attribuer le produit de la vente ou de son pouvoir discrétionnaire de porter atteinte au droit de propriété. Bien que la Commission puisse sembler posséder toute une gamme d’attributions et de fonctions, il ressort de l’AEUBA, de la PUBA et de la

review applicable to the Board’s decision on the issue of jurisdiction is correctness. Here, the Board did not have the jurisdiction to allocate the proceeds of the sale of the utility’s asset. The Court of Appeal made no error of fact or law when it concluded that the Board acted beyond its jurisdiction by misapprehending its statu-tory and common law authority. However, the Court of Appeal erred when it did not go on to conclude that the Board has no jurisdiction to allocate any portion of the proceeds of sale of the property to ratepayers. [21-34]

The interpretation of the AEUBA, the Public Utilities Board Act (“PUBA”) and the GUA can lead to only one conclusion: the Board does not have the pre-rogative to decide on the distribution of the net gain from the sale of assets of a utility. On their grammatical and ordinary meaning, s. 26(2) GUA, s. 15(3) AEUBA and s. 37 PUBA are silent as to the Board’s power to deal with sale proceeds. Section 26(2) GUA conferred on the Board the power to approve a transaction with-out more. The intended meaning of the Board’s power pursuant to s. 15(3) AEUBA to impose conditions on an order that the Board considers necessary in the public interest, as well as the general power in s. 37 PUBA, is lost when the provisions are read in isolation. They are, on their own, vague and open-ended. It would be absurd to allow the Board an unfettered discretion to attach any condition it wishes to any order it makes. While the concept of “public interest” is very wide and elas-tic, the Board cannot be given total discretion over its limitations. These seemingly broad powers must be in-terpreted within the entire context of the statutes which are meant to balance the need to protect consumers as well as the property rights retained by owners, as rec-ognized in a free market economy. The context indi-cates that the limits of the Board’s powers are grounded in its main function of fixing just and reasonable rates and in protecting the integrity and dependability of the supply system. [7] [41] [43] [46]

An examination of the historical background of public utilities regulation in Alberta generally, and the legislation in respect of the powers of the Alberta Energy and Utilities Board in particular, reveals that nowhere is there a mention of the authority for the Board to allo-cate proceeds from a sale or the discretion of the Board to interfere with ownership rights. Moreover, although the Board may seem to possess a variety of powers and functions, it is manifest from a reading of the AEUBA,

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GUA que son principal mandat à l’égard des entrepri-ses de services publics est l’établissement de tarifs. Son pouvoir de surveiller les finances et le fonctionnement de ces entreprises est certes vaste mais, en pratique, il est accessoire à sa fonction première. Les objectifs de viabilité, d’équité et d’efficacité, qui expliquent le mode de fixation des tarifs, sont à l’origine d’un arrangement économique et social qui garantit à tous les clients l’ac-cès au service public à un prix raisonnable, sans plus. Le paiement du tarif par le client n’emporte pas l’ac-quisition d’un droit de propriété ou de possession sur les biens du service public. L’objet de la législation est de protéger le client et l’investisseur, et la Commission a pour mandat d’établir une tarification qui favorise les avantages financiers de l’un et de l’autre. Toutefois, ce subtil compromis ne supprime pas le caractère privé de l’entreprise. Le fait que l’on donne au service public la possibilité de tirer un profit de la prestation du ser-vice et de bénéficier d’un juste rendement de son actif ne peut ni ne devrait l’empêcher d’encaisser le béné-fice résultant de la vente d’un élément d’actif. Sans compter que l’entreprise n’est pas à l’abri de la perte pouvant en découler. La Commission s’est méprise en confondant le droit des clients à un service sûr et effi-cace avec le droit sur les biens affectés à la prestation de ce service et dont l’entreprise est l’unique propriétaire. [54-69]

Non seulement le pouvoir d’attribuer le produit de la vente n’est pas expressément prévu par la loi, mais on ne peut « déduire » du régime législatif qu’il découle nécessairement du pouvoir exprès. Pour que s’applique la doctrine de la compétence par déduction nécessaire, la preuve doit établir que l’exercice de ce pouvoir est né-cessaire dans les faits à la Commission pour que soient atteints les objectifs de la loi, ce qui n’est pas le cas en l’espèce. Non seulement il n’est pas nécessaire, pour s’acquitter de sa mission, que la Commission ait le pou-voir d’attribuer à une partie le produit de la vente qu’elle autorise, mais toute conclusion contraire permettrait d’interpréter un pouvoir largement défini, comme celui prévu dans l’AEUBA, la GUA ou la PUBA, d’une façon qui empiète sur la liberté économique de l’entreprise de services publics, dépouillant cette dernière de ses droits. Si l’assemblée législative albertaine souhaite que les clients bénéficient des avantages financiers décou-lant de la vente des biens d’un service public, elle peut adopter une disposition le prévoyant expressément. [39] [77-80]

Indépendamment de la conclusion que la Commission n’avait pas compétence, la décision d’exercer le pouvoir discrétionnaire de protéger l’intérêt public en répartis-sant le produit de la vente comme elle l’a fait ne satis-faisait pas à la norme de la raisonnabilité. Lorsqu’elle

the PUBA and the GUA that the principal function of the Board in respect of public utilities, is the determi-nation of rates. Its power to supervise the finances of these companies and their operations, although wide, is in practice incidental to fixing rates. The goals of sustainability, equity and efficiency, which underlie the reasoning as to how rates are fixed, have resulted in an economic and social arrangement which ensures that all customers have access to the utility at a fair price — nothing more. The rates paid by customers do not in-corporate acquiring ownership or control of the utility’s assets. The object of the statutes is to protect both the customer and the investor, and the Board’s responsibil-ity is to maintain a tariff that enhances the economic benefits to consumers and investors of the utility. This well-balanced regulatory arrangement does not, how-ever, cancel the private nature of the utility. The fact that the utility is given the opportunity to make a profit on its services and a fair return on its investment in its assets should not and cannot stop the utility from ben-efiting from the profits which follow the sale of assets. Neither is the utility protected from losses incurred from the sale of assets. The Board misdirected itself by confusing the interests of the customers in obtaining safe and efficient utility service with an interest in the underlying assets owned only by the utility. [54-69]

Not only is the power to allocate the proceeds of the sale absent from the explicit language of the leg-islation, but it cannot be implied from the statutory regime as necessarily incidental to the explicit powers. For the doctrine of jurisdiction by necessary implica-tion to apply, there must be evidence that the exercise of that power is a practical necessity for the Board to accomplish the objects prescribed by the legislature, something which is absent in this case. Not only is the authority to attach a condition to allocate the proceeds of a sale to a particular party unnecessary for the Board to accomplish its role, but deciding otherwise would lead to the conclusion that broadly drawn powers, such as those found in the AEUBA, the GUA and the PUBA, can be interpreted so as to encroach on the economic freedom of the utility, depriving it of its rights. If the Alberta legislature wishes to confer on ratepayers the economic benefits resulting from the sale of utility assets, it can expressly provide for this in the legisla-tion. [39] [77-80]

Notwithstanding the conclusion that the Board lacked jurisdiction, its decision to exercise its discre-tion to protect the public interest by allocating the sale proceeds as it did to ratepaying customers did not meet a reasonable standard. When it explicitly concluded

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a conclu explicitement que la vente des biens ne cau-serait aucun préjudice aux clients, la Commission n’a pas cerné d’intérêt public à protéger et aucun élément ne justifiait donc l’exercice de son pouvoir discrétion-naire d’attribuer le produit de la vente. Enfin, on ne peut conclure que la répartition était raisonnable, la Commission ayant supposé à tort que les clients avaient acquis un droit de propriété sur les biens de l’entreprise du fait de la prise en compte de ceux-ci dans l’établisse-ment des tarifs. [82-85]

La juge en chef McLachlin et les juges Binnie et Fish (dissidents) : La décision de la Commission de-vrait être rétablie. Le paragraphe 15(3) de l’AEUBA conférait à la Commission le pouvoir d’« imposer les conditions supplémentaires qu’elle juge[ait] nécessai-res dans l’intérêt public » en statuant sur la demande d’autorisation de vendre le terrain et les bâtiments en cause présentée par ATCO. Dans l’exercice de ce pou-voir, et vu la « surveillance générale des services de gaz et de leurs propriétaires » qui lui incombait suivant le par. 22(1) de la GUA, la Commission a réparti le gain net en se fondant sur des considérations d’intérêt public. Son pouvoir discrétionnaire n’est pas illimité et elle doit l’exercer de bonne foi et aux fins auxquelles il est conféré. Dans la présente affaire, en attribuant un tiers du gain net à ATCO et deux tiers à la base tarifaire, la Commission a expliqué qu’il fallait mettre en balance les intérêts des actionnaires et ceux des clients. Selon elle, attribuer aux clients la totalité du profit n’aurait pas incité l’entreprise à accroître son efficacité et à réduire ses coûts et l’attribuer à l’entreprise aurait pu encoura-ger la spéculation à l’égard de biens non amortissables ou l’identification des biens dont la valeur s’était accrue et leur aliénation pour des motifs étrangers à l’intérêt véritable de l’entreprise réglementée. La Commission pouvait accueillir la demande d’ATCO et lui attribuer la totalité du profit, mais la solution qu’elle a retenue en l’espèce s’inscrivait parmi celles pour lesquelles elle pouvait raisonnablement opter. L’« intérêt public » tient essentiellement et intrinsèquement à l’opinion et au pouvoir discrétionnaire. Même si le cadre législatif de la réglementation des services publics varie d’un ressort à l’autre, la Commission s’est vu conférer par le législa-teur albertain un pouvoir plus étendu que celui accordé à la plupart des organismes apparentés. Il n’appartient pas à notre Cour de déterminer quelles conditions sont « nécessaires dans l’intérêt public » et de substituer son opinion à celle de la Commission. La décision que la Commission a rendue dans l’exercice de son pouvoir se situe dans les limites des opinions exprimées par les organismes de réglementation, que la norme applica-ble soit celle du manifestement déraisonnable ou celle du raisonnable simpliciter. [91-92] [98-99] [110] [113] [122] [148]

that no harm would ensue to customers from the sale of the asset, the Board did not identify any public in-terest which required protection and there was, there-fore, nothing to trigger the exercise of the discretion to allocate the proceeds of sale. Finally, it cannot be concluded that the Board’s allocation was reasonable when it wrongly assumed that ratepayers had acquired a proprietary interest in the utility’s assets because assets were a factor in the rate-setting process. [82-85]

Per McLachlin C.J. and Binnie and Fish JJ. (dissent-ing): The Board’s decision should be restored. Section 15(3) AEUBA authorized the Board, in dealing with ATCO’s application to approve the sale of the subject land and buildings, to “impose any additional condi-tions that the Board considers necessary in the public interest”. In the exercise of that authority, and having regard to the Board’s “general supervision over all gas utilities, and the owners of them” pursuant to s. 22(1) GUA, the Board made an allocation of the net gain for public policy reasons. The Board’s discretion is not unlimited and must be exercised in good faith for its intended purpose. Here, in allocating one third of the net gain to ATCO and two thirds to the rate base, the Board explained that it was proper to balance the inter-ests of both shareholders and ratepayers. In the Board’s view to award the entire gain to the ratepayers would deny the utility an incentive to increase its efficiency and reduce its costs, but on the other hand to award the entire gain to the utility might encourage speculation in non-depreciable property or motivate the utility to identify and dispose of properties which have appreci-ated for reasons other than the best interest of the regu-lated business. Although it was open to the Board to allow ATCO’s application for the entire profit, the solu-tion it adopted in this case is well within the range of reasonable options. The “public interest” is largely and inherently a matter of opinion and discretion. While the statutory framework of utilities regulation varies from jurisdiction to jurisdiction, Alberta’s grant of author-ity to its Board is more generous than most. The Court should not substitute its own view of what is “neces-sary in the public interest”. The Board’s decision made in the exercise of its jurisdiction was within the range of established regulatory opinion, whether the proper standard of review in that regard is patent unreasona-bleness or simple reasonableness. [91-92] [98-99] [110] [113] [122] [148]

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La prétention d’ATCO selon laquelle attribuer le profit aux clients équivaut à confisquer l’actif de l’en-treprise ne tient pas compte de la différence manifeste entre un investissement dans une entreprise non régle-mentée et un investissement dans un service public ré-glementé; dans ce dernier cas, les clients supportent les coûts et le taux de rendement est fixé par un organisme de réglementation, et non par le marché. La mesure retenue par la Commission ne peut être qualifiée de « confiscatoire » dans quelque acception de ce terme et elle fait partie des solutions jugées acceptables dans des ressorts comparables en ce qui concerne l’attribution du profit tiré de la vente d’un terrain dont l’entreprise de services publics a elle-même inclus le coût historique dans sa base tarifaire. On ne peut non plus faire droit à la prétention d’ATCO voulant que la Commission se soit indûment livrée à une tarification rétroactive. La Commission a proposé de tenir compte d’une partie du profit escompté pour fixer les tarifs ultérieurs. L’ordonnance a un effet prospectif, et non rétroactif. La fixation du rendement futur et la surveillance générale « des services de gaz et de leurs propriétaires » rele-vaient sans conteste du mandat légal de la Commission. Dans son pourvoi incident, ATCO prétend en outre que la Cour d’appel de l’Alberta a établi à tort une distinc-tion entre le profit tiré de la vente d’un terrain dont le coût historique n’est pas amorti et le profit tiré de la vente d’un bien amorti, comme un bâtiment. Il ressort de la pratique réglementaire que de nombreux organis-mes de réglementation, mais pas tous, jugent cette dis-tinction non pertinente. Ce n’est pas que l’organisme de réglementation doive l’écarter systématiquement, mais elle n’est pas aussi déterminante que le prétend ATCO. En Alberta, la Commission peut autoriser une vente à la condition que le produit qui en est tiré soit réparti comme elle le juge nécessaire dans l’intérêt public. Enfin, la prétention selon laquelle ATCO assume seule le risque que la valeur d’un terrain diminue ne tient pas compte du fait que s’il y a contraction du marché, l’entreprise de services publics continue de bénéficier d’un rendement fondé sur le coût historique même si la valeur marchande a considérablement diminué. De plus, il appert qu’une telle perte est prise en considéra-tion dans la procédure d’établissement des tarifs. [93] [123-147]

Jurisprudence

Citée par le juge Bastarache

Arrêts mentionnés : Re ATCO Gas‑North, Alta. E.U.B., Décision 2001-65, 31 juillet 2001; TransAlta Utilities Corp. c. Public Utilities Board (Alta.) (1986), 68 A.R. 171; Re TransAlta Utilities Corp., Alta. E.U.B., Décision 2000-41, 5 juillet 2000; Pushpanathan c.

ATCO’s submission that an allocation of profit to the customers would amount to a confiscation of the corporation’s property overlooks the obvious differ-ence between investment in an unregulated business and investment in a regulated utility where the ratepay-ers carry the costs and the regulator sets the return on investment, not the marketplace. The Board’s response cannot be considered “confiscatory” in any proper use of the term, and is well within the range of what is re-garded in comparable jurisdictions as an appropriate regulatory allocation of the gain on sale of land whose original investment has been included by the utility itself in its rate base. Similarly, ATCO’s argument that the Board engaged in impermissible retroactive rate making should not be accepted. The Board proposed to apply a portion of the expected profit to future rate mak- ing. The effect of the order is prospective not retroac-tive. Fixing the going-forward rate of return, as well as general supervision of “all gas utilities, and the owners of them”, were matters squarely within the Board’s stat-utory mandate. ATCO also submits in its cross-appeal that the Court of Appeal erred in drawing a distinction between gains on sale of land whose original cost is not depreciated and depreciated property, such as buildings. A review of regulatory practice shows that many, but not all, regulators reject the relevance of this distinc-tion. The point is not that the regulator must reject any such distinction but, rather, that the distinction does not have the controlling weight as contended by ATCO. In Alberta, it is up to the Board to determine what alloca-tions are necessary in the public interest as conditions of the approval of sale. Finally, ATCO’s contention that it alone is burdened with the risk on land that declines in value overlooks the fact that in a falling market the utility continues to be entitled to a rate of return on its original investment, even if the market value at the time is substantially less than its original investment. Further, it seems such losses are taken into account in the ongoing rate-setting process. [93] [123-147]

Cases Cited

By Bastarache J.

Referred to: Re ATCO Gas‑North, Alta. E.U.B., Decision 2001-65, July 31, 2001; TransAlta Utilities Corp. v. Public Utilities Board (Alta.) (1986), 68 A.R. 171; Re TransAlta Utilities Corp., Alta. E.U.B., Decision 2000-41, July 5, 2000; Pushpanathan v.

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Canada (Ministre de la Citoyenneté et de l’Immi‑gration), [1998] 1 R.C.S. 982; United Taxi Drivers’ Fellowship of Southern Alberta c. Calgary (Ville), [2004] 1 R.C.S. 485, 2004 CSC 19; Consumers’ Gas Co. c. Ontario (Energy Board), [2001] O.J. No. 5024 (QL); Coalition of Citizens Impacted by the Caroline Shell Plant c. Alberta (Energy Utilities Board) (1996), 41 Alta. L.R. (3d) 374; Atco Ltd. c. Calgary Power Ltd., [1982] 2 R.C.S. 557; Dome Petroleum Ltd. c. Public Utilities Board (Alberta) (1976), 2 A.R. 453, conf. par [1977] 2 R.C.S. 822; Barrie Public Utilities c. Assoc. canadienne de télévision par câble, [2003] 1 R.C.S. 476, 2003 CSC 28; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 R.C.S. 27; Bell ExpressVu Limited Partnership c. Rex, [2002] 2 R.C.S. 559, 2002 CSC 42; H.L. c. Canada (Procureur général), [2005] 1 R.C.S. 401, 2005 CSC 25; Marche c. Cie d’Assurance Halifax, [2005] 1 R.C.S. 47, 2005 CSC 6; Contino c. Leonelli‑Contino, [2005] 3 R.C.S. 217, 2005 CSC 63; Re Alberta Government Telephones, Alta. P.U.B., Décision no E84081, 29 juin 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84116, 12 octobre 1984; TransAlta Utilities Corp. (Re), [2002] A.E.U.B.D. No. 30 (QL); ATCO Electric Ltd. (Re), [2003] A.E.U.B.D. No. 92 (QL); Lignes aériennes Canadien Pacifique Ltée c. Assoc. canadienne des pilotes de lignes aérien‑nes, [1993] 3 R.C.S. 724; Bristol‑Myers Squibb Co. c. Canada (Procureur général), [2005] 1 R.C.S. 533, 2005 CSC 26; Chieu c. Canada (Ministre de la Citoyenneté et de l’Immigration), [2002] 1 R.C.S. 84, 2002 CSC 3; Bell Canada c. Canada (Conseil de la radiodiffusion et des télécommunications canadiennes), [1989] 1 R.C.S. 1722; R. c. McIntosh, [1995] 1 R.C.S. 686; Re Dow Chemical Canada Inc. and Union Gas Ltd. (1982), 141 D.L.R. (3d) 641, conf. par (1983), 42 O.R. (2d) 731; Interprovincial Pipe Line Ltd. c. Office national de l’énergie, [1978] 1 C.F. 601; Ligue de la radiodiffusion canadienne c. Conseil de la radiodiffusion et des télé‑communications canadiennes, [1983] 1 C.F. 182, conf. par [1985] 1 R.C.S. 174; Northwestern Utilities Ltd. c. City of Edmonton, [1929] R.C.S. 186; Northwestern Utilities Ltd. c. Ville d’Edmonton, [1979] 1 R.C.S. 684; Re Canadian Western Natural Gas Co., Alta. P.U.B., Décision no E84113, 12 octobre 1984; Re Union Gas Ltd. and Ontario Energy Board (1983), 1 D.L.R. (4th) 698; Duquesne Light Co. c. Barasch, 488 U.S. 299 (1989); Market St. Ry. Co. c. Railroad Commission of State of California, 324 U.S. 548 (1945); Re Coseka Resources Ltd. and Saratoga Processing Co. (1981), 126 D.L.R. (3d) 705, autorisation de pourvoi refusée, [1981] 2 R.C.S. vii; Re Consumers’ Gas Co., E.B.R.O. 410-II, 411-II, 412-II, 23 mars 1987; Loi sur l’Office na‑tional de l’énergie (Can.) (Re), [1986] 3 C.F. 275; Pacific National Investments Ltd. c. Victoria (Ville), [2000] 2

Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19; Consumers’ Gas Co. v. Ontario (Energy Board), [2001] O.J. No. 5024 (QL); Coalition of Citizens Impacted by the Caroline Shell Plant v. Alberta (Energy Utilities Board) (1996), 41 Alta. L.R. (3d) 374; Atco Ltd. v. Calgary Power Ltd., [1982] 2 S.C.R. 557; Dome Petroleum Ltd. v. Public Utilities Board (Alberta) (1976), 2 A.R. 453, aff’d [1977] 2 S.C.R. 822; Barrie Public Utilities v. Canadian Cable Television Assn., [2003] 1 S.C.R. 476, 2003 SCC 28; Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; H.L. v. Canada (Attorney General), [2005] 1 S.C.R. 401, 2005 SCC 25; Marche v. Halifax Insurance Co., [2005] 1 S.C.R. 47, 2005 SCC 6; Contino v. Leonelli‑Contino, [2005] 3 S.C.R. 217, 2005 SCC 63; Re Alberta Government Telephones, Alta. P.U.B., Decision No. E84081, June 29, 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84116, October 12, 1984; TransAlta Utilities Corp. (Re), [2002] A.E.U.B.D. No. 30 (QL); ATCO Electric Ltd. (Re), [2003] A.E.U.B.D. No. 92 (QL); Canadian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., [1993] 3 S.C.R. 724; Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26; Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3; Bell Canada v. Canada (Canadian Radio‑Television and Telecommunications Commission), [1989] 1 S.C.R. 1722; R. v. McIntosh, [1995] 1 S.C.R. 686; Re Dow Chemical Canada Inc. and Union Gas Ltd. (1982), 141 D.L.R. (3d) 641, aff’d (1983), 42 O.R. (2d) 731; Interprovincial Pipe Line Ltd. v. National Energy Board, [1978] 1 F.C. 601; Canadian Broadcasting League v. Canadian Radio‑television and Telecommunications Commission, [1983] 1 F.C. 182, aff’d [1985] 1 S.C.R. 174; Northwestern Utilities Ltd. v. City of Edmonton, [1929] S.C.R. 186; Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684; Re Canadian Western Natural Gas Co., Alta. P.U.B., Decision No. E84113, October 12, 1984; Re Union Gas Ltd. and Ontario Energy Board (1983), 1 D.L.R. (4th) 698; Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989); Market St. Ry. Co. v. Railroad Commission of State of California, 324 U.S. 548 (1945); Re Coseka Resources Ltd. and Saratoga Processing Co. (1981), 126 D.L.R. (3d) 705, leave to appeal refused, [1981] 2 S.C.R. vii; Re Consumers’ Gas Co., E.B.R.O. 410-II, 411-II, 412-II, March 23, 1987; National Energy Board Act (Can.) (Re), [1986] 3 F.C. 275; Pacific National Investments Ltd. v. Victoria (City), [2000] 2 S.C.R. 919, 2000 SCC 64; Leiriao v. Val‑Bélair (Town), [1991] 3 S.C.R. 349;

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R.C.S. 919, 2000 CSC 64; Leiriao c. Val‑Bélair (Ville), [1991] 3 R.C.S. 349; Banque Hongkong du Canada c. Wheeler Holdings Ltd., [1993] 1 R.C.S. 167.

Citée par le juge Binnie (dissident)

Atco Ltd. c. Calgary Power Ltd., [1982] 2 R.C.S. 557; S.C.F.P. c. Ontario (Ministre du Travail), [2003] 1 R.C.S. 539, 2003 CSC 29; TransAlta Utilities Corp. c. Public Utilities Board (Alta.) (1986), 68 A.R. 171; Dr Q c. College of Physicians and Surgeons of British Columbia, [2003] 1 R.C.S. 226, 2003 CSC 19; Calgary Power Ltd. c. Copithorne, [1959] R.C.S. 24; Fraternité unie des charpentiers et menuisiers d’Amérique, section locale 579 c. Bradco Construction Ltd., [1993] 2 R.C.S. 316; Pezim c. Colombie‑Britannique (Superintendent of Brokers), [1994] 2 R.C.S. 557; Memorial Gardens Association (Canada) Ltd. c. Colwood Cemetery Co., [1958] R.C.S. 353; Union Gas Co. of Canada Ltd. c. Sydenham Gas and Petroleum Co., [1957] R.C.S. 185; Re C.T.C. Dealer Holdings Ltd. and Ontario Securities Commission (1987), 59 O.R. (2d) 79; Comité pour le traitement égal des actionnaires minoritaires de la Société Asbestos ltée c. Ontario (Commission des va‑leurs mobilières), [2001] 2 R.C.S. 132, 2001 CSC 37; Re Consumers’ Gas Co., E.B.R.O. 341-I, 30 juin 1976; Re Boston Gas Co., 49 P.U.R. 4th 1 (1982); Re Consumers’ Gas Co., E.B.R.O. 465, 1er mars 1991; Re Natural Resource Gas Ltd., C.É.O., RP-2002-0147, EB-2002-0446, 27 juin 2003; Yukon Energy Corp. c. Utilities Board (1996), 74 B.C.A.C. 58; Re Arizona Public Service Co., 91 P.U.R. 4th 337 (1988); Re Southern California Water Co., 43 C.P.U.C. 2d 596 (1992); Re Southern California Gas Co., 118 P.U.R. 4th 81 (1990); Democratic Central Committee of the District of Columbia c. Washington Metropolitan Area Transit Commission, 485 F.2d 786 (1973); Board of Public Utility Commissioners c. New York Telephone Co., 271 U.S. 23 (1976); Northwestern Utilities Ltd. c. Ville d’Ed‑monton, [1979] 1 R.C.S. 684; New York Water Service Corp. c. Public Service Commission, 208 N.Y.S.2d 857 (1960); Re Compliance with the Energy Policy Act of 1992, 62 C.P.U.C. 2d 517 (1995); Re California Water Service Co., 66 C.P.U.C. 2d 100 (1996); Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84116, 12 oc-tobre 1984; Re Alberta Government Telephones, Alta. P.U.B., Décision no E84081, 29 juin 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84115, 12 octobre 1984; Re Canadian Western Natural Gas Co., Alta. P.U.B., Décision no E84113, 12 octobre 1984.

Lois et règlements cités

Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A-17, art. 13, 15, 26(1), (2), 27.

Hongkong Bank of Canada v. Wheeler Holdings Ltd., [1993] 1 S.C.R. 167.

By Binnie J. (dissenting)

Atco Ltd. v. Calgary Power Ltd., [1982] 2 S.C.R. 557; C.U.P.E. v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, 2003 SCC 29; TransAlta Utilities Corp. v. Public Utilities Board (Alta.) (1986), 68 A.R. 171; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19; Calgary Power Ltd. v. Copithorne, [1959] S.C.R. 24; United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd., [1993] 2 S.C.R. 316; Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; Memorial Gardens Association (Canada) Ltd. v. Colwood Cemetery Co., [1958] S.C.R. 353; Union Gas Co. of Canada Ltd. v. Sydenham Gas and Petroleum Co., [1957] S.C.R. 185; Re C.T.C. Dealer Holdings Ltd. and Ontario Securities Commission (1987), 59 O.R. (2d) 79; Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132, 2001 SCC 37; Re Consumers’ Gas Co., E.B.R.O. 341-I, June 30, 1976; Re Boston Gas Co., 49 P.U.R. 4th 1 (1982); Re Consumers’ Gas Co., E.B.R.O. 465, March 1, 1991; Re Natural Resource Gas Ltd., O.E.B., RP-2002-0147, EB-2002-0446, June 27, 2003; Yukon Energy Corp. v. Utilities Board (1996), 74 B.C.A.C. 58; Re Arizona Public Service Co., 91 P.U.R. 4th 337 (1988); Re Southern California Water Co., 43 C.P.U.C. 2d 596 (1992); Re Southern California Gas Co., 118 P.U.R. 4th 81 (1990); Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission, 485 F.2d 786 (1973); Board of Public Utility Commissioners v. New York Telephone Co., 271 U.S. 23 (1976); Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684; New York Water Service Corp. v. Public Service Commission, 208 N.Y.S.2d 857 (1960); Re Compliance with the Energy Policy Act of 1992, 62 C.P.U.C. 2d 517 (1995); Re California Water Service Co., 66 C.P.U.C. 2d 100 (1996); Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84116, October 12, 1984; Re Alberta Government Telephones, Alta. P.U.B., Decision No. E84081, June 29, 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84115, October 12, 1984; Re Canadian Western Natural Gas Co., Alta. P.U.B., Decision No. E84113, October 12, 1984.

Statutes and Regulations Cited

Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A-17, ss. 13, 15, 26(1), (2), 27.

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Gas Utilities Act, R.S.A. 2000, ch. G-5, art. 16, 17, 22, 24, 26, 27(1), 36 à 45, 59.

Interpretation Act, R.S.A. 2000, ch. I-8, art. 10.Public Utilities Act, S.A. 1915, ch. 6, art. 21, 23, 24,

29g).Public Utilities Board Act, R.S.A. 2000, ch. P-45, art. 36,

37, 80, 85(1), 87, 89 à 95, 101(1), (2), 102(1).

Doctrine citée

Anisman, Philip, and Robert F. Reid. Administrative Law Issues and Practice. Scarborough, Ont. : Car-swell, 1995.

Black, Alexander J. « Responsible Regulation : Incentive Rates for Natural Gas Pipelines » (1992), 28 Tulsa L.J. 349.

Blake, Sara. Administrative Law in Canada, 3rd ed. Markham, Ont. : Butterworths, 2001.

Brown, David M. Energy Regulation in Ontario. Aurora, Ont. : Canada Law Book, 2001 (loose-leaf updated November 2004, release 3).

Brown, Donald J. M., and John M. Evans. Judicial Review of Administrative Action in Canada. Toronto : Can-vasback, 1998 (loose-leaf updated July 2005).

Brown-John, C. Lloyd. Canadian Regulatory Agen‑cies : Quis custodiet ipsos custodes? Toronto : But-terworths, 1981.

Côté, Pierre-André. Interprétation des lois, 3e éd. Mont-réal : Thémis, 1999.

Cross, Phillip S. « Rate Treatment of Gain on Sale of Land: Ratepayer Indifference, A New Standard? » (1990), 126 Pub. Util. Fort. 44.

Depoorter, Ben W. F. « Regulation of Natural Monop-oly », in B. Bouckaert and G. De Geest, eds., Encyclo‑pedia of Law and Economics, vol. III, The Regulation of Contracts. Northampton, Mass. : Edward Elgar, 2000.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto : Butterworths, 1983.

Green, Richard, and Martin Rodriguez Pardina. Reset‑ting Price Controls for Privatized Utilities : A Manual for Regulators. Washington, D.C. : World Bank, 1999.

Institut canadien du droit des ressources. Canada Energy Law Service : Alberta. Edited by Steven A. Kennett. Toronto : Thomson Carswell, 1981 (loose-leaf up-dated 2005, release 2).

Kahn, Alfred E. The Economics of Regulation : Prin‑ciples and Institutions, vol. 1, Economic Principles. Cambridge, Mass. : MIT Press, 1988.

MacAvoy, Paul W., and J. Gregory Sidak. « The Effi-cient Allocation of Proceeds from a Utility’s Sale of Assets » (2001), 22 Energy L.J. 233.

Gas Utilities Act, R.S.A. 2000, c. G-5, ss. 16, 17, 22, 24, 26, 27(1), 36 to 45, 59.

Interpretation Act, R.S.A. 2000, c. I-8, s. 10.Public Utilities Act, S.A. 1915, c. 6, ss. 21, 23, 24, 29(g).Public Utilities Board Act, R.S.A. 2000, c. P-45, ss. 36,

37, 80, 85(1), 87, 89 to 95, 101(1), (2), 102(1).

Authors Cited

Anisman, Philip, and Robert F. Reid. Administrative Law Issues and Practice. Scarborough, Ont.: Car-swell, 1995.

Black, Alexander J. “Responsible Regulation: Incentive Rates for Natural Gas Pipelines” (1992), 28 Tulsa L.J. 349.

Blake, Sara. Administrative Law in Canada, 3rd ed. Markham, Ont.: Butterworths, 2001.

Brown, David M. Energy Regulation in Ontario. Aurora, Ont.: Canada Law Book, 2001 (loose-leaf updated November 2004, release 3).

Brown, Donald J. M., and John M. Evans. Judicial Review of Administrative Action in Canada. Toronto: Canvasback, 1998 (loose-leaf updated July 2005).

Brown-John, C. Lloyd. Canadian Regulatory Agencies: Quis custodiet ipsos custodes? Toronto: Butterworths, 1981.

Canadian Institute of Resources Law. Canada Energy Law Service: Alberta. Edited by Steven A. Kennett. Toronto: Thomson Carswell, 1981 (loose-leaf updated 2005, release 2).

Côté, Pierre-André. The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.

Cross, Phillip S. “Rate Treatment of Gain on Sale of Land: Ratepayer Indifference, A New Standard?” (1990), 126 Pub. Util. Fort. 44.

Depoorter, Ben W. F. “Regulation of Natural Monopoly”, in B. Bouckaert and G. De Geest, eds., Encyclope‑dia of Law and Economics, vol. III, The Regulation of Contracts. Northampton, Mass.: Edward Elgar, 2000.

Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.

Green, Richard, and Martin Rodriguez Pardina. Reset‑ting Price Controls for Privatized Utilities: A Manual for Regulators. Washington, D.C.: World Bank, 1999.

Kahn, Alfred E. The Economics of Regulation: Prin‑ciples and Institutions, vol. 1, Economic Principles. Cambridge, Mass.: MIT Press, 1988.

MacAvoy, Paul W., and J. Gregory Sidak. “The Effi-cient Allocation of Proceeds from a Utility’s Sale of Assets” (2001), 22 Energy L.J. 233.

Milner, H. R. “Public Utility Rate Control in Alberta” (1930), 8 Can. Bar Rev. 101.

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Milner, H. R. « Public Utility Rate Control in Alberta » (1930), 8 R. du B. can. 101.

Mullan, David J. Administrative Law. Toronto : Irwin Law, 2001.

Netz, Janet S. « Price Regulation : A (Non- Technical) Overview », in B. Bouckaert and G. De Geest, eds., Encyclopedia of Law and Economics, vol. III, The Regulation of Contracts. Northampton, Mass. : Edward Elgar, 2000.

Reid, Robert F., and Hillel David. Administrative Law and Practice, 2nd ed. Toronto : Butterworths, 1978.

Sullivan, Ruth. Sullivan and Driedger on the Construc‑tion of Statutes, 4th ed. Markham, Ont. : Butter-worths, 2002.

Trebilcock, Michael J. « The Consumer Interest and Regulatory Reform », in G. B. Doern, ed., The Regu‑latory Process in Canada. Toronto : Macmillan of Canada, 1978, 94.

POURVOI et POURVOI INCIDENT contre un arrêt de la Cour d’appel de l’Alberta (les juges Wittmann et LoVecchio (ad hoc)) (2004), 24 Alta. L.R. (4th) 205, 339 A.R. 250, 312 W.A.C. 250, [2004] 4 W.W.R. 239, [2004] A.J. No. 45 (QL), 2004 ABCA 3, qui a infirmé une décision de l’Alberta Energy and Utilities Board, [2002] A.E.U.B.D. No. 52 (QL). Pourvoi rejeté et pourvoi incident accueilli, la juge en chef McLachlin et les juges Binnie et Fish sont dissidents.

Brian K. O’Ferrall et Daron K. Naffin, pour l’appelante/intimée au pourvoi incident.

Clifton D. O’Brien, c.r., Lawrence E. Smith, c.r., H. Martin Kay, c.r., et Laurie A. Goldbach, pour l’intimée/appelante au pourvoi incident.

J. Richard McKee et Renée Marx, pour l’interve-nante Alberta Energy and Utilities Board.

Argumentation écrite seulement par George Vegh et Michael W. Lyle, pour l’intervenante la Commission de l’énergie de l’Ontario.

Argumentation écrite seulement par J. L. McDougall, c.r., et Michael D. Schafler, pour l’in-tervenante Enbridge Gas Distribution Inc.

Argumentation écrite seulement par Michael A. Penny et Susan Kushneryk, pour l’intervenante Union Gas Limited.

Mullan, David J. Administrative Law. Toronto: Irwin Law, 2001.

Netz, Janet S. “Price Regulation: A (Non- Technical) Overview”, in B. Bouckaert and G. De Geest, eds., Encyclopedia of Law and Economics, vol. III, The Regulation of Contracts. Northampton, Mass.: Edward Elgar, 2000.

Reid, Robert F., and Hillel David. Administrative Law and Practice, 2nd ed. Toronto: Butterworths, 1978.

Sullivan, Ruth. Sullivan and Driedger on the Construc‑tion of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.

Trebilcock, Michael J. “The Consumer Interest and Reg-ulatory Reform”, in G. B. Doern, ed., The Regulatory Process in Canada. Toronto: Macmillan of Canada, 1978, 94.

APPEAL and CROSS-APPEAL from a judg-ment of the Alberta Court of Appeal (Wittmann J.A. and LoVecchio J. (ad hoc)) (2004), 24 Alta. L.R. (4th) 205, 339 A.R. 250, 312 W.A.C. 250, [2004] 4 W.W.R. 239, [2004] A.J. No. 45 (QL), 2004 ABCA 3, reversing a decision of the Alberta Energy and Utilities Board, [2002] A.E.U.B.D. No. 52 (QL). Appeal dismissed and cross-appeal allowed, McLachlin C.J. and Binnie and Fish JJ. dissenting.

Brian K. O’Ferrall and Daron K. Naffin, for the appellant/respondent on cross-appeal.

Clifton D. O’Brien, Q.C., Lawrence E. Smith, Q.C., H. Martin Kay, Q.C., and Laurie A. Goldbach, for the respondent/appellant on cross-appeal.

J. Richard McKee and Renée Marx, for the in-tervener the Alberta Energy and Utilities Board.

Written submissions only by George Vegh and Michael W. Lyle, for the intervener the Ontario Energy Board.

Written submissions only by J. L. McDougall, Q.C., and Michael D. Schafler, for the intervener Enbridge Gas Distribution Inc.

Written submissions only by Michael A. Penny and Susan Kushneryk, for the intervener Union Gas Limited.

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Version française du jugement des juges Bastarache, LeBel, Deschamps et Charron rendu par

le juge Bastarache —

1. Introduction

Le présent pourvoi a pour objet la compétence d’un tribunal administratif. Plus précisément, notre Cour doit déterminer, selon la norme de contrôle appropriée, si l’organisme de réglementation a cor-rectement circonscrit ses attributions et son pou-voir discrétionnaire.

De nos jours, rares sont les facettes de notre vie qui échappent à la réglementation. Le service té-léphonique, les transports ferroviaire et aérien, le camionnage, l’investissement étranger, l’assurance, le marché des capitaux, la radiodiffusion (licences et contenu), les activités bancaires, les aliments, les médicaments et les normes de sécurité ne consti-tuent que quelques-uns des objets de la réglementa-tion au Canada : M. J. Trebilcock, « The Consumer Interest and Regulatory Reform », dans G. B. Doern, dir., The Regulatory Process in Canada (1978), 94. Le pouvoir discrétionnaire est au cœur de l’élaboration des politiques des organismes ad-ministratifs, mais son étendue varie d’un orga-nisme à l’autre (voir C. L. Brown-John, Canadian Regulatory Agencies : Quis custodiet ipsos custo‑des? (1981), p. 29). Et, plus important encore, dans l’exercice de son pouvoir discrétionnaire, l’orga-nisme créé par voie législative doit s’en tenir à son domaine de compétence : il ne peut s’immiscer dans un autre pour lequel le législateur ne lui a pas attri-bué compétence (voir D. J. Mullan, Administrative Law (2001), p. 9-10).

Le secteur de l’énergie et des services publics n’y échappe pas. En l’espèce, l’intimée est un ser-vice public albertain de distribution de gaz na-turel. Il ne s’agit en fait que d’une société privée assujettie à certaines contraintes réglementaires. Essentiellement, elle est dans la même situation que toute société privée : elle obtient son finan-cement par l’émission d’actions et d’obligations; ses ressources, ses terrains et ses autres biens lui

The judgment of Bastarache, LeBel, Deschamps and Charron JJ. was delivered by

Bastarache J. —

1. Introduction

At the heart of this appeal is the issue of the ju-risdiction of an administrative board. More spe-cifically, the Court must consider whether, on the appropriate standard of review, this utility board appropriately set out the limits of its powers and discretion.

Few areas of our lives are now untouched by regulation. Telephone, rail, airline, trucking, for-eign investment, insurance, capital markets, broad-casting licences and content, banking, food, drug and safety standards, are just a few of the objects of public regulations in Canada: M. J. Trebilcock, “The Consumer Interest and Regulatory Reform”, in G. B. Doern, ed., The Regulatory Process in Canada (1978), 94. Discretion is central to the regulatory agency policy process, but this discre-tion will vary from one administrative body to an-other (see C. L. Brown-John, Canadian Regulatory Agencies: Quis custodiet ipsos custodes? (1981), at p. 29). More importantly, in exercising this discre-tion, statutory bodies must respect the confines of their jurisdiction: they cannot trespass in areas where the legislature has not assigned them author-ity (see D. J. Mullan, Administrative Law (2001), at pp. 9-10).

The business of energy and utilities is no excep-tion to this regulatory framework. The respond-ent in this case is a public utility in Alberta which delivers natural gas. This public utility is nothing more than a private corporation subject to certain regulatory constraints. Fundamentally, it is like any other privately held company: it obtains the necessary funding from investors through public issues of shares in stock and bond markets; it is the

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appartiennent en propre; elle construit des ins-tallations, achète du matériel et, pour fournir ses services, conclut des contrats avec des employés; elle réalise des profits en pratiquant des tarifs ap-prouvés par l’Alberta Energy and Utilities Board (« Commission ») (voir P. W. MacAvoy et J. G. Sidak, « The Efficient Allocation of Proceeds from a Utility’s Sale of Assets » (2001), 22 Energy L.J. 233, p. 234). Cela dit, on ne peut faire abstraction de la caractéristique importante qui rend un service public si distinct : il doit rendre compte à un orga-nisme de réglementation. Les services publics sont habituellement des monopoles naturels : la techno-logie requise et la demande sont telles que les coûts fixes sont moindres lorsque le marché est desservi par une seule entreprise au lieu de plusieurs fai-sant double-emploi dans un contexte concurrentiel (voir A. E. Kahn, The Economics of Regulation : Principles and Institutions (1988), vol. 1, p. 11; B. W. F. Depoorter, « Regulation of Natural Monopoly », dans B. Bouckaert et G. De Geest, dir., Encyclopedia of Law and Economics (2000), vol. III, 498; J. S. Netz, « Price Regulation : A (Non-Technical) Overview », dans B. Bouckaert et G. De Geest, dir., Encyclopedia of Law and Economics (2000), vol. III, 396, p. 398; A. J. Black, « Responsible Regulation : Incentive Rates for Natural Gas Pipelines » (1992), 28 Tulsa L.J. 349, p. 351). Ce modèle favorise l’efficience de la produc-tion. Toutefois, les gouvernements ont voulu s’éloi-gner du concept théorique et ont opté pour ce qu’il convient d’appeler un « monopole réglementé ». La réglementation des services publics vise à protéger la population contre un comportement monopolis-tique et l’inélasticité de la demande qui en résulte tout en assurant la qualité constante d’un service essentiel (voir Kahn, p. 11).

Comme toute autre entreprise, un service public prend des décisions d’affaires, son objectif ultime étant de maximiser les profits revenant aux action-naires. Cependant, l’organisme de réglementation restreint son pouvoir discrétionnaire à l’égard de certains éléments clés, dont les prix, les services offerts et l’opportunité d’investir dans des instal-lations et du matériel. Et, plus important encore dans la présente affaire, il restreint également son

sole owner of the resources, land and other assets; it constructs plants, purchases equipment, and con-tracts with employees to provide the services; it re-alizes profits resulting from the application of the rates approved by the Alberta Energy and Utilities Board (“Board”) (see P. W. MacAvoy and J. G. Sidak, “The Efficient Allocation of Proceeds from a Utility’s Sale of Assets” (2001), 22 Energy L.J. 233, at p. 234). That said, one cannot ignore the important feature which makes a public utility so distinct: it must answer to a regulator. Public utili-ties are typically natural monopolies: technology and demand are such that fixed costs are lower for a single firm to supply the market than would be the case where there is duplication of services by different companies in a competitive environment (see A. E. Kahn, The Economics of Regulation: Principles and Institutions (1988), vol. 1, at p. 11; B. W. F. Depoorter, “Regulation of Natural Monopoly”, in B. Bouckaert and G. De Geest, eds., Encyclopedia of Law and Economics (2000), vol. III, 498; J. S. Netz, “Price Regulation: A (Non-Technical) Overview”, in B. Bouckaert and G. De Geest, eds., Encyclopedia of Law and Economics (2000), vol. III, 396, at p. 398; A. J. Black, “Responsible Regulation: Incentive Rates for Natural Gas Pipelines” (1992), 28 Tulsa L.J. 349, at p. 351). Efficiency of production is promoted under this model. However, governments have pur-ported to move away from this theoretical concept and have adopted what can only be described as a “regulated monopoly”. The utility regulations exist to protect the public from monopolistic behaviour and the consequent inelasticity of demand while ensuring the continued quality of an essential serv-ice (see Kahn, at p. 11).

As in any business venture, public utilities make business decisions, their ultimate goal being to maximize the residual benefits to shareholders. However, the regulator limits the utility’s manage-rial discretion over key decisions, including prices, service offerings and the prudency of plant and equipment investment decisions. And more rele-vant to this case, the utility, outside the ordinary course of business, is limited in its right to sell

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pouvoir de vendre ses biens en dehors du cours normal de ses activités : son autorisation doit être obtenue pour la vente d’un bien affecté jusqu’alors à la prestation d’un service réglementé (voir MacAvoy et Sidak, p. 234).

C’est dans ce contexte qu’on demande à notre Cour de déterminer si, lorsqu’elle autorise un service public à vendre un bien désaffecté, la Commission peut, suivant ses lois habilitantes, attribuer aux clients une partie du gain net obtenu. Dans l’af-firmative, il nous faut décider si la Commission a raisonnablement exercé son pouvoir et respecté les limites de sa compétence : était-elle autorisée, en l’espèce, à attribuer une partie du gain net aux clients?

La ville de Calgary (« Ville ») défend les inté-rêts des clients dans le cadre du présent pourvoi. Elle soutient que la Commission peut décider de l’attribution du produit de la vente en vertu de son pouvoir d’autoriser ou non l’opération et de pro-téger l’intérêt public. Cette thèse me paraît peu convaincante.

L’analyse de l’Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A-17 (« AEUBA »), de la Public Utilities Board Act, R.S.A. 2000, ch. P-45 (« PUBA »), et de la Gas Utilities Act, R.S.A. 2000, ch. G-5 (« GUA ») (voir leurs dispositions perti-nentes en annexe) mène à une seule conclusion : la Commission n’a pas le pouvoir de décider de la ré-partition du gain net tiré de la vente d’un bien par un service public. Son pouvoir apparemment vaste de rendre toute décision et d’imposer les conditions supplémentaires qu’elle juge nécessaires dans l’inté-rêt public doit être interprété dans le contexte global des lois en cause qui visent à protéger non seulement le consommateur, mais aussi le droit de propriété reconnu au propriétaire dans une économie de libre marché. Les limites du pouvoir de la Commission sont inhérentes à sa principale fonction qui consiste à fixer des tarifs justes et raisonnables (la tarifica-tion) et à préserver l’intégrité et la fiabilité du réseau d’alimentation.

assets it owns: it must obtain authorization from its regulator before selling an asset previously used to produce regulated services (see MacAvoy and Sidak, at p. 234).

Against this backdrop, the Court is being asked to determine whether the Board has jurisdiction pursuant to its enabling statutes to allocate a portion of the net gain on the sale of a now discarded util-ity asset to the rate-paying customers of the utility when approving the sale. Subsequently, if this first question is answered affirmatively, the Court must consider whether the Board’s exercise of its juris-diction was reasonable and within the limits of its jurisdiction: was it allowed, in the circumstances of this case, to allocate a portion of the net gain on the sale of the utility to the rate-paying customers?

The customers’ interests are represented in this case by the City of Calgary (“City”) which argues that the Board can determine how to allocate the proceeds pursuant to its power to approve the sale and protect the public interest. I find this position unconvincing.

The interpretation of the Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A-17 (“AEUBA”), the Public Utilities Board Act, R.S.A. 2000, c. P-45 (“PUBA”), and the Gas Utilities Act, R.S.A. 2000, c. G-5 (“GUA”) (see Appendix for the relevant provisions of these three statutes), can lead to only one conclusion: the Board does not have the prerogative to decide on the distribution of the net gain from the sale of assets of a utility. The Board’s seemingly broad powers to make any order and to impose any additional conditions that are nec-essary in the public interest has to be interpreted within the entire context of the statutes which are meant to balance the need to protect consumers as well as the property rights retained by owners, as recognized in a free market economy. The limits of the powers of the Board are grounded in its main function of fixing just and reasonable rates (“rate setting”) and in protecting the integrity and de-pendability of the supply system.

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1.1 Aperçu des faits

ATCO Gas - South (« AGS »), une filiale d’ATCO Gas and Pipelines Ltd. (« ATCO »), a fait parvenir à la Commission une lettre dans laquelle elle lui demandait, en application du par. 25.1(2) (l’actuel par. 26(2)) de la GUA, l’autorisation de vendre des biens situés à Calgary (le Calgary Stores Block). Ces biens étaient constitués d’un terrain et de bâ-timents, mais c’est le terrain qui présentait le plus grand intérêt, et l’acquéreur comptait démolir les bâtiments et réaménager le terrain, ce qu’il a d’ailleurs fait. Devant la Commission, AGS a indi-qué que les biens n’étaient plus utilisés pour four-nir un service public ni susceptibles de l’être et que leur vente ne causerait aucun préjudice aux clients. AGS a en fait laissé entendre que l’opération se tra-duirait par une économie pour les clients du fait que la valeur comptable nette des biens ne serait plus prise en compte dans l’établissement de la base tarifaire, diminuant d’autant les tarifs. ATCO a de-mandé à la Commission d’autoriser l’opération et l’affectation du produit de la vente au paiement du solde de la valeur comptable et au recouvrement des frais d’aliénation, puis de permettre le verse-ment du gain net aux actionnaires. La Commission a examiné la demande sur dossier sans entendre de témoins ni tenir d’audience. La Ville, Federation of Alberta Gas Co-ops Ltd., Gas Alberta Inc. et des intervenants municipaux ont déposé des observa-tions écrites. Tous s’opposaient à ce que le produit de la vente soit attribué aux actionnaires comme le préconisait ATCO.

1.2 Historique judiciaire

1.2.1 La Commission

1.2.1.1 Décision 2001‑78

Dans une première décision relative à la demande d’autorisation de la vente des biens, la Commission a appliqué le critère de l’« absence de préjudice » et soupesé les répercussions possibles sur les tarifs et la qualité des services offerts aux clients, ainsi que l’opportunité de l’opération, compte tenu de l’acquéreur et de la procédure d’appel d’offres ou de vente suivie. Elle a conclu à l’« absence de

1.1 Overview of the Facts

ATCO Gas - South (“AGS”), which is a division of ATCO Gas and Pipelines Ltd. (“ATCO”), filed an application by letter with the Board pursuant to s. 25.1(2) (now s. 26(2)) of the GUA, for approval of the sale of its properties located in Calgary known as Calgary Stores Block (the “property”). The property consisted of land and buildings; however, the main value was in the land, and the purchaser intended to and did eventually demolish the build-ings and redevelop the land. According to AGS, the property was no longer used or useful for the provi-sion of utility services, and the sale would not cause any harm to customers. In fact, AGS suggested that the sale would result in cost savings to customers, by allowing the net book value of the property to be retired and withdrawn from the rate base, thereby reducing rates. ATCO requested that the Board ap-prove the sale transaction and the disposition of the sale proceeds to retire the remaining book value of the sold assets, to recover the disposition costs, and to recognize the balance of the profits result-ing from the sale of the plant should be paid to shareholders. The Board dealt with the application in writing, without witnesses or an oral hearing. Other parties making written submissions to the Board were the City of Calgary, the Federation of Alberta Gas Co-ops Ltd., Gas Alberta Inc. and the Municipal Interveners, who all opposed ATCO’s position with respect to the disposition of the sale proceeds to shareholders.

1.2 Judicial History

1.2.1 Alberta Energy and Utilities Board

1.2.1.1 Decision 2001‑78

In a first decision, which considered ATCO’s application to approve the sale of the property, the Board employed a “no-harm” test, assessing the potential impact on both rates and the level of service to customers and the prudence of the sale transaction, taking into account the purchaser and tender or sale process followed. The Board was of the view that the test had been satisfied. It was

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préjudice ». Elle s’est dite convaincue que la vente ne serait pas préjudiciable aux clients étant donné l’entente de location judicieusement conclue en vue du remplacement des installations vendues. Elle a estimé qu’il n’y aurait pas d’effet négatif sur les tarifs exigés des clients, du moins les cinq premiè-res années de la location. La Commission a en fait jugé que la vente permettrait aux clients d’obtenir les mêmes services à meilleur prix. Elle ne s’est pas prononcée sur les effets de l’opération sur les frais d’exploitation futurs; à titre d’exemple, elle n’a pas tenu compte des frais liés à l’entente de loca-tion conclue par ATCO. La Commission a dit que les parties intéressées et elle pourraient se pencher sur ces frais dans le cadre d’une demande générale d’approbation de tarifs.

1.2.1.2 Décision 2002‑037, [2002] A.E.U.B.D. No. 52 (QL)

Dans une deuxième décision, la Commission a décidé de l’attribution du produit net de la vente. Elle a fait état de la politique réglementaire et des principes généraux présidant à la décision, même si les dispositions législatives applicables n’énu-mèrent pas les facteurs précis devant être pris en compte. Elle a fait mention du critère de l’« ab-sence de préjudice » élaboré auparavant et dont elle avait résumé la raison d’être dans sa décision 2001-65 (Re ATCO Gas‑North) : [TRADUCTION] « La Commission estime que son pouvoir de limiter ou de compenser le préjudice que pourraient subir les clients en leur attribuant tout ou partie du produit de la vente découle de son vaste mandat de protéger les clients dans l’intérêt public » (p. 16).

La Commission a ensuite analysé les répercus-sions de l’arrêt TransAlta Utilities Corp. c. Public Utilities Board (Alta.) (1986), 68 A.R. 171, de la Cour d’appel de l’Alberta, en se référant à différen-tes décisions qu’elle avait rendues. Citant sa déci-sion 2000-41 (Re TransAlta Utilities Corp.), voici comment elle a résumé la « formule TransAlta » :

[TRADUCTION] Dans des décisions subséquentes, la Commission a conclu que pour la Cour d’appel, lors-que le prix de vente des biens est plus élevé que leur coût historique, les actionnaires ont droit à la valeur comptable nette (en fonction de la valeur historique),

persuaded that customers would not be harmed by the sale, given that a prudent lease arrangement to replace the sold facility had been concluded. The Board was satisfied that there would not be a nega-tive impact on customers’ rates, at least during the five-year initial term of the lease. In fact, the Board concluded that there would be cost savings to the customers and that there would be no impact on the level of service to customers as a result of the sale. It did not make a finding on the specific impact on future operating costs; for example, it did not con-sider the costs of the lease arrangement entered into by ATCO. The Board noted that those costs could be reviewed by the Board in a future general rate application brought by interested parties.

1.2.1.2 Decision 2002‑037, [2002] A.E.U.B.D. No. 52 (QL)

In a second decision, the Board determined the allocation of net sale proceeds. It reviewed the regulatory policy and general principles which af-fected the decision, although no specific matters are enumerated for consideration in the applicable legislative provisions. The Board had previously developed a “no-harm” test, and it reviewed the ra-tionale for the test as summarized in its Decision 2001-65 (Re ATCO Gas‑North): “The Board con-siders that its power to mitigate or offset potential harm to customers by allocating part or all of the sale proceeds to them, flows from its very broad mandate to protect consumers in the public inter-est” (p. 16).

The Board went on to discuss the implications of the Alberta Court of Appeal decision in TransAlta Utilities Corp. v. Public Utilities Board (Alta.) (1986), 68 A.R. 171, referring to various decisions it had rendered in the past. Quoting from its Decision 2000-41 (Re TransAlta Utilities Corp.), the Board summarized the “TransAlta Formula”:

In subsequent decisions, the Board has interpreted the Court of Appeal’s conclusion to mean that where the sale price exceeds the original cost of the assets, share-holders are entitled to net book value (in historical dol-lars), customers are entitled to the difference between

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les clients ont droit à la différence entre la valeur comp-table nette et le coût historique, et toute appréciation des biens (c.-à-d. la différence entre le coût historique et le prix de vente) est répartie entre les actionnaires et les clients. Le montant attribué aux actionnaires est calculé en multipliant le ratio prix de vente/coût histo-rique par la valeur comptable nette et celui qui revient aux clients est obtenu en multipliant ce ratio par la dif-férence entre le coût historique et la valeur comptable nette. Toutefois, lorsque le prix de vente n’est pas supé-rieur au coût historique, les clients ont droit à la totalité du gain réalisé lors de la vente. [par. 27]

La Commission a également cité la décision 2001-65 renfermant les explications suivantes :

[TRADUCTION] Selon la Commission, lorsque l’ap-plication de la formule TransAlta donne un montant supérieur à celui obtenu en appliquant le critère de l’absence de préjudice, les clients ont droit au montant plus élevé. Par contre, lorsqu’elle débouche sur un mon-tant inférieur à celui obtenu en appliquant le critère de l’absence de préjudice, les clients ont droit à ce dernier montant. De plus, cette approche est compatible avec la manière dont elle a appliqué jusqu’à maintenant la for-mule TransAlta. [par. 28]

En ce qui concerne son pouvoir de répartir le produit net de la vente, la Commission a dit :

[TRADUCTION] Le fait qu’un service public régle-menté doive obtenir de la Commission l’autorisation de se départir d’un bien montre que l’assemblée législative a voulu limiter son droit de propriété. Dans certaines circonstances, la Commission a clairement le pouvoir d’empêcher un service public de se départir d’un bien. Selon nous, il s’ensuit également que la Commission peut autoriser une aliénation en l’assortissant de condi-tions aptes à protéger les intérêts des clients.

Pour ce qui est de l’argument d’AGS selon lequel l’attribution aux clients d’un montant supérieur à celui obtenu en appliquant le critère de l’absence de pré-judice équivaudrait à une tarification rétroactive, la Commission cite à nouveau l’arrêt TransAlta dans lequel la Cour d’appel a reconnu que la Commission pouvait assimiler à un « revenu » un montant payable aux clients pour les indemniser de l’amortissement ex-cédentaire pris en compte dans la tarification antérieure. Il ne saurait y avoir de tarification rétroactive lorsqu’un service public se dessaisit d’un bien auparavant inclus dans la base tarifaire et que la Commission applique la formule TransAlta.

net book value and original cost, and any apprecia-tion in the value of the assets (i.e. the difference be-tween original cost and the sale price) is to be shared by shareholders and customers. The amount to be shared by each is determined by multiplying the ratio of sale price/original cost to the net book value (for sharehold-ers) and the difference between original cost and net book value (for customers). However, where the sale price does not exceed original cost, customers are enti-tled to all of the gain on sale. [para. 27]

The Board also referred to Decision 2001-65, where it had clarified the following:

In the Board’s view, if the TransAlta Formula yields a result greater than the no-harm amount, customers are entitled to the greater amount. If the TransAlta Formula yields a result less than the no-harm amount, customers are entitled to the no-harm amount. In the Board’s view, this approach is consistent with its historical applica-tion of the TransAlta Formula. [para. 28]

On the issue of its jurisdiction to allocate the net proceeds of a sale, the Board in the present case stated:

The fact that a regulated utility must seek Board ap-proval before disposing of its assets is sufficient indi-cation of the limitations placed by the legislature on the property rights of a utility. In appropriate circum-stances, the Board clearly has the power to prevent a utility from disposing of its property. In the Board’s view it also follows that the Board can approve a dispo-sition subject to appropriate conditions to protect cus-tomer interests.

Regarding AGS’s argument that allocating more than the no-harm amount to customers would amount to retrospective ratemaking, the Board again notes the decision in the TransAlta Appeal. The Court of Appeal accepted that the Board could include in the definition of “revenue” an amount payable to customers represent-ing excess depreciation paid by them through past rates. In the Board’s view, no question of retrospective rate-making arises in cases where previously regulated rate base assets are being disposed of out of rate base and the Board applies the TransAlta Formula.

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L’argument de la société voulant que les biens (le Calgary Stores Block) ne soient plus des biens du ser-vice public parce qu’ils ne sont plus requis pour fournir le service ne nous convainc pas. La Commission signale que les biens pourraient encore servir à la prestation de services destinés aux clients de l’entreprise réglemen-tée. En fait, les services anciennement fournis grâce aux biens demeurent requis, mais leur prestation sera assurée par des installations existantes et des installa-tions récemment louées. La Commission note de plus que même dans le cas où un bien et le service qu’il four-nissait aux clients ne sont plus requis, elle a déjà at-tribué plus que le montant obtenu par l’application du critère de l’absence de préjudice lorsque le produit de l’aliénation a été supérieur au coût historique. [par. 47-49]

La Commission a ensuite appliqué le critère de l’absence de préjudice aux faits de l’espèce. Elle a signalé que, dans sa décision relative à la de-mande d’autorisation, elle avait conclu au respect de ce critère, mais n’avait alors tiré aucune conclu-sion concernant l’incidence sur les frais d’exploita-tion, notamment l’entente de location obtenue par ATCO.

Puis, après avoir examiné les observations por-tant sur l’attribution du gain net, la Commission a rejeté l’argument selon lequel le fait que le nouveau propriétaire n’utiliserait pas les bâtiments situés sur le terrain était déterminant à cet égard. Elle a conclu que les bâtiments avaient alors une cer-taine valeur, mais elle n’a pas jugé nécessaire de la préciser. Elle a reconnu et confirmé que suivant la formule TransAlta, le profit inattendu réalisé lors-que le produit de la vente excède le coût historique pouvait être réparti entre les clients et les action-naires. Elle a estimé qu’il y avait lieu en l’espèce d’appliquer la formule et de tenir compte de la to-talité du gain issu de l’opération sans dissocier la partie attribuable au terrain et celle correspondant aux bâtiments.

Pour ce qui est de la répartition du gain entre les clients et les actionnaires d’ATCO, la Commission a tenté de mettre en balance la volonté des clients d’obtenir des services à la fois sûrs et fiables à un prix raisonnable et celle des investisseurs de tou-cher un rendement raisonnable :

The Board is not persuaded by the Company’s ar-gument that the Stores Block assets are now ‘non- utility’ by virtue of being ‘no longer required for utility service’. The Board notes that the assets could still be providing service to regulated customers. In fact, the services formerly provided by the Stores Block assets continue to be required, but will be provided from exist-ing and newly leased facilities. Furthermore, the Board notes that even when an asset and the associated service it was providing to customers is no longer required the Board has previously allocated more than the no-harm amount to customers where proceeds have exceeded the original cost of the asset. [paras. 47-49]

The Board went on to apply the no-harm test to the present facts. It noted that in its decision on the application for the approval of the sale, it had al-ready considered the no-harm test to be satisfied. However, in that first decision, it had not made a finding with respect to the specific impact on future operating costs, including the particular lease ar-rangement being entered into by ATCO.

The Board then reviewed the submissions with respect to the allocation of the net gain and rejected the submission that if the new owner had no use of the buildings on the land, this should affect the al-location of net proceeds. The Board held that the buildings did have some present value but did not find it necessary to fix a specific value. The Board recognized and confirmed that the TransAlta Formula was one whereby the “windfall” real-ized when the proceeds of sale exceed the original cost could be shared between customers and share-holders. It held that it should apply the formula in this case and that it would consider the gain on the transaction as a whole, not distinguishing between the proceeds allocated to land separately from the proceeds allocated to buildings.

With respect to allocation of the gain between customers and shareholders of ATCO, the Board tried to balance the interests of both the customers’ desire for safe reliable service at a reasonable cost with the provision of a fair return on the investment made by the company:

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[TRADUCTION] Il serait avantageux pour les clients de leur attribuer la totalité du profit net tiré de la vente du terrain et des bâtiments, mais cela pourrait dissua-der la société de soumettre son fonctionnement à une analyse continue afin de trouver des moyens d’amélio-rer son rendement et de réduire ses coûts de manière constante.

À l’inverse, attribuer à l’entreprise réglementée la totalité du profit net pourrait encourager la spéculation à l’égard de biens non amortissables ou l’identification des biens dont la valeur s’est déjà accrue et leur aliéna-tion. [par. 112-113]

La Commission a poursuivi en concluant que le partage du gain net résultant globalement de la vente du terrain et des bâtiments, selon la formule TransAlta, était équitable dans les circonstances et conforme à ses décisions antérieures.

Elle a décidé de répartir le produit brut de la vente (6 550 000 $) comme suit : 465 000 $ à ATCO pour les frais d’aliénation (265 000 $) et la dépollution (200 000 $), 2 014 690 $ aux ac-tionnaires et 4 070 310 $ aux clients. Un montant de 225 245 $ devait être prélevé de la somme at-tribuée aux actionnaires pour radier des registres d’ATCO la valeur comptable nette des biens vendus. De la somme attribuée aux clients, 3 045 813 $ étaient alloués aux clients d’ATCO Gas - South et 1 024 497 $ à ceux d’ATCO Pipelines - South.

1.2.2 La Cour d’appel de l’Alberta ((2004), 24 Alta. L.R. (4th) 205, 2004 ABCA 3)

ATCO a interjeté appel de la décision. Elle a fait valoir que la Commission n’avait pas com-pétence pour attribuer le produit de la vente, qui aurait dû revenir en entier aux actionnaires. Selon elle, en touchant une partie du produit de la vente, les clients gagnaient sur tous les tableaux puisqu’ils n’avaient pas supporté le coût de la rénovation des biens vendus et qu’ils profiteraient d’économies grâce à l’entente de location. La Cour d’appel de l’Alberta lui a donné raison, accueillant l’appel et annulant la décision. Elle a renvoyé l’affaire à la

To award the entire net gain on the land and build-ings to the customers, while beneficial to the custom-ers, could establish an environment that may deter the process wherein the company continually assesses its operation to identify, evaluate, and select options that continually increase efficiency and reduce costs.

Conversely, to award the entire net gain to the com-pany may establish an environment where a regulated utility company might be moved to speculate in non-depreciable property or result in the company being motivated to identify and sell existing properties where appreciation has already occurred. [paras. 112-13]

The Board went on to conclude that the sharing of the net gain on the sale of the land and build-ings collectively, in accordance with the TransAlta Formula, was equitable in the circumstances of this application and was consistent with past Board decisions.

The Board determined that from the gross proceeds of $6,550,000, ATCO should re-ceive $465,000 to cover the cost of disposition ($265,000) and the provision for environmental re-mediation ($200,000), the shareholders should re-ceive $2,014,690, and $4,070,310 should go to the customers. Of the amount credited to sharehold-ers, $225,245 was to be used to remove the remain-ing net book value of the property from ATCO’s accounts. Of the amount allocated to customers, $3,045,813 was allocated to ATCO Gas - South customers and $1,024,497 to ATCO Pipelines - South customers.

1.2.2 Court of Appeal of Alberta ((2004), 24 Alta. L.R. (4th) 205, 2004 ABCA 3)

ATCO appealed the Board’s decision. It argued that the Board did not have any jurisdiction to al-locate the proceeds of sale and that the proceeds should have been allocated entirely to the share-holders. In its view, allowing customers to share in the proceeds of sale would result in them ben-efiting twice, since they had been spared the costs of renovating the sold assets and would enjoy cost savings from the lease arrangements. The Court of Appeal of Alberta agreed with ATCO, allowing the appeal and setting aside the Board’s decision. The

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Commission, lui enjoignant d’attribuer à ATCO la totalité du solde à répartir selon la ligne 11 du ta-bleau d’attribution du produit de la vente. Pour les motifs qui suivent, il y a lieu de confirmer en partie le jugement de la Cour d’appel, qui n’a pas eu tort de statuer que la Commission n’avait pas le pouvoir d’attribuer le produit de la vente aux clients.

2. Analyse

2.1 Questions en litige

Nous sommes saisis d’un pourvoi et d’un pour-voi incident. Dans son pourvoi, la Ville affirme que contrairement à ce qu’a estimé la Cour d’appel, la Commission avait le pouvoir d’attribuer aux clients une partie du gain net résultant de la vente d’un bien affecté au service public même si elle avait conclu, au moment d’autoriser la vente, qu’aucun préjudice ne serait causé au public. Dans son pourvoi incident, ATCO conteste le pouvoir de la Commission d’attribuer aux clients toute partie du produit de la vente. Elle soutient en particulier que la Commission n’a pas le pouvoir de leur attribuer l’équivalent de l’amortissement calculé les années antérieures. Peu importe la formulation de la ques-tion en litige, notre Cour est appelée en l’espèce à décider si la Commission a le pouvoir d’attribuer le gain net tiré de la vente d’un bien d’une entreprise de services publics.

Vu la conclusion à laquelle j’arrive, point n’est besoin de se demander si la Commission a raisonna-blement réparti le produit de la vente. Néanmoins, comme je le signale au par. 82, vu les motifs de mon collègue, je me penche brièvement sur la ques-tion de l’exercice du pouvoir discrétionnaire.

2.2 Norme de contrôle

Une décision administrative étant à l’origine du présent pourvoi, il faut déterminer le degré de dé-férence auquel a droit l’organisme qui l’a rendue. S’exprimant au nom de la Cour d’appel, le juge Wittmann a conclu que la question de la compétence de la Commission commandait l’application de la norme de la décision correcte. ATCO en convient, et moi aussi. Il n’y a pas lieu de faire preuve de

matter was referred back to the Board, and the Board was directed to allocate the entire amount appearing in Line 11 of the allocation of proceeds, entitled “Remainder to be Shared” to ATCO. For the reasons that follow, the Court of Appeal’s deci-sion should be upheld, in part; it did not err when it held that the Board did not have the jurisdiction to allocate the proceeds of the sale to ratepayers.

2. Analysis

2.1 Issues

There is an appeal and a cross-appeal in this case: an appeal by the City in which it submits that, contrary to the Court of Appeal’s decision, the Board had jurisdiction to allocate a portion of the net gain on the sale of a utility asset to the rate-paying customers, even where no harm to the public was found at the time the Board approved the sale, and a cross-appeal by ATCO in which it questions the Board’s jurisdiction to allocate any of ATCO’s proceeds from the sale to customers. In particular, ATCO contends that the Board has no jurisdiction to make an allocation to rate-paying customers, equivalent to the accumulated deprecia-tion calculated for prior years. No matter how the issue is framed, it is evident that the crux of this appeal lies in whether the Board has the jurisdic-tion to distribute the gain on the sale of a utility company’s asset.

Given my conclusion on this issue, it is not nec-essary for me to consider whether the Board’s allo-cation of the proceeds in this case was reasonable. Nevertheless, as I note at para. 82, I will direct my attention briefly to the question of the exercise of discretion in view of my colleague’s reasons.

2.2 Standard of Review

As this appeal stems from an administrative body’s decision, it is necessary to determine the ap-propriate level of deference which must be shown to the body. Wittmann J.A., writing for the Court of Appeal, concluded that the issue of jurisdic-tion of the Board attracted a standard of correct-ness. ATCO concurs with this conclusion. I agree. No deference should be shown for the Board’s

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déférence à l’égard de la décision de la Commission concernant son pouvoir d’attribuer le gain net tiré de la vente des biens. L’examen des facteurs énon-cés par notre Cour dans l’arrêt Pushpanathan c. Canada (Ministre de la Citoyenneté et de l’Im‑migration), [1998] 1 R.C.S. 982, confirme cette conclusion, tout comme son raisonnement dans l’arrêt United Taxi Drivers’ Fellowship of Southern Alberta c. Calgary (Ville), [2004] 1 R.C.S. 485, 2004 CSC 19.

Bien qu’il ne soit pas nécessaire d’approfondir la question de la norme de contrôle applicable en l’espèce, je l’examinerai brièvement puisque, dans ses motifs, le juge Binnie se prononce sur l’exer-cice du pouvoir discrétionnaire. Les quatre facteurs à considérer pour déterminer la norme de contrôle applicable à la décision d’un tribunal administratif sont les suivants : (1) l’existence d’une clause priva-tive; (2) l’expertise du tribunal ou de l’organisme; (3) l’objet de la loi applicable et des dispositions en cause; (4) la nature du problème (Pushpanathan, par. 29-38).

Dans la présente affaire, il faut se garder de conclure hâtivement que la question en litige en est une de « compétence » puis de laisser tomber l’analyse pragmatique et fonctionnelle. L’examen exhaustif des facteurs s’impose.

Premièrement, le par. 26(1) de l’AEUBA prévoit un droit d’appel restreint qui ne peut être exercé que sur une question de compétence ou de droit et seu-lement avec l’autorisation d’un juge :

[TRADUCTION]

26(1) Sous réserve du paragraphe (2), les décisions de la Commission sont susceptibles d’appel devant la Cour d’appel sur une question de droit ou de compétence.

(2) L’autorisation d’appel ne peut être obtenue d’un juge de la Cour d’appel que sur demande présentée

a) dans les 30 jours qui suivent l’ordonnance, la décision ou la directive en cause ou

b) dans le délai supplémentaire que le juge estime justifié d’accorder dans les circonstances.

decision with regard to its jurisdiction on the al-location of the net gain on sale of assets. An in-quiry into the factors enunciated by this Court in Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, confirms this conclusion, as does the reasoning in United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), [2004] 1 S.C.R. 485, 2004 SCC 19.

Although it is not necessary to conduct a full analysis of the standard of review in this case, I will address the issue briefly in light of the fact that Binnie J. deals with the exercise of discretion in his reasons for judgment. The four factors that need to be canvassed in order to determine the appropri-ate standard of review of an administrative tribunal decision are: (1) the existence of a privative clause; (2) the expertise of the tribunal/board; (3) the pur-pose of the governing legislation and the particu-lar provisions; and (4) the nature of the problem (Pushpanathan, at paras. 29-38).

In the case at bar, one should avoid a hasty char-acterizing of the issue as “jurisdictional” and sub-sequently be tempted to skip the pragmatic and functional analysis. A complete examination of the factors is required.

First, s. 26(1) of the AEUBA grants a right of appeal, but in a limited way. Appeals are allowed on a question of jurisdiction or law and only after leave to appeal is obtained from a judge:

26(1) Subject to subsection (2), an appeal lies from the Board to the Court of Appeal on a question of jurisdic-tion or on a question of law.

(2) Leave to appeal may be obtained from a judge of the Court of Appeal only on an application made

(a) within 30 days from the day that the order, de-cision or direction sought to be appealed from was made, or

(b) within a further period of time as granted by the judge where the judge is of the opinion that the circumstances warrant the granting of that further period of time.

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De plus, l’AEUBA renferme une clause d’immu-nité de contrôle (ou clause privative) prévoyant que toute mesure, ordonnance ou décision de la Commission est définitive et ne peut être contestée, révisée ou restreinte dans le cadre d’une instance judiciaire, y compris une demande de contrôle ju-diciaire (art. 27).

Le fait que la loi prévoit un droit d’appel sur une question de compétence ou de droit seulement permet de conclure à l’application d’une norme de contrôle plus stricte et donne à penser que notre Cour doit se montrer moins déférente vis-à-vis de la Commission relativement à ces questions (voir Pushpanathan, par. 30). Cependant, l’existence d’une clause d’immunité de contrôle et d’un droit d’appel n’est pas décisive, de sorte qu’il nous faut examiner la nature de la question à trancher et l’expertise relative du tribunal administratif à cet égard.

Deuxièmement, comme l’a fait remarquer la Cour d’appel, nul ne conteste que la Commission est un organisme spécialisé doté d’une grande ex-pertise en ce qui concerne les ressources et les services publics de l’Alberta dans le domaine énergétique (voir, p. ex., Consumers’ Gas Co. c. Ontario (Energy Board), [2001] O.J. No. 5024 (QL) (C. div.), par. 2; Coalition of Citizens Impacted by the Caroline Shell Plant c. Alberta (Energy Utilities Board) (1996), 41 Alta. L.R. (3d) 374 (C.A.), par. 14. Il s’agit en fait d’un tribunal administratif per-manent qui régit depuis nombre d’années les servi-ces publics réglementés.

Quoi qu’il en soit, notre Cour s’intéresse non pas à l’expertise générale de l’instance administrative, mais à son expertise quant à la question précise dont elle est saisie. Par conséquent, même si l’on tiendrait normalement pour acquis que l’expertise de la Commission est beaucoup plus grande que celle d’une cour de justice, la nature de la ques-tion en litige « neutralise », pour reprendre le terme employé par la Cour d’appel (par. 35), la déférence qu’appelle cette considération. Comme je l’expli-que plus loin, l’expertise de la Commission n’est pas mise à contribution lorsqu’elle se prononce sur l’étendue de ses pouvoirs.

In addition, the AEUBA includes a privative clause which states that every action, order, ruling or de-cision of the Board is final and shall not be ques-tioned, reviewed or restrained by any proceeding in the nature of an application for judicial review or otherwise in any court (s. 27).

The presence of a statutory right of appeal on questions of jurisdiction and law suggests a more searching standard of review and less deference to the Board on those questions (see Pushpanathan, at para. 30). However, the presence of the privative clause and right to appeal are not decisive, and one must proceed with the examination of the nature of the question to be determined and the relative ex-pertise of the tribunal in those particular matters.

Second, as observed by the Court of Appeal, no one disputes the fact that the Board is a special-ized body with a high level of expertise regarding Alberta’s energy resources and utilities (see, e.g., Consumers’ Gas Co. v. Ontario (Energy Board), [2001] O.J. No. 5024 (QL) (Div. Ct.), at para. 2; Coalition of Citizens Impacted by the Caroline Shell Plant v. Alberta (Energy Utilities Board) (1996), 41 Alta. L.R. (3d) 374 (C.A.), at para. 14. In fact, the Board is a permanent tribunal with a long-term regulatory relationship with the regu-lated utilities.

Nevertheless, the Court is concerned not with the general expertise of the administrative deci-sion maker, but with its expertise in relation to the specific nature of the issue before it. Consequently, while normally one would have assumed that the Board’s expertise is far greater than that of a court, the nature of the problem at bar, to adopt the lan-guage of the Court of Appeal (para. 35), “neutral-izes” this deference. As I will elaborate below, the expertise of the Board is not engaged when decid-ing the scope of its powers.

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Troisièmement, trois lois s’appliquent en l’es-pèce : la PUBA, la GUA et l’AEUBA. Suivant ces lois, la Commission a pour mission de protéger l’in-térêt public quant à la nature et à la qualité des ser-vices fournis à la collectivité par les entreprises de services publics : Atco Ltd. c. Calgary Power Ltd., [1982] 2 R.C.S. 557, p. 576; Dome Petroleum Ltd. c. Public Utilities Board (Alberta) (1976), 2 A.R. 453 (C.A.), par. 20-22, conf. par [1977] 2 R.C.S. 822. L’objet premier de ce cadre législatif est de régle-menter adéquatement un service de gaz dans l’inté-rêt public ou, plus précisément, de réglementer un monopole dans l’intérêt public, grâce principale-ment à l’établissement des tarifs. J’y reviendrai.

La disposition qui nous intéresse au premier chef, le sous-al. 26(2)d)(i) de la GUA, qui exige qu’un service public obtienne de l’organisme de ré-glementation l’autorisation de vendre un bien, vise à protéger les clients contre les effets préjudicia-bles de toute opération de l’entreprise en veillant à l’accroissement des avantages financiers qu’ils en tirent (MacAvoy et Sidak, p. 234-236).

Même si, à première vue, on peut considé-rer que l’objet des lois pertinentes et la raison d’être de la Commission sont de réaliser un équi-libre délicat entre divers intéressés — le service public et les clients — et, par conséquent, qu’ils impliquent un processus décisionnel polycentri-que (Pushpanathan, par. 36), l’interprétation des lois habilitantes et des dispositions en cause (al. 26(2)d) de la GUA et 15(3)d) de l’AEUBA) n’est pas, contrairement à ce qu’a conclu la Cour d’ap-pel, une question polycentrique. Il s’agit plutôt de déterminer si, interprétées correctement, les lois habilitantes confèrent à la Commission le pou-voir d’attribuer le profit tiré de la vente d’un bien. Lorsque aucune question de principe n’est soule-vée, le mandat premier de la Commission n’est pas d’interpréter l’AEUBA, la GUA ou la PUBA de manière abstraite, mais de veiller à ce que la tari-fication soit toujours juste et raisonnable (voir Atco Ltd., p. 576). En l’espèce, ce rôle de protection n’en-tre pas en jeu. Partant, le troisième facteur com-mande l’application d’une norme de contrôle moins déférente.

Third, the present case is governed by three pieces of legislation: the PUBA, the GUA and the AEUBA. These statutes give the Board a mandate to safeguard the public interest in the nature and quality of the service provided to the community by public utilities: Atco Ltd. v. Calgary Power Ltd., [1982] 2 S.C.R. 557, at p. 576; Dome Petroleum Ltd. v. Public Utilities Board (Alberta) (1976), 2 A.R. 453 (C.A.), at paras. 20-22, aff’d [1977] 2 S.C.R. 822. The legislative framework at hand has as its main purpose the proper regulation of a gas utility in the public interest, more specifically the regula-tion of a monopoly in the public interest with its primary tool being rate setting, as I will explain later.

The particular provision at issue, s. 26(2)(d)(i) of the GUA, which requires a utility to obtain the approval of the regulator before it sells an asset, serves to protect the customers from adverse results brought about by any of the utility’s transactions by ensuring that the economic benefits to customers are enhanced (MacAvoy and Sidak, at pp. 234-36).

While at first blush the purposes of the relevant statutes and of the Board can be conceived as a delicate balancing between different constituen-cies, i.e., the utility and the customer, and there-fore entail determinations which are polycentric (Pushpanathan, at para. 36), the interpretation of the enabling statutes and the particular provisions under review (s. 26(2)(d) of the GUA and s. 15(3)(d) of the AEUBA) is not a polycentric question, con-trary to the conclusion of the Court of Appeal. It is an inquiry into whether a proper construction of the enabling statutes gives the Board jurisdic-tion to allocate the profits realized from the sale of an asset. The Board was not created with the main purpose of interpreting the AEUBA, the GUA or the PUBA in the abstract, where no policy consid-eration is at issue, but rather to ensure that utility rates are always just and reasonable (see Atco Ltd., at p. 576). In the case at bar, this protective role does not come into play. Hence, this factor points to a less deferential standard of review.

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Quatrièmement, la nature du problème n’est pas la même pour chacune des questions en litige. Les parties demandent en substance à notre Cour de répondre à deux questions (énoncées précé-demment). Premièrement, le pouvoir d’attribuer le produit de la vente relève-t-il du mandat légal de la Commission? Dans sa décision, cette dernière a statué qu’elle avait le pouvoir d’attribuer aux clients une partie du produit de la vente des biens d’un service public. Elle a invoqué à l’appui ses pouvoirs légaux, les principes d’équité inhérents au « pacte réglementaire » (voir par. 63 des pré-sents motifs) et ses décisions antérieures. Il s’agit clairement d’une question de droit et de compé-tence. L’on pourrait soutenir que la Commission ne possède pas une plus grande expertise qu’une cour de justice à cet égard. Une cour de justice est appelée à interpréter des dispositions ne com-portant aucun aspect technique, ce qui n’était pas le cas de la disposition en litige dans l’arrêt Barrie Public Utilities c. Assoc. canadienne de télévision par câble, [2003] 1 R.C.S. 476, 2003 CSC 28, par. 86. Qui plus est, l’interprétation de notions générales comme l’« intérêt public » et l’« imposition de conditions » (que l’on retrouve à l’al. 15(3)d) de l’AEUBA), n’est pas étrangère à une cour de justice et n’appartient pas à un do-maine dans lequel il a été jugé qu’un tribunal ad-ministratif avait une plus grande expertise qu’une cour de justice. Deuxièmement, la méthode em-ployée en l’espèce et l’attribution en résultant étaient-elles raisonnables? Pour répondre à cette question, il faut examiner la jurisprudence, les considérations de principe et la pratique d’autres organismes, ainsi que le détail de l’attribution en l’espèce. Il s’agit en somme d’une question mixte de fait et de droit.

Au vu des quatre facteurs, je conclus que cha-cune des questions en litige appelle une norme de contrôle distincte. Statuer sur le pouvoir de la Commission d’attribuer le produit de la vente d’un bien d’un service public requiert l’application de la norme de la décision correcte. Comme l’a dit la Cour d’appel, l’accent est mis sur les dispositions invoquées et interprétées par la Commission (al. 26(2)d) de la GUA et 15(3)d) de l’AEUBA) et la

Fourth, the nature of the problem underlying each issue is different. The parties are in essence asking the Court to answer two questions (as I have set out above), the first of which is to de-termine whether the power to dispose of the pro-ceeds of sale falls within the Board’s statutory mandate. The Board, in its decision, determined that it had the power to allocate a portion of the proceeds of a sale of utility assets to the ratepay-ers; it based its decision on its statutory powers, the equitable principles rooted in the “regulatory compact” (see para. 63 of these reasons) and pre-vious practice. This question is undoubtedly one of law and jurisdiction. The Board would argu-ably have no greater expertise with regard to this issue than the courts. A court is called upon to interpret provisions that have no technical aspect, in contrast with the provision disputed in Barrie Public Utilities v. Canadian Cable Television Assn., [2003] 1 S.C.R. 476, 2003 SCC 28, at para. 86. The interpretation of general concepts such as “public interest” and “conditions” (as found in s. 15(3)(d) of the AEUBA) is not foreign to courts and is not derived from an area where the tribu-nal has been held to have greater expertise than the courts. The second question is whether the method and actual allocation in this case were reasonable. To resolve this issue, one must con-sider case law, policy justifications and the prac-tice of other boards, as well as the details of the particular allocation in this case. The issue here is most likely characterized as one of mixed fact and law.

In light of the four factors, I conclude that each question requires a distinct standard of review. To determine the Board’s power to allocate proceeds from a sale of utility assets suggests a standard of review of correctness. As expressed by the Court of Appeal, the focus of this inquiry remains on the particular provisions being invoked and inter-preted by the tribunal (s. 26(2)(d) of the GUA and s. 15(3)(d) of the AEUBA) and “goes to jurisdiction”

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question « touche la compétence » (Pushpanathan, par. 28). De plus, gardant présents à l’esprit tous les facteurs considérés, le caractère général de la pro-position est un autre élément qui milite en faveur de la norme de la décision correcte, comme je l’ai dit dans l’arrêt Pushpanathan (par. 38) :

. . . plus les propositions avancées sont générales, et plus les répercussions de ces décisions s’écartent du do-maine d’expertise fondamental du tribunal, moins il est vraisemblable qu’on fasse preuve de retenue. En l’ab-sence d’une intention législative implicite ou expresse à l’effet contraire manifestée dans les critères qui précè-dent, on présumera que le législateur a voulu laisser aux cours de justice la compétence de formuler des énoncés de droit fortement généralisés.

La deuxième question, qui porte sur la mé-thode employée par la Commission pour attribuer le produit de la vente, appelle vraisemblablement une norme de contrôle plus déférente. D’une part, l’expertise de la Commission, dans ce domaine en particulier, son vaste mandat, la technicité de la question et l’objet général des lois en cause portent à croire que sa décision justifie un degré relativement élevé de déférence. D’autre part, l’absence d’une clause d’immunité de contrôle visant les questions de compétence et la nécessité de se référer au droit pour trancher la question, appellent l’application d’une norme de contrôle moins déférente privilé-giant le caractère raisonnable de la décision. Il n’est toutefois pas nécessaire que je précise quelle norme de contrôle aurait été applicable en l’espèce.

Comme le montre l’analyse qui suit, je suis d’avis que la Cour d’appel n’a pas commis d’erreur de fait ou de droit lorsqu’elle a conclu que la Commission avait outrepassé sa compétence en se méprenant sur les pouvoirs que lui confèrent la loi et la common law. Cependant, elle a eu tort de ne pas conclure en outre que la Commission n’avait pas le pouvoir d’attribuer aux clients quelque partie du produit de la vente des biens.

2.3 La Commission a‑t‑elle rendu une décision correcte au sujet de sa compétence?

Un tribunal ou un organisme administratif est une création de la loi : il ne peut outrepasser les pouvoirs que lui confère sa loi habilitante, il doit

(Pushpanathan, at para. 28). Moreover, keeping in mind all the factors discussed, the generality of the proposition will be an additional factor in favour of the imposition of a correctness standard, as I stated in Pushpanathan, at para. 38:

. . . the broader the propositions asserted, and the fur-ther the implications of such decisions stray from the core expertise of the tribunal, the less likelihood that deference will be shown. Without an implied or express legislative intent to the contrary as manifested in the criteria above, legislatures should be assumed to have left highly generalized propositions of law to courts.

The second question regarding the Board’s actual method used for the allocation of proceeds likely attracts a more deferential standard. On the one hand, the Board’s expertise, particularly in this area, its broad mandate, the technical nature of the question and the general purposes of the legisla-tion, all suggest a relatively high level of deference to the Board’s decision. On the other hand, the ab-sence of a privative clause on questions of jurisdic-tion and the reference to law needed to answer this question all suggest a less deferential standard of review which favours reasonableness. It is not nec-essary, however, for me to determine which spe-cific standard would have applied here.

As will be shown in the analysis below, I am of the view that the Court of Appeal made no error of fact or law when it concluded that the Board acted beyond its jurisdiction by misapprehending its stat-utory and common law authority. However, the Court of Appeal erred when it did not go on to con-clude that the Board has no jurisdiction to allocate any portion of the proceeds of sale of the property to ratepayers.

2.3 Was the Board’s Decision as to Its Jurisdiction Correct?

Administrative tribunals or agencies are statu-tory creations: they cannot exceed the powers that were granted to them by their enabling statute; they

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[TRADUCTION] « s’en tenir à son domaine de com-pétence et ne peut s’immiscer dans un autre pour lequel le législateur ne lui a pas attribué compé-tence » : Mullan, p. 9-10 (voir également S. Blake, Administrative Law in Canada (3e éd. 2001), p. 183-184).

Pour décider si la Commission a eu raison de conclure qu’elle avait le pouvoir d’attribuer le pro-duit de la vente des biens d’un service public, je dois interpréter le cadre législatif à l’origine de ses attributions et de ses actes.

2.3.1 Principes généraux d’interprétation législa-tive

Depuis un certain nombre d’années, notre Cour fait sienne l’approche moderne d’E. A. Driedger en matière d’interprétation des lois (Construction of Statutes (2e éd. 1983), p. 87) :

[TRADUCTION] Aujourd’hui il n’y a qu’un seul principe ou solution : il faut lire les termes d’une loi dans leur contexte global en suivant le sens ordinaire et grammatical qui s’harmonise avec l’esprit de la loi, l’objet de la loi et l’intention du législateur.

(Voir, p. ex., Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 R.C.S. 27, par. 21; Bell ExpressVu Limited Partnership c. Rex, [2002] 2 R.C.S. 559, 2002 CSC 42, par. 26; H.L. c. Canada (Procureur général), [2005] 1 R.C.S. 401, 2005 CSC 25, par. 186-187; Marche c. Cie d’Assurance Halifax, [2005] 1 R.C.S. 47, 2005 CSC 6, par. 54; Barrie Public Utilities, par. 20 et 86; Contino c. Leonelli‑Contino, [2005] 3 R.C.S. 217, 2005 CSC 63, par. 19.)

Toutefois, dans le domaine du droit administratif, plus particulièrement, la compétence des tribunaux et des organismes administratifs a deux sources : (1) l’octroi exprès par une loi (pouvoir explicite) et (2) la common law, suivant la doctrine de la déduc-tion nécessaire (pouvoir implicite) (voir également D. M. Brown, Energy Regulation in Ontario (éd. feuilles mobiles), p. 2-15).

La Ville soutient que le pouvoir exprès de la Commission d’autoriser la vente des biens d’un

must “adhere to the confines of their statutory au-thority or ‘jurisdiction’[; and t]hey cannot trespass in areas where the legislature has not assigned them authority”: Mullan, at pp. 9-10 (see also S. Blake, Administrative Law in Canada (3rd ed. 2001), at pp. 183-84).

In order to determine whether the Board’s deci-sion that it had the jurisdiction to allocate proceeds from the sale of a utility’s asset was correct, I am required to interpret the legislative framework by which the Board derives its powers and actions.

2.3.1 General Principles of Statutory Interpreta-tion

For a number of years now, the Court has adopted E. A. Driedger’s modern approach as the method to follow for statutory interpretation (Construction of Statutes (2nd ed. 1983), at p. 87):

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

(See, e.g., Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, at para. 26; H.L. v. Canada (Attorney General), [2005] 1 S.C.R. 401, 2005 SCC 25, at paras. 186-87; Marche v. Halifax Insurance Co., [2005] 1 S.C.R. 47, 2005 SCC 6, at para. 54; Barrie Public Utilities, at paras. 20 and 86; Contino v. Leonelli‑Contino, [2005] 3 S.C.R. 217, 2005 SCC 63, at para. 19.)

But more specifically in the area of administra-tive law, tribunals and boards obtain their juris-diction over matters from two sources: (1) express grants of jurisdiction under various statutes (ex-plicit powers); and (2) the common law, by appli-cation of the doctrine of jurisdiction by necessary implication (implicit powers) (see also D. M. Brown, Energy Regulation in Ontario (loose-leaf ed.), at p. 2-15).

The City submits that it is both implicit and ex-plicit within the express jurisdiction that has been

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conferred upon the Board to approve or refuse to approve the sale of utility assets, that the Board can determine how to allocate the proceeds of the sale in this case. ATCO retorts that not only is such a power absent from the explicit language of the leg-islation, but it cannot be “implied” from the statu-tory regime as necessarily incidental to the explicit powers. I agree with ATCO’s submissions and will elaborate in this regard.

2.3.2 Explicit Powers: Grammatical and Ordinary Meaning

As a preliminary submission, the City argues that given that ATCO applied to the Board for ap-proval of both the sale transaction and the dispo-sition of the proceeds of sale, this suggests that ATCO recognized that the Board has authority to allocate the proceeds as a condition of a proposed sale. This argument does not hold any weight in my view. First, the application for approval cannot be considered on its own an admission by ATCO of the jurisdiction of the Board. In any event, an admission of this nature would not have any bear-ing on the applicable law. Moreover, knowing that in the past the Board had decided that it had juris-diction to allocate the proceeds of a sale of assets and had acted on this power, one can assume that ATCO was asking for the approval of the disposi-tion of the proceeds should the Board not accept their argument on jurisdiction. In fact, a review of past Board decisions on the approval of sales shows that utility companies have constantly challenged the Board’s jurisdiction to allocate the net gain on the sale of assets (see, e.g., Re TransAlta Utilities Corp., Alta. E.U.B., Decision 2000-41; Re ATCO Gas‑North, Alta. E.U.B., Decision 2001-65; Re Alberta Government Telephones, Alta. P.U.B., Decision No. E84081, June 29, 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84116, October 12, 1984; TransAlta Utilities Corp. (Re), [2002] A.E.U.B.D. No. 30 (QL); ATCO Electric Ltd. (Re), [2003] A.E.U.B.D. No. 92 (QL)).

The starting point of the analysis requires that the Court examine the ordinary meaning of the sections at the centre of the dispute, s. 26(2)(d)(i) of the GUA, ss. 15(1) and 15(3)(d) of the AEUBA and

service public englobe — implicitement et explici-tement — celui de décider de l’attribution du pro-duit de la vente. ATCO réplique que non seulement ce pouvoir n’est pas expressément prévu par la loi, mais qu’on ne peut « déduire » du régime législatif qu’il découle nécessairement du pouvoir exprès. Je suis d’accord avec elle et voici pourquoi.

2.3.2 Pouvoir explicite : sens grammatical et ordinaire

La Ville soutient à titre préliminaire qu’en lui demandant d’autoriser la vente des biens et l’attri-bution du produit de l’opération, ATCO a reconnu le pouvoir de la Commission d’imposer, comme condition de l’autorisation, une certaine attribution du produit de la vente projetée. À mon avis, l’argu-ment ne tient pas. D’abord, la demande d’autorisa-tion ne peut à elle seule être considérée comme une reconnaissance de la compétence de la Commission. De toute manière, une telle reconnaissance ne serait pas déterminante quant au droit applicable. De plus, sachant que, par le passé, la Commission avait jugé être investie du pouvoir d’attribuer le pro-duit de la vente et avait exercé ce pouvoir, on peut présumer qu’ATCO lui a demandé d’autoriser l’at-tribution du produit de la vente pour le cas où elle rejetterait sa prétention relative à la compétence. En fait, il appert des décisions antérieures de la Commission d’autoriser ou non une opération que les entreprises de services publics contestent systé-matiquement son pouvoir d’attribuer le gain net en résultant (voir, p. ex., Re TransAlta Utilities Corp., Alta. E.U.B., Décision 2000-41; Re ATCO Gas‑North, Alta. E.U.B., Décision 2001-65; Re Alberta Government Telephones, Alta. P.U.B., Décision no E84081, 29 juin 1984; Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84116, 12 octobre 1984; TransAlta Utilities Corp. (Re), [2002] A.E.U.B.D. No. 30 (QL); ATCO Electric Ltd. (Re), [2003] A.E.U.B.D. No. 92 (QL)).

L’analyse exige au départ qu’on se penche sur le sens ordinaire des dispositions au cœur du litige, savoir le sous-al. 26(2)d)(i) de la GUA, le par. 15(1) et l’al. 15(3)d) de l’AEUBA et l’art. 37 de la

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PUBA. Pour faciliter leur consultation, en voici le texte :

[TRADUCTION]

GUA

26. . . .

(2) Le propriétaire d’un service de gaz désigné en ap-plication du paragraphe (1) ne peut

. . .

d) sans l’autorisation de la Commission,

(i) aliéner ou grever ses biens, concessions, privilèges ou droits, en tout ou en partie, notamment en les vendant, en les louant ou en les hypothéquant,

. . .

tout grèvement, vente, location, constitution d’hypo-thèque, aliénation, regroupement ou fusion interve-nant en contravention de la présente disposition est nul, sauf s’il intervient dans le cours normal des ac-tivités de l’entreprise.

AEUBA

15(1) Dans l’exercice de ses fonctions, la Commission jouit des pouvoirs, des droits et des privilèges qu’un texte législatif ou le droit par ailleurs applicable confère à l’ERCB [Energy Resources Conservation Board] et à la PUB [Public Utilities Board].

. . .

(3) Sans limiter la portée du paragraphe (1), la Commission peut prendre les mesures suivantes, en to-talité ou en partie :

. . .

d) à l’égard d’une ordonnance rendue par elle, l’ERCB ou la PUB en application des alinéas a) à c), rendre toute autre ordonnance et imposer les conditions supplémentaires qu’elle juge né-cessaires dans l’intérêt public;

. . .

s. 37 of the PUBA. For ease of reference, I repro-duce these provisions:

GUA

26. . . .

(2) No owner of a gas utility designated under subsec-tion (1) shall

. . .

(d) without the approval of the Board,

(i) sell, lease, mortgage or otherwise dispose of or encumber its property, franchises, privileges or rights, or any part of it or them

. . .

and a sale, lease, mortgage, disposition, encum-brance, merger or consolidation made in contraven-tion of this clause is void, but nothing in this clause shall be construed to prevent in any way the sale, lease, mortgage, disposition, encumbrance, merger or consolidation of any of the property of an owner of a gas utility designated under subsection (1) in the ordinary course of the owner’s business.

AEUBA

15(1) For the purposes of carrying out its functions, the Board has all the powers, rights and privileges of the ERCB [Energy Resources Conservation Board] and the PUB [Public Utilities Board] that are granted or provided for by any enactment or by law.

. . .

(3) Without restricting subsection (1), the Board may do all or any of the following:

. . .

(d) with respect to an order made by the Board, the ERCB or the PUB in respect of matters referred to in clauses (a) to (c), make any further order and impose any additional conditions that the Board considers necessary in the public interest;

. . .

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PUBA

37 Dans les domaines de sa compétence, la Commission peut ordonner et exiger qu’une personne, y compris une administration municipale, immédiatement ou dans le délai qu’elle impartit et selon les modalités qu’elle détermine, à condition que ce ne soit pas incompatible avec la présente loi ou une autre conférant compétence, fasse ce qu’elle est tenue de faire ou susceptible d’être tenue de faire suivant la présente loi ou toute autre, gé-nérale ou spéciale, et elle peut interdire ou faire cesser tout ce qui contrevient à ces lois ou à ses règles, ses or-donnances ou ses directives.

Certaines de ces dispositions figurent également dans les deux autres lois (voir, p. ex., le par. 85(1) et le sous-al. 101(2)d)(i) de la PUBA; le par. 22(1) de la GUA; texte en annexe).

Nul ne conteste que le par. 26(2) de la GUA inter-dit entre autres au propriétaire d’un service public d’aliéner ses biens, notamment par vente, location ou constitution d’hypothèque, sans l’autorisation de la Commission, sauf dans le cours normal des acti-vités de l’entreprise. Comme l’a fait valoir ATCO, la Commission a le pouvoir d’autoriser l’opération, sans plus. L’article 26 ne fait aucune mention des raisons pour lesquelles l’autorisation peut être ac-cordée ou refusée ni de la faculté d’autoriser l’opé-ration à certaines conditions, encore moins du pouvoir d’attribuer le profit net réalisé. Je signale au passage que le pouvoir conféré au par. 26(2) suffit à dissiper la crainte de la Commission que le service public soit tenté de vendre ses biens à fort profit, au détriment des clients, si le bénéfice tiré de la vente lui revient entièrement.

Il est intéressant de noter que le par. 26(2) ne s’applique pas à tous les types de vente (ainsi que de location, de constitution d’hypothèque, d’aliéna-tion, de grèvement ou de fusion). En effet, il pré-voit une exception pour la vente effectuée dans le cours normal des activités de l’entreprise. Si le régime législatif conférait à la Commission le pou-voir d’attribuer le produit de la vente des biens d’un service public, comme on le prétend en l’espèce, il va de soi que le par. 26(2) s’appliquerait à toute vente de biens ou, à tout le moins, ne prévoirait une exception que pour la vente n’excédant pas un cer-tain montant. Il appert que l’attribution du produit de la vente aux clients n’est pas l’un de ses objets.

PUBA

37 In matters within its jurisdiction the Board may order and require any person or local authority to do forth-with or within or at a specified time and in any manner prescribed by the Board, so far as it is not inconsistent with this Act or any other Act conferring jurisdiction, any act, matter or thing that the person or local author-ity is or may be required to do under this Act or under any other general or special Act, and may forbid the doing or continuing of any act, matter or thing that is in contravention of any such Act or of any regulation, rule, order or direction of the Board.

Some of the above provisions are duplicated in the other two statutes (see, e.g., PUBA, ss. 85(1) and 101(2)(d)(i); GUA, s. 22(1); see Appendix).

There is no dispute that s. 26(2) of the GUA con-tains a prohibition against, among other things, the owner of a utility selling, leasing, mortgaging or otherwise disposing of its property outside of the ordinary course of business without the approval of the Board. As submitted by ATCO, the power conferred is to approve without more. There is no mention in s. 26 of the grounds for granting or de-nying approval or of the ability to grant conditional approval, let alone the power of the Board to allo-cate the net profit of an asset sale. I would note in passing that this power is sufficient to alleviate the fear expressed by the Board that the utility might be tempted to sell assets on which it might realize a large profit to the detriment of ratepayers if it could reap the benefits of the sale.

It is interesting to note that s. 26(2) does not apply to all types of sales (and leases, mortgages, dispo-sitions, encumbrances, mergers or consolidations). It excludes sales in the ordinary course of the own-er’s business. If the statutory scheme was such that the Board had the power to allocate the proceeds of the sale of utility assets, as argued here, s. 26(2) would naturally apply to all sales of assets or, at a minimum, exempt only those sales below a certain value. It is apparent that allocation of sale proceeds to customers is not one of its purposes. In fact, s. 26(2) can only have limited, if any, application to non-utility assets not related to utility function (es-pecially when the sale has passed the “no-harm”

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D’ailleurs, en ce qui concerne les biens non affec-tés au service public et étrangers à la prestation du service, l’application de cette disposition, à sup-poser qu’elle s’applique, est nécessairement limi-tée (surtout lorsque la vente satisfait au critère de l’« absence de préjudice »). Le paragraphe 26(2) ne peut avoir qu’un seul objet, soit garantir que le bien n’est pas affecté au service public, de manière que son aliénation ne nuise ni à la prestation du service ni à sa qualité.

Par conséquent, la simple lecture du par. 26(2) de la GUA permet de conclure que la Commission n’a pas le pouvoir d’attribuer le produit de la vente d’un bien.

La Ville ne fonde pas son argumentation que sur le par. 26(2); elle fait aussi valoir que le par. 15(3) de l’AEUBA, qui autorise la Commission à assortir ses ordonnances des conditions qu’elle estime né-cessaires dans l’intérêt public, confère un pouvoir exprès à la Commission. De plus, elle invoque le pouvoir général que prévoit l’art. 37 de la PUBA pour soutenir que la Commission peut, dans les do-maines de sa compétence, rendre toute ordonnance qui n’est pas incompatible avec une disposition lé-gislative applicable. Or, considérer ces deux dispo-sitions isolément comme le préconise la Ville fait perdre de vue leur véritable portée : R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4e éd. 2002), p. 21; Lignes aériennes Canadien Pacifique Ltée c. Assoc. canadienne des pilotes de lignes aériennes, [1993] 3 R.C.S. 724, p. 735; Marche, par. 59-60; Bristol‑Myers Squibb Co. c. Canada (Procureur général), [2005] 1 R.C.S. 533, 2005 CSC 26, par. 105. En eux-mêmes, le par. 15(3) et l’art. 37 sont vagues et sujets à diver-ses interprétations. Il serait absurde d’accorder à la Commission le pouvoir discrétionnaire absolu d’assortir ses ordonnances des conditions de son choix. De plus, la notion d’« intérêt public » à la-quelle renvoie le par. 15(3) est très large et élas-tique; la Commission ne peut se voir accorder le pouvoir discrétionnaire absolu d’en circonscrire les limites.

Même si, à l’issue de la première étape du pro-cessus d’interprétation législative, je suis enclin à

test). The provision can only be meant to ensure that the asset in question is indeed non-utility, so that its loss does not impair the utility function or quality.

Therefore, a simple reading of s. 26(2) of the GUA does permit one to conclude that the Board does not have the power to allocate the proceeds of an asset sale.

The City does not limit its arguments to s. 26(2); it also submits that the AEUBA, pursuant to s. 15(3), is an express grant of jurisdiction because it author-izes the Board to impose any condition to any order so long as the condition is necessary in the public interest. In addition, it relies on the general power in s. 37 of the PUBA for the proposition that the Board may, in any matter within its jurisdiction, make any order pertaining to that matter that is not inconsistent with any applicable statute. The in-tended meaning of these two provisions, however, is lost when the provisions are simply read in isola-tion as proposed by the City: R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at p. 21; Canadian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., [1993] 3 S.C.R. 724, at p. 735; Marche, at paras. 59-60; Bristol‑Myers Squibb Co. v. Canada (Attorney General), [2005] 1 S.C.R. 533, 2005 SCC 26, at para. 105. These provisions on their own are vague and open-ended. It would be absurd to allow the Board an un-fettered discretion to attach any condition it wishes to an order it makes. Furthermore, the concept of “public interest” found in s. 15(3) is very wide and elastic; the Board cannot be given total discretion over its limitations.

While I would conclude that the legislation is silent as to the Board’s power to deal with sale

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conclure que la loi est silencieuse en ce qui concerne le pouvoir de la Commission de décider du sort du produit de la vente, je poursuis l’analyse car on peut néanmoins soutenir que les dispositions sont jus-qu’à un certain point ambiguës et incohérentes.

Notre Cour a affirmé maintes fois que le sens grammatical et ordinaire d’une disposition n’est pas déterminant et ne met pas fin à l’analyse. Il faut tenir compte du contexte global de la disposition, même si, à première vue, le sens de son libellé peut paraître évident (voir Chieu c. Canada (Ministre de la Citoyenneté et de l’Immigration), [2002] 1 R.C.S. 84, 2002 CSC 3, par. 34; Sullivan, p. 20-21). Je vais donc examiner l’objet et l’esprit des lois habilitantes, l’intention du législateur et les normes juridiques pertinentes.

2.3.3 Pouvoir implicite : contexte global

Les dispositions en cause figurent dans des lois qui font elles-mêmes partie d’un cadre législatif plus large dont on ne peut faire abstraction :

Œuvre d’un législateur rationnel et logique, la loi est censée former un système : chaque élément contribue au sens de l’ensemble et l’ensemble, au sens de chacun des éléments : « chaque disposition légale doit être en-visagée, relativement aux autres, comme la fraction d’un ensemble complet » . . .

(P.-A. Côté, Interprétation des lois (3e éd. 1999), p. 388)

Comme dans le cadre de toute interprétation lé-gislative, appelée à circonscrire les pouvoirs d’un organisme administratif, une cour de justice doit tenir compte du contexte qui colore les mots et du cadre législatif. L’objectif ultime consiste à déga-ger l’intention manifeste du législateur et l’objet vé-ritable de la loi tout en préservant l’harmonie, la cohérence et l’uniformité des lois en cause (Bell ExpressVu, par. 27; voir également l’Interpreta‑tion Act, R.S.A. 2000, ch. I-8, art. 10, à l’annexe). « L’interprétation législative est [. . .] l’art de dé-couvrir l’esprit du législateur qui imprègne les textes législatifs » : Bristol‑Myers Squibb Co., par. 102.

proceeds after the initial stage in the statutory in-terpretation analysis, because the provisions can nevertheless be said to reveal some ambiguity and incoherence, I will pursue the inquiry further.

This Court has stated on numerous occasions that the grammatical and ordinary sense of a sec-tion is not determinative and does not constitute the end of the inquiry. The Court is obliged to consider the total context of the provisions to be interpreted, no matter how plain the disposition may seem upon initial reading (see Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, 2002 SCC 3, at para. 34; Sullivan, at pp. 20-21). I will therefore proceed to examine the purpose and scheme of the legislation, the legislative intent and the relevant legal norms.

2.3.3 Implicit Powers: Entire Context

The provisions at issue are found in statutes which are themselves components of a larger statu-tory scheme which cannot be ignored:

As the product of a rational and logical legislature, the statute is considered to form a system. Every com-ponent contributes to the meaning as a whole, and the whole gives meaning to its parts: “each legal provision should be considered in relation to other provisions, as parts of a whole” . . . .

(P.-A. Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at p. 308)

As in any statutory interpretation exercise, when determining the powers of an administrative body, courts need to examine the context that colours the words and the legislative scheme. The ultimate goal is to discover the clear intent of the legislature and the true purpose of the statute while preserv-ing the harmony, coherence and consistency of the legislative scheme (Bell ExpressVu, at para. 27; see also Interpretation Act, R.S.A. 2000, c. I-8, s. 10 (in Appendix)). “[S]tatutory interpretation is the art of finding the legislative spirit embodied in enact-ments”: Bristol‑Myers Squibb Co., at para. 102.

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Le pouvoir discrétionnaire que le par. 15(3) de l’AEUBA et l’art. 37 de la PUBA confèrent à la Commission n’est donc pas absolu. Comme le dit ATCO, la Commission doit l’exercer en res-pectant le cadre législatif et les principes généra-lement applicables en matière de réglementation, dont le législateur est présumé avoir tenu compte en adoptant ces lois (voir Sullivan, p. 154-155). Dans le même ordre d’idées, le passage suivant de l’arrêt Bell Canada c. Canada (Conseil de la radiodiffusion et des télécommunications cana‑diennes), [1989] 1 R.C.S. 1722, p. 1756, se révèle pertinent :

Les pouvoirs d’un tribunal administratif doivent évi-demment être énoncés dans sa loi habilitante, mais ils peuvent également découler implicitement du texte de la loi, de son économie et de son objet. Bien que les tribunaux doivent s’abstenir de trop élargir les pouvoirs de ces organismes de réglementation par législation ju-diciaire, ils doivent également éviter de les rendre sté-riles en interprétant les lois habilitantes de façon trop formaliste.

Il incombe à notre Cour de déterminer l’intention du législateur et d’y donner effet (Bell ExpressVu, par. 62) sans franchir la ligne qui sépare l’inter-prétation judiciaire de la formulation législative (voir R. c. McIntosh, [1995] 1 R.C.S. 686, par. 26; Bristol‑Myers Squibb Co., par. 174). Cela dit, cette règle permet l’application de « la doctrine de la compétence par déduction nécessaire » : sont com-pris dans les pouvoirs conférés par la loi habili-tante non seulement ceux qui y sont expressément énoncés, mais aussi, par déduction, tous ceux qui sont de fait nécessaires à la réalisation de l’objec-tif du régime législatif : voir Brown, p. 2-16.2; Bell Canada, p. 1756. Par le passé, les cours de justice canadiennes ont appliqué la doctrine de manière à investir les organismes administratifs de la com-pétence nécessaire à l’exécution de leur mandat légal :

[TRADUCTION] Lorsque l’objet de la législation est de créer un vaste cadre réglementaire, le tribunal admi-nistratif doit posséder les pouvoirs qui, par nécessité pratique et déduction nécessaire, découlent du pouvoir réglementaire qui lui est expressément conféré.

Consequently, a grant of authority to exercise a discretion as found in s. 15(3) of the AEUBA and s. 37 of the PUBA does not confer unlimited dis-cretion to the Board. As submitted by ATCO, the Board’s discretion is to be exercised within the confines of the statutory regime and principles gen-erally applicable to regulatory matters, for which the legislature is assumed to have had regard in passing that legislation (see Sullivan, at pp. 154-55). In the same vein, it is useful to refer to the following passage from Bell Canada v. Canada (Canadian Radio‑Television and Telecommuni‑cations Commission), [1989] 1 S.C.R. 1722, at p. 1756:

The powers of any administrative tribunal must of course be stated in its enabling statute but they may also exist by necessary implication from the wording of the act, its structure and its purpose. Although courts must refrain from unduly broadening the powers of such reg-ulatory authorities through judicial law-making, they must also avoid sterilizing these powers through overly technical interpretations of enabling statutes.

The mandate of this Court is to determine and apply the intention of the legislature (Bell ExpressVu, at para. 62) without crossing the line between judicial interpretation and legislative drafting (see R. v. McIntosh, [1995] 1 S.C.R. 686, at para. 26; Bristol‑Myers Squibb Co., at para. 174). That being said, this rule allows for the application of the “doctrine of jurisdiction by necessary impli-cation”; the powers conferred by an enabling statute are construed to include not only those expressly granted but also, by implication, all powers which are practically necessary for the accomplishment of the object intended to be secured by the statutory regime created by the legislature (see Brown, at p. 2-16.2; Bell Canada, at p. 1756). Canadian courts have in the past applied the doctrine to ensure that administrative bodies have the necessary jurisdic-tion to accomplish their statutory mandate:

When legislation attempts to create a comprehen-sive regulatory framework, the tribunal must have the powers which by practical necessity and necessary im-plication flow from the regulatory authority explicitly conferred upon it.

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Re Dow Chemical Canada Inc. and Union Gas Ltd. (1982), 141 D.L.R. (3d) 641 (H.C. Ont.), p. 658-659, conf. par (1983), 42 O.R. (2d) 731 (C.A.) (voir éga-lement Interprovincial Pipe Line Ltd. c. Office na‑tional de l’énergie, [1978] 1 C.F. 601 (C.A.); Ligue de la radiodiffusion canadienne c. Conseil de la radiodiffusion et des télécommunications cana‑diennes, [1983] 1 C.F. 182 (C.A.), conf. par [1985] 1 R.C.S. 174).

Voici quelles sont selon moi les prétentions de la Ville : (1) en acquittant leurs factures, les clients acquièrent un droit sur les biens du propriétaire du service public et ont donc droit à une partie du profit tiré de leur vente; (2) le pouvoir de la Commission d’autoriser ou non la vente des biens d’un service public emporte, par nécessité, celui d’assujettir l’autorisation à une certaine répartition du produit de la vente. La doctrine de la compé-tence par déduction nécessaire est au cœur de la deuxième prétention de la Ville. Je ne peux faire droit ni à l’une ni à l’autre de ces prétentions qui, à mon avis, sont diamétralement contraires au droit applicable, comme le révèle ci-après l’examen du contexte global.

Après un bref rappel historique, je me pencherai sur la principale fonction de la Commission, l’éta-blissement des tarifs, puis sur les pouvoirs acces-soires qui peuvent être déduits du contexte.

2.3.3.1 Historique et contexte général

Les services publics sont réglementés en Alberta depuis la création en 1915 de l’organisme appelé Board of Public Utility Commissioners en vertu de la loi intitulée The Public Utilities Act, S.A. 1915, ch. 6, inspirée d’une loi américaine similaire : H. R. Milner, « Public Utility Rate Control in Alberta » (1930), 8 R. du B. can. 101, p. 101. Bien qu’il faille aborder avec circonspection la jurisprudence et la doctrine américaines dans ce domaine — les régi-mes politiques des États-Unis et du Canada étant fort différents, tout comme leurs régimes de droit constitutionnel —, elles éclairent la question.

Suivant The Public Utilities Act, la première commission des services publics, composée de

Re Dow Chemical Canada Inc. and Union Gas Ltd. (1982), 141 D.L.R. (3d) 641 (Ont. H.C.), at pp. 658-59, aff’d (1983), 42 O.R. (2d) 731 (C.A.) (see also Interprovincial Pipe Line Ltd. v. National Energy Board, [1978] 1 F.C. 601 (C.A.); Canadian Broadcasting League v. Canadian Radio‑ television and Telecommunications Commission, [1983] 1 F.C. 182 (C.A.), aff’d [1985] 1 S.C.R. 174).

I understand the City’s arguments to be as fol-lows: (1) the customers acquire a right to the prop-erty of the owner of the utility when they pay for the service and are therefore entitled to a return on the profits made at the time of the sale of the prop-erty; and (2) the Board has, by necessity, because of its jurisdiction to approve or refuse to approve the sale of utility assets, the power to allocate the proceeds of the sale as a condition of its order. The doctrine of jurisdiction by necessary implication is at the heart of the City’s second argument. I cannot accept either of these arguments which are, in my view, diametrically contrary to the state of the law. This is revealed when we scrutinize the entire con-text which I will now endeavour to do.

After a brief review of a few historical facts, I will probe into the main function of the Board, rate setting, and I will then explore the incidental powers which can be derived from the context.

2.3.3.1 Historical Background and Broader Con‑text

The history of public utilities regulation in Alberta originated with the creation in 1915 of the Board of Public Utility Commissioners by The Public Utilities Act, S.A. 1915, c. 6. This statute was based on similar American legislation: H. R. Milner, “Public Utility Rate Control in Alberta” (1930), 8 Can. Bar Rev. 101, at p. 101. While the American jurisprudence and texts in this area should be considered with caution given that Canada and the United States have very different political and constitutional-legal regimes, they do shed some light on the issue.

Pursuant to The Public Utilities Act, the first public utility board was established as a

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trois membres, surveillait de manière générale tous les services publics (art. 21), enquêtait sur les tarifs (art. 23), rendait des ordonnances concernant l’équipement (art. 24) et exigeait que chacun des services publics lui remette la liste complète de ses tarifs (art. 23). Signalons pour les besoins du pré-sent pourvoi que la loi de 1915 exigeait également d’un service public qu’il obtienne de l’organisme l’autorisation de vendre un bien en dehors du cours normal de ses activités (al. 29g)).

La Commission a été créée en février 1995 par le fusionnement de l’Energy Resources Conservation Board et de la Public Utilities Board (voir Institut canadien du droit des ressources, Canada Energy Law Service : Alberta (éd. feuilles mobiles), p. 30-3101). Dès lors, toutes les affaires qui étaient du ressort des organismes fusionnés relevaient de sa compétence exclusive. La Commission a tous les pouvoirs, les droits et les privilèges des organis-mes auxquels elle a succédé (AEUBA, art. 13, par. 15(1); GUA, art. 59).

Outre les pouvoirs prévus dans la loi de 1915, qui sont pratiquement identiques à ceux que confère actuellement la PUBA, la Commission est aujourd’hui investie des pouvoirs exprès suivants :

1. rendre une ordonnance concernant l’amé-lioration du service ou du produit (PUBA, al. 80b));

2. autoriser l’entreprise de services publics à émettre des actions, des obligations ou d’autres titres d’emprunt (GUA, al. 26(2)a); PUBA, al. 101(2)a));

3. autoriser l’entreprise de services publics à aliéner ou à grever ses biens, concessions, pri-vilèges ou droits, notamment en les louant ou en les hypothéquant (GUA, sous-al. 26(2)d)(i); PUBA, sous-al. 101(2)d)(i));

4. autoriser la fusion ou le regroupement des biens, concessions, privilèges ou droits de l’entreprise de services publics (GUA, sous-al. 26(2)d)(ii); PUBA, sous-al. 101(2)d)(ii));

three-member tribunal to provide general super-vision of all public utilities (s. 21), to investigate rates (s. 23), to make orders regarding equipment (s. 24), and to require every public utility to file with it complete schedules of rates (s. 23). Of inter-est for our purposes, the 1915 statute also required public utilities to obtain the approval of the Board of Public Utility Commissioners before selling any property when outside the ordinary course of their business (s. 29(g)).

The Alberta Energy and Utilities Board was created in February 1995 by the amalgamation of the Energy Resources Conservation Board and the Public Utilities Board (see Canadian Institute of Resources Law, Canada Energy Law Service: Alberta (loose-leaf ed.), at p. 30-3101). Since then, all matters under the jurisdiction of the Energy Resources Conservation Board and the Public Utilities Board have been handled by the Alberta Energy and Utilities Board and are within its exclu-sive jurisdiction. The Board has all of the powers, rights and privileges of its two predecessor boards (AEUBA, ss. 13, 15(1); GUA, s. 59).

In addition to the powers found in the 1915 stat-ute, which have remained virtually the same in the present PUBA, the Board now benefits from the following express powers to:

1. make an order respecting the improvement of the service or commodity (PUBA, s. 80(b));

2. approve the issue by the public utility of shares, stocks, bonds and other evidences of indebted-ness (GUA, s. 26(2)(a); PUBA, s. 101(2)(a));

3. approve the lease, mortgage, disposition or encumbrance of the public utility’s property, franchises, privileges or rights (GUA, s. 26(2)(d)(i); PUBA, s. 101(2)(d)(i));

4. approve the merger or consolidation of the public utility’s property, franchises, privi-leges or rights (GUA, s. 26(2)(d)(ii); PUBA, s. 101(2)(d)(ii)); and

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5. autoriser la vente d’actions de l’entreprise de services publics à une société ou l’inscription dans ses registres de toute cession d’actions à une société lorsque la vente ou la cession ferait en sorte que cette société détienne plus de 50 pour 100 des actions en circulation du proprié-taire de l’entreprise de services publics (GUA, par. 27(1); PUBA, par. 102(1)).

Il appert donc de cette énumération qu’une entre-prise de services publics a une marge de manœuvre très limitée. Il n’est fait mention ni du pouvoir d’at-tribuer le produit de la vente ni du pouvoir discré-tionnaire de porter atteinte au droit de propriété.

Même lorsque le législateur a décidé de créer la Commission en 1995, il n’a pas jugé opportun de modifier la PUBA ou la GUA pour donner au nouvel organisme le pouvoir d’attribuer le produit d’une vente. Pourtant, la question suscitait déjà la controverse (voir, p. ex., Re Alberta Government Telephones, Alta. P.U.B., Décision no E84081, et Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84116). Selon un principe bien établi, le légis-lateur est présumé connaître parfaitement le droit existant, qu’il s’agisse de la common law ou du droit d’origine législative (voir Sullivan, p. 154-155). Il est également censé être au fait de toutes les circonstances entourant l’adoption de la nouvelle loi.

Bien que la Commission puisse sembler possé-der toute une gamme d’attributions et de fonctions, il ressort de l’AEUBA, de la PUBA et de la GUA que son principal mandat, à l’égard des entrepri-ses de services publics, est l’établissement de tarifs. Son pouvoir de surveiller les finances et le fonc-tionnement de ces entreprises est certes vaste mais, en pratique, il est accessoire à sa fonction première (voir Milner, p. 102; Brown, p. 2-16.6). S’exprimant au nom des juges majoritaires dans Atco Ltd., le juge Estey a abondé dans ce sens (p. 576) :

Il ressort des pouvoirs que le législateur a accordé[s] à la Commission dans les deux lois mentionnées ci-dessus, qu’il a investi la Commission du mandat très gé-néral de veiller aux intérêts du public quant à la nature et à la qualité des services rendus à la collectivité par

5. authorize the sale or permit to be made on the public utility’s book a transfer of any share of its capital stock to a corporation that would result in the vesting in that corporation of more than 50 percent of the outstanding capital stock of the owner of the public utility (GUA, s. 27(1); PUBA, s. 102(1)).

It goes without saying that public utilities are very limited in the actions they can take, as evi-denced from the above list. Nowhere is there a mention of the authority to allocate proceeds from a sale or the discretion of the Board to interfere with ownership rights.

Even in 1995 when the legislature decided to form the Alberta Energy and Utilities Board, it did not see fit to modify the PUBA or the GUA to provide the new Board with the power to allo-cate the proceeds of a sale even though the con-troversy surrounding this issue was full-blown (see, e.g., Re Alberta Government Telephones, Alta. P.U.B., Decision No. E84081; Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84116). It is a well-established principle that the legislature is presumed to have a mastery of existing law, both common law and statute law (see Sullivan, at pp. 154-55). It is also presumed to have known all of the circumstances surrounding the adoption of new legislation.

Although the Board may seem to possess a va-riety of powers and functions, it is manifest from a reading of the AEUBA, the PUBA and the GUA that the principal function of the Board in respect of public utilities is the determination of rates. Its power to supervise the finances of these compa-nies and their operations, although wide, is in prac-tice incidental to fixing rates (see Milner, at p. 102; Brown, at p. 2-16.6). Estey J., speaking for the ma-jority of this Court in Atco Ltd., at p. 576, echoed this view when he said:

It is evident from the powers accorded to the Board by the legislature in both statutes mentioned above that the legislature has given the Board a mandate of the widest proportions to safeguard the public interest in the nature and quality of the service provided to the

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les entreprises de services publics. Un régime de régle-mentation aussi vaste doit, pour être efficace, compren-dre le droit de contrôler les réunions ou, pour reprendre l’expression du législateur, « l’union » des entreprises et installations existantes. Cela a sans aucun doute un rapport direct avec la fonction de fixation des tarifs qui constitue un des pouvoirs les plus importants attribués à la Commission. [Je souligne.]

Voici d’ailleurs comment la Commission décrit elle-même ses fonctions sur son site Internet (http://www.eub.gov.ab.ca/BBS/eubinfo/default.htm) :

[TRADUCTION] La Commission réglemente l’ex-ploitation sûre, responsable et efficiente des ressources énergétiques de l’Alberta — pétrole, gaz naturel, sables bitumineux, charbon et électricité — ainsi que les pipe-lines et les lignes de transport servant à l’acheminement vers les marchés. En ce qui a trait aux services publics, elle réglemente les tarifs des services de gaz naturel, d’électricité et d’eau appartenant au privé et le niveau de service y afférent, ainsi que les principaux réseaux de transport de gaz en Alberta, afin que les clients ob-tiennent des services sûrs et fiables à un prix juste et raisonnable. [Je souligne.]

Le processus par lequel la Commission fixe les tarifs est donc fondamental et son examen s’impose pour statuer sur la première prétention de la Ville.

2.3.3.2 Établissement des tarifs

La réglementation tarifaire a plusieurs objectifs — viabilité, équité et efficacité — qui expliquent le mode de fixation des tarifs :

[TRADUCTION] . . . l’entreprise réglementée doit être en mesure de financer ses activités et tout investissement nécessaire à la poursuite de ses activités. [. . .] L’équité est liée à la redistribution de la richesse dans la société. L’objectif de la viabilité suppose déjà que les actionnai-res ne doivent pas réaliser un « trop faible » rendement (défini comme la gratification requise pour assurer l’in-vestissement continu dans l’entreprise), alors que celui de l’équité implique qu’ils ne doivent pas obtenir un rendement « trop élevé ».

(R. Green et M. Rodriguez Pardina, Resetting Price Controls for Privatized Utilities : A Manual for Regulators (1999), p. 5)

Ces objectifs sont à l’origine d’un arran-gement économique et social appelé « pacte

community by the public utilities. Such an extensive regulatory pattern must, for its effectiveness, include the right to control the combination or, as the legisla-ture says, “the union” of existing systems and facilities. This no doubt has a direct relationship with the rate-fixing function which ranks high in the authority and functions assigned to the Board. [Emphasis added.]

In fact, even the Board itself, on its website (http://www.eub.gov.ab.ca/BBS/eubinfo/default.htm), de-scribes its functions as follows:

We regulate the safe, responsible, and efficient devel-opment of Alberta’s energy resources: oil, natural gas, oil sands, coal, and electrical energy; and the pipelines and transmission lines to move the resources to market. On the utilities side, we regulate rates and terms of serv-ice of investor-owned natural gas, electric, and water utility services, as well as the major intra-Alberta gas transmission system, to ensure that customers receive safe and reliable service at just and reasonable rates. [Emphasis added.]

The process by which the Board sets the rates is therefore central and deserves some attention in order to ascertain the validity of the City’s first argument.

2.3.3.2 Rate Setting

Rate regulation serves several aims — sustain-ability, equity and efficiency — which underlie the reasoning as to how rates are fixed:

. . . the regulated company must be able to finance its operations, and any required investment, so that it can continue to operate in the future. . . . Equity is related to the distribution of welfare among members of soci-ety. The objective of sustainability already implies that shareholders should not receive “too low” a return (and defines this in terms of the reward necessary to ensure continued investment in the utility), while equity im-plies that their returns should not be “too high”.

(R. Green and M. Rodriguez Pardina, Resetting Price Controls for Privatized Utilities: A Manual for Regulators (1999), at p. 5)

These goals have resulted in an economic and social arrangement dubbed the “regulatory

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réglementaire » qui garantit à tous les clients l’accès au service public à un prix raisonnable, sans plus, et qui, je l’explique plus loin, ne transmet aucun droit de propriété aux clients. Le pacte réglementaire ac-corde en fait aux entreprises réglementées le droit exclusif de vendre leurs services dans une région donnée à des tarifs leur permettant de réaliser un juste rendement au bénéfice de leurs actionnaires. En contrepartie de ce monopole, elles ont l’obliga-tion d’offrir un service adéquat et fiable à tous les clients d’un territoire donné et voient leurs tarifs et certaines de leurs activités assujettis à la régle-mentation (voir Black, p. 356-357; Milner, p. 101; Atco Ltd., p. 576; Northwestern Utilities Ltd. c. City of Edmonton, [1929] R.C.S. 186 (« Northwestern 1929 »), p. 192-193).

Par conséquent, lorsqu’il s’agit d’interpréter les vastes pouvoirs de la Commission, on ne peut faire abstraction de ce subtil compromis servant de toile de fond à l’interprétation contextuelle. L’objet de la législation est de protéger le client et l’investisseur (Milner, p. 101). Le pacte ne supprime pas le ca-ractère privé de l’entreprise. La Commission a es-sentiellement pour mandat d’établir une tarification qui accroît les avantages financiers des consomma-teurs et des investisseurs.

Elle tient son pouvoir de fixer les tarifs à la fois de la GUA (art. 16 et 17 et art. 36 à 45) et de la PUBA (art. 89 à 95). Il lui incombe de fixer des [TRADUCTION] « tarifs [. . .] justes et raisonnables » (PUBA, al. 89a); GUA, al. 36a)). Pour le faire, elle doit [TRADUCTION] « établi[r] une base tarifaire pour les biens du propriétaire » et « fixe[r] un juste rendement par rapport à cette base tarifaire » (GUA, par. 37(1)). Dans Northwestern Utilities Ltd. c. Ville d’Edmonton, [1979] 1 R.C.S. 684 (« Northwestern 1979 »), p. 691, notre Cour a décrit le processus comme suit :

La PUB approuve ou fixe pour les services publics des tarifs destinés à couvrir les dépenses et à permettre à l’entreprise d’obtenir un taux de rendement ou profit convenable. Le processus s’accomplit en deux étapes. Dans la première étape, la PUB établit une base de ta-rification en calculant le montant des fonds investis par la compagnie en terrains, usines et équipements, plus le montant alloué au fonds de roulement, sommes dont

compact”, which ensures that all customers have access to the utility at a fair price — nothing more. As I will further explain, it does not transfer onto the customers any property right. Under the regu-latory compact, the regulated utilities are given ex-clusive rights to sell their services within a specific area at rates that will provide companies the op-portunity to earn a fair return for their investors. In return for this right of exclusivity, utilities assume a duty to adequately and reliably serve all custom-ers in their determined territories, and are required to have their rates and certain operations regulated (see Black, at pp. 356-57; Milner, at p. 101; Atco Ltd., at p. 576; Northwestern Utilities Ltd. v. City of Edmonton, [1929] S.C.R. 186 (“Northwestern 1929”), at pp. 192-93).

Therefore, when interpreting the broad powers of the Board, one cannot ignore this well-balanced regulatory arrangement which serves as a backdrop for contextual interpretation. The object of the stat-utes is to protect both the customer and the inves-tor (Milner, at p. 101). The arrangement does not, however, cancel the private nature of the utility. In essence, the Board is responsible for maintaining a tariff that enhances the economic benefits to con-sumers and investors of the utility.

The Board derives its power to set rates from both the GUA (ss. 16, 17 and 36 to 45) and the PUBA (ss. 89 to 95). The Board is mandated to fix “just and reasonable . . . rates” (PUBA, s. 89(a); GUA, s. 36(a)). In the establishment of these rates, the Board is directed to “determine a rate base for the prop-erty of the owner” and “fix a fair return on the rate base” (GUA, s. 37(1)). This Court, in Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684 (“Northwestern 1979”), at p. 691, adopted the following description of the process:

The PUB approves or fixes utility rates which are estimated to cover expenses plus yield the utility a fair return or profit. This function is generally performed in two phases. In Phase I the PUB determines the rate base, that is the amount of money which has been in-vested by the company in the property, plant and equip-ment plus an allowance for necessary working capital all of which must be determined as being necessary to

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il faut établir la nécessité dans l’exploitation de l’en-treprise. C’est également à cette première étape qu’est calculé le revenu nécessaire pour couvrir les dépenses d’exploitation raisonnables et procurer un rendement convenable sur la base de tarification. Le total des dé-penses d’exploitation et du rendement donne un mon-tant appelé le revenu nécessaire. Dans une deuxième étape, les tarifs sont établis de façon à pouvoir produire, dans des conditions météorologiques normales, « le revenu nécessaire prévu ». Ces tarifs restent en vigueur tant qu’ils ne sont pas modifiés à la suite d’une nou-velle requête ou d’une plainte, ou sur intervention de la Commission. C’est également à cette seconde étape que les tarifs provisoires sont confirmés ou réduits et, dans ce dernier cas, qu’un remboursement est ordonné.

(Voir également Re Canadian Western Natural Gas Co., Alta. P.U.B., Décision no E84113, 12 oc-tobre 1984, p. 23; Re Union Gas Ltd. and Ontario Energy Board (1983), 1 D.L.R. (4th) 698 (C. div. Ont.), p. 701-702.)

Pour établir la base tarifaire, la Commission tient donc compte (GUA, par. 37(2)) :

[TRADUCTION]

a) du coût du bien lors de son affectation initiale à l’utilisation publique et de sa juste valeur d’acqui-sition pour le propriétaire du service de gaz, moins la dépréciation, l’amortissement et l’épuisement;

b) du capital nécessaire.

Le fait que l’on donne au service public la pos-sibilité de tirer un profit de la prestation du service et de bénéficier d’un juste rendement de son actif ne peut ni ne devrait l’empêcher d’encaisser le bé-néfice résultant de la vente d’un élément d’actif. L’entreprise n’est d’ailleurs pas non plus à l’abri de la perte pouvant en découler. Il ressort du libellé des dispositions précitées que les biens appartien-nent à l’entreprise de services publics. Droit de pro-priété sur les biens et droit au profit ou à la perte lors de leur réalisation vont de pair. L’investisseur s’attend à toucher le produit net, une fois tous les frais payés, soit l’équivalent de la valeur actualisée de l’investissement initial. Le versement aux clients d’une partie du produit net restant, à l’issue d’une nouvelle répartition, sape le processus d’investisse-ment : MacAvoy et Sidak, p. 244. À vrai dire, les

provide the utility service. The revenue required to pay all reasonable operating expenses plus provide a fair return to the utility on its rate base is also determined in Phase I. The total of the operating expenses plus the return is called the revenue requirement. In Phase II rates are set, which, under normal temperature condi-tions are expected to produce the estimates of “forecast revenue requirement”. These rates will remain in effect until changed as the result of a further application or complaint or the Board’s initiative. Also in Phase II ex-isting interim rates may be confirmed or reduced and if reduced a refund is ordered.

(See also Re Canadian Western Natural Gas Co., Alta. P.U.B., Decision No. E84113, October 12, 1984, at p. 23; Re Union Gas Ltd. and Ontario Energy Board (1983), 1 D.L.R. (4th) 698 (Ont. Div. Ct.), at pp. 701-2.)

Consequently, when determining the rate base, the Board is to give due consideration (GUA, s. 37(2)):

(a) to the cost of the property when first devoted to public use and to prudent acquisition cost to the owner of the gas utility, less depreciation, amorti-zation or depletion in respect of each, and

(b) to necessary working capital.

The fact that the utility is given the opportunity to make a profit on its services and a fair return on its investment in its assets should not and cannot stop the utility from benefiting from the profits which follow the sale of assets. Neither is the util-ity protected from losses incurred from the sale of assets. In fact, the wording of the sections quoted above suggests that the ownership of the assets is clearly that of the utility; ownership of the asset and entitlement to profits or losses upon its realization are one and the same. The equity investor expects to receive the net revenues after all costs are paid, equal to the present value of original investment at the time of that investment. The disbursement of some portions of the residual amount of net rev-enue, by after-the-fact reallocation to rate-paying customers, undermines that investment process:

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opérations de spéculation seraient encore plus fré-quentes si le service public et ses actionnaires ne touchaient pas le profit éventuel, car les investis-seurs s’attendraient à obtenir une meilleure prime de la seule manière alors possible, le rendement de la mise de fonds initiale; en outre, ils seraient moins disposés à courir un risque.

La Ville a-t-elle raison alors de prétendre que les clients ont un droit de propriété sur le service public? Absolument pas. Sinon, les principes fon-damentaux du droit des sociétés seraient dénatu-rés. En acquittant sa facture, le client paie pour le service réglementé un montant équivalant au coût du service et des ressources nécessaires. Il ne se porte pas implicitement acquéreur des biens des investisseurs. Le paiement n’emporte pas l’acqui-sition d’un droit de propriété ou de possession sur les biens. Le client acquitte le prix du service, à l’exclusion du coût de possession des biens eux-mêmes : [TRADUCTION] « Le client d’un service public n’en est pas le propriétaire puisqu’il n’a pas droit au reliquat des biens » : MacAvoy et Sidak, p. 245 (voir également p. 237). Le client n’a rien in-vesti. Les actionnaires, eux, ont investi des fonds et assument tous les risques car ils touchent le profit restant. Le client court seulement le [TRADUCTION] « risque que le prix change par suite de la modifi-cation (autorisée) du coût du service, ce qui n’arrive que périodiquement lors de la révision des tarifs par l’organisme de réglementation » (MacAvoy et Sidak, p. 245).

Je suis d’accord avec ce qu’affirme ATCO à ce sujet au par. 38 de son mémoire :

[TRADUCTION] Les biens en cause appartiennent au propriétaire du service public tout comme ses autres biens. Nul droit issu de la loi ou de l’equity n’est conféré ou transmis au client à l’égard d’un bien du fait de son affectation à un service public. Faute d’un tel droit, une appropriation, comme celle ordonnée par la Commission, a un effet confiscatoire . . .

Comme l’a si bien dit le juge Wittmann, de la Cour d’appel :

[TRADUCTION] Le client d’un service public paie un service, mais n’obtient aucun droit de propriété sur les

MacAvoy and Sidak, at p. 244. In fact, speculation would accrue even more often should the public utility, through its shareholders, not be the one to benefit from the possibility of a profit, as inves-tors would expect to receive a larger premium for their funds through the only means left available, the return on their original investment. In addition, they would be less willing to accept any risk.

Thus, can it be said, as alleged by the City, that the customers have a property interest in the util-ity? Absolutely not: that cannot be so, as it would mean that fundamental principles of corporate law would be distorted. Through the rates, the custom-ers pay an amount for the regulated service that equals the cost of the service and the necessary resources. They do not by their payment implic-itly purchase the asset from the utility’s investors. The payment does not incorporate acquiring own-ership or control of the utility’s assets. The rate-payer covers the cost of using the service, not the holding cost of the assets themselves: “A utility’s customers are not its owners, for they are not resid-ual claimants”: MacAvoy and Sidak, at p. 245 (see also p. 237). Ratepayers have made no investment. Shareholders have and they assume all risks as the residual claimants to the utility’s profit. Customers have only “the risk of a price change resulting from any (authorized) change in the cost of service. This change is determined only periodically in a tariff review by the regulator” (MacAvoy and Sidak, at p. 245).

In this regard, I agree with ATCO when it as-serts in its factum, at para. 38:

The property in question is as fully the private prop-erty of the owner of the utility as any other asset it owns. Deployment of the asset in utility service does not create or transfer any legal or equitable rights in that property for ratepayers. Absent any such interest, any taking such as ordered by the Board is confisca-tory . . . .

Wittmann J.A., at the Court of Appeal, said it best when he stated:

Consumers of utilities pay for a service, but by such payment, do not receive a proprietary right in the

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biens de cette entreprise. Lorsque le tarif établi corres-pond au prix du service pour la période considérée, le client n’acquiert à l’égard des biens non amortissables aucun droit fondé sur l’equity ou issu de la loi lorsqu’il n’a payé que pour l’utilisation de ces biens. [Je souligne; par. 64.]

Je suis entièrement d’accord. La Commission s’est méprise en confondant le droit des clients à un ser-vice sûr et efficace avec le droit sur les biens affec-tés à la prestation de ce service et dont l’entreprise est l’unique propriétaire. Alors que l’entreprise a été rémunérée pour le service fourni, les clients n’ont versé aucune contrepartie en échange du profit tiré de la vente des biens. L’argument voulant que les biens achetés soient pris en compte dans l’établis-sement de la base tarifaire ne doit pas embrouiller la question de savoir qui est le véritable titulaire du droit de propriété sur les biens et qui supporte les risques y afférents. Les biens comptent effective-ment parmi les facteurs considérés pour fixer les tarifs, et un service public ne peut vendre un bien affecté à la prestation du service pour réaliser un profit et, ce faisant, diminuer la qualité du service ou majorer son prix. Même si les biens du service public sont pris en compte dans l’établissement de la base tarifaire, les actionnaires sont les seuls tou-chés lorsque la vente donne lieu à un profit ou à une perte. L’entreprise absorbe les pertes et les gains, l’appréciation ou la dépréciation des biens, eu égard à la conjoncture économique et aux défaillances techniques imprévues, mais elle continue de four-nir un service fiable sur le plan de la qualité et du prix. Le client peut courir le risque que l’entreprise manque à ses obligations, mais cela ne lui donne pas droit au reliquat des biens. Sans m’appuyer in-dûment sur la jurisprudence américaine, je signale qu’aux États-Unis, l’arrêt de principe en la matière est Duquesne Light Co. c. Barasch, 488 U.S. 299 (1989), qui s’appuie sur le même principe que celui appliqué dans l’arrêt Market St. Ry. Co. c. Railroad Commission of State of California, 324 U.S. 548 (1945).

De plus, il faut reconnaître qu’une entreprise de services publics n’est pas une société d’État, une association d’assistance mutuelle, une coopérative ou une société mutuelle même si elle sert « l’intérêt public » en fournissant à la collectivité un service

assets of the utility company. Where the calculated rates represent the fee for the service provided in the relevant period of time, ratepayers do not gain equitable or legal rights to non-depreciable assets when they have paid only for the use of those assets. [Emphasis added; para. 64.]

I fully adopt this conclusion. The Board misdi-rected itself by confusing the interests of the cus-tomers in obtaining safe and efficient utility service with an interest in the underlying assets owned only by the utility. While the utility has been com-pensated for the services provided, the custom-ers have provided no compensation for receiving the benefits of the subject property. The argument that assets purchased are reflected in the rate base should not cloud the issue of determining who is the appropriate owner and risk bearer. Assets are indeed considered in rate setting, as a factor, and utilities cannot sell an asset used in the service to create a profit and thereby restrict the quality or increase the price of service. Despite the consid-eration of utility assets in the rate-setting process, shareholders are the ones solely affected when the actual profits or losses of such a sale are realized; the utility absorbs losses and gains, increases and decreases in the value of assets, based on economic conditions and occasional unexpected technical difficulties, but continues to provide certainty in service both with regard to price and quality. There can be a default risk affecting ratepayers, but this does not make ratepayers residual claimants. While I do not wish to unduly rely on American jurispru-dence, I would note that the leading U.S. case on this point is Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989), which relies on the same principle as was adopted in Market St. Ry. Co. v. Railroad Commission of State of California, 324 U.S. 548 (1945).

Furthermore, one has to recognize that utilities are not Crown entities, fraternal societies or coop-eratives, or mutual companies, although they have a “public interest” aspect which is to supply the public with a necessary service (in the present case,

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nécessaire (en l’occurrence, la distribution du gaz naturel). Son capital ne provient pas des pouvoirs publics ou des clients, mais d’investisseurs privés qui escomptent un rendement aussi élevé que celui offert par d’autres placements présentant les mêmes caractéristiques d’attractivité, de stabilité et de cer-titude (voir Northwestern 1929, p. 192). Les action-naires s’attendent donc nécessairement à toucher le gain ou à subir la perte résultant de l’aliénation d’un élément d’actif de l’entreprise, comme un ter-rain ou un bâtiment.

Il appert de l’analyse qui précède portant sur le droit de propriété que la Commission ne pouvait ef-fectuer un remboursement tacite en attribuant aux clients le profit tiré de la vente des biens au motif que les tarifs avaient été excessifs dans le passé. C’est pourquoi la première prétention de la Ville doit être rejetée. La Commission a tenté de remé-dier à une supposée rétribution excessive de l’entre-prise de services publics par ses clients. Or, aucune des lois applicables ne lui confère le pouvoir d’ef-fectuer un tel remboursement à partir d’une telle perception erronée. La jurisprudence des différen-tes provinces confirme que les organismes de régle-mentation n’ont pas le pouvoir de modifier les tarifs rétroactivement (Northwestern 1979, p. 691; Re Coseka Resources Ltd. and Saratoga Processing Co. (1981), 126 D.L.R. (3d) 705 (C.A. Alb.), p. 715, autorisation d’appel refusée, [1981] 2 R.C.S. vii; Re Dow Chemical Canada Inc. (C.A.), p. 734-735). Qui plus est, on ne peut même pas dire qu’il y a eu paiement excessif : la tarification est un proces-sus conjectural où clients et actionnaires assument ensemble leur part du risque lié aux activités de l’entreprise de services publics (voir MacAvoy et Sidak, p. 238-239).

2.3.3.3 Le pouvoir d’imposer des conditions

La Ville soutient en second lieu que le pouvoir d’attribuer le produit de la vente des biens d’un service public est nécessairement accessoire aux pouvoirs exprès que confèrent à la Commission l’AEUBA, la GUA et la PUBA. Elle fait valoir que la Commission a nécessairement ce pouvoir lors-qu’elle exerce celui — discrétionnaire — d’autori-ser ou non la vente d’éléments d’actifs, puisqu’elle

the provision of natural gas). The capital invested is not provided by the public purse or by the custom-ers; it is injected into the business by private parties who expect as large a return on the capital invested in the enterprise as they would receive if they were investing in other securities possessing equal fea-tures of attractiveness, stability and certainty (see Northwestern 1929, at p. 192). This prospect will necessarily include any gain or loss that is made if the company divests itself of some of its assets, i.e., land, buildings, etc.

From my discussion above regarding the prop-erty interest, the Board was in no position to proceed with an implicit refund by allocating to ratepayers the profits from the asset sale be-cause it considered ratepayers had paid excessive rates for services in the past. As such, the City’s first argument must fail. The Board was seek-ing to rectify what it perceived as a historic over- compensation to the utility by ratepayers. There is no power granted in the various statutes for the Board to execute such a refund in respect of an errone-ous perception of past over-compensation. It is well established throughout the various provinces that utilities boards do not have the authority to retro-actively change rates (Northwestern 1979, at p. 691; Re Coseka Resources Ltd. and Saratoga Processing Co. (1981), 126 D.L.R. (3d) 705 (Alta. C.A.), at p. 715, leave to appeal refused, [1981] 2 S.C.R. vii; Re Dow Chemical Canada Inc. (C.A.), at pp. 734-35). But more importantly, it cannot even be said that there was over-compensation: the rate-setting process is a speculative procedure in which both the ratepayers and the shareholders jointly carry their share of the risk related to the business of the utility (see MacAvoy and Sidak, at pp. 238-39).

2.3.3.3 The Power to Attach Conditions

As its second argument, the City submits that the power to allocate the proceeds from the sale of the utility’s assets is necessarily incidental to the express powers conferred on the Board by the AEUBA, the GUA and the PUBA. It argues that the Board must necessarily have the power to allo-cate sale proceeds as part of its discretionary power to approve or refuse to approve a sale of assets. It

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peut assortir de toute condition l’ordonnance auto-risant la vente. Je ne suis pas d’accord.

La Ville semble tenir pour acquis que la doctrine de la compétence par déduction nécessaire s’appli-que tout autant aux pouvoirs « définis largement » qu’à ceux qui sont « biens circonscrits ». Ce ne sau-rait être le cas. Dans sa décision Re Consumers’ Gas Co., E.B.R.O. 410-II/411-II/412-II, 23 mars 1987, par. 4.73, la Commission de l’énergie de l’On-tario a énuméré les situations dans lesquelles s’ap-plique la doctrine de la compétence par déduction nécessaire :

[TRADUCTION]

* la compétence alléguée est nécessaire à la réalisa-tion des objectifs du régime législatif et essentielle à l’exécution du mandat de la Commission;

* la loi habilitante ne confère pas expressément le pouvoir de réaliser l’objectif législatif;

* le mandat de la Commission est suffisamment large pour donner à penser que l’intention du législateur était de lui conférer une compétence tacite;

* la Commission n’a pas à exercer la compétence alléguée en s’appuyant sur des pouvoirs expressé-ment conférés, démontrant ainsi l’absence de né-cessité;

* le législateur n’a pas envisagé la question et ne s’est pas prononcé contre l’octroi du pouvoir à la Com-mission.

(Voir également Brown, p. 2-16.3.)

Il est donc clair que la doctrine de la compétence par déduction nécessaire sera moins utile dans le cas de pouvoirs largement définis que dans celui de pouvoirs bien circonscrits. Les premiers seront nécessairement interprétés de manière à ne s’appli-quer qu’à ce qui est rationnellement lié à l’objet de la réglementation. C’est ce qu’explique la profes-seure Sullivan, à la p. 228 :

[TRADUCTION] En pratique, toutefois, l’analyse téléo-logique rend les pouvoirs conférés aux organismes ad-ministratifs presque infiniment élastiques. Un pouvoir bien circonscrit peut englober, par « déduction néces-saire », tout ce qui est requis pour que le responsable

submits that this results from the fact that the Board is allowed to attach any condition to an order it makes approving such a sale. I disagree.

The City seems to assume that the doctrine of jurisdiction by necessary implication applies to “broadly drawn powers” as it does for “narrowly drawn powers”; this cannot be. The Ontario Energy Board in its decision in Re Consumers’ Gas Co., E.B.R.O. 410-II/411-II/412-II, March 23, 1987, at para. 4.73, enumerated the circumstances when the doctrine of jurisdiction by necessary implication may be applied:

* [when] the jurisdiction sought is necessary to ac-complish the objectives of the legislative scheme and is essential to the Board fulfilling its mandate;

* [when] the enabling act fails to explicitly grant the power to accomplish the legislative objective;

* [when] the mandate of the Board is sufficiently broad to suggest a legislative intention to implicitly confer jurisdiction;

* [when] the jurisdiction sought must not be one which the Board has dealt with through use of expressly granted powers, thereby showing an ab-sence of necessity; and

* [when] the Legislature did not address its mind to the issue and decide against conferring the power upon the Board.

(See also Brown, at p. 2-16.3.)

In light of the above, it is clear that the doctrine of jurisdiction by necessary implication will be of less help in the case of broadly drawn powers than for narrowly drawn ones. Broadly drawn powers will necessarily be limited to only what is ration-ally related to the purpose of the regulatory frame-work. This is explained by Professor Sullivan, at p. 228:

In practice, however, purposive analysis makes the powers conferred on administrative bodies almost in-finitely elastic. Narrowly drawn powers can be under-stood to include “by necessary implication” all that is needed to enable the official or agency to achieve the

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ou l’organisme puisse accomplir l’objet de son octroi. À l’inverse, on considère qu’un pouvoir largement défini vise uniquement ce qui est rationnellement lié à son objet. Il s’ensuit qu’un pouvoir a une portée qui aug-mente ou diminue au besoin, en fonction de son objet. [Je souligne.]

En l’espèce, l’art. 15 de l’AEUBA, qui permet à la Commission d’imposer des conditions supplé-mentaires dans le cadre d’une ordonnance, paraît à première vue conférer un pouvoir dont la portée est infiniment élastique. J’estime cependant que la Ville ne saurait y avoir recours pour accroître les pouvoirs que le par. 26(2) de la GUA confère à la Commission. Notre Cour doit interpréter le par. 15(3) de l’AEUBA conformément à l’objet du par. 26(2).

Dans leur article, MacAvoy et Sidak avancent trois raisons principales d’exiger qu’une vente soit autorisée par la Commission (p. 234-236) :

1. éviter que l’entreprise de services publics ne diminue qualitativement ou quantitativement le service réglementé et ne cause de la sorte un préjudice aux clients;

2. garantir que l’entreprise maximisera l’ensem-ble des avantages financiers tirés de ses activi-tés, et non seulement ceux destinés à certains groupes d’intérêt ou d’autres intéressés;

3. éviter précisément que les investisseurs ne soient favorisés.

Par conséquent, pour qu’un organisme de régle-mentation ait le pouvoir d’attribuer le produit d’une vente, la preuve doit établir que ce pouvoir lui est nécessaire dans les faits pour atteindre les objec-tifs de la loi, ce qui n’est pas le cas en l’espèce (voir l’arrêt Loi sur l’Office national de l’énergie (Can.) (Re), [1986] 3 C.F. 275 (C.A.)). Pour satisfaire aux trois exigences susmentionnées, il n’est pas néces-saire que la Commission détermine qui touchera le produit de la vente. Le volet intérêt public ne peut à lui seul lui conférer le pouvoir d’attribuer la totalité du profit tiré de la vente de biens. En fait, il n’est pas nécessaire à l’accomplissement de son mandat qu’elle puisse ordonner à l’entreprise de services

purpose for which the power was granted. Conversely, broadly drawn powers are understood to include only what is rationally related to the purpose of the power. In this way the scope of the power expands or contracts as needed, in keeping with the purpose. [Emphasis added.]

In the case at bar, s. 15 of the AEUBA, which allows the Board to impose additional conditions when making an order, appears at first glance to be a power having infinitely elastic scope. However, in my opinion, the attempt by the City to use it to augment the powers of the Board in s. 26(2) of the GUA must fail. The Court must construe s. 15(3) of the AEUBA in accordance with the purpose of s. 26(2).

MacAvoy and Sidak, in their article, at pp. 234-36, suggest three broad reasons for the requirement that a sale must be approved by the Board:

1. It prevents the utility from degrading the qual-ity, or reducing the quantity, of the regulated service so as to harm consumers;

2. It ensures that the utility maximizes the aggre-gate economic benefits of its operations, and not merely the benefits flowing to some interest group or stakeholder; and

3. It specifically seeks to prevent favoritism toward investors.

Consequently, in order to impute jurisdiction to a regulatory body to allocate proceeds of a sale, there must be evidence that the exercise of that power is a practical necessity for the regulatory body to accomplish the objects prescribed by the legislature, something which is absent in this case (see National Energy Board Act (Can.) (Re), [1986] 3 F.C. 275 (C.A.)). In order to meet these three goals, it is not necessary for the Board to have con-trol over which party should benefit from the sale proceeds. The public interest component cannot be said to be sufficient to impute to the Board the power to allocate all the profits pursuant to the sale of assets. In fact, it is not necessary for the Board in

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publics de céder la plus grande partie du produit de la vente en contrepartie de l’autorisation accor-dée. La Commission dispose, dans les limites de sa compétence, d’autres moyens que l’appropriation du produit de la vente, le plus évident étant le refus d’autoriser une vente qui, à son avis, nuira à la qua-lité ou à la quantité des services offerts ou occa-sionnera des frais d’exploitation supplémentaires. Ce qui ne veut pas dire qu’elle ne peut jamais as-sujettir son autorisation à une condition. Par exem-ple, elle pourrait autoriser la vente à la condition que l’entreprise prenne des engagements en ce qui concerne le remplacement des biens en cause et leur rentabilité. Elle pourrait aussi exiger le réinvestis-sement d’une partie du produit de la vente dans l’entreprise afin de préserver un système d’exploi-tation moderne assurant une croissance optimale.

J’estime que permettre la confiscation du gain net tiré de la vente sous prétexte de protéger les clients et d’agir dans l’« intérêt public » c’est se mépren-dre grandement sur le pouvoir de la Commission d’autoriser ou non une vente et faire totalement abstraction des fondements économiques de la tari-fication exposés précédemment. S’approprier ainsi un produit net extraordinaire pour le compte des clients serait d’un opportunisme très poussé qui, en fin de compte, se traduirait par une hausse du coût du capital pour l’entreprise (MacAvoy et Sidak, p. 246). Au risque de me répéter, une entreprise de services publics est avant tout une entreprise privée dont l’objectif est de réaliser des profits. Cela n’est pas contraire au régime législatif, même si le pacte réglementaire modifie les principes économiques habituellement applicables, les lois habilitantes prévoyant explicitement différentes limitations. Aucune des trois lois pertinentes en l’espèce ne confère à la Commission le pouvoir d’attribuer le produit de la vente d’un bien et d’empiéter de la sorte sur le droit de propriété de l’entreprise de ser-vices publics.

Il est bien établi qu’une disposition législative susceptible d’avoir un effet confiscatoire doit être interprétée avec prudence afin de ne pas dépouiller les parties intéressées de leurs droits lorsque ce

carrying out its mandate to order the utility to sur-render the bulk of the proceeds from a sale of its property in order for that utility to obtain approval for a sale. The Board has other options within its jurisdiction which do not involve the appropriation of the sale proceeds, the most obvious one being to refuse to approve a sale that will, in the Board’s view, affect the quality and/or quantity of the serv-ice offered by the utility or create additional oper-ating costs for the future. This is not to say that the Board can never attach a condition to the approval of sale. For example, the Board could approve the sale of the assets on the condition that the utility company gives undertakings regarding the replace-ment of the assets and their profitability. It could also require as a condition that the utility reinvest part of the sale proceeds back into the company in order to maintain a modern operating system that achieves the optimal growth of the system.

In my view, allowing the Board to confiscate the net gain of the sale under the pretence of protect-ing rate-paying customers and acting in the “public interest” would be a serious misconception of the powers of the Board to approve a sale; to do so would completely disregard the economic rationale of rate setting, as I explained earlier in these rea-sons. Such an attempt by the Board to appropriate a utility’s excess net revenues for ratepayers would be highly sophisticated opportunism and would, in the end, simply increase the utility’s capital costs (MacAvoy and Sidak, at p. 246). At the risk of re-peating myself, a public utility is first and foremost a private business venture which has as its goal the making of profits. This is not contrary to the leg-islative scheme, even though the regulatory com-pact modifies the normal principles of economics with various restrictions explicitly provided for in the various enabling statutes. None of the three statutes applicable here provides the Board with the power to allocate the proceeds of a sale and therefore affect the property interests of the public utility.

It is well established that potentially confisca-tory legislative provision ought to be construed cautiously so as not to strip interested parties of their rights without the clear intention of the

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n’est pas l’intention manifeste du législateur (voir Sullivan, p. 400-403; Côté, p. 607-613; Pacific National Investments Ltd. c. Victoria (Ville), [2000] 2 R.C.S. 919, 2000 CSC 64, par. 26; Leiriao c. Val‑Bélair (Ville), [1991] 3 R.C.S. 349, p. 357; Banque Hongkong du Canada c. Wheeler Holdings Ltd., [1993] 1 R.C.S. 167, p. 197). Non seulement il n’est pas nécessaire, pour s’acquitter de sa mission, que la Commission ait le pouvoir d’attribuer à une partie le produit de la vente qu’elle autorise, mais toute conclusion contraire permettrait d’interpréter un pouvoir largement défini d’une façon qui em-piète sur la liberté économique de l’entreprise de services publics, dépouillant cette dernière de ses droits, ce qui irait à l’encontre des principes d’in-terprétation susmentionnés.

Si l’assemblée législative albertaine souhaite que les clients bénéficient des avantages financiers découlant de la vente des biens d’un service public, elle peut le prévoir expressément dans la loi, à l’ins-tar de certains États américains (le Connecticut, par exemple).

2.4 Autres considérations

Dans le cadre du pacte réglementaire, les clients sont protégés par la procédure d’établissement des tarifs à l’issue de laquelle la Commission doit rendre une décision pondérée. Il appert du dossier que la Ville n’a pas saisi la Commission d’une de-mande d’approbation du tarif général en réponse à celle présentée par ATCO afin d’obtenir l’autorisa-tion de vendre des biens. Néanmoins, si elle l’avait fait, la Commission aurait pu, de son propre chef, convoquer les parties intéressées à une audience afin de fixer de nouveaux tarifs justes et raisonna-bles tenant dûment compte de la situation financière nouvelle devant résulter de la vente (PUBA, al. 89a); GUA, art. 24, al. 36a), par. 37(3), art. 40) (texte en annexe).

2.5 À supposer que la Commission ait eu le pou‑voir de répartir le produit de la vente, a‑t‑elle exercé ce pouvoir de manière raisonnable?

Vu ma conclusion touchant à la compétence, il n’est pas nécessaire de déterminer si la Commission

legislation (see Sullivan, at pp. 400-403; Côté, at pp. 482-86; Pacific National Investments Ltd. v. Victoria (City), [2000] 2 S.C.R. 919, 2000 SCC 64, at para. 26; Leiriao v. Val‑Bélair (Town), [1991] 3 S.C.R. 349, at p. 357; Hongkong Bank of Canada v. Wheeler Holdings Ltd., [1993] 1 S.C.R. 167, at p. 197). Not only is the authority to attach a condi-tion to allocate the proceeds of a sale to a particular party unnecessary for the Board to accomplish its role, but deciding otherwise would lead to the con-clusion that a broadly drawn power can be inter-preted so as to encroach on the economic freedom of the utility, depriving it of its rights. This would go against the above principles of interpretation.

If the Alberta legislature wishes to confer on ratepayers the economic benefits resulting from the sale of utility assets, it can expressly provide for this in the legislation, as was done by some states in the United States (e.g., Connecticut).

2.4 Other Considerations

Under the regulatory compact, customers are protected through the rate-setting process, under which the Board is required to make a well- balanced determination. The record shows that the City did not submit to the Board a general rate review application in response to ATCO’s applica-tion requesting approval for the sale of the property at issue in this case. Nonetheless, if it chose to do so, this would not have stopped the Board, on its own initiative, from convening a hearing of the in-terested parties in order to modify and fix just and reasonable rates to give due consideration to any new economic data anticipated as a result of the sale (PUBA, s. 89(a); GUA, ss. 24, 36(a), 37(3), 40) (see Appendix).

2.5 If Jurisdiction Had Been Found, Was the Board’s Allocation Reasonable?

In light of my conclusion with regard to juris-diction, it is not necessary to determine whether

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a exercé son pouvoir discrétionnaire de façon rai-sonnable en répartissant le produit de la vente comme elle l’a fait. Toutefois, vu les motifs de mon collègue le juge Binnie, je me penche très briève-ment sur la question. Le règlement du pourvoi aurait été le même si j’avais conclu que la Commission avait ce pouvoir, car j’estime que la décision qu’elle a rendue sur son fondement ne satisfaisait pas à la norme de la raisonnabilité.

Je ne vois pas très bien comment on pourrait conclure que la répartition était raisonnable, la Commission ayant supposé à tort que les clients avaient acquis un droit de propriété sur les biens de l’entreprise du fait de la prise en compte de ceux-ci dans l’établissement des tarifs et ayant en outre conclu explicitement que la vente des biens ne causerait aucun préjudice aux clients. À mon avis, une cour de justice appelée à contrôler la dé-cision au fond doit se livrer à une analyse en deux étapes. Premièrement, elle doit déterminer si l’or-donnance était justifiée au vu de l’obligation de la Commission de protéger les clients (c.-à-d. l’ordon-nance était-elle nécessaire dans l’intérêt public?). Deuxièmement, dans l’affirmative, elle doit déter-miner si la Commission a bien appliqué la formule TransAlta (voir le par. 12 des présents motifs), qui renvoie à la différence entre la valeur comptable nette des biens et leur coût historique, d’une part, et à l’appréciation des biens, d’autre part. Pour les besoins de l’analyse, je ne vois dans la deuxième étape qu’une opération mathématique, rien de plus. Je ne crois pas que la formule TransAlta oriente la décision de la Commission d’attribuer ou non une partie du produit de la vente aux clients. Elle ne préside qu’à la détermination de ce qui sera at‑tribué et des modalités d’attribution (lorsqu’elle a décidé qu’il y avait lieu d’attribuer le produit de la vente). Il importe également de signaler que nul ne conteste que seule la valeur comptable figurant dans les états financiers de l’entreprise de services publics doit être utilisée pour le calcul.

Je le répète, la Commission n’était même pas jus-tifiée, à mon sens, d’exercer le pouvoir d’attribuer le produit de la vente. Suivant son raisonnement même, elle ne doit exercer son pouvoir discrétion-naire d’agir dans l’intérêt public que lorsque les

the Board’s exercise of discretion by allocating the sale proceeds as it did was reasonable. Nonetheless, given the reasons of my colleague Binnie J., I will address the issue very briefly. Had I not concluded that the Board lacked jurisdiction, my disposition of this case would have been the same, as I do not believe the Board met a reasonable standard when it exercised its power.

I am not certain how one could conclude that the Board’s allocation was reasonable when it wrongly assumed that ratepayers had acquired a proprietary interest in the utility’s assets because assets were a factor in the rate-setting process, and, moreover, when it explicitly concluded that no harm would ensue to customers from the sale of the asset. In my opinion, when reviewing the substance of the Board’s decision, a court must conduct a two-step analysis: first, it must determine whether the order was warranted given the role of the Board to protect the customers (i.e., was the order necessary in the public interest?); and second, if the first question is answered in the affirmative, a court must then ex-amine the validity of the Board’s application of the TransAlta Formula (see para. 12 of these reasons), which refers to the difference between net book value and original cost, on the one hand, and ap-preciation in the value of the asset on the other. For the purposes of this analysis, I view the second step as a mathematical calculation and nothing more. I do not believe it provides the criteria which guides the Board to determine if it should allocate part of the sale proceeds to ratepayers. Rather, it merely guides the Board on what to allocate and how to allocate it (if it should do so in the first place). It is also interesting to note that there is no discussion of the fact that the book value used in the calculation must be referable solely to the financial statements of the utility.

In my view, as I have already stated, the power of the Board to allocate proceeds does not even arise in this case. Even by the Board’s own reasoning, it should only exercise its discretion to act in the public interest when customers would be harmed

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clients subiraient ou seraient susceptibles de subir un préjudice. Or sa conclusion à ce sujet est claire : aucun préjudice ou risque de préjudice n’était asso-cié à l’opération projetée :

[TRADUCTION] Comme les mêmes services seront offerts à partir d’autres installations, et vu l’accepta-tion de ce transfert par les clients, la Commission est convaincue que la vente ne devrait pas avoir de réper-cussions sur le niveau de service. Quoi qu’il en soit, elle considère que le niveau de service offert pourra au besoin faire l’objet d’un examen et d’une mesure cor-rective dans le cadre d’une procédure ultérieure.

(Décision 2002-037, par. 54)

Après avoir déclaré que, tout bien considéré, les clients ne seraient pas lésés, la Commission a statué au vu des éléments de preuve présentés qu’ils réaliseraient apparemment des économies. Aucun droit légitime des clients ne pouvait ni ne devait être protégé par un refus d’autorisation ou un octroi assorti de la condition de répartir le pro-duit de la vente d’une certaine manière. Même si la Commission avait conclu à la possibilité que la vente ait un effet préjudiciable, comment pouvait-elle, à ce stade, attribuer le produit de la vente en fonction d’une perte éventuelle indéterminée? La mauvaise foi présumée d’ATCO qui paraît sous-tendre la détermination de la Commission à proté-ger le public contre un risque éventuel, en l’absence de tout fondement factuel, me préoccupe égale-ment. De toute manière, je l’ai déjà dit, cette déter-mination à protéger l’intérêt public est également difficile à concilier avec le pouvoir exprès de la Commission de prévenir tout préjudice causé aux clients en refusant d’autoriser la vente des biens d’un service public. Je rappelle que la Commission jouit d’un pouvoir discrétionnaire considérable dans l’établissement des tarifs futurs afin de proté-ger l’intérêt public.

Par conséquent, je suis d’avis que la Commission n’a pas cerné d’intérêt public à protéger et qu’aucun élément ne justifiait donc l’exercice de son pouvoir discrétionnaire d’attribuer le produit de la vente. Indépendamment de ma conclusion au sujet de la compétence de la Commission, je conclus que sa décision d’exercer son pouvoir discrétionnaire

or would face some risk of harm. But the Board was clear: there was no harm or risk of harm in the present situation:

With the continuation of the same level of service at other locations and the acceptance by customers re-garding the relocation, the Board is convinced there should be no impact on the level of service to customers as a result of the Sale. In any event, the Board considers that the service level to customers is a matter that can be addressed and remedied in a future proceeding if necessary.

(Decision 2002-037, at para. 54)

After declaring that the customers would not, on balance, be harmed, the Board maintained that, on the basis of the evidence filed, there appeared to be a cost savings to the customers. There was no le-gitimate customer interest which could or needed to be protected by denying approval of the sale, or by making approval conditional on a particular allocation of the proceeds. Even if the Board had found a possible adverse effect arising from the sale, how could it allocate proceeds now based on an unquantified future potential loss? Moreover, in the absence of any factual basis to support it, I am also concerned with the presumption of bad faith on the part of ATCO that appears to under-lie the Board’s determination to protect the public from some possible future menace. In any case, as mentioned earlier in these reasons, this determina-tion to protect the public interest is also difficult to reconcile with the actual power of the Board to prevent harm to ratepayers from occurring by simply refusing to approve the sale of a utility’s asset. To that, I would add that the Board has con-siderable discretion in the setting of future rates in order to protect the public interest, as I have al-ready stated.

In consequence, I am of the view that, in the present case, the Board did not identify any public interest which required protection and there was, therefore, nothing to trigger the exercise of the discretion to allocate the proceeds of sale. Hence, notwithstanding my conclusion on the first issue re-garding the Board’s jurisdiction, I would conclude

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de protéger l’intérêt public ne satisfaisait pas à la norme de la raisonnabilité.

3. Conclusion

Le rôle de notre Cour dans le présent pourvoi a été d’interpréter les lois habilitantes en tenant compte comme il se doit du contexte, de l’intention du législateur et de l’objectif législatif. Aller plus loin et conclure à l’issue d’une interprétation large que l’organisme administratif jouit de pouvoirs non nécessaires n’est pas conforme aux règles d’inter-prétation législative. Une telle approche est particu-lièrement dangereuse lorsqu’un droit de propriété est en jeu.

La Commission n’avait pas le pouvoir d’attribuer le produit de la vente d’un bien du service public; sa décision ne satisfaisait pas à la norme de la décision correcte. Par conséquent, je suis d’avis de rejeter le pourvoi de la Ville et d’accueillir le pourvoi inci-dent d’ATCO, avec dépens dans les deux instances. Je suis également d’avis d’annuler la décision de la Commission et de lui renvoyer l’affaire en lui enjoi-gnant d’autoriser la vente des biens d’ATCO et de reconnaître son droit au produit de la vente.

Version française des motifs de la juge en chef McLachlin et des juges Binnie et Fish rendus par

le juge Binnie (dissident) — L’intimée, ATCO Gas and Pipelines Ltd. (« ATCO »), fait partie d’une grande société qui, directement et par l’en-tremise de diverses filiales, exploite à la fois des entreprises réglementées et des entreprises non ré-glementées. L’Alberta Energy and Utilities Board (« Commission ») estime qu’il n’est pas dans l’inté-rêt public d’encourager les entreprises de services publics à jumeler leurs activités dans les deux sec-teurs. Plus particulièrement, elle a adopté des poli-tiques afin de dissuader les entreprises de services publics de faire de leur secteur réglementé un lieu de spéculation foncière et d’augmenter ainsi le ren-dement de leurs investissements indépendamment du cadre réglementaire. En attribuant une partie du profit à l’entreprise de services publics (et à ses ac-tionnaires), la Commission récompense la diligence avec laquelle elle se départit de biens qui ne sont

that the Board’s decision to exercise its discretion to protect the public interest did not meet a reason-able standard.

3. Conclusion

This Court’s role in this case has been one of interpreting the enabling statutes using the appro-priate interpretive tools, i.e., context, legislative in-tention and objective. Going further than required by reading in unnecessary powers of an adminis-trative agency under the guise of statutory interpre-tation is not consistent with the rules of statutory interpretation. It is particularly dangerous to adopt such an approach when property rights are at stake.

The Board did not have the jurisdiction to allo-cate the proceeds of the sale of the utility’s asset; its decision did not meet the correctness standard. Thus, I would dismiss the City’s appeal and allow ATCO’s cross-appeal, both with costs. I would also set aside the Board’s decision and refer the matter back to the Board to approve the sale of the prop-erty belonging to ATCO, recognizing that the pro-ceeds of the sale belong to ATCO.

The reasons of McLachlin C.J. and Binnie and Fish JJ. were delivered by

Binnie J. (dissenting) — The respondent ATCO Gas and Pipelines Ltd. (“ATCO”) is part of a large entrepreneurial company that directly and through various subsidiaries operates both regulated busi-nesses and unregulated businesses. The Alberta Energy and Utilities Board (“Board”) believes it not to be in the public interest to encourage util-ity companies to mix together the two types of un-dertakings. In particular, the Board has adopted policies to discourage utilities from using their reg-ulated businesses as a platform to engage in land speculation to increase their return on investment outside the regulatory framework. By awarding part of the profit to the utility (and its sharehold-ers), the Board rewards utilities for diligence in divesting themselves of assets that are no longer productive, or that could be more productively em-ployed elsewhere. However, by crediting part of the

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plus productifs ou qui pourraient l’être davantage s’ils étaient employés autrement. Toutefois, en por-tant une partie du profit au crédit de la base tari-faire de l’entreprise (c.-à-d. en la déduisant d’autres coûts), la Commission tente d’empêcher les entre-prises de services publics de céder à la tentation d’infléchir les décisions afférentes à leurs activités réglementées pour favoriser la réalisation de profits indus. De son point de vue, un tel compromis est né-cessaire dans l’intérêt du public, celui-ci conférant à ATCO un monopole dans un secteur d’activité. Dans la recherche de ce compromis, la Commission a autorisé ATCO à vendre un terrain et un entre-pôt situés au centre-ville de Calgary, mais refusé qu’elle conserve, au bénéfice de ses actionnaires, la totalité du profit découlant de l’appréciation du ter-rain dont le coût d’acquisition était pris en compte, depuis 1922, pour la tarification du gaz naturel. La Commission a ordonné que le profit tiré de la vente soit attribué à raison d’un tiers à ATCO et que les deux tiers servent à réduire ses coûts, contribuant à contenir toute hausse des tarifs et favorisant ainsi la clientèle.

J’ai lu avec intérêt les motifs de mon collègue le juge Bastarache, mais, en toute déférence, je ne suis pas d’accord avec ses conclusions. Comme nous le verrons, le par. 15(3) de l’Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A-17 (« AEUBA »), confère à la Commission le pouvoir d’assujettir la vente aux [TRADUCTION] « condi-tions supplémentaires qu’elle juge nécessaires dans l’intérêt public ». Il appartenait à la Commission de décider de la nécessité d’imposer des conditions dans l’intérêt public. La Cour d’appel de l’Alberta a infirmé la décision de la Commission. En toute déférence, j’estime que la Commission était mieux placée que la Cour d’appel ou que notre Cour pour juger de la nécessité de protéger l’intérêt public dans ce domaine. J’accueillerais le pourvoi et réta-blirais la décision de la Commission.

I. Analyse

La thèse d’ATCO se résume à ce qu’elle affirme au début de son mémoire :

[TRADUCTION] À défaut de tout droit de pro-priété et de tout préjudice causé à la clientèle par le

profit on the sale of such property to the utility’s rate base (i.e. as a set-off to other costs), the Board seeks to dampen any incentive for utilities to skew decisions in their regulated business to favour such profit taking unduly. Such a balance, in the Board’s view, is necessary in the interest of the public which allows ATCO to operate its utility business as a monopoly. In pursuit of this balance, the Board ap-proved ATCO’s application to sell land and ware-housing facilities in downtown Calgary, but denied ATCO’s application to keep for its shareholders the entire profit resulting from appreciation in the value of the land, whose cost of acquisition had formed part of the rate base on which gas rates had been calculated since 1922. The Board ordered the profit on the sale to be allocated one third to ATCO and two thirds as a credit to its cost base, thereby help-ing keep utility rates down, and to that extent ben-efiting ratepayers.

I have read with interest the reasons of my col-league Bastarache J. but, with respect, I do not agree with his conclusion. As will be seen, the Board has authority under s. 15(3) of the Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A-17 (“AEUBA”), to impose on the sale “any ad-ditional conditions that the Board considers nec-essary in the public interest”. Whether or not the conditions of approval imposed by the Board were necessary in the public interest was for the Board to decide. The Alberta Court of Appeal overruled the Board but, with respect, the Board is in a better position to assess necessity in this field for the pro-tection of the public interest than either that court or this Court. I would allow the appeal and restore the Board’s decision.

I. Analysis

ATCO’s argument boils down to the proposition announced at the outset of its factum:

In the absence of any property right or interest and of any harm to the customers arising from the

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dessaisissement, rien ne justifiait qu’on puise dans les poches de l’entreprise. En fait, le présent pourvoi doit être réglé au regard du droit de propriété.

(Mémoire de l’intimée, par. 2)

Pour les motifs qui suivent, je ne crois pas que le litige ressortisse au droit de propriété. ATCO a choisi d’investir dans un secteur réglementé, celui de la distribution du gaz, où le rendement est établi par la Commission, et non par le marché. À mon avis, la question en litige est essentiellement de savoir si la Cour d’appel de l’Alberta était justifiée de res-treindre les conditions que la Commission pouvait « juge[r] nécessaires dans l’intérêt public ».

A. Les pouvoirs légaux de la Commission

La première question qui se pose est celle de la compétence. D’où la Commission tient-elle le pou-voir de rendre l’ordonnance que conteste ATCO? La réponse de la Commission comporte trois volets. Le paragraphe 22(1) de la Gas Utilities Act, R.S.A. 2000, ch. G-5 (« GUA »), prévoit entre autres que [TRADUCTION] « [l]a Commission assure la sur-veillance générale des services de gaz et de leurs propriétaires . . . ». Selon la Commission, cette dis-position lui confère le vaste pouvoir d’établir des politiques qui débordent le cadre du règlement de demandes au cas par cas (approbation de tarifs, etc.). Élément plus pertinent encore, le sous-al. 26(2)d)(i) de la même loi interdit à l’entreprise réglementée de vendre ses biens, de les louer ou de les grever par ailleurs sans l’autorisation de la Commission. (Voir dans le même sens le sous-al. 101(2)d)(i) de la Public Utilities Board Act, R.S.A. 2000, ch. P-45.) Tous conviennent que cette limitation s’applique à la vente projetée par ATCO du terrain et de l’entre-pôt situés au centre-ville de Calgary et que si les cir-constances l’avaient justifié, la Commission aurait pu simplement refuser son autorisation. En l’espèce, la Commission a décidé d’autoriser la vente et de l’assujettir à certaines conditions. Elle a statué que le pouvoir plus large de refuser d’autoriser la vente englobait celui, plus restreint, de l’autoriser en l’as-sujettissant à certaines conditions :

[TRADUCTION] Dans certaines circonstances, la Commission a clairement le pouvoir d’empêcher une

withdrawal from utility service, there was no proper ground for reaching into the pocket of the utility. In es-sence this case is about property rights.

(Respondent’s factum, at para. 2)

For the reasons which follow I do not believe the case is about property rights. ATCO chose to make its investment in a regulated industry. The return on investment in the regulated gas industry is fixed by the Board, not the free market. In my view, the es-sential issue is whether the Alberta Court of Appeal was justified in limiting what the Board is allowed to “conside[r] necessary in the public interest”.

A. The Board’s Statutory Authority

The first question is one of jurisdiction. What gives the Board the authority to make the order ATCO complains about? The Board’s answer is threefold. Section 22(1) of the Gas Utilities Act, R.S.A. 2000, c. G-5 (“GUA”), provides in part that “[t]he Board shall exercise a general supervi-sion over all gas utilities, and the owners of them . . .”. This, the Board says, gives it a broad juris-diction to set policies that go beyond its specific powers in relation to specific applications, such as rate setting. Of more immediate pertinence, s. 26(2)(d)(i) of the same Act prohibits the regulated utility from selling, leasing or otherwise encum-bering any of its property without the Board’s ap-proval. (To the same effect, see s. 101(2)(d)(i) of the Public Utilities Board Act, R.S.A. 2000, c. P-45.) It is common ground that this restraint on alien-ation of property applies to the proposed sale of ATCO’s land and warehouse facilities in down-town Calgary, and that the Board could, in appro-priate circumstances, simply have denied ATCO’s application for approval of the sale. However, the Board was of the view to allow the sale subject to conditions. The Board ruled that the greater power (i.e. to deny the sale) must include the lesser (i.e. to allow the sale, subject to conditions):

In appropriate circumstances, the Board clearly has the power to prevent a utility from disposing of its property.

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entreprise de services publics de se départir d’un bien. Il s’ensuit donc qu’elle peut autoriser une aliénation et l’assortir de conditions susceptibles de bien protéger les intérêts du consommateur.

(Décision 2002-037, [2002] A.E.U.B.D. No. 52 (QL), par. 47)

Il n’est toutefois pas nécessaire qu’elle s’appuie sur un tel pouvoir implicite pour établir des condi-tions. Je le répète, le par. 15(3) de l’AEUBA confère explicitement à la Commission le pouvoir de [TRADUCTION] « rendre toute autre ordonnance et [d’]imposer les conditions supplémentaires qu’elle juge nécessaires dans l’intérêt public ». Dans Atco Ltd. c. Calgary Power Ltd., [1982] 2 R.C.S. 557, p. 576, le juge Estey a dit au nom des juges majoritaires :

Il ressort des pouvoirs que le législateur a accordé[s] à la Commission dans les deux lois mentionnées ci-dessus, qu’il a investi la Commission du mandat très gé-néral de veiller aux intérêts du public quant à la nature et à la qualité des services rendus à la collectivité par les entreprises de services publics. [Je souligne.]

Le paragraphe 15(3) dispose que les conditions fixées sont celles que la Commission juge néces-saires. Évidemment, son pouvoir discrétionnaire n’est pas illimité. Elle doit l’exercer de bonne foi et aux fins auxquelles il est conféré : S.C.F.P. c. Ontario (Ministre du Travail), [2003] 1 R.C.S. 539, 2003 CSC 29. ATCO prétend que la Commission a même outrepassé un aussi large pouvoir. Voici un extrait de son mémoire :

[TRADUCTION] Nul droit issu de la loi ou de l’equity n’est conféré ou transmis au client à l’égard d’un bien du fait de son affectation à un service public. Faute d’un tel droit, une appropriation, comme celle ordonnée par la Commission, a un effet confiscatoire . . .

(Mémoire de l’intimée, par. 38)

À mon avis, toutefois, la Commission devait déter-miner la hauteur du profit qu’ATCO était admise à tirer de son investissement dans une entreprise réglementée.

Subsidiairement, ATCO soutient que la Commission s’est indûment livrée à une

In the Board’s view it also follows that the Board can approve a disposition subject to appropriate conditions to protect customer interests.

(Decision 2002-037, [2002] A.E.U.B.D. No. 52 (QL), at para. 47)

There is no need to rely on any such implicit power to impose conditions, however. As stated, the Board’s explicit power to impose conditions is found in s. 15(3) of the AEUBA, which authorizes the Board to “make any further order and impose any additional conditions that the Board consid-ers necessary in the public interest”. In Atco Ltd. v. Calgary Power Ltd., [1982] 2 S.C.R. 557, at p. 576, Estey J., for the majority, stated:

It is evident from the powers accorded to the Board by the legislature in both statutes mentioned above that the legislature has given the Board a mandate of the widest proportions to safeguard the public interest in the nature and quality of the service provided to the community by the public utilities. [Emphasis added.]

The legislature says in s. 15(3) that the conditions are to be what the Board considers necessary. Of course, the discretionary power to impose condi-tions thus granted is not unlimited. It must be ex-ercised in good faith for its intended purpose: C.U.P.E. v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, 2003 SCC 29. ATCO says the Board overstepped even these generous limits. In ATCO’s submission:

Deployment of the asset in utility service does not create or transfer any legal or equitable rights in that property for ratepayers. Absent any such interest, any taking such as ordered by the Board is confisca-tory . . . .

(Respondent’s factum, at para. 38)

In my view, however, the issue before the Board was how much profit ATCO was entitled to earn on its investment in a regulated utility.

ATCO argues in the alternative that the Board engaged in impermissible “retroactive rate

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« tarification rétroactive ». Or, l’Alberta a opté pour la tarification selon le « coût historique » et personne ne laisse entendre que, depuis plus de 80 ans, la Commission applique à tort cette méthode qui prend en compte l’investissement d’ATCO pour l’établissement de sa base tarifaire. La Commission a proposé de tenir compte d’une partie du profit es-compté pour fixer les tarifs ultérieurs. L’ordonnance a un effet prospectif, et non rétroactif. La fixation du rendement futur et la surveillance générale [TRADUCTION] « des services de gaz et de leurs propriétaires » relevaient sans conteste du mandat légal de la Commission.

B. La décision de la Commission

ATCO soutient que la décision de la Commission doit être considérée isolément, sans égard aux attri-butions de l’organisme en matière de tarification. Toutefois, je ne crois pas que l’audience tenue pour l’application de l’art. 26 puisse être ainsi dissociée des attributions générales de la Commission à titre d’organisme de réglementation. Dans son mémoire, ATCO fait valoir ce qui suit :

[TRADUCTION] . . . la demande d’[atco] n’avait rien à voir avec l’approbation de tarifs et la Commission n’était pas engagée dans un processus de tarification (à supposer que cela ait pu la justifier, ce qui est nié).

(Mémoire de l’intimée, par. 98)

Il semble que la Commission ait entendu la de-mande d’autorisation fondée sur l’art. 26 indépen-damment d’une demande d’approbation de tarifs en raison, premièrement, de la manière dont ATCO avait engagé l’instance et, deuxièmement, de l’ap-probation de cette démarche par la Cour d’ap-pel de l’Alberta dans TransAlta Utilities Corp. c. Public Utilities Board (Alta.) (1986), 68 A.R. 171 (« TransAlta (1986) »). Il s’agit de l’arrêt de prin-cipe albertain en ce qui concerne l’attribution du profit réalisé lors de l’aliénation d’un bien affecté à un service public, et la Cour d’appel y a énoncé la formule TransAlta que la Commission a appliquée en l’espèce. Voici ce qu’a dit le juge Kerans à ce sujet (p. 174) :

[TRADUCTION] Je signale en passant que je comprends maintenant que toutes les parties ont intérêt à ce que

making”. But Alberta is an “original cost” juris-diction, and no one suggests that the Board’s origi-nal cost rate making during the 80-plus years this investment has been reflected in ATCO’s ratebase was wrong. The Board proposed to apply a por-tion of the expected profit to future rate making. The effect of the order is prospective, not retroac-tive. Fixing the going-forward rate of return as well as general supervision of “all gas utilities, and the owners of them” were matters squarely within the Board’s statutory mandate.

B. The Board’s Decision

ATCO argues that the Board’s decision should be seen as a stand-alone decision divorced from its rate-making responsibilities. However, I do not agree that the hearing under s. 26 of the GUA can be isolated in this way from the Board’s general regulatory responsibilities. ATCO argues in its factum that

the subject application by [atco] to the Board did not concern or relate to a rate application, and the Board was not engaged in fixing rates (if that could provide any justification, which is denied).

(Respondent’s factum, at para. 98)

It seems the Board proceeded with the s. 26 ap-proval hearing separately from a rate setting hear-ing firstly because ATCO framed the proceeding in that way and secondly because this is the proce-dure approved by the Alberta Court of Appeal in TransAlta Utilities Corp. v. Public Utilities Board (Alta.) (1986), 68 A.R. 171. That case (which I will refer to as TransAlta (1986)) is a leading Alberta authority dealing with the allocation of the gain on the disposal of utility assets and the source of what is called the TransAlta Formula applied by the Board in this case. Kerans J.A. had this to say, at p. 174:

I observe parenthetically that I now appreciate that it suits the convenience of everybody involved to resolve

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les questions de cette nature soient, si possible, résolues avant l’audition de la demande générale de majoration tarifaire de manière à ne pas alourdir cette procédure déjà complexe.

Fort de ces propos de la Cour d’appel de l’Al-berta, j’accorderais peu d’importance à l’argument procédural d’ATCO. Nous le verrons, la décision de la Commission est directement liée à la tari-fication générale, les deux tiers du profit étant déduits des coûts à partir desquels sont ultime-ment déterminés les besoins en revenus d’ATCO. Je l’ai déjà dit, le profit tiré de la vente des biens d’ATCO situés à Calgary constituera une rentrée courante (et non historique), et si la décision de la Commission est confirmée, les deux tiers du profit tiré de l’opération seront pris en compte pour la tarification ultérieure (et non de manière rétroactive).

L’audience tenue pour l’application de l’art. 26 s’est déroulée en deux étapes. La Commission a d’abord décidé qu’elle ne refusait pas d’autoriser la vente projetée vu l’« absence de préjudice », un cri-tère qu’elle avait élaboré au fil des ans, mais qui n’était pas prévu dans les lois (décision 2001-78). Cependant, elle a lié son autorisation à l’examen subséquent des conséquences financières. Comme elle l’a elle-même fait remarquer :

[TRADUCTION] Dans la décision 2001-78, la Commission a autorisé la vente parce qu’il avait été établi que les clients ne s’opposaient pas à l’opération, qu’ils ne su-biraient pas une diminution de service et que la vente ne risquait pas de leur infliger un préjudice financier qui ne pourrait faire l’objet d’un examen dans le cadre d’une procédure ultérieure. Elle a donc conclu à l’ab-sence de préjudice et décidé que la vente pouvait avoir lieu. [Soulignements et italiques ajoutés.]

(Décision 2002-037, par. 13)

ATCO fait abstraction de ce qui figure en italique dans cet extrait. Elle soutient que la Commission était functus officio après la première étape de l’audience. Or, elle avait elle-même consenti au déroulement de la procédure en deux étapes, et la deuxième partie de l’audience a effectivement été consacrée à sa demande d’attribution du profit tiré de la vente.

issues of this sort, if possible, before a general rate hearing so as to lessen the burden on that already com-plex procedure.

Given this encouragement from the Alberta Court of Appeal, I would place little significance on ATCO’s procedural point. As will be seen, the Board’s ruling is directly tied into the setting of general rates because two thirds of the profit is taken into account as an offset to ATCO’s costs from which its revenue requirement is ultimately derived. As stated, ATCO’s profit on the sale of the Calgary property will be a current (not his-torical) receipt and, if the Board has its way, two thirds of it will be applied to future (not retroac-tive) rate making.

The s. 26 hearing proceeded in two phases. The Board first determined that it would not deny its approval to the proposed sale as it met a “no-harm test” devised over the years by Board practice (it is not to be found in the statutes) (Decision 2001-78). However, the Board linked its approval to subse-quent consideration of the financial ramifications, as the Board itself noted:

The Board approved the Sale in Decision 2001-78 based on evidence that customers did not object to the Sale [and] would not suffer a reduction in services nor would they be exposed to the risk of financial harm as a result of the Sale that could not be examined in a future pro‑ceeding. On that basis the Board determined that the no-harm test had been satisfied and that the Sale could proceed. [Underlining and italics added.]

(Decision 2002-037, at para. 13)

In effect, ATCO ignores the italicized words. It argues that the Board was functus after the first phase of its hearing. However, ATCO itself had agreed to the two-phase procedure, and indeed the second phase was devoted to ATCO’s own applica-tion for an allocation of the profits on the sale.

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Au cours de la deuxième étape de l’audition de la demande fondée sur l’art. 26, la Commission a attribué un tiers du profit net à ATCO et deux tiers à la base tarifaire (au bénéfice des clients). Elle a exposé les raisons pour lesquelles elle jugeait cette répartition nécessaire à la protection de l’intérêt public. Elle a expliqué qu’il fallait mettre en balance les intérêts des actionnaires et ceux des clients dans le cadre de ce qu’elle a appelé [TRADUCTION] « le pacte réglementaire » (décision 2002-037, par. 44). Selon la Commission :

a) il faut mettre en balance les intérêts des clients et ceux des propriétaires de l’entreprise de services publics;

b) les décisions visant l’entreprise doivent tenir compte des intérêts des deux parties;

c) attribuer aux clients la totalité du profit tiré de la vente n’inciterait pas l’entreprise à accroître son efficacité et à réduire ses coûts;

d) en attribuer la totalité à l’entreprise pourrait encourager la spéculation à l’égard de biens non amortissables ou l’identification des biens dont la valeur s’est accrue et leur aliénation pour des motifs étrangers à l’intérêt véritable de l’entreprise réglementée.

Pour les besoins du présent pourvoi, il importe de rappeler les considérations de principe invo-quées par la Commission :

[TRADUCTION] Il serait avantageux pour les clients de leur attribuer la totalité du profit net tiré de la vente du terrain et des bâtiments, mais cela pourrait dissua-der la société de soumettre son fonctionnement à une analyse continue afin de trouver des moyens d’amélio-rer son rendement et de réduire ses coûts de manière constante.

À l’inverse, attribuer à l’entreprise réglementée la totalité du profit net pourrait encourager la spéculation à l’égard de biens non amortissables ou l’identification des biens dont la valeur s’est déjà accrue et leur aliéna-tion.

La Commission croit qu’une certaine mise en balance des intérêts des deux parties permettra la

In the second phase of the s. 26 approval hear-ing, the Board allocated one third of the net gain to ATCO and two thirds to the rate base (which would benefit ratepayers). The Board spelled out why it considered these conditions to be necessary in the public interest. The Board explained that it was necessary to balance the interests of both share-holders and ratepayers within the framework of what it called “the regulatory compact” (Decision 2002-037, at para. 44). In the Board’s view:

(a) there ought to be a balancing of the interests of the ratepayers and the owners of the utility;

(b) decisions made about the utility should be driven by both parties’ interests;

(c) to award the entire gain to the ratepayers would deny the utility an incentive to increase its effi-ciency and reduce its costs; and

(d) to award the entire gain to the utility might en-courage speculation in non-depreciable property or motivate the utility to identify and dispose of properties which have appreciated for reasons other than the best interest of the regulated business.

For purposes of this appeal, it is important to set out the Board’s policy reasons in its own words:

To award the entire net gain on the land and build-ings to the customers, while beneficial to the custom-ers, could establish an environment that may deter the process wherein the company continually assesses its operation to identify, evaluate, and select options that continually increase efficiency and reduce costs.

Conversely, to award the entire net gain to the com-pany may establish an environment where a regulated utility company might be moved to speculate in non-depreciable property or result in the company being motivated to identify and sell existing properties where appreciation has already occurred.

The Board believes that some method of balanc-ing both parties’ interests will result in optimization

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réalisation optimale des objectifs de l’entreprise dans son propre intérêt et dans celui de ses clients. Par consé-quent, elle estime équitable en l’espèce et conforme à ses décisions antérieures de partager selon la formule TransAlta le profit net tiré de la vente du terrain et des bâtiments. [Je souligne; par. 112-114.]

On a informé notre Cour que les deux tiers du profit attribués aux clients seraient déduits des coûts considérés pour l’établissement de la base ta-rifaire d’ATCO, puis amortis sur un certain nombre d’années.

C. La norme de contrôle

L’approche actuelle de notre Cour à l’égard de cette question épineuse a récemment été précisée par la juge en chef McLachlin dans l’arrêt Dr Q c. College of Physicians and Surgeons of British Columbia, [2003] 1 R.C.S. 226, 2003 CSC 19, par. 26 :

Selon l’analyse pragmatique et fonctionnelle, la norme de contrôle est déterminée en fonction de quatre facteurs contextuels — la présence ou l’absence dans la loi d’une clause privative ou d’un droit d’appel; l’ex-pertise du tribunal relativement à celle de la cour de révision sur la question en litige; l’objet de la loi et de la disposition particulière; la nature de la question — de droit, de fait ou mixte de fait et de droit. Les facteurs peuvent se chevaucher. L’objectif global est de cerner l’intention du législateur, sans perdre de vue le rôle constitutionnel des tribunaux judiciaires dans le main-tien de la légalité.

Je n’entends pas reprendre les propos de mon col-lègue le juge Bastarache à ce sujet. Nous convenons que la norme applicable en matière de compétence est celle de la décision correcte. Nous convenons également qu’en ce qui a trait à l’exercice de sa com-pétence par la Commission, une déférence accrue s’impose. Il ne peut être interjeté appel d’une déci-sion de la Commission que sur une question de droit ou de compétence. La Commission en sait bien da-vantage qu’une cour de justice sur les services de gaz et les limites qui doivent leur être imposées « dans l’intérêt public » lorsqu’ils effectuent des opérations relatives à des biens dont le coût est inclus dans la base tarifaire. De plus, il est difficile d’imagi-ner un pouvoir discrétionnaire plus vaste que celui

of business objectives for both the customer and the company. Therefore, the Board considers that sharing of the net gain on the sale of the land and buildings col-lectively in accordance with the TransAlta Formula is equitable in the circumstances of this application and is consistent with past Board decisions. [Emphasis added; paras. 112-14.]

The Court was advised that the two-third share allocated to ratepayers would be included in ATCO’s rate calculation to set off against the costs included in the rate base and amortized over a number of years.

C. Standard of Review

The Court’s modern approach to this vexed ques-tion was recently set out by McLachlin C.J. in Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19, at para. 26:

In the pragmatic and functional approach, the stand-ard of review is determined by considering four con-textual factors — the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and, the nature of the question — law, fact, or mixed law and fact. The factors may overlap. The overall aim is to discern legislative intent, keeping in mind the constitutional role of the courts in maintaining the rule of law.

I do not propose to cover the ground already set out in the reasons of my colleague Bastarache J. We agree that the standard of review on matters of jurisdiction is correctness. We also agree that the Board’s exercise of its jurisdiction calls for greater judicial deference. Appeals from the Board are lim-ited to questions of law or jurisdiction. The Board knows a great deal more than the courts about gas utilities, and what limits it is necessary to impose “in the public interest” on their dealings with assets whose cost is included in the rate base. Moreover, it is difficult to think of a broader discretion than that conferred on the Board to “impose any additional conditions that the Board considers necessary in the public interest” (s. 15(3)(d) of the AEUBA).

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— conféré à la Commission — d’[TRADUCTION] « imposer les conditions supplémentaires qu’elle juge nécessaires dans l’intérêt public » (al. 15(3)d) de l’AEUBA). L’élément subjectif de ce pouvoir (« qu’elle juge nécessaires »), l’expertise du dé-cideur et la nature de la décision (« dans l’intérêt public ») appellent à mon avis la plus grande défé-rence et l’application de la norme de la décision ma-nifestement déraisonnable.

En ce qui a trait à l’élément « qu’elle juge né-cessaires », le juge Martland a dit ce qui suit dans l’arrêt Calgary Power Ltd. c. Copithorne, [1959] R.C.S. 24, p. 34 :

[TRADUCTION] En l’espèce, il n’appartient pas à une cour de justice de déterminer si les terrains de l’intimé étaient ou non « nécessaires », mais bien si le ministre a « estimé » qu’ils l’étaient.

Voir également D. J. M. Brown et J. M. Evans, Judicial Review of Administrative Action in Canada (éd. feuilles mobiles), vol. 1, par. 14:2622 : « “Objective” and “Subjective” Grants of Dis‑ cretion ».

Comme l’a dit le juge Sopinka dans l’ar-rêt Fraternité unie des charpentiers et menui‑siers d’Amérique, section locale 579 c. Bradco Construction Ltd., [1993] 2 R.C.S. 316, p. 335, l’ex-pertise que possède un organisme de réglementa-tion est « de la plus haute importance pour ce qui est de déterminer l’intention du législateur quant au degré de retenue dont il faut faire preuve à l’égard de la décision d’un tribunal en l’absence d’une clause privative intégrale ». Il a ajouté :

Même lorsque la loi habilitante du tribunal prévoit ex-pressément l’examen par voie d’appel, comme c’était le cas dans l’affaire Bell Canada [c. Canada (Conseil de la radiodiffusion et des télécommunications canadien‑nes), [1989] 1 R.C.S. 1722], on a souligné qu’il y avait lieu pour le tribunal d’appel de faire preuve de retenue envers les opinions que le tribunal spécialisé de juridic-tion inférieure avait exprimées sur des questions rele-vant directement de sa compétence.

(Cette opinion incidente a été citée avec approba-tion dans l’arrêt Pezim c. Colombie‑Britannique (Superintendent of Brokers), [1994] 2 R.C.S. 557, p. 592.)

The identification of a subjective discretion in the decision maker (“the Board considers necessary”), the expertise of that decision maker and the nature of the decision to be made (“in the public interest”), in my view, call for the most deferential standard, patent unreasonableness.

As to the phrase “the Board considers neces-sary”, Martland J. stated in Calgary Power Ltd. v. Copithorne, [1959] S.C.R. 24, at p. 34:

The question as to whether or not the respondent’s lands were “necessary” is not one to be determined by the Courts in this case. The question is whether the Minister “deemed” them to be necessary.

See also D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf ed.), vol. 1, at para. 14:2622: “‘Objective’ and ‘Subjective’ Grants of Discretion”.

The expert qualifications of a regulatory Board are of “utmost importance in determining the in-tention of the legislator with respect to the degree of deference to be shown to a tribunal’s decision in the absence of a full privative clause”, as stated by Sopinka J. in United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd., [1993] 2 S.C.R. 316, at p. 335. He continued:

Even where the tribunal’s enabling statute provides explicitly for appellate review, as was the case in Bell Canada [v. Canada (Canadian Radio‑Television and Telecommunications Commission), [1989] 1 S.C.R. 1722], it has been stressed that deference should be shown by the appellate tribunal to the opinions of the specialized lower tribunal on matters squarely within its jurisdiction.

(This dictum was cited with approval in Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557, at p. 592.)

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L’exercice d’un pouvoir de réglementation « dans l’intérêt public » exige nécessairement la concilia-tion d’intérêts économiques divergents. Il est depuis longtemps établi que la question de savoir ce qui est « dans l’intérêt public » n’est pas véritablement une question de droit ou de fait, mais relève plutôt de l’opinion. Dans TransAlta (1986), la Cour d’appel de l’Alberta a fait (au par. 24) un parallèle entre la portée des mots « intérêt public » et celle de l’ex-pression bien connue « la commodité et les besoins du public » en citant l’arrêt Memorial Gardens Association (Canada) Ltd. c. Colwood Cemetery Co., [1958] R.C.S. 353, où notre Cour avait dit ce qui suit à la p. 357 :

[TRADUCTION] [L]a question de savoir si la commodité et les besoins du public nécessitent l’accomplissement de certains actes n’est pas une question de fait. C’est avant tout l’expression d’une opinion. Il faut évidemment que la décision de la Commission se fonde sur des faits mis en preuve, mais cette décision ne peut être prise sans que la discrétion administrative y joue un rôle important. En conférant à la Commission ce pouvoir discrétionnaire, la Législature a délégué à cet organisme la responsabilité de décider, dans l’intérêt du public . . . [Je souligne.]

Dans cet extrait, notre Cour reprenait l’opinion incidente du juge Rand dans l’arrêt Union Gas Co. of Canada Ltd. c. Sydenham Gas and Petroleum Co., [1957] R.C.S. 185, p. 190 :

[TRADUCTION] On a prétendu, et la Cour a semblé d’ac-cord, que l’appréciation de la commodité et des besoins du public est elle-même une question de fait, mais je ne puis souscrire à cette opinion : il ne s’agit pas de déter-miner si objectivement telle situation existe. La décision consiste à exprimer une opinion, en l’espèce, l’opinion du Comité et du Comité seulement. [Je souligne.]

Évidemment, même un pouvoir aussi vaste n’est pas absolu. Mais reconnaître qu’il puisse faire l’objet d’abus n’implique pas qu’il doive être res-treint. Je suis d’accord sur ce point avec l’avis ex-primé par le juge Reid (coauteur de R. F. Reid et H. David, Administrative Law and Practice (2e éd. 1978), et coéditeur de P. Anisman et R. F. Reid, Administrative Law Issues and Practice (1995)), dans la décision Re C.T.C. Dealer Holdings Ltd. and Ontario Securities Commission (1987), 59 O.R. (2d) 79 (C. div.), p. 97, au sujet des pouvoirs de la Commission des valeurs mobilières de l’Ontario :

A regulatory power to be exercised “in the public interest” necessarily involves accommodation of conflicting economic interests. It has long been rec-ognized that what is “in the public interest” is not really a question of law or fact but is an opinion. In TransAlta (1986), the Alberta Court of Appeal (at para. 24) drew a parallel between the scope of the words “public interest” and the well-known phrase “public convenience and necessity” in its citation of Memorial Gardens Association (Canada) Ltd. v. Colwood Cemetery Co., [1958] S.C.R. 353, where this Court stated, at p. 357:

[T]he question whether public convenience and neces-sity requires a certain action is not one of fact. It is pre-dominantly the formulation of an opinion. Facts must, of course, be established to justify a decision by the Commission but that decision is one which cannot be made without a substantial exercise of administrative discretion. In delegating this administrative discretion to the Commission the Legislature has delegated to that body the responsibility of deciding, in the public inter-est . . . . [Emphasis added.]

This passage reiterated the dictum of Rand J. in Union Gas Co. of Canada Ltd. v. Sydenham Gas and Petroleum Co., [1957] S.C.R. 185, at p. 190:

It was argued, and it seems to have been the view of the Court, that the determination of public convenience and necessity was itself a question of fact, but with that I am unable to agree: it is not an objective existence to be ascertained; the determination is the formulation of an opinion, in this case, the opinion of the Board and of the Board only. [Emphasis added.]

Of course even such a broad power is not untram-melled. But to say that such a power is capable of abuse does not lead to the conclusion that it should be truncated. I agree on this point with Reid J. (co-author of R. F. Reid and H. David, Administrative Law and Practice (2nd ed. 1978), and co-editor of P. Anisman and R. F. Reid, Administrative Law Issues and Practice (1995)), who wrote in Re C.T.C. Dealer Holdings Ltd. and Ontario Securities Commission (1987), 59 O.R. (2d) 79 (Div. Ct.), in relation to the powers of the Ontario Securities Commission, at p. 97:

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[TRADUCTION] . . . lorsque la Commission a agi de bonne foi en se souciant clairement et véritablement de l’intérêt public et en fondant son opinion sur des élé-ments de preuve, le risque que l’étendue de son pou-voir discrétionnaire puisse un jour l’inciter à l’exercer abusivement et à se placer ainsi au-dessus de la loi ne fait pas de l’existence de ce pouvoir une mauvaise chose en soi et n’exige pas l’annulation de la décision de la Commission.

(Notre Cour a fait mention, apparemment avec ap-probation, de la décision C.T.C. Dealer Holdings dans l’arrêt Comité pour le traitement égal des ac‑tionnaires minoritaires de la Société Asbestos ltée c. Ontario (Commission des valeurs mobilières), [2001] 2 R.C.S. 132, 2001 CSC 37, par. 42.)

La norme du « manifestement déraisonnable » appelle un degré élevé de déférence judiciaire :

La méthode de la décision correcte signifie qu’il n’y a qu’une seule réponse appropriée. La méthode du carac-tère manifestement déraisonnable signifie que de nom-breuses réponses appropriées étaient possibles, sauf celle donnée par le décideur.

(S.C.F.P., par. 164)

Cela dit, il importe peu à mon sens que la norme applicable soit celle du manifestement déraison-nable (comme je le pense) ou celle du raisonnable simpliciter (comme le croit mon collègue). Nous le verrons, la décision de la Commission se situe dans les limites des opinions exprimées par les or-ganismes de réglementation. Même si une norme moins déférente s’appliquait aux conditions impo-sées par la Commission, je ne verrais aucune raison d’intervenir.

D. La Commission avait‑elle le pouvoir d’assor‑tir son autorisation des conditions en cause « dans l’intérêt public »?

ATCO prétend que la Commission n’avait pas le pouvoir d’imposer des conditions ayant un effet « confiscatoire ». Or, en s’exprimant ainsi, elle pré-sume de la question en litige. La bonne démar-che n’est pas de supposer qu’ATCO avait droit au profit net tiré de la vente, puis de se demander si la Commission pouvait le confisquer. L’investissement de 83 000 $ d’ATCO a graduellement été pris en

. . . when the Commission has acted bona fide, with an obvious and honest concern for the public interest, and with evidence to support its opinion, the prospect that the breadth of its discretion might someday tempt it to place itself above the law by misusing that discretion is not something that makes the existence of the discre-tion bad per se, and requires the decision to be struck down.

(The C.T.C. Dealer Holdings decision was re-ferred to with apparent approval by this Court in Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132, 2001 SCC 37, at para. 42.)

“Patent unreasonableness” is a highly deferen-tial standard:

A correctness approach means that there is only one proper answer. A patently unreasonable one means that there could have been many appropriate answers, but not the one reached by the decision maker.

(C.U.P.E., at para. 164)

Having said all that, in my view nothing much turns on the result on whether the proper standard in that regard is patent unreasonableness (as I view it) or simple reasonableness (as my colleague sees it). As will be seen, the Board’s response is well within the range of established regulatory opin-ions. Hence, even if the Board’s conditions were subject to the less deferential standard, I would find no cause for the Court to interfere.

D. Did the Board Have Jurisdiction to Impose the Conditions It Did on the Approval Order “In the Public Interest”?

ATCO says the Board had no jurisdiction to impose conditions that are “confiscatory”. Framing the question in this way, however, assumes the point in issue. The correct point of departure is not to assume that ATCO is entitled to the net gain and then ask if the Board can confiscate it. ATCO’s in-vestment of $83,000 was added in increments to its regulatory cost base as the land was acquired from

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compte dans sa base tarifaire réglementaire puis-que l’acquisition du terrain s’est échelonnée de 1922 à 1965. Dans un secteur réglementé, le ren-dement juste et équitable est déterminé par l’orga-nisme de réglementation compétent et non par le marché spéculatif et aléatoire de l’immobilier.

Je ne crois pas que l’allégation d’effet « confis-catoire » apporte quoi que ce soit au débat juridi-que. La loi interdit à ATCO de se départir de ses biens sans l’autorisation de la Commission et inves-tit cette dernière du pouvoir d’assortir son autorisa-tion de conditions. Ce n’est donc pas l’existence de la compétence qui est en litige, mais plutôt la ma-nière dont la Commission l’a exercée en imposant des conditions et, plus particulièrement, en répar-tissant le profit net tiré de la vente.

E. La Commission a‑t‑elle exercé sa compétence irrégulièrement en imposant les conditions qu’elle jugeait « nécessaires dans l’intérêt public »?

Il y a évidemment de nombreuses façons de concevoir « l’intérêt public ». Celle de la Commission tient essentiellement (et de manière inhérente) à son opinion et à son pouvoir discré-tionnaire. Même si le cadre législatif de la régle-mentation des services publics varie d’un ressort à l’autre et qu’aux États-Unis, la pratique doit être in-terprétée à la lumière de la protection constitution-nelle du droit de propriété, la Commission s’est vu conférer par le législateur albertain un pouvoir plus étendu que celui accordé à la plupart des organis-mes apparentés. ATCO reconnaît que sa prétention fondée sur le « droit de propriété » ne saurait tenir face à l’intention contraire du législateur, mais elle affirme qu’une telle intention ne ressort pas des lois.

La plupart des organismes de réglementation, sinon tous, sont appelés à décider de l’attribution du profit tiré d’un bien dont le coût historique est inclus dans la base tarifaire, mais qui n’est plus né-cessaire pour fournir le service. Lorsqu’elle formule ses politiques, la Commission peut tenir compte (et elle tient compte) d’une foule de précédents provenant de nombreux ressorts. Trouver le bon

time to time between 1922 and 1965. It is in the nature of a regulated industry that the question of what is a just and equitable return is determined by a board and not by the vagaries of the speculative property market.

I do not think the legal debate is assisted by talk of “confiscation”. ATCO is prohibited by stat-ute from disposing of the asset without Board ap-proval, and the Board has statutory authority to impose conditions on its approval. The issue thus necessarily turns not on the existence of the ju-risdiction but on the exercise of the Board’s juris-diction to impose the conditions that it did, and in particular to impose a shared allocation of the net gain.

E. Did the Board Improperly Exercise the Juris‑diction It Possessed to Impose Conditions the Board Considered “Necessary in the Public Interest”?

There is no doubt that there are many approaches to “the public interest”. Which approach the Board adopts is largely (and inherently) a matter of opin-ion and discretion. While the statutory framework of utilities regulation varies from jurisdiction to ju-risdiction, and practice in the United States must be read in light of the constitutional protection of prop-erty rights in that country, nevertheless Alberta’s grant of authority to its Board is more generous than most. ATCO concedes that its “property” claim would have to give way to a contrary legis-lative intent, but ATCO says such intent cannot be found in the statutes.

Most if not all regulators face the problem of how to allocate gains on property whose original cost is included in the rate base but is no longer required to provide the service. There is a wealth of regulatory experience in many jurisdictions that the Board is entitled to (and does) have regard to in formulating its policies. Striking the correct bal-ance in the allocation of gains between ratepayers

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compromis dans la répartition du profit entre les clients et les investisseurs est une préoccupa-tion commune aux organismes apparentés à la Commission :

[TRADUCTION] D’abord, cela permet d’éviter que l’en-treprise de services publics ne diminue qualitativement ou quantitativement le service réglementé et ne cause de la sorte un préjudice aux clients. Deuxièmement, elle garantit que l’entreprise maximisera l’ensemble des avantages financiers tirés de ses activités, et non seulement ceux destinés à certains groupes d’intérêt ou à d’autres intéressés. Troisièmement, elle vise précisé-ment à ce que les investisseurs ne soient pas favorisés au détriment des clients touchés par l’opération.

(P. W. MacAvoy et J. G. Sidak, « The Efficient Allocation of Proceeds from a Utility’s Sale of Assets » (2001), 22 Energy L.J. 233, p. 234)

Ce n’est pas d’hier que les organismes de régle-mentation canadiens examinent de près les opéra-tions de spéculation foncière auxquelles se livrent les services publics qui leur sont assujettis. Dans la décision Re Consumers’ Gas Co., E.B.R.O. 341-I, 30 juin 1976, la Commission de l’énergie de l’Onta-rio s’est demandé comment devait être considéré le profit de 2 millions de dollars, après impôt, tiré de la vente d’un terrain par une entreprise de services publics. Elle a dit :

[TRADUCTION] Consumers’ n’a pas acquis le bien-fonds (Station B) à des fins de spéculation, mais bien pour les besoins d’un service public. Même si cet in-vestissement n’était pas amortissable, des intérêts et un risque lié à leur taux devaient être absorbés par les re-venus et, jusqu’à ce que l’usine de production de gaz ne devienne obsolescente, l’aliénation du bien-fonds n’était pas possible. Par conséquent, si la commission permet-tait que seuls les actionnaires bénéficient du profit tiré de la vente d’un terrain, elle encouragerait la spécula-tion sur les biens des services publics. À son avis, ces gains en capital doivent être partagés entre les action-naires et les clients. [Je souligne; par. 326.]

Certains organismes de réglementation amé-ricains jugent également opportun de déduire le profit, en tout ou en partie, de coûts pris en compte dans la base tarifaire. Dans Re Boston Gas Co., 49 P.U.R. 4th 1 (Mass. D.P.U. 1982), l’organisme de ré-glementation a attribué aux clients le profit tiré de la vente d’un terrain :

and investors is a common preoccupation of com-parable boards and agencies:

First, it prevents the utility from degrading the quality, or reducing the quantity, of the regulated service so as to harm consumers. Second, it ensures that the utility maximizes the aggregate economic benefits of its op-erations, and not merely the benefits flowing to some in-terest group or stakeholder. Third, it specifically seeks to prevent favoritism toward investors to the detriment of ratepayers affected by the transaction.

(P. W. MacAvoy and J. G. Sidak, “The Efficient Allocation of Proceeds from a Utility’s Sale of Assets” (2001), 22 Energy L.J. 233, at p. 234)

The concern with which Canadian regulators view utilities under their jurisdiction that are spec-ulating in land is not new. In Re Consumers’ Gas Co., E.B.R.O. 341-I, June 30, 1976, the Ontario Energy Board considered how to deal with a real estate profit on land which was disposed of at an after-tax profit of over $2 million. The Board stated:

The Station “B” property was not purchased by Consumers’ for land speculation but was acquired for utility purposes. This investment, while non- depreciable, was subject to interest charges and risk paid for through revenues and, until the gas manufac-turing plant became obsolete, disposal of the land was not a feasible option. If, in such circumstances, the Board were to permit real estate profit to accrue to the shareholders only, it would tend to encourage real estate speculation with utility capital. In the Board’s opin-ion, the shareholders and the ratepayers should share the benefits of such capital gains. [Emphasis added; para. 326.]

Some U.S. regulators also consider it good regu-latory policy to allocate part or all of the profit to offset costs in the rate base. In Re Boston Gas Co., 49 P.U.R. 4th 1 (Mass. D.P.U. 1982), the regulator allocated a gain on the sale of land to ratepayers, stating:

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[TRADUCTION] La société et ses actionnaires ont touché un rendement sur l’utilisation de ces parcelles de terrain le temps que leur coût a été inclus dans la base tarifaire, et ils n’ont droit à aucun rendement supplé-mentaire découlant de leur vente. Conclure le contraire équivaudrait à dire qu’une entreprise de services pu-blics peut tirer avantage d’un bien non amortissable et que même si elle a obtenu de ses clients un rendement raisonnable à l’égard de ce bien, elle peut toucher en sus un profit inattendu en le vendant. Nous estimons que, dans le cas d’une installation en service, il s’agirait d’une situation risques/avantages inhabituelle pour une entreprise réglementée. [Je souligne; p. 26.]

Au Canada, d’autres organismes de réglementa-tion que la Commission craignent que la perspec-tive de vendre des terrains à profit n’infléchisse les décisions des entreprises de services publics en ce qui concerne leurs activités réglementées. Dans la décision Re Consumers’ Gas Co., E.B.R.O. 465, 1er mars 1991, la Commission de l’énergie de l’Ontario a statué que le profit de 1,9 million de dollars réa-lisé lors de la vente d’un terrain devait être réparti également entre les actionnaires et les clients :

[TRADUCTION] . . . attribuer 100 p. 100 du profit tiré de la vente d’un terrain soit aux actionnaires de l’entre-prise, soit à ses clients, pourrait diminuer l’attention ac-cordée aux préoccupations légitimes de la partie exclue. Par exemple, le moment de l’acquisition d’un terrain et l’intensité des négociations la précédant pourraient être déterminés de façon à favoriser le bénéficiaire ultime de l’opération, ou à en faire fi. [par. 3.3.8]

Le principe appliqué par la Commission, soit le partage du profit entre les investisseurs et les clients, est également conforme à la décision Re Natural Resource Gas Ltd., RP-2002-0147, EB-2002-0446, 27 juin 2003, dans laquelle la Commission de l’énergie de l’Ontario, après s’être penchée sur la question du profit tiré de la vente d’un terrain et de bâtiments, a de nouveau conclu :

[TRADUCTION] La Commission juge raisonnable, dans les circonstances, de répartir les gains en capital à parts égales entre l’entreprise et ses clients. Pour arriver à cette conclusion, elle a tenu compte du caractère non récurrent de l’opération. [par. 45]

Dans TransAlta (1986), p. 175-176, le juge Kerans a signalé que le sort réservé à de tels gains variait considérablement d’un organisme de

The company and its shareholders have received a return on the use of these parcels while they have been included in rate base, and are not entitled to any ad-ditional return as a result of their sale. To hold other-wise would be to find that a regulated utility company may speculate in nondepreciable utility property and, despite earning a reasonable rate of return from its cus-tomers on that property, may also accumulate a windfall through its sale. We find this to be an uncharacteristic risk/reward situation for a regulated utility to be in with respect to its plant in service. [Emphasis added; p. 26.]

Canadian regulators other than the Board are also concerned with the prospect that decisions of utilities in their regulated business may be skewed under the undue influence of prospective profits on land sales. In Re Consumers’ Gas Co., E.B.R.O. 465, March 1, 1991, the Ontario Energy Board de-termined that a $1.9 million gain on sale of land should be divided equally between shareholders and ratepayers. It held that

the allocation of 100 percent of the profit from land sales to either the shareholders or the ratepayers might diminish the recognition of the valid concerns of the excluded party. For example, the timing and inten-sity of land purchase and sales negotiations could be skewed to favour or disregard the ultimate beneficiary. [para. 3.3.8]

The Board’s principle of dividing the gain be-tween investors and ratepayers is consistent, as well, with Re Natural Resource Gas Ltd., RP-2002-0147, EB-2002-0446, June 27, 2003, in which the Ontario Energy Board addressed the allocation of a profit on the sale of land and buildings and again stated:

The Board finds that it is reasonable in the circum-stances that the capital gains be shared equally between the Company and its customers. In making this finding the Board has considered the non-recurring nature of this transaction. [para. 45]

The wide variety of regulatory treatment of such gains was noted by Kerans J.A. in TransAlta (1986), at pp. 175-76, including Re Boston Gas Co.

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réglementation à l’autre, mentionnant à titre d’exemple la décision Re Boston Gas Co., précitée. Dans cette affaire, la Commission avait assimilé à un « revenu » au sens de la Hydro and Electric Energy Act, R.S.A. 1980, ch. H-13, le profit réa-lisé par TransAlta lors de la vente d’un terrain et de bâtiments appartenant à sa « concession » d’Ed-monton. (La décision ne portait donc pas sur le pouvoir de la Commission d’imposer les conditions qu’« elle juge nécessaires dans l’intérêt public ».) Le juge Kerans a précisé (p. 176) :

[TRADUCTION] Pour les motifs exposés ci-après, je ne suis pas d’accord avec la décision de la Commission, mais il serait absurde de ne pas reconnaître que [le mot « revenu »] puisse raisonnablement avoir le sens qu’elle lui prête.

Il a ajouté que [TRADUCTION] « l’indemnisation visait, à toutes fins utiles, à compenser la perte d’une concession » (p. 180), de sorte que, dans « ces circonstances exceptionnelles » (p. 179), le gain ne pouvait en droit être qualifié de revenu sui-vant la norme de la décision correcte. Dans l’arrêt Yukon Energy Corp. c. Utilities Board (1996), 74 B.C.A.C. 58 (C.A.Y.), par. 85, le juge Goldie a lui aussi relevé la diversité de la pratique réglementaire à l’égard du « gain tiré d’une vente ».

Les décisions récentes d’organismes de régle-mentation des États-Unis révèlent que le sort ré-servé au gain réalisé lors de la vente d’un terrain non amorti y est aussi très variable et comprend tant la solution préconisée par ATCO que celle re-tenue par la Commission :

[TRADUCTION] Certains ressorts ont conclu que, sur le plan de l’équité, seuls les actionnaires doivent béné-ficier du gain tiré d’un terrain qui s’est apprécié, car en général, les clients des entreprises de services publics paient les taxes foncières et non le coût d’acquisition et les charges d’amortissement. Suivant ce raisonnement, les clients n’assument aucun risque de perte et n’acquiè-rent aucun droit sur le bien, y compris en equity.

D’autres estiment que les clients ont droit à une partie des profits résultant de la vente d’un terrain affecté à un service public. Les ressorts qui ont opté pour une ré-partition équitable conviennent que l’examen des déci-sions des organismes de réglementation et des cours de

mentioned earlier. In TransAlta (1986), the Board characterized TransAlta’s gain on the disposal of land and buildings included in its Edmonton “franchise” as “revenue” within the meaning of the Hydro and Electric Energy Act, R.S.A. 1980, c. H-13. (The case therefore did not deal with the power to impose conditions “the Board considers necessary in the public interest”.) Kerans J.A. said (at p. 176):

I do not agree with the Board’s decision for reasons later expressed, but it would be fatuous to deny that its interpretation [of the word “revenue”] is one which the word can reasonably bear.

Kerans J.A. went on to find that in that case “[t]he compensation was, for all practical purposes, com-pensation for loss of franchise” (p. 180) and on that basis the gain in these “unique circumstances” (p. 179) could not, as a matter of law, be character-ized as revenue, i.e. applying a correctness stand-ard. The range of regulatory practice on the “gains on sale” issue was similarly noted by Goldie J.A. in Yukon Energy Corp. v. Utilities Board (1996), 74 B.C.A.C. 58 (Y.C.A.), at para. 85.

A survey of recent regulatory experience in the United States reveals the wide variety of treat-ment in that country of gains on the sale of unde-preciated land. The range includes proponents of ATCO’s preferred allocation as well as proponents of the solution adopted by the Board in this case:

Some jurisdictions have concluded that as a matter of equity, shareholders alone should benefit from any gain realized on appreciated real estate, because rate-payers generally pay only for taxes on the land and do not contribute to the cost of acquiring the property and pay no depreciation expenses. Under this analysis, rate-payers assume no risk for losses and acquire no legal or equitable interest in the property, but rather pay only for the use of the land in utility service.

Other jurisdictions claim that ratepayers should retain some of the benefits associated with the sale of property dedicated to utility service. Those jurisdic-tions that have adopted an equitable sharing approach agree that a review of regulatory and judicial decisions

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justice sur la question ne permet pas de dégager l’exi-gence générale que le profit soit attribué aux seuls ac-tionnaires, mais seulement une interdiction générale de le répartir lorsque le coût du terrain n’a jamais été inclus dans la base tarifaire.

(P. S. Cross, « Rate Treatment of Gain on Sale of Land : Ratepayer Indifference, A New Standard? » (1990), 126 Pub. Util. Fort. 44, p. 44)

La décision Re Arizona Public Service Co., 91 P.U.R. 4th 337 (Ariz. C.C. 1988), illustre le point de vue américain favorable à la solution rete-nue par la Commission dans la présente affaire (p. 361) :

[TRADUCTION] Les principes généraux qui peuvent être dégagés des décisions rendues dans d’autres ressorts, s’il en est, sont les suivants : (1) les actionnaires d’une entreprise de services publics n’ont pas automatique‑ment droit au gain réalisé lors de toute vente d’un bien affecté au service public; (2) les clients n’ont pas droit à la totalité ou à une partie du profit tiré lors de la vente d’un bien qui n’a jamais été pris en compte pour l’éta-blissement des tarifs. [En italique dans l’original.]

La composition de l’actif dont le coût est pris en compte dans la base tarifaire varie au gré des acqui-sitions et des aliénations, mais l’entreprise, elle, de-meure. La démarche de la Commission en l’espèce est tout à fait compatible avec le principe de la « pé-rennité de l’entreprise » appliqué notamment dans Re Southern California Water Co., 43 C.P.U.C. 2d 596 (1992). Dans cette affaire, Southern California Water avait sollicité l’autorisation de vendre un vieil établissement, et la commission devait déci-der de l’attribution du profit tiré de l’opération. La commission a conclu :

[TRADUCTION] Partant du principe de la « pérennité de l’entreprise », le profit tiré de l’opération doit être af-fecté à l’exploitation du service public, et non attribué à court terme aux actionnaires ou aux clients directe-ment.

Ce principe n’est ni nouveau ni absolu. Il a claire-ment été énoncé dans la décision de principe que la commission a rendue en 1989 concernant le gain réa-lisé lors d’une vente (D.89-07-016, 32 Cal. P.U.C.2d 233 (Redding)). En termes simples, lorsqu’une entreprise de services publics réalise un profit en vendant un bien qu’elle remplace par un autre ou par un titre de créance,

on the issue does not reveal any general principle that requires the allocation of benefits solely to sharehold-ers; rather, the cases show only a general prohibition against sharing benefits on the sale property that has never been reflected in utility rates.

(P. S. Cross, “Rate Treatment of Gain on Sale of Land: Ratepayer Indifference, A New Standard?” (1990), 126 Pub. Util. Fort. 44, at p. 44)

Regulatory opinion in the United States favourable to the solution adopted here by the Board is illus-trated by Re Arizona Public Service Co., 91 P.U.R. 4th 337 (Ariz. C.C. 1988), at p. 361:

To the extent any general principles can be gleaned from the decisions in other jurisdictions they are: (1) the utility’s stockholders are not automatically entitled to the gains from all sales of utility property; and (2) rate-payers are not entitled to all or any part of a gain from the sale of property which has never been reflected in the utility’s rates. [Emphasis in original.]

Assets purchased with capital reflected in the rate base come and go, but the utility itself endures. What was done by the Board in this case is quite consistent with the “enduring enterprise” theory espoused, for example, in Re Southern California Water Co., 43 C.P.U.C. 2d 596 (1992). In that case, Southern California Water had asked for approval to sell an old headquarters building and the issue was how to allocate its profits on the sale. The Commission held:

Working from the principle of the “enduring enter-prise”, the gain-on-sale from this transaction should remain within the utility’s operations rather than being distributed in the short run directly to either ratepayers or shareholders.

The “enduring enterprise” principle, is neither novel nor radical. It was clearly articulated by the Commission in its seminal 1989 policy decision on the issue of gain-on-sale, D.89-07-016, 32 Cal. P.U.C.2d 233 (Redding). Simply stated, to the extent that a utility realizes a gain-on-sale from the liquidation of an asset and replaces it with another asset or obligation while at

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sans que son obligation de servir la clientèle ne soit sup-primée ou réduite, le profit doit être affecté à l’exploita-tion de l’entreprise. [p. 604]

À mon avis, ni les lois de l’Alberta ni la pratique réglementaire dans cette province et dans d’autres ressorts ne commandaient une décision en parti-culier. La Commission aurait pu accueillir la de-mande d’ATCO et lui attribuer la totalité du profit. Mais la solution qu’elle a retenue n’outrepassait aucunement sa compétence légale et ne justifie pas une intervention judiciaire.

F. L’argumentation d’ATCO

Les principaux arguments d’ATCO ont pour la plupart été abordés, mais, par souci de clarté, je les rappellerai. ATCO ne conteste pas vraiment le pouvoir de la Commission d’assortir de conditions la vente d’un terrain. Elle soutient plutôt que la Commission a violé en l’espèce un certain nombre de garanties et nous demande de restreindre sa marge de manœuvre.

Premièrement, ATCO prétend que les clients n’acquièrent aucun droit de propriété sur les biens de l’entreprise. C’est elle, et non ses clients, qui a initialement acheté le bien en question et qui en est devenue propriétaire, ce qui lui donnait droit à tout profit tiré de sa vente. Selon elle, attribuer le profit aux clients équivaut à confisquer l’actif de l’entreprise.

Deuxièmement, ATCO prétend que son droit à la totalité du profit n’a rien à voir avec le « pacte réglementaire ». Ses clients ont payé un prix que, d’une année à l’autre, la Commission a jugé rai-sonnable en contrepartie d’un service sûr et fiable. C’est ce qu’ils ont obtenu et c’est tout ce à quoi ils avaient droit. En leur attribuant une partie du profit, la Commission s’est indûment livrée à une tarifica-tion « rétroactive ».

Troisièmement, une entreprise de services publics ne peut amortir un terrain dans sa base tarifaire, de sorte que les clients n’ont pas défrayé ATCO de quelque partie du coût historique du terrain en ques-tion, encore moins en fonction de sa valeur actuelle. Le traitement réservé au profit tiré de la vente d’un bien amorti ne s’applique donc pas.

the same time its responsibility to serve its customers is neither relieved nor reduced, then any gain-on-sale should remain within the utility’s operation. [p. 604]

In my view, neither the Alberta statutes nor reg-ulatory practice in Alberta and elsewhere dictates the answer to the problems confronting the Board. It would have been open to the Board to allow ATCO’s application for the entire profit. But the so-lution it adopted was quite within its statutory au-thority and does not call for judicial intervention.

F. ATCO’s Arguments

Most of ATCO’s principal submissions have al-ready been touched on but I will repeat them here for convenience. ATCO does not really dispute the Board’s ability to impose conditions on the sale of land. Rather, ATCO says that what the Board did here violates a number of basic legal protections and principles. It asks the Court to clip the Board’s wings.

Firstly, ATCO says that customers do not ac-quire any proprietary right in the company’s assets. ATCO, rather than its customers, originally pur-chased the property, held title to it, and therefore was entitled to any gain on its sale. An allocation of profit to the customers would amount to a confisca-tion of the corporation’s property.

Secondly, ATCO says its retention of 100 per-cent of the gain has nothing to do with the so-called “regulatory compact”. The gas customers paid what the Board regarded over the years as a fair price for safe and reliable service. That is what the ratepayers got and that is all they were entitled to. The Board’s allocation of part of the profit to the ratepayers amounts to impermissible “retroactive” rate setting.

Thirdly, utilities are not entitled to include in the rate base an amount for depreciation on land and ratepayers have therefore not repaid ATCO any part of ATCO’s original cost, let alone the present value. The treatment accorded gain on sales of de-preciated property therefore does not apply.

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Quatrièmement, ATCO reproche à la solution de la Commission de créer une disparité. Les clients se voient attribuer une partie du profit résultant de l’appréciation d’un terrain sans pour autant être tenus, advenant une contraction du marché, d’as-sumer une partie des pertes subies lors de son aliénation.

À mon avis, ce sont toutes des prétentions qui devaient être dûment formulées devant la Commission (et qui l’ont été). Certaines décisions d’organismes de réglementation étayent la thèse d’ATCO, d’autres appuient celle de ses clients. Il appartenait à la Commission de décider, au vu des circonstances, quelles conditions étaient néces-saires dans l’intérêt public. Comme je vais m’ef-forcer de le démontrer, la solution adoptée par la Commission en l’espèce s’inscrivait parmi celles pour lesquelles elle pouvait raisonnablement opter.

1. La question de l’effet confiscatoire

Dans son mémoire, ATCO affirme que [TRADUCTION] « [l]es biens appartenaient au pro-priétaire du service public et que la répartition pro-jetée par la Commission ne peut avoir qu’un effet confiscatoire » (mémoire de l’intimée, par. 6). Cet argument ne tient pas compte de la différence ma-nifeste entre un investissement dans une entreprise non réglementée et un investissement dans un ser-vice public réglementé, le taux de rendement étant, dans ce dernier cas, fixé par un organisme de régle-mentation, et non par le marché. Dans la décision Re Southern California Gas Co., 118 P.U.R. 4th 81 (C.P.U.C. 1990) (« SoCalGas »), l’organisme de ré-glementation a fait remarquer :

[TRADUCTION] Dans le secteur privé, qui exclut donc les services publics, l’investisseur n’est pas assuré d’un rendement raisonnable sur un tel investissement irré-cupérable. Bien que les actionnaires et les détenteurs d’obligations fournissent le capital initial, les clients paient au fil des ans, par le truchement de la base tari-faire, les taxes, les frais d’entretien et les autres coûts liés à la possession du bien, de sorte que la personne qui investit dans un service public ne risque pas d’avoir à supporter ces coûts. Les clients paient également un rendement raisonnable pendant que le bien (terrain

Fourthly, ATCO complains that the Board’s so-lution is asymmetrical. Ratepayers are given part of the benefit of an increase in land values without, in a falling market, bearing any part of the burden of losses on the disposition of land.

In my view, these are all arguments that should be (and were) properly directed to the Board. There are indeed precedents in the regulatory field for what ATCO proposes, just as there are precedents for what the ratepayers proposed. It was for the Board to decide what conditions in these particular circumstances were necessary in the public inter-est. The Board’s solution in this case is well within the range of reasonable options, as I will endeavour to demonstrate.

1. The Confiscation Issue

In its factum, ATCO says that “[t]he property belonged to the owner of the utility and the Board’s proposed distribution cannot be characterized oth-erwise than as being confiscatory” (respondent’s factum, at para. 6). ATCO’s argument overlooks the obvious difference between investment in an unregulated business and investment in a regu-lated utility where the regulator sets the return on investment, not the marketplace. In Re Southern California Gas Co., 118 P.U.R. 4th 81 (C.P.U.C. 1990) (“SoCalGas”), the regulator pointed out:

In the non-utility private sector, investors are not guar-anteed to earn a fair return on such sunk investment. Although shareholders and bondholders provide the initial capital investment, the ratepayers pay the taxes, maintenance, and other costs of carrying utility prop-erty in rate base over the years, and thus insulate util-ity investors from the risk of having to pay those costs. Ratepayers also pay the utility a fair return on prop-erty (including land) while it is in rate base, compen-sate the utility for the diminishment of the value of its depreciable property over time through depreciation

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compris) est inclus dans la base tarifaire, ils indemnisent l’entreprise de la dépréciation d’un bien amortissable selon la méthode de la prise en charge par amortisse-ment et ils courent le risque de payer l’amortissement et un rendement pour un bien inclus dans la base tarifaire qui est mis hors service prématurément. [p. 103]

(La Commission ne fait évidemment pas main basse sur le produit de la vente. Pour les besoins de la tarification, un montant équivalant aux deux tiers du profit est en fait pris en compte pour éta-blir la base tarifaire actuelle d’ATCO. Le profit est donc réparti de manière abstraite entre les intéres-sés concurrents.)

L’argument d’ATCO est fréquemment invoqué aux États-Unis sur le fondement de la protection constitutionnelle du « droit de propriété », laquelle n’a toutefois pas empêché que tout ou partie du profit en cause soit attribué aux clients de services publics américains. L’un des arrêts de principe aux États-Unis est Democratic Central Committee of the District of Columbia c. Washington Metropolitan Area Transit Commission, 485 F.2d 786 (D.C. Cir. 1973). Dans cette affaire, des parcelles de terrain affectées au transport en commun étaient devenues superflues lorsque l’entreprise avait remplacé ses trolleybus par des autobus. L’organisme de régle-mentation a attribué aux actionnaires le profit tiré de la vente des terrains dont la valeur s’était ap-préciée, mais la cour d’appel a infirmé la décision en tenant un raisonnement directement applicable à l’effet « confiscatoire » allégué par ATCO :

[TRADUCTION] Nous ne voyons aucun obstacle, constitutionnel ou autre, à la reconnaissance d’un prin-cipe de tarification permettant aux clients de bénéficier de l’appréciation d’un bien survenue pendant son affec-tation au service public. Nous croyons que la doctrine fondant essentiellement les décisions contraires n’est plus pertinente. Un principe juridique et économique fondamental — parfois formulé en termes exprès, par-fois implicite —, sous-tend ces décisions, savoir qu’un bien affecté à un service public demeure la propriété des seuls investisseurs de l’entreprise et que son ap-préciation est un élément indissociable et inviolable de ce droit de propriété. La notion de propriété privée qui imprègne notre jurisprudence a naturellement mené à l’application de ce principe, lequel a obtenu un certain appui dans les premières décisions en matière de ta-rification. S’il est encore valable, ce principe étaye la

accounting, and bear the risk that they must pay depre-ciation and a return on prematurely retired rate base property. [p. 103]

(It is understood, of course, that the Board does not appropriate the actual proceeds of sale. What hap-pens is that an amount equivalent to two-thirds of the profit is included in the calculation of ATCO’s current cost base for rate-making purposes. In that way, there is a notional distribution of the benefit of the gain amongst the competing stakeholders.)

ATCO’s argument is frequently asserted in the United States under the flag of constitutional protec-tion for “property”. Constitutional protection has not however prevented allocation of all or part of such gains to the U.S. ratepayers. One of the leading U.S. authorities is Democratic Central Committee of the District of Columbia v. Washington Metropolitan Area Transit Commission, 485 F.2d 786 (D.C. Cir. 1973). In that case, the assets at issue were parcels of real estate which had been employed in mass transit operations but which were no longer needed when the transit system converted to buses. The regulator awarded the profit on the appreciated land values to the shareholders but the Court of Appeals reversed the decision, using language directly ap-plicable to ATCO’s “confiscation” argument:

We perceive no impediment, constitutional or other-wise, to recognition of a ratemaking principle enabling ratepayers to benefit from appreciations in value of util-ity properties accruing while in service. We believe the doctrinal consideration upon which pronouncements to the contrary have primarily rested has lost all present-day vitality. Underlying these pronouncements is a basic legal and economic thesis — sometimes articu-lated, sometimes implicit — that utility assets, though dedicated to the public service, remain exclusively the property of the utility’s investors, and that growth in value is an inseparable and inviolate incident of that property interest. The precept of private ownership historically pervading our jurisprudence led naturally to such a thesis, and early decisions in the ratemaking field lent some support to it; if still viable, it strengthens the investor’s claim. We think, however, after careful

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prétention de l’investisseur. Après mûre réflexion, nous pensons que ses fondements se sont depuis longtemps effrités et que la conclusion qu’il semblait dicter ne vaut plus. [p. 800]

Ces « décisions » qui ne sont « plus pertinente[s] » englobent sans doute Board of Public Utility Commissioners c. New York Telephone Co., 271 U.S. 23 (1976), une décision invoquée par ATCO en l’espèce et dans laquelle la Cour suprême des États-Unis a dit :

[TRADUCTION] Les clients paient un service, et non le bien servant à sa prestation. Leurs paiements ne sont pas affectés à l’amortissement ou aux autres frais d’ex-ploitation, non plus qu’au capital de l’entreprise. En ac-quittant leurs factures, les clients n’acquièrent aucun droit, suivant la loi ou l’equity, sur les biens utilisés pour fournir le service ou sur les fonds de l’entreprise. Les biens acquis avec les sommes reçues en contrepar-tie des services appartiennent à l’entreprise, tout comme ceux achetés avec les fonds obtenus par l’émission d’ac-tions et d’obligations. [p. 32]

Dans cette affaire, ayant conclu tardivement que l’amortissement autorisé pour New York Telephone Company les années précédentes était trop élevé, l’organisme de réglementation avait tenté de cor-riger la situation pendant l’exercice en cours en ra-justant rétroactivement la base tarifaire. La cour a statué que l’organisme n’avait pas le pouvoir de réviser une tarification antérieure. Les avantages financiers découlant des erreurs commises par l’or-ganisme étaient désormais acquis à l’entreprise. Le contexte n’est pas le même en l’espèce. Nul ne prétend que la tarification antérieure établie par la Commission en fonction du coût historique était er-ronée. En 2001, lorsqu’elle a été saisie de l’affaire, la Commission avait le pouvoir d’autoriser ou non la vente projetée. L’opération n’avait pas encore été conclue. La réalisation d’un profit par ATCO n’était qu’une possibilité. Comme on l’a expliqué dans Re Arizona Public Service Co. :

[TRADUCTION] Dans New York Telephone, le tribu-nal devait déterminer si l’organisme de réglementation de l’État en question pouvait affecter à la réduction des tarifs l’excédent accumulé aux fins d’amortissement les années précédentes et ainsi fixer des tarifs qui ne pro-duisaient pas un rendement raisonnable. [. . .] [L]a Cour a simplement repris un truisme en l’expliquant : les

exploration, that the foundations for that approach, and the conclusion it seemed to indicate, have long since eroded away. [p. 800]

The court’s reference to “pronouncements” which have “lost all present-day vitality” likely includes Board of Public Utility Commissioners v. New York Telephone Co., 271 U.S. 23 (1976), a decision relied upon in this case by ATCO. In that case, the Supreme Court of the United States said:

Customers pay for service, not for the property used to render it. Their payments are not contributions to de-preciation or other operating expenses or to capital of the company. By paying bills for service they do not acquire any interest, legal or equitable, in the property used for their convenience or in the funds of the com-pany. Property paid for out of moneys received for serv-ice belongs to the company just as does that purchased out of proceeds of its bonds and stock. [p. 32]

In that case, the regulator belatedly concluded that the level of depreciation allowed the New York Telephone Company had been excessive in past years and sought to remedy the situation in the cur-rent year by retroactively adjusting the cost base. The court held that the regulator had no power to re-open past rates. The financial fruits of the reg-ulator’s errors in past years now belonged to the company. That is not this case. No one contends that the Board’s prior rates, based on ATCO’s orig-inal investment, were wrong. In 2001, when the matter came before the Board, the Board had juris-diction to approve or not approve the proposed sale. It was not a done deal. The receipt of any profit by ATCO was prospective only. As explained in Re Arizona Public Service Co.:

In New York Telephone, the issue presented was whether a state regulatory commission could use exces-sive depreciation accruals from prior years to reduce rates for future service and thereby set rates which did not yield a just return. . . . [T]he Court simply reiterated and provided the reasons for a ratemaking truism: rates must be designed to produce enough revenue to pay

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tarifs doivent être établis de façon que les revenus per-mettent d’acquitter les charges (raisonnables) d’exploi-tation courantes et que les investisseurs de l’entreprise obtiennent un rendement raisonnable. Lorsque, pour une raison ou une autre, les tarifs fixés produisent trop de revenus ou pas assez, on ne peut revenir en arrière. On augmente les tarifs ou on les réduit pour tenir compte de la situation actuelle; leur fixation ne vise pas la res-titution de profits excessifs antérieurs ou la compensa-tion de pertes d’exploitation antérieures. En l’espèce, il s’agit plutôt de déterminer si, pour l’établissement des tarifs, le revenu provenant de la fourniture d’un service public pendant une année de référence peut comprendre le produit de la vente de biens de l’entreprise de services publics. La décision New York Telephone de la Cour suprême des États-Unis ne porte pas sur cette question. [Je souligne; p. 361.]

Plus récemment, dans la décision SoCalGas, la commission californienne de surveillance des ser-vices publics s’est penchée sur la question de l’attri-bution du profit tiré d’une aliénation. Comme dans la présente affaire, l’entreprise de services publics (SoCalGas) souhaitait vendre un terrain et des bâ-timents situés (dans ce cas) au centre-ville de Los Angeles. La commission a réparti le profit entre les actionnaires et les clients de l’entreprise et a conclu :

[TRADUCTION] Nous croyons que la question de savoir à qui appartient le bien affecté au service public est devenue un faux problème en l’espèce et que la pro-priété ne permet pas à elle seule de déterminer qui a droit au profit lorsque ce bien cesse d’être inclus dans la base tarifaire et est vendu. [p. 100]

ATCO soutient dans son mémoire que les clients [TRADUCTION] « n’acquièrent aucun droit, suivant la loi ou l’equity, sur les biens utilisés pour four-nir le service, non plus que sur les fonds de l’en-treprise » (par. 2). À cet égard, voici ce qu’a conclu l’organisme de réglementation dans SoCalGas :

[TRADUCTION] Personne ne prétend sérieusement que les clients acquièrent un droit de propriété sur les biens affectés au service public; la DRA [Division of Ratepayer Advocates] soutient que le profit tiré de leur vente doit être retranché des besoins en revenus ulté-rieurs non pas parce que les clients sont propriétaires de ces biens, mais parce qu’ils en ont payé les coûts et assumé les risques pendant leur affectation au service public et leur inclusion dans la base tarifaire. [p. 100]

current (reasonable) operating expenses and provide a fair return to the utility’s investors. If it turns out that, for whatever reason, existing rates have produced too much or too little income, the past is past. Rates are raised or lowered to reflect current conditions; they are not designed to pay back past excessive profits or recoup past operating losses. In contrast, the issue in this proceeding is whether for ratemaking purposes a utility’s test year income from sales of utility service can include its income from sales of utility property. The United States Supreme Court’s decision in New York Telephone does not address that issue. [Emphasis added; p. 361.]

More recently, the allocation of gain on sale was addressed by the California Public Utilities Commission in SoCalGas. In that case, as here, the utility (SoCalGas) wished to sell land and buildings located (in that case) in downtown Los Angeles. The Commission apportioned the gain on sale be-tween the shareholders and the ratepayers, conclud-ing that:

We believe that the issue of who owns the utility property providing utility service has become a red herring in this case, and that ownership alone does not determine who is entitled to the gain on the sale of the property providing utility service when it is removed from rate base and sold. [p. 100]

ATCO argues in its factum that ratepayers “do not acquire any interest, legal or equitable, in the property used to provide the service or in the funds of the owner of the utility” (para. 2). In SoCalGas, the regulator disposed of this point as follows:

No one seriously argues that ratepayers acquire title to the physical property assets used to provide utility ser-vice; DRA [Division of Ratepayer Advocates] argues that the gain on sale should reduce future revenue re-quirements not because ratepayers own the property, but rather because they paid the costs and faced the risks associated with that property while it was in rate base providing public service. [p. 100]

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Cette considération liée aux « risques » vaut égale-ment en Alberta. Pendant les 80 dernières années, le marché albertain de l’immobilier a connu des fluctuations considérables, mais durant toute cette période, que la conjoncture ait été favorable ou non, les clients ont garanti à ATCO un rendement juste et équitable pour le terrain et les bâtiments consi‑dérés en l’espèce.

L’approche suivant laquelle le partage des ris-ques emporte le partage du gain net a également été retenue dans SoCalGas :

[TRADUCTION] Même si les actionnaires et les dé-tenteurs d’obligations ont fourni le capital initial, les clients ont payé au fil des ans, par le truchement de la base tarifaire, les taxes, les frais d’entretien et les autres coûts liés à la possession du terrain et des bâtiments et ils ont assuré à l’entreprise un rendement raisonnable selon la valeur non amortie du terrain et des bâtiments pendant la période où leur coût a été inclus dans la base tarifaire. [p. 110]

Autrement dit, même aux États-Unis où le droit de propriété est protégé par la Constitution, la thèse de l’effet « confiscatoire » avancée par ATCO est reje-tée au motif qu’elle est simpliste.

Je ne prétends pas que l’attribution du profit en l’espèce convient nécessairement en toute circons-tance. D’autres organismes de réglementation ont jugé que l’intérêt public commande une attribution différente. La Commission tranche au cas par cas. Je dis simplement que la mesure retenue ne peut être qualifiée de « confiscatoire » dans quelque accep-tion de ce terme et qu’elle fait partie des solutions jugées acceptables dans des ressorts comparables en ce qui concerne l’attribution du profit tiré de la vente d’un terrain dont l’entreprise de services pu-blics a elle-même inclus le coût historique dans sa base tarifaire. La déférence s’impose en l’espèce et, à mon avis, la décision de la Commission n’aurait pas dû être annulée.

2. Le pacte réglementaire

Dans sa décision, la Commission renvoie au « pacte réglementaire », notion aux contours flous selon laquelle, en contrepartie d’un monopole

This “risk” theory applies in Alberta as well. Over the last 80 years, there have been wild swings in Alberta real estate, yet through it all, in bad times and good, the ratepayers have guaranteed ATCO a just and equitable return on its investment in this land and these buildings.

The notion that the division of risk justifies a di-vision of the net gain was also adopted by the regu-lator in SoCalGas:

Although the shareholders and bondholders provided the initial capital investment, the ratepayers paid the taxes, maintenance, and other costs of carrying the land and buildings in rate base over the years, and paid the utility a fair return on its unamortized investment in the land and buildings while they were in rate base. [p. 110]

In other words, even in the United States, where property rights are constitutionally protected, ATCO’s “confiscation” point is rejected as an oversimplification.

My point is not that the Board’s allocation in this case is necessarily correct in all circumstances. Other regulators have determined that the public interest requires a different allocation. The Board proceeds on a “case-by-case” basis. My point simply is that the Board’s response in this case cannot be considered “confiscatory” in any proper use of the term, and is well within the range of what are regarded in comparable jurisdictions as appro-priate regulatory responses to the allocation of the gain on sale of land whose original investment has been included by the utility itself in its rate base. The Board’s decision is protected by a deferential standard of review and in my view it should not have been set aside.

2. The Regulatory Compact

The Board referred in its decision to the “regu-latory compact” which is a loose expression sug-gesting that in exchange for a statutory monopoly

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conféré par la loi et d’un revenu calculé suivant la méthode du coût d’achat majoré, l’entreprise de ser-vices publics accepte de voir son rendement limité de même que sa liberté de se départir des biens dont le coût est pris en compte pour établir sa base tarifaire. C’est ce qui ressort de l’arrêt Washington Metropolitan Area Transit de la Cour d’appel des États-Unis (circuit du district de Columbia) :

[TRADUCTION] Le processus de tarification consiste essentiellement à « mettre en balance l’intérêt de l’in-vestisseur et celui du consommateur ». L’intérêt de l’investisseur est de protéger son investissement et d’avoir une possibilité raisonnable de toucher un ren-dement acceptable. L’intérêt du consommateur réside dans la protection gouvernementale contre la tari-fication déraisonnable de services fournis dans un contexte monopolistique. Pour ce qui est de l’apprécia-tion d’un bien, l’équilibre optimal est atteint lorsque les intérêts de l’un et de l’autre sont respectés le plus possible. [p. 806]

ATCO estime que la manière dont la Commission a attribué le profit contrevient au pacte réglementaire non seulement en raison de son effet confiscatoire, mais aussi parce qu’il s’agit d’une « tarification ré-troactive ». Dans l’arrêt Northwestern Utilities Ltd. c. Ville d’Edmonton, [1979] 1 R.C.S. 684, le juge Estey a dit ce qui suit à la p. 691 :

Il ressort clairement de plusieurs dispositions de The Gas Utilities Act que la Commission n’agit que pour l’avenir et ne peut fixer des tarifs qui permettraient à l’entreprise de recouvrer des dépenses engagées anté-rieurement et que les tarifs précédents n’avaient pas suffi à compenser.

Je le répète, la Commission était appelée à se prononcer sur une rentrée projetée et elle a décidé que les deux tiers devraient être pris en compte dans la tarification ultérieure (et non antérieure), ce qui est conforme à la pratique réglementaire. Par exemple, dans la décision New York Water Service Corp. c. Public Service Commission, 208 N.Y.S.2d 857 (1960), l’organisme de réglementation a statué que le profit réalisé lors de la vente d’un terrain de-vrait servir à réduire les tarifs pour les 17 années suivantes :

[TRADUCTION] Lorsqu’un terrain est vendu à profit, le gain doit être ajouté à l’amortissement cumulé, c.-à-d.

and receipt of revenue on a cost plus basis, the utility accepts limitations on its rate of return and its freedom to do as it wishes with property whose cost is reflected in its rate base. This was expressed in the Washington Metropolitan Area Transit case by the U.S. Court of Appeals for the District of Columbia Circuit as follows:

The ratemaking process involves fundamentally “a balancing of the investor and the consumer interests”. The investor’s interest lies in the integrity of his in-vestment and a fair opportunity for a reasonable return thereon. The consumer’s interest lies in governmental protection against unreasonable charges for the mo-nopolistic service to which he subscribes. In terms of property value appreciations, the balance is best struck at the point at which the interests of both groups receive maximum accommodation. [p. 806]

ATCO considers that the Board’s allocation of profit violated the regulatory compact not only because it is confiscatory but because it amounts to “retroactive rate making”. In Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684, Estey J. stated, at p. 691:

It is clear from many provisions of The Gas Utilities Act that the Board must act prospectively and may not award rates which will recover expenses incurred in the past and not recovered under rates established for past periods.

As stated earlier, the Board in this case was ad-dressing a prospective receipt and allocated two thirds of it to a prospective (not retroactive) rate-making exercise. This is consistent with regulatory practice, as is illustrated by New York Water Service Corp. v. Public Service Commission, 208 N.Y.S.2d 857 (1960). In that case, a utility commission ruled that gains on the sale of real estate should be taken into account to reduce rates annually over the fol-lowing period of 17 years :

If land is sold at a profit, it is required that the profit be added to, i.e., “credited to”, the depreciation reserve, so

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« porté à son crédit », de manière à réduire proportion-nellement la base tarifaire et, par conséquent, le rende-ment. [p. 864]

L’ordonnance a été confirmée par la Cour suprême de l’État de New York (section d’appel).

Plus récemment, dans la décision Re Compliance with the Energy Policy Act of 1992, 62 C.P.U.C. 2d 517 (1995), l’organisme de réglementation a dit :

[TRADUCTION] . . . nous avons jugé approprié de dé-duire la plus grande partie du profit des coûts futurs liés au siège de l’entreprise parce que les clients avaient assumé les risques et les charges pendant l’inclusion du bien dans la base tarifaire. Nous avons également jugé équitable d’attribuer une partie du profit aux actionnai-res afin d’inciter raisonnablement l’entreprise à obtenir le meilleur prix de vente possible et d’indemniser les actionnaires des risques inhérents à la possession du bien. [p. 529]

Toutes ces décisions mettent l’accent sur la mise en balance des intérêts des actionnaires et des clients, ce qui est tout à fait compatible avec la théorie du « pacte réglementaire » qui sous-tend la décision de la Commission en l’espèce.

3. Le terrain en tant que bien non amortissa-ble

La Cour d’appel de l’Alberta a établi une dis-tinction entre le profit tiré de la vente d’un terrain, dont le coût historique n’est pas amorti (et qui n’est donc pas graduellement remboursé par le truche-ment de la base tarifaire), et le profit tiré de la vente d’un bien amorti, comme un bâtiment, pour lequel la base tarifaire opère un certain remboursement du capital et qui, en ce sens, « a été payé » par les clients. Elle a conclu que la Commission avait eu raison d’inclure dans la base tarifaire l’équivalent de l’amortissement consenti pour les bâtiments (l’objet du pourvoi incident d’ATCO). Ainsi, en l’espèce, alors que la valeur du terrain était encore reportée dans les comptes d’ATCO au coût histori-que de 83 720 $, les bâtiments, payés initialement 596 591 $, avaient été amortis dans les tarifs exigés des consommateurs et leur valeur comptable nette s’établissait à 141 525 $.

that there is a corresponding reduction of the rate base and resulting return. [p. 864]

The regulator’s order was upheld by the New York State Supreme Court (Appellate Division).

More recently, in Re Compliance with the Energy Policy Act of 1992, 62 C.P.U.C. 2d 517 (1995), the regulator commented:

. . . we found it appropriate to allocate the principal amount of the gain to offset future costs of headquar-ters facilities, because ratepayers had borne the burden of risks and expenses while the property was in rate-base. At the same time, we found that it was equitable to allocate a portion of the benefits from the gain-on-sale to shareholders in order to provide a reasonable in-centive to the utility to maximize the proceeds from selling such property and compensate shareholders for any risks borne in connection with holding the former property. [p. 529]

The emphasis in all these cases is on balancing the interests of the shareholders and the ratepayers. This is perfectly consistent with the “regulatory compact” approach reflected in the Board doing what it did in this case.

3. Land as a Non-Depreciable Asset

The Alberta Court of Appeal drew a distinc-tion between gains on sale of land, whose origi-nal cost is not depreciated (and thus is not repaid in increments through the rate base) and depreci-ated property such as buildings where the rate base does include a measure of capital repayment and which in that sense the ratepayers have “paid for”. The Alberta Court of Appeal held that the Board was correct to credit the rate base with an amount equivalent to the depreciation paid in respect of the buildings (this is the subject matter of ATCO’s cross-appeal). Thus, in this case, the land was still carried on ATCO’s books at its original price of $83,720 whereas the original $596,591 cost of the buildings had been depreciated through the rates charged customers to a net book value of $141,525.

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Il ressort de la pratique réglementaire que de nombreux organismes de réglementation (et non tous) refusent de faire une distinction (à cette fin) entre les biens amortissables et les biens non amor-tissables. Dans la décision Re Boston Gas Co. (citée dans TransAlta (1986), p. 176), par exemple, l’orga-nisme a conclu :

[TRADUCTION] . . . les clients de l’entreprise ont versé un rendement et payé tous les autres coûts afférents à l’utilisation du terrain. Le fait qu’il s’agit d’un bien non amortissable — son utilisation ne diminuant habituel-lement pas sa valeur d’usage — n’a rien à voir avec la question de savoir qui a droit au produit de sa vente. [p. 26]

Dans SoCalGas, l’organisme de réglementation a également refusé de faire une distinction entre le profit réalisé lors de la vente d’un bien amortissa-ble et celui issu de la vente d’un bien non amortis-sable, affirmant à la p. 107, qu’[TRADUCTION] « [i]l ne voyait pas pourquoi des ventes de terrains de-vraient être traitées différemment » et ajoutant :

[TRADUCTION] En somme, les clients s’engagent à verser un rendement selon la valeur comptable, que le bien soit amorti ou non pour les besoins de la tarifi-cation, et ce, tant que le bien est employé et suscepti-ble de l’être. L’amortissement tient simplement compte du fait que certains biens, contrairement à d’autres, se détériorent durant leur affectation au service public. Fondamentalement, la relation entre l’entreprise et ses clients demeure la même qu’il s’agisse de biens amortis-sables ou non. [Je souligne; p. 107.]

Dans Re California Water Service Co., 66 C.P.U.C. 2d 100 (1996), l’organisme de réglemen-tation a fait la remarque suivante :

[TRADUCTION] Dans nos décisions, nous concluons gé-néralement qu’il n’y a pas lieu de traiter différemment le profit réalisé lors de la vente d’un bien non amortis-sable, comme un terrain nu, et celui issu de la vente d’un bien amortissable dont le coût a été inclus dans la base tarifaire ou d’un terrain détenu pour usage ulté-rieur. [p. 105]

Encore une fois, je ne dis pas que l’organisme de réglementation doit systématiquement écar-ter toute distinction entre un bien amortissable et un bien non amortissable. Je dis simplement que la distinction n’est pas aussi déterminante que le

Regulatory practice shows that many (not all) regulators also do not accept the distinction (for this purpose) between depreciable and non- depreciable assets. In Re Boston Gas Co. for exam-ple (cited in TransAlta (1986), at p. 176), the regu-lator held:

. . . the company’s ratepayers have been paying a return on this land as well as all other costs associated with its use. The fact that land is a nondepreciable asset because its useful value is not ordinarily diminished through use is, we find, irrelevant to the question of who is entitled to the proceeds on the sales of this land. [p. 26]

In SoCalGas, as well, the Commission de-clined to make a distinction between the gain on sale of depreciable, as compared to non- depreciable, property, stating: “We see little reason why land sales should be treated differently” (p. 107). The decision continued:

In short, whether an asset is depreciated for rate-making purposes or not, ratepayers commit to paying a return on its book value for as long as it is used and useful. Depreciation simply recognizes the fact that cer-tain assets are consumed over a period of utility service while others are not. The basic relationship between the utility and its ratepayers is the same for depreciable and non-depreciable assets. [Emphasis added; p. 107.]

In Re California Water Service Co., 66 C.P.U.C. 2d 100 (1996), the regulator commented that:

Our decisions generally find no reason to treat gain on the sale of nondepreciable property, such as bare land, different[ly] than gains on the sale of depreciable rate base assets and land in PHFU [plant held for future use]. [p. 105]

Again, my point is not that the regulator must reject any distinction between depreciable and non-depreciable property. Simply, my point is that the distinction does not have the controlling weight as contended by ATCO. In Alberta, it is up to the

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prétend ATCO. En Alberta, la Commission peut autoriser une vente à la condition que le produit qui en est tiré soit réparti comme elle le juge nécessaire dans l’intérêt public. La limitation du pouvoir dis-crétionnaire de la Commission, alléguée par ATCO sur le fondement de différents points de vue doc-trinaux, n’est pas compatible avec les termes géné-raux employés par le législateur albertain et doit être rejetée.

4. L’absence de réciprocité

ATCO soutient que les clients ne devraient pas tirer avantage d’un marché haussier, car c’est elle, et non eux, qui subirait la perte si la valeur du ter-rain diminuait. Toutefois, la documentation présen-tée à notre Cour donne à penser que la Commission tient compte des profits et des pertes. Dans les déci-sions mentionnées ci-après, elle énonce et rappelle, puis rappelle encore, le « principe général » :

[TRADUCTION] . . . la Commission estime que les pro-fits ou les pertes (soit la différence entre la valeur comp-table nette et le produit de la vente) résultant de la vente de biens affectés à un service public doivent être attri-bués aux clients de l’entreprise de services publics, et non à son propriétaire. [Je souligne.]

(Voir Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84116, 12 octobre 1984, p. 17; Re TransAlta Utilities Corp., Alta. P.U.B., Décision no E84115, 12 octobre 1984, p. 12; Re Canadian Western Natural Gas Co., Alta. P.U.B., Décision no E84113, 12 octobre 1984, p. 23.)

Dans Re Alberta Government Telephones, Alta. P.U.B., Décision no E84081, 29 juin 1984, la Commission a examiné un certain nombre de dé-cisions d’organismes de réglementation (y compris Re Boston Gas Co., précitée) portant sur le profit tiré d’une vente et a dit ce qui suit au sujet de ses propres décisions (p. 12) :

[TRADUCTION] La Commission est consciente de n’avoir pas appliqué une formule ou une règle uniforme permet-tant de déterminer automatiquement la procédure comp-table à suivre à l’égard du profit ou de la perte résultant de l’aliénation d’un bien affecté à un service public. Il en est ainsi parce qu’elle décide de ce qui est juste et raisonna-ble en fonction du fond ou des faits de chaque affaire.

Board to determine what allocations are necessary in the public interest as conditions of the approval of sale. ATCO’s attempt to limit the Board’s discre-tion by reference to various doctrine is not consist-ent with the broad statutory language used by the Alberta legislature and should be rejected.

4. Lack of Reciprocity

ATCO argues that the customers should not profit from a rising market because if the land loses value it is ATCO, and not the ratepayers, that will absorb the loss. However, the material put before the Court suggests that the Board takes into ac-count both gains and losses. In the following de-cisions the Board stated, repeated, and repeated again its “general rule” that

the Board considers that any profit or loss (being the difference between the net book value of the assets and the sale price of those assets) resulting from the dis-posal of utility assets should accrue to the customers of the utility and not to the owner of the utility. [Emphasis added.]

(See Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84116, October 12, 1984, at p. 17; Re TransAlta Utilities Corp., Alta. P.U.B., Decision No. E84115, October 12, 1984, at p. 12; Re Canadian Western Natural Gas Co., Alta. P.U.B., Decision No. E84113, October 12, 1984, at p. 23.)

In Re Alberta Government Telephones, Alta. P.U.B., Decision No. E84081, June 29, 1984, the Board reviewed a number of regulatory approaches (including Re Boston Gas Co., previously men-tioned) with respect to gains on sale and concluded with respect to its own practice, at p. 12:

The Board is aware that it has not applied any consist-ent formula or rule which would automatically deter-mine the accounting procedure to be followed in the treatment of gains or losses on the disposition of utility assets. The reason for this is that the Board’s determi-nation of what is fair and reasonable rests on the merits or facts of each case.

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La prétention selon laquelle ATCO assume seule le risque que la valeur d’un terrain diminue ne tient pas compte du fait que s’il y a contraction du marché, l’entreprise de services publics conti-nue de bénéficier d’un rendement fondé sur le coût historique même si la valeur marchande a considé-rablement diminué. Comme il a été signalé dans SoCalGas :

[TRADUCTION] Si la valeur du terrain devenait in-férieure à son coût historique, on pourrait prétendre que le rendement constant versé au fil des ans [par les clients] pour le terrain a en fait surindemnisé les inves-tisseurs. Le rapport entre les risques et les avantages est tout aussi symétrique pour un terrain que pour un bien amortissable lorsque leur coût est pris en compte pour l’établissement de la base tarifaire. [p. 107]

II. Conclusion

En résumé, le par. 15(3) de l’AEUBA conférait à la Commission le pouvoir d’[TRADUCTION] « im-poser les conditions supplémentaires qu’elle juge nécessaires dans l’intérêt public » en statuant sur la demande d’autorisation de la vente du terrain et des bâtiments en cause. Dans l’exercice de ce pouvoir, et vu la [TRADUCTION] « surveillance générale des services de gaz et de leurs propriétaires » qui lui incombait (GUA, par. 22(1)), la Commission a attri-bué le gain comme elle l’a fait pour les considéra-tions d’intérêt public énoncées dans sa décision. Le pouvoir aurait peut-être été exercé différemment par un autre organisme de réglementation ou dans un autre ressort, mais il reste que la Commission était autorisée à répartir le gain tiré de la vente d’un bien qu’ATCO souhaitait soustraire à la base tarifaire. Il ne nous appartient pas de déterminer quelles conditions sont « nécessaires dans l’intérêt public » et de substituer notre opinion à celle de la Commission.

III. Dispositif

Je suis d’avis d’accueillir le pourvoi, d’annuler la décision de la Cour d’appel de l’Alberta et de ré-tablir la décision de la Commission, avec dépens payables à la ville de Calgary dans toutes les cours. Le pourvoi incident d’ATCO devrait être rejeté avec dépens.

ATCO’s contention that it alone is burdened with the risk on land that declines in value over-looks the fact that in a falling market the utility continues to be entitled to a rate of return on its original investment, even if the market value at the time is substantially less than its original invest-ment. As pointed out in SoCalGas:

If the land actually does depreciate in value below its original cost, then one view could be that the steady rate of return [the ratepayers] have paid for the land over time has actually overcompensated investors. Thus, there is symmetry of risk and reward associated with rate base land just as there is with regard to depreciable rate base property. [p. 107]

II. Conclusion

In summary, s. 15(3) of the AEUBA authorized the Board in dealing with ATCO’s application to approve the sale of the subject land and buildings to “impose any additional conditions that the Board considers necessary in the public interest”. In the exercise of that authority, and having regard to the Board’s “general supervision over all gas utilities, and the owners of them” (GUA, s. 22(1)), the Board made an allocation of the net gain for the public policy reasons which it articulated in its decision. Perhaps not every regulator and not every jurisdic-tion would exercise the power in the same way, but the allocation of the gain on an asset ATCO sought to withdraw from the rate base was a decision the Board was mandated to make. It is not for the Court to substitute its own view of what is “necessary in the public interest”.

III. Disposition

I would allow the appeal, set aside the decision of the Alberta Court of Appeal, and restore the deci-sion of the Board, with costs to the City of Calgary both in this Court and in the court below. ATCO’s cross-appeal should be dismissed with costs.

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ANNEXE

Alberta Energy and Utilities Board Act, R.S.A. 2000, ch. A-17

[TRADUCTION]

Compétence

13 La Commission connaît de toute question dont peut connaître l’ERCB ou la PUB suivant un texte législatif ou le droit par ailleurs applicable, et sa compétence est exclusive.

Pouvoirs de la Commission

15(1) Dans l’exercice de ses fonctions, la Commission jouit des pouvoirs, des droits et des privilèges qu’un texte législatif ou le droit par ailleurs applicable confère à l’ERCB et à la PUB.

(2) La Commission peut agir d’office à l’égard de tout renvoi, demande, plainte, directive ou requête auquel l’ERCB, la PUB ou la Commission peut donner suite.

(3) Sans limiter la portée du paragraphe (1), la Commission peut prendre les mesures suivantes, en to-talité ou en partie :

a) rendre toute ordonnance que l’ERCB ou la PUB peut rendre suivant un texte législatif;

b) avec l’approbation du lieutenant-gouverneur en conseil, rendre toute ordonnance que l’ERCB peut, avec l’approbation du lieutenant-gouver-neur en conseil, rendre en vertu d’un texte légis-latif;

c) avec l’approbation du lieutenant-gouverneur en conseil, rendre toute ordonnance que la PUB peut, avec l’approbation du lieutenant-gouver-neur en conseil, rendre en vertu d’un texte légis-latif;

d) à l’égard d’une ordonnance rendue par elle, l’ERCB ou la PUB en application des alinéas a) à c), rendre toute autre ordonnance et imposer les conditions supplémentaires qu’elle juge né-cessaires dans l’intérêt public;

e) rendre une ordonnance accordant en tout ou en partie la réparation demandée;

f) lorsqu’elle l’estime juste et convenable, accorder en partie la réparation demandée ou en accorder

APPENDIX

Alberta Energy and Utilities Board Act, R.S.A. 2000, c. A-17

Jurisdiction

13 All matters that may be dealt with by the ERCB or the PUB under any enactment or as otherwise provided by law shall be dealt with by the Board and are within the exclusive jurisdiction of the Board.

Powers of the Board

15(1) For the purposes of carrying out its functions, the Board has all the powers, rights and privileges of the ERCB and the PUB that are granted or provided for by any enactment or by law.

(2) In any case where the ERCB, the PUB or the Board may act in response to an application, complaint, direc-tion, referral or request, the Board may act on its own initiative or motion.

(3) Without restricting subsection (1), the Board may do all or any of the following:

(a) make any order that the ERCB or the PUB may make under any enactment;

(b) with the approval of the Lieutenant Governor in Council, make any order that the ERCB may, with the approval of the Lieutenant Governor in Council, make under any enactment;

(c) with the approval of the Lieutenant Governor in Council, make any order that the PUB may, with the approval of the Lieutenant Governor in Council, make under any enactment;

(d) with respect to an order made by the Board, the ERCB or the PUB in respect of matters referred to in clauses (a) to (c), make any further order and impose any additional conditions that the Board considers necessary in the public inter-est;

(e) make an order granting the whole or part only of the relief applied for;

(f) where it appears to the Board to be just and proper, grant partial, further or other relief in

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une autre en sus ou en lieu et place comme si tel était l’objet de la demande.

Appel

26(1) Sous réserve du paragraphe (2), les décisions de la Commission sont susceptibles d’appel devant la Cour d’appel sur une question de droit ou de compétence.

(2) L’autorisation d’appel ne peut être obtenue d’un juge de la Cour d’appel que sur demande présentée

a) dans les 30 jours qui suivent l’ordonnance, la décision ou la directive en cause ou

b) dans le délai supplémentaire que le juge estime justifié d’accorder dans les circonstances.

. . .

Immunité de contrôle

27 Sous réserve de l’article 26, toute mesure, ordon-nance ou décision de la Commission ou de la personne exerçant ses pouvoirs ou ses fonctions est définitive et ne peut être contestée, révisée ou restreinte dans le cadre d’une instance judiciaire, y compris une demande de contrôle judiciaire.

Gas Utilities Act, R.S.A. 2000, ch. G-5

[TRADUCTION]

Surveillance

22(1) La Commission assure la surveillance générale des services de gaz et de leurs propriétaires et peut, en ce qui concerne notamment le matériel, les appareils, les extensions d’ouvrages ou de systèmes et l’établisse-ment de rapports, rendre les ordonnances nécessaires à la protection de l’intérêt public ou à la bonne application d’un contrat, de statuts constitutifs ou d’une concession comportant l’emploi de biens publics ou l’exercice de droits publics.

(2) La Commission mène toute enquête nécessaire à l’obtention de renseignements complets sur la façon dont le propriétaire d’un service de gaz se conforme à la loi ou sur tout ce qui est par ailleurs de son ressort suivant la présente loi.

addition to, or in substitution for, that applied for as fully and in all respects as if the applica-tion or matter had been for that partial, further or other relief.

Appeals

26(1) Subject to subsection (2), an appeal lies from the Board to the Court of Appeal on a question of jurisdic-tion or on a question of law.

(2) Leave to appeal may be obtained from a judge of the Court of Appeal only on an application made

(a) within 30 days from the day that the order, de-cision or direction sought to be appealed from was made, or

(b) within a further period of time as granted by the judge where the judge is of the opinion that the circumstances warrant the granting of that further period of time.

. . .

Exclusion of prerogative writs

27 Subject to section 26, every action, order, ruling or decision of the Board or the person exercising the powers or performing the duties of the Board is final and shall not be questioned, reviewed or restrained by any proceeding in the nature of an application for judi-cial review or otherwise in any court.

Gas Utilities Act, R.S.A. 2000, c. G-5

Supervision

22(1) The Board shall exercise a general supervision over all gas utilities, and the owners of them, and may make any orders regarding equipment, appliances, extensions of works or systems, reporting and other matters, that are necessary for the convenience of the public or for the proper carrying out of any contract, charter or franchise involving the use of public property or rights.

(2) The Board shall conduct all inquiries necessary for the obtaining of complete information as to the manner in which owners of gas utilities comply with the law, or as to any other matter or thing within the jurisdiction of the Board under this Act.

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Enquêtes

24(1) La Commission peut, d’office ou à la demande d’un intéressé, faire enquête sur toute question relative à un service de gaz.

. . .

Services de gaz désignés

26(1) Le lieutenant-gouverneur en conseil peut, par rè-glement, désigner les propriétaires de services de gaz assujettis au présent article et à l’article 27.

(2) Le propriétaire d’un service de gaz désigné en ap-plication du paragraphe (1) ne peut

a) émettre

(i) d’actions,

(ii) d’obligations ou d’autres titres d’emprunt dont le terme est supérieur à un an,

que si, au préalable, il convainc la Commission que l’émission projetée est conforme à la loi et obtient d’elle l’autorisation d’y procéder et une ordonnance le confirmant;

b) capitaliser

(i) son droit d’exister en tant que personne morale,

(ii) un droit, une concession ou un privilège en sus du montant réellement versé en contre-partie à l’État ou à une municipalité, à l’exclusion d’une taxe ou d’une charge an-nuelle,

(iii) un contrat de fusion ou de regroupement;

c) sans l’autorisation de la Commission, capitali-ser un bail;

d) sans l’autorisation de la Commission,

(i) aliéner ou grever ses biens, concessions, privilèges ou droits, en tout ou en partie, notamment en les vendant, en les louant ou en les hypothéquant,

(ii) fusionner ou regrouper ses biens, conces-sions, privilèges ou droits, en tout ou en partie;

Investigation of gas utility

24(1) The Board, on its own initiative or on the appli-cation of a person having an interest, may investigate any matter concerning a gas utility.

. . .

Designated gas utilities

26(1) The Lieutenant Governor in Council may by reg-ulation designate those owners of gas utilities to which this section and section 27 apply.

(2) No owner of a gas utility designated under subsec-tion (1) shall

(a) issue any

(i) of its shares or stock, or

(ii) bonds or other evidences of indebtedness, payable in more than one year from the date of them,

unless it has first satisfied the Board that the proposed issue is to be made in accordance with law and has obtained the approval of the Board for the purposes of the issue and an order of the Board authorizing the issue,

(b) capitalize

(i) its right to exist as a corporation,

(ii) a right, franchise or privilege in excess of the amount actually paid to the Govern-ment or a municipality as the consideration for it, exclusive of any tax or annual charge, or

(iii) a contract for consolidation, amalgamation or merger,

(c) without the approval of the Board, capitalize any lease, or

(d) without the approval of the Board,

(i) sell, lease, mortgage or otherwise dispose of or encumber its property, franchises, privileges or rights, or any part of it or them, or

(ii) merge or consolidate its property, fran-chises, privileges or rights, or any part of it or them,

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tout grèvement, vente, location, constitution d’hypothèque, aliénation, regroupement ou fusion intervenant en contravention de la pré-sente disposition est nul, sauf s’il intervient dans le cours normal des activités de l’entreprise.

. . .

Incessibilité des actions

27(1) Sauf ordonnance de la Commission l’y auto-risant, le propriétaire d’un service de gaz désigné en application du paragraphe 26(1) s’abstient de vendre tout ou partie des actions de son capital-actions à une société, indépendamment du mode de constitution de celle-ci, ou d’effectuer ou d’autoriser une inscription dans ses registres constatant une telle cession, lorsque la vente ou la cession, à elle seule ou de pair avec une opération antérieure, ferait en sorte que la société dé-tienne plus de 50 % des actions en circulation du pro-priétaire du service de gaz.

. . .

Pouvoirs de la Commission

36 La Commission peut, d’office ou à la demande d’un intéressé, par ordonnance écrite, après avoir donné un avis aux personnes intéressées et les avoir entendues,

a) fixer des tarifs individuels ou conjoints, des taux ou des charges justes et raisonnables, ou leurs barèmes, ainsi que des tarifs d’abonnement et d’autres tarifs spéciaux opposables au proprié-taire d’un service de gaz et applicables par lui;

b) établir des taux et des méthodes valables et ac-ceptables de dépréciation, d’amortissement et d’épuisement pour les biens du propriétaire d’un service de gaz, qui doit s’y conformer dans la tenue des comptes y afférents;

c) à l’intention du propriétaire d’un service de gaz, établir des normes, des classifications, des règles, des pratiques ou des mesures justes et raisonnables et déterminer les services justes et raisonnables devant être fournis;

d) exiger que le propriétaire d’un service de gaz construise, entretienne et exploite,

and a sale, lease, mortgage, disposition, encum-brance, merger or consolidation made in contra-vention of this clause is void, but nothing in this clause shall be construed to prevent in any way the sale, lease, mortgage, disposition, encum-brance, merger or consolidation of any of the property of an owner of a gas utility designated under subsection (1) in the ordinary course of the owner’s business.

. . .

Prohibited share transactions

27(1) Unless authorized to do so by an order of the Board, the owner of a gas utility designated under sec-tion 26(1) shall not sell or make or permit to be made on its books any transfer of any share or shares of its capital stock to a corporation, however incorporated, if the sale or transfer, by itself or in connection with pre-vious sales or transfers, would result in the vesting in that corporation of more than 50% of the outstanding capital stock of the owner of the gas utility.

. . .

Powers of Board

36 The Board, on its own initiative or on the application of a person having an interest, may by order in writing, which is to be made after giving notice to and hearing the parties interested,

(a) fix just and reasonable individual rates, joint rates, tolls or charges or schedules of them, as well as commutation and other special rates, which shall be imposed, observed and followed afterwards by the owner of the gas utility,

(b) fix proper and adequate rates and methods of depreciation, amortization or depletion in re-spect of the property of any owner of a gas util-ity, who shall make the owner’s depreciation, amortization or depletion accounts conform to the rates and methods fixed by the Board,

(c) fix just and reasonable standards, classifica-tions, regulations, practices, measurements or service, which shall be furnished, imposed, ob-served and followed thereafter by the owner of the gas utility,

(d) require an owner of a gas utility to estab-lish, construct, maintain and operate, but in

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conformément à la présente loi et à toute autre s’y rapportant, une extension raisonnable de ses installations lorsqu’elle juge que cette extension est raisonnable et réalisable, que les prévisions de rentabilité justifient sa construction et son en-tretien et que la situation financière du proprié-taire du service de gaz justifie raisonnablement les dépenses initiales requises pour construire et exploiter l’extension;

e) exiger que le propriétaire d’un service de gaz approvisionne en gaz certaines personnes, à certaines fins, en contrepartie de certains tarifs, prix et charges, et à certaines conditions, selon ce qu’elle détermine.

Base tarifaire

37(1) Pour fixer des tarifs, des taux ou des charges justes et raisonnables, ou leurs barèmes, opposables au propriétaire d’un service de gaz et applicables par lui, la Commission établit une base tarifaire pour les biens du propriétaire d’un service de gaz servant ou devant servir à la fourniture du service au public en Alberta et, ce faisant, elle établit un juste rendement.

(2) Pour établir la base tarifaire, la Commission tient compte

a) du coût du bien lors de son affectation initiale à l’utilisation publique et de sa juste valeur d’ac-quisition pour le propriétaire du service de gaz, moins la dépréciation, l’amortissement et l’épui-sement;

b) du capital nécessaire.

(3) Pour établir le juste rendement auquel a droit le pro-priétaire d’un service de gaz par rapport à la base tari-faire, la Commission tient compte de tous les facteurs qu’elle estime pertinents.

Recettes excédentaires ou insuffisantes

40 Pour fixer des tarifs, des taux ou des charges justes et raisonnables, ou leurs barèmes, opposables au pro-priétaire d’un service de gaz et applicables par lui, la Commission

a) peut tenir compte de toutes les recettes et les dé-penses du propriétaire qu’elle estime afférentes à l’une des périodes suivantes, à l’exclusion de toute attribution à une partie de cette période :

(i) la totalité de l’exercice du propriétaire au cours duquel est engagée une procédure de

compliance with this and any other Act relating to it, any reasonable extension of the owner’s existing facilities when in the judgment of the Board the extension is reasonable and practical and will furnish sufficient business to justify its construction and maintenance, and when the fi-nancial position of the owner of the gas utility reasonably warrants the original expenditure required in making and operating the exten-sion, and

(e) require an owner of a gas utility to supply and deliver gas to the persons, for the purposes, at the rates, prices and charges and on the terms and conditions that the Board directs, fixes or imposes.

Rate base

37(1) In fixing just and reasonable rates, tolls or charges, or schedules of them, to be imposed, observed and followed afterwards by an owner of a gas utility, the Board shall determine a rate base for the property of the owner of the gas utility used or required to be used to provide service to the public within Alberta and on determining a rate base it shall fix a fair return on the rate base.

(2) In determining a rate base under this section, the Board shall give due consideration

(a) to the cost of the property when first devoted to public use and to prudent acquisition cost to the owner of the gas utility, less depreciation, am-ortization or depletion in respect of each, and

(b) to necessary working capital.

(3) In fixing the fair return that an owner of a gas util-ity is entitled to earn on the rate base, the Board shall give due consideration to all facts that in its opinion are relevant.

Excess revenues or losses

40 In fixing just and reasonable rates, tolls or charges, or schedules of them, to be imposed, observed and fol-lowed afterwards by an owner of a gas utility,

(a) the Board may consider all revenues and costs of the owner that are in the Board’s opinion ap-plicable to a period consisting of

(i) the whole of the fiscal year of the owner in which a proceeding is initiated for the

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fixation des tarifs, des taux ou des charges, ou de leurs barèmes,

(ii) un exercice ultérieur,

(iii) deux exercices ou plus visés aux sous- alinéas (i) et (ii), s’ils sont consécutifs;

b) peut prendre en considération la partie de l’ex-cédent ou du déficit du propriétaire qui, selon elle, se rattache à la totalité de l’exercice du pro-priétaire au cours duquel est engagée une procé-dure de fixation de tarifs, de taux et de charges, ou de leurs barèmes, qu’elle estime justes et rai-sonnables;

c) peut prendre en considération la partie de l’ex-cédent ou du déficit du propriétaire subséquent au début de la procédure visée à l’alinéa b) qui, selon elle, est attribuable à un retard injustifié dans le déroulement de la procédure;

d) approuve par ordonnance ce qu’il convient de faire de tout excédent ou déficit visé aux alinéas b) ou c) et la période, y compris tout exercice ultérieur, au cours de laquelle il convient de le faire.

Pouvoirs généraux

59 Pour l’application de la présente loi, la Commission a, à l’égard des installations, des locaux, du matériel, des services, de l’organisation de la production, de la distribution et de la vente de gaz en Alberta, ainsi que du propriétaire d’un service de gaz et de son entreprise, les pouvoirs que lui confère la Public Utilities Board Act à l’égard d’une entreprise de services publics au sens de cette loi.

Public Utilities Board Act, R.S.A. 2000, ch. P-45

[TRADUCTION]

Compétence et pouvoirs

36(1) La Commission a la compétence et les pouvoirs nécessaires

fixing of rates, tolls or charges, or sched-ules of them,

(ii) a subsequent fiscal year of the owner, or

(iii) 2 or more of the fiscal years of the owner referred to in subclauses (i) and (ii) if they are consecutive,

and need not consider the allocation of those revenues and costs to any part of that period,

(b) the Board may give effect to that part of any excess revenue received or any revenue de-ficiency incurred by the owner that is in the Board’s opinion applicable to the whole of the fiscal year of the owner in which a proceeding is initiated for the fixing of rates, tolls or charges, or schedules of them, that the Board determines is just and reasonable,

(c) the Board may give effect to that part of any excess revenue received or any revenue defi-ciency incurred by the owner after the date on which a proceeding is initiated for the fixing of rates, tolls or charges, or schedules of them, that the Board determines has been due to undue delay in the hearing and determining of the matter, and

(d) the Board shall by order approve

(i) the method by which, and

(ii) the period, including any subsequent fiscal period, during which,

any excess revenue received or any revenue deficiency incurred, as determined pursuant to clause (b) or (c), is to be used or dealt with.

General powers of Board

59 For the purposes of this Act, the Board has the same powers in respect of the plant, premises, equipment, service and organization for the production, distribu-tion and sale of gas in Alberta, and in respect of the business of an owner of a gas utility and in respect of an owner of a gas utility, that are by the Public Utilities Board Act conferred on the Board in the case of a public utility under that Act.

Public Utilities Board Act, R.S.A. 2000, c. P-45

Jurisdiction and powers

36(1) The Board has all the necessary jurisdiction and power

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a) pour agir à l’égard des entreprises de services publics et de leurs propriétaires conformément à la présente loi;

b) pour agir à l’égard des entreprises de services publics et connaître de questions connexes tou-chant une région adjacente à une ville, confor-mément à la présente loi.

(2) Outre la compétence et les pouvoirs mentionnés au paragraphe (1), la Commission a la compétence et les pouvoirs nécessaires pour exercer les fonctions qui lui sont légalement dévolues.

(3) La Commission a et est réputée avoir toujours eu compétence pour fixer, sur demande, le prix et les conditions d’une acquisition effectuée par un conseil municipal sous le régime de l’article 47 de la Municipal Government Act

a) avant que le conseil n’exerce son droit d’acquisi-tion suivant cet article, et sans qu’il soit tenu de procéder à l’acquisition ou

b) lorsque l’acquisition est soumise à son approba-tion suivant cet article, avant que la Commis-sion n’entende la demande et ne statue sur elle.

Pouvoirs généraux

37 Dans les domaines de sa compétence, la Commission peut ordonner et exiger qu’une personne, y compris une administration municipale, immédiatement ou dans le délai qu’elle impartit et selon les modalités qu’elle détermine, à condition que ce ne soit pas incompatible avec la présente loi ou une autre conférant compétence, fasse ce qu’elle est tenue de faire ou susceptible d’être tenue de faire suivant la présente loi ou toute autre, gé-nérale ou spéciale, et elle peut interdire ou faire cesser tout ce qui contrevient à ces lois ou à ses règles, ses or-donnances ou ses directives.

Enquêtes sur les services publics et les tarifs

80 Lorsqu’il lui est démontré à l’audition d’une de-mande présentée par le propriétaire d’une entreprise de services publics ou par une municipalité ou une per-sonne ayant un intérêt actuel ou éventuel dans l’objet de la demande, qu’il y a lieu de croire que les taux établis par le propriétaire d’une entreprise de services publics excèdent ce qui est juste et raisonnable eu égard à la nature et à la qualité du service ou du produit en cause, la Commission

a) peut enquêter comme elle le juge utile sur toute question liée à la nature et à la qualité du

(a) to deal with public utilities and the owners of them as provided in this Act;

(b) to deal with public utilities and related matters as they concern suburban areas adjacent to a city, as provided in this Act.

(2) In addition to the jurisdiction and powers mentioned in subsection (1), the Board has all necessary jurisdic-tion and powers to perform any duties that are assigned to it by statute or pursuant to statutory authority.

(3) The Board has, and is deemed at all times to have had, jurisdiction to fix and settle, on application, the price and terms of purchase by a council of a municipal-ity pursuant to section 47 of the Municipal Government Act

(a) before the exercise by the council under that provision of its right to purchase and without binding the council to purchase, or

(b) when an application is made under that provi-sion for the Board’s consent to the purchase, before hearing or determining the application for its consent.

General power

37 In matters within its jurisdiction the Board may order and require any person or local authority to do forth-with or within or at a specified time and in any manner prescribed by the Board, so far as it is not inconsistent with this Act or any other Act conferring jurisdiction, any act, matter or thing that the person or local author-ity is or may be required to do under this Act or under any other general or special Act, and may forbid the doing or continuing of any act, matter or thing that is in contravention of any such Act or of any regulation, rule, order or direction of the Board.

Investigation of utilities and rates

80 When it is made to appear to the Board, on the appli-cation of an owner of a public utility or of a municipal-ity or person having an interest, present or contingent, in the matter in respect of which the application is made, that there is reason to believe that the tolls demanded by an owner of a public utility exceed what is just and reasonable, having regard to the nature and quality of the service rendered or of the commodity supplied, the Board

(a) may proceed to hold any investigation that it thinks fit into all matters relating to the nature

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service ou du produit en cause, ou à l’exécution du service et aux taux ou charges y afférents;

b) peut, en ce qui concerne l’amélioration du ser-vice ou du produit et les taux et charges y af-férents, rendre toute ordonnance qu’elle estime juste et raisonnable;

c) peut écarter ou modifier, comme elle l’estime raisonnable, les taux ou les charges qu’elle juge excessifs, injustes ou déraisonnables, ou indû-ment discriminatoires envers une personne, y compris une municipalité, sous réserve toute-fois des dispositions qu’elle considère justes et raisonnables d’un contrat liant le propriétaire de l’entreprise de services publics et une municipa-lité au moment de la demande.

Surveillance

85(1) La Commission assure la surveillance générale des entreprises de services publics et de leurs proprié-taires et peut, en ce qui concerne notamment les exten-sions d’ouvrages ou de systèmes et l’établissement de rapports, rendre les ordonnances nécessaires à la pro-tection de l’intérêt public ou à la bonne exécution d’un contrat, de statuts constitutifs ou d’une concession com-portant l’emploi de biens publics ou l’exercice de droits publics.

. . .

Enquêtes

87(1) La Commission peut, d’office ou à la demande d’un intéressé, faire enquête sur toute question relative à une entreprise de services publics.

(2) Lorsqu’elle estime nécessaire d’enquêter sur une entreprise de services publics ou sur les activités de son propriétaire, la Commission a accès aux livres, docu-ments et dossiers relatifs à l’entreprise qui sont en la possession du propriétaire, d’une municipalité, d’un or-ganisme public ou d’un ministère, et elle peut les uti-liser.

(3) La personne qui exerce un pouvoir direct ou indirect sur l’entreprise d’un propriétaire de services publics en Alberta et toute société dont cette personne est action-naire majoritaire est tenue de donner à la Commission ou à son représentant l’accès aux livres, documents et dossiers relatifs à l’entreprise du propriétaire ou de communiquer tout renseignement y afférent exigé par la Commission.

and quality of the service or the commodity in question, or to the performance of the service and the tolls or charges demanded for it,

(b) may make any order respecting the improve-ment of the service or commodity and as to the tolls or charges demanded, that seems to it to be just and reasonable, and

(c) may disallow or change, as it thinks reasonable, any such tolls or charges that, in its opinion, are excessive, unjust or unreasonable or unjustly discriminate between different persons or dif-ferent municipalities, but subject however to any provisions of any contract existing between the owner of the public utility and a municipal-ity at the time the application is made that the Board considers fair and reasonable.

Supervision by Board

85(1) The Board shall exercise a general supervision over all public utilities, and the owners of them, and may make any orders regarding extension of works or systems, reporting and other matters, that are necessary for the convenience of the public or for the proper car-rying out of any contract, charter or franchise involving the use of public property or rights.

. . .

Investigation of public utility

87(1) The Board may, on its own initiative, or on the application of a person having an interest, investigate any matter concerning a public utility.

(2) When in the opinion of the Board it is necessary to investigate a public utility or the affairs of its owner, the Board shall be given access to and may use any books, documents or records with respect to the public utility and in the possession of any owner of the public utility or municipality or under the control of a board, com-mission or department of the Government.

(3) A person who directly or indirectly controls the business of an owner of a public utility within Alberta and any company controlled by that person shall give the Board or its agent access to any of the books, doc-uments and records that relate to the business of the owner or shall furnish any information in respect of it required by the Board.

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Établissement des tarifs

89 La Commission peut, d’office ou à la demande d’un intéressé, par ordonnance écrite, après avoir donné un avis aux personnes intéressées et les avoir entendues,

a) fixer des tarifs individuels ou conjoints, des taux ou des charges justes et raisonnables, ou leurs barèmes, ainsi que des tarifs d’abonnement, des tarifs au mille ou au kilomètre et d’autres tarifs spéciaux opposables au propriétaire de l’entre-prise de services publics et applicables par lui;

b) établir des taux et des méthodes valables et acceptables de dépréciation, d’amortissement et d’épuisement pour les biens du propriétaire d’une entreprise de services publics, qui doit s’y conformer dans la tenue des comptes y affé-rents;

c) à l’intention du propriétaire d’une entreprise de services publics, établir des normes, des classifi-cations, des règles, des pratiques ou des mesures justes et raisonnables et déterminer les services justes et raisonnables devant être fournis;

d) abrogé;

e) exiger qu’un propriétaire d’entreprise de servi-ces publics construise, entretienne et exploite, conformément à toute autre disposition de la présente loi ou d’une autre s’y rapportant, une extension raisonnable de ses installations lors-qu’elle juge que cette extension est raisonnable et réalisable, que les prévisions de rentabilité justifient sa construction et son entretien et que la situation financière du propriétaire de l’entreprise de services publics justifie raison-nablement les dépenses initiales requises pour construire et exploiter l’extension.

Base tarifaire

90(1) Pour fixer des tarifs, des taux ou des charges justes et raisonnables, ou leurs barèmes, opposables au propriétaire d’une entreprise de services public et appli-cables par lui, la Commission établit une base tarifaire pour les biens du propriétaire de l’entreprise de services publics servant ou devant servir à la fourniture du ser-vice au public en Alberta et, ce faisant, elle établit un juste rendement.

(2) Pour établir la base tarifaire, la Commission tient compte :

a) du coût du bien lors de son affectation initiale à l’utilisation publique et de sa juste valeur

Fixing of rates

89 The Board, either on its own initiative or on the ap-plication of a person having an interest, may by order in writing, which is to be made after giving notice to and hearing the parties interested,

(a) fix just and reasonable individual rates, joint rates, tolls or charges, or schedules of them, as well as commutation, mileage or kilometre rate and other special rates, which shall be im-posed, observed and followed subsequently by the owner of the public utility;

(b) fix proper and adequate rates and methods of de-preciation, amortization or depletion in respect of the property of any owner of a public utility, who shall make the owner’s depreciation, am-ortization or depletion accounts conform to the rates and methods fixed by the Board;

(c) fix just and reasonable standards, classifica-tions, regulations, practices, measurements or service, which shall be furnished, imposed, ob-served and followed subsequently by the owner of the public utility;

(d) repealed;

(e) require an owner of a public utility to establish, construct, maintain and operate, but in compli-ance with other provisions of this or any other Act relating to it, any reasonable extension of the owner’s existing facilities when in the judg-ment of the Board the extension is reasonable and practical and will furnish sufficient business to justify its construction and maintenance, and when the financial position of the owner of the public utility reasonably warrants the original expenditure required in making and operating the extension.

Determining rate base

90(1) In fixing just and reasonable rates, tolls or charges, or schedules of them, to be imposed, observed and followed subsequently by an owner of a public util-ity, the Board shall determine a rate base for the prop-erty of the owner of a public utility used or required to be used to provide service to the public within Alberta and on determining a rate base it shall fix a fair return on the rate base.

(2) In determining a rate base under this section, the Board shall give due consideration

(a) to the cost of the property when first devoted to public use and to prudent acquisition cost to

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d’acquisition pour le propriétaire de l’entre-prise de services publics, moins la dépréciation, l’amortissement et l’épuisement;

b) du capital nécessaire.

(3) Pour établir le juste rendement auquel a droit le pro-priétaire d’une entreprise de services publics par rap-port à la base tarifaire, la Commission tient compte de tous les facteurs qui, selon elle, sont pertinents.

Prise en compte des recettes et des dépenses

91(1) Pour fixer des tarifs, des taux ou des charges justes et raisonnables, ou leurs barèmes, opposables au propriétaire d’une entreprise de services publics et ap-plicables par lui, la Commission

a) peut tenir compte de toutes les recettes et les dé-penses du propriétaire qu’elle estime afférentes à l’une des périodes suivantes, à l’exclusion de toute attribution à une partie de cette période :

(i) la totalité de l’exercice du propriétaire au cours duquel est engagée une procédure de fixation des tarifs, des taux ou des charges, ou de leurs barèmes;

(ii) un exercice ultérieur;

(iii) deux exercices ou plus visés aux sous- alinéas (i) et (ii), s’ils sont consécutifs;

b) tient compte de l’incidence de la Small Power Research and Development Act sur les recettes et les dépenses du propriétaire relatives à la pro-duction, au transport et à la distribution d’élec-tricité;

c) peut prendre en considération la partie de l’ex-cédent ou du déficit du propriétaire qui, selon elle, se rattache à la totalité de l’exercice du pro-priétaire au cours duquel est engagée une procé-dure de fixation de tarifs, de taux et de charges, ou de leurs barèmes, qu’elle estime justes et rai-sonnables;

d) peut prendre en considération la partie de l’ex-cédent ou du déficit du propriétaire subséquent au début de la procédure visée à l’alinéa c) qui, selon elle, est attribuable à un retard injustifié dans le déroulement de la procédure;

the owner of the public utility, less depreciation, amortization or depletion in respect of each, and

(b) to necessary working capital.

(3) In fixing the fair return that an owner of a public utility is entitled to earn on the rate base, the Board shall give due consideration to all those facts that, in the Board’s opinion, are relevant.

Revenue and costs considered

91(1) In fixing just and reasonable rates, tolls or charges, or schedules of them, to be imposed, observed and followed by an owner of a public utility,

(a) the Board may consider all revenues and costs of the owner that are in the Board’s opinion ap-plicable to a period consisting of

(i) the whole of the fiscal year of the owner in which a proceeding is initiated for the fixing of rates, tolls or charges, or sched-ules of them,

(ii) a subsequent fiscal year of the owner, or

(iii) 2 or more of the fiscal years of the owner referred to in subclauses (i) and (ii) if they are consecutive,

and need not consider the allocation of those revenues and costs to any part of such a period,

(b) the Board shall consider the effect of the Small Power Research and Development Act on the revenues and costs of the owner with respect to the generation, transmission and distribution of electric energy,

(c) the Board may give effect to that part of any excess revenue received or any revenue de-ficiency incurred by the owner that is in the Board’s opinion applicable to the whole of the fiscal year of the owner in which a proceeding is initiated for the fixing of rates, tolls or charges, or schedules of them, as the Board determines is just and reasonable,

(d) the Board may give effect to such part of any excess revenue received or any revenue defi-ciency incurred by the owner after the date on which a proceeding is initiated for the fixing of rates, tolls or charges, or schedules of them, as the Board determines has been due to undue delay in the hearing and determining of the matter, and

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e) approuve par ordonnance ce qu’il convient de faire de tout excédent ou déficit visé aux alinéas c) ou d) et la période (y compris tout exercice ultérieur) au cours de laquelle il convient de le faire.

Services de gaz désignés

101(1) Le lieutenant-gouverneur en conseil peut, par règlement, désigner les propriétaires d’entreprises de services publics assujettis au présent article et à l’ar-ticle 102.

(2) Le propriétaire d’une entreprise de services publics désigné en application du paragraphe (1) ne peut

a) émettre

(i) d’actions,

(ii) d’obligations ou d’autres titres d’emprunt dont le terme est supérieur à un an,

que si, au préalable, il convainc la Commission que l’émission projetée est conforme à la loi et obtient d’elle l’autorisation d’y procéder et une ordonnance le confirmant;

b) capitaliser

(i) son droit d’exister en tant que personne morale,

(ii) un droit, une concession ou un privilège en sus du montant réellement versé en contre-partie à l’État ou à une municipalité, à l’exclusion d’une taxe ou d’une charge an-nuelle,

(iii) un contrat de fusion ou de regroupement;

c) sans l’autorisation de la Commission, capitali-ser un bail;

d) sans l’autorisation de la Commission,

(i) aliéner ou grever ses biens, concessions, privilèges ou droits, en tout ou en partie, notamment en les vendant, en les louant ou en les hypothéquant,

(ii) fusionner ou regrouper ses biens, conces-sions, privilèges ou droits, en tout ou en partie;

(e) the Board shall by order approve the method by which, and the period (including any subsequent fiscal period) during which, any excess revenue received or any revenue deficiency incurred, as determined pursuant to clause (c) or (d), is to be used or dealt with.

Designated public utilities

101(1) The Lieutenant Governor in Council may by regulation designate those owners of public utilities to which this section and section 102 apply.

(2) No owner of a public utility designated under sub-section (1) shall

(a) issue any

(i) of its shares or stock, or

(ii) bonds or other evidences of indebtedness, payable in more than one year from the date of them,

unless it has first satisfied the Board that the proposed issue is to be made in accordance with law and has obtained the approval of the Board for the purposes of the issue and an order of the Board authorizing the issue,

(b) capitalize

(i) its right to exist as a corporation,

(ii) a right, franchise or privilege in excess of the amount actually paid to the Govern-ment or a municipality as the consideration for it, exclusive of any tax or annual charge, or

(iii) a contract for consolidation, amalgamation or merger,

(c) without the approval of the Board, capitalize any lease, or

(d) without the approval of the Board,

(i) sell, lease, mortgage or otherwise dispose of or encumber its property, franchises, privileges or rights, or any part of them, or

(ii) merge or consolidate its property, fran-chises, privileges or rights, or any part of them,

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tout grèvement, vente, location, constitution d’hypothèque, aliénation, regroupement ou fusion intervenant en contravention de la pré-sente disposition est nul, sauf s’il intervient dans le cours normal des activités de l’entreprise.

. . .

Incessibilité des actions

102(1) Sauf ordonnance de la Commission l’y autori-sant, le propriétaire d’une entreprise de services publics désignée en application du paragraphe 101(1) s’abstient de vendre tout ou partie des actions de son capital-actions à une société, indépendamment du mode de constitution de celle-ci, ou d’effectuer ou d’autoriser une inscription dans ses registres constatant une telle cession, lorsque la vente ou la cession, à elle seule ou de pair avec une opération antérieure, ferait en sorte que la société détienne plus de 50 % des actions en circulation du propriétaire de l’entreprise de services publics.

. . .

Interpretation Act, R.S.A. 2000, ch. I-8

[TRADUCTION]

Principe et interprétation

10 Tout texte est réputé apporter une solution de droit et s’interprète de la manière la plus équitable et la plus large qui soit compatible avec la réalisation de son objet.

Pourvoi rejeté avec dépens et pourvoi incident accueilli avec dépens, la juge en chef mclachlin et les juges Binnie et Fish sont dissidents.

Procureurs de l’appelante/intimée au pourvoi incident : McLennan Ross, Calgary.

Procureurs de l’intimée/appelante au pourvoi incident : Bennett Jones, Calgary.

Procureur de l’intervenante Alberta Energy and Utilities Board : J. Richard McKee, Calgary.

and a sale, lease, mortgage, disposition, en-cumbrance, merger or consolidation made in contravention of this clause is void, but nothing in this clause shall be construed to prevent in any way the sale, lease, mortgage, disposition, encumbrance, merger or consolidation of any of the property of an owner of a public utility designated under subsection (1) in the ordinary course of the owner’s business.

. . .

Prohibited share transaction

102(1) Unless authorized to do so by an order of the Board, the owner of a public utility designated under section 101(1) shall not sell or make or permit to be made on its books a transfer of any share of its capital stock to a corporation, however incorporated, if the sale or transfer, in itself or in connection with previous sales or transfers, would result in the vesting in that corpora-tion of more than 50% of the outstanding capital stock of the owner of the public utility.

. . .

Interpretation Act, R.S.A. 2000, c. I-8

Enactments remedial

10 An enactment shall be construed as being remedial, and shall be given the fair, large and liberal construc-tion and interpretation that best ensures the attainment of its objects.

Appeal dismissed with costs and cross‑appeal allowed with costs, mclachlin c.J. and Binnie and Fish JJ. dissenting.

Solicitors for the appellant/respondent on cross‑appeal: McLennan Ross, Calgary.

Solicitors for the respondent/appellant on cross‑appeal: Bennett Jones, Calgary.

Solicitor for the intervener the Alberta Energy and Utilities Board: J. Richard McKee, Calgary.

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Procureur de l’intervenante la Commission de l’énergie de l’Ontario : Commission de l’énergie de l’Ontario, Toronto.

Procureurs de l’intervenante Enbridge Gas Distribution Inc. : Fraser Milner Casgrain, Toronto.

Procureurs de l’intervenante Union Gas Limited : Torys, Toronto.

Solicitor for the intervener the Ontario Energy Board: Ontario Energy Board, Toronto.

Solicitors for the intervener Enbridge Gas Distribution Inc.: Fraser Milner Casgrain, Toronto.

Solicitors for the intervener Union Gas Limited: Torys, Toronto.

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TAB 3

Page 1

Case Name:

Chastain v. British Columbia Hydro and Power Authority

Between Karen Chastain, Phillip Rankin, Alistair Waddell, suing on

behalf of themselves and suing on behalf of all other individual persons in residential premises being required to pay security deposits or who have paid security deposits to

the British Columbia Hydro and Power Authority for the supply of gas and electrical power, plaintiffs, and

British Columbia Hydro and Power Authority, defendant

[1972] B.C.J. No. 576

32 D.L.R. (3d) 443

[1973] 2 W.W.R. 481

Vancouver Registry No. 13647/72

British Columbia Supreme Court Vancouver, British Columbia

McIntyre J.

Heard: October 19, 20, 23, 24 and 31, 1972.

Judgment: filed December 28, 1972.

(32 paras.) Counsel: I.G. Waddell, and D.W. Mossop, for the plaintiffs. R.D. Strilive, for the defendant.

1 McINTYRE J.:-- The plaintiffs sue on behalf of themselves and all others in residen-tial premises being required to pay security deposits or who have already paid such de-

Page 2

posits to the defendant for the supply of gas and electric power. The plaintiff Karen Chastain is a student, the plaintiff Rankin is a student and the plaintiff Waddell was, at the commencement of these proceedings, unemployed, but is now employed as a detention home supervisor. All of the named plaintiffs are young, though precise evidence of age was not given, and although Karen Chastain and her husband jointly own some real prop-erty in Mission, British Columbia, all are in modest, if not impecunious, circumstances. The defendant is a Crown corporation incorporated under the provisions of the British Columbia Hydro and Power Authority Act, 1964. By section 14(1)(a) of the Act the defendant is em-powered to generate, manufacture, distribute and supply power. The word "power" as de-fined in section 2 of the Act includes electricity and gas. It was alleged that the defendant has an absolute monopoly in British Columbia for the supply of gas and electricity. This was denied and it was asserted that other agencies in British Columbia could also supply gas and electricity. It was conceded, however, and I find as a fact that in the area in which the plaintiffs sought the delivery of services from the defendant and, indeed, for the major-ity of power users in British Columbia the defendant does have an absolute monopoly and there was no other source to which the plaintiffs could turn for the supply of gas and elec-tricity. 2 Karen Chastain, one of the plaintiffs, is a student at Simon Fraser University and a part time waitress. She and her husband lived at Mission, British Columbia in 1968. They had a power account with the defendant there in the husband's name. The husband was also a student in receipt of some form of military pension from the United States Govern-ment. They were not asked for a security deposit in Mission and there is no suggestion that when that account was closed there were unpaid bills for service. They moved to 4429 James Street in Vancouver about October 1st of 1971. Power and gas were already con-nected, presumably in the name of an earlier occupant, and she, her husband and three others (two of whom left when there was a threat of a power cut-off) had the use of a power supply from October 1st, 1971. She applied in her own name for the power connec-tion and signed the defendant's application form in early November of 1971. The exact date is not clear but the application which was mailed to the defendant bears a postmark of November 9th. This application and others signed by the other plaintiffs bear above the signature of the applicant the following words:

"AGREEMENT: The undersigned agrees to take and pay for electricity and/or gas from the British Columbia Hydro and Power Authority in ac-cordance with this application and the rates, terms, and conditions con-tained in the Authority's electric and/or gas tariff(s) as amended from time to time and available for inspection at any general office of the Authority."

3 By letter dated November 30th, 1971, the defendant wrote to the plaintiff in the fol-lowing terms:

"As provided in the tariffs of the British Columbia Hydro and Power Au-thority, a Security Deposit in the amount of $75.00 is required on the above account.

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We would appreciate receiving payment in this office on or before 7 December 1971.

Please mark your cheque or money order 'For Security Deposit

Only'." This letter was duly received but Mrs. Chastain did not pay the $75.00. On the 8th of De-cember, 1971 the defendant wrote a second letter in which it stated that if the $75.00 was not paid by the 20th of December, 1971, service would be discontinued without further no-tice. The plaintiff 'phoned the defendant's office and arranged for an extension of time until the end of December, 1971 and on or about the 20th or 21st of December wrote to the defendant in the following terms:

"In reference to your letters of November 30th and December 8th 1971, I would like to know why I have to pay this deposit. I would also like to know what are 'the tariffs of the British Columbia Hydro and Power Au-thority' as they affect me in your demand for a security deposit.

I would appreciate an early reply to my letter since my hydro will be

cut off on December 28th." This letter drew a reply dated 29th of December, 1971:

"In reply to your enquiry regarding the necessity for a Security De-posit for a utility account, we trust the following information will clarify the matter.

Obtaining a Security Deposit to guarantee payment of a utilities ac-

count is a common business practice exercised by most utility companies on the North American continent. The Electric and Gas Tariff available for public inspection at the Hydro Authority's head office at 970 Burrard Street, Vancouver, states: 'Any customer may at any time be required by the Authority to deposit and to maintain with the Authority a Security De-posit in cash or its equivalent'.

You may establish a good payment record with the British Columbia

Hydro and Power Authority by paying your bills promptly for two years. At the expiry date of such time, and upon request, a review of your account will be undertaken with the view to refunding your Deposit if terms of payment have been met.

We would appreciate receiving payment of the $75.00 Security De-

posit in our office by the 17 January 1972, after which time the service would be subject to disconnection without further notice."

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The deadline of January 17th, 1972 passed with no interruption in service and these pro-ceedings were commenced on January 26th of 1972. Mrs. Chastain then stood in peril of having her power cut off at the date of the commencement of these proceedings. 4 The plaintiff Rankin was at all relevant times a student at Simon Fraser University. He and three or four other students occupied the residential premises at 1139 East 13th Avenue in Vancouver from September 14th, 1971 to about the end of May, 1972. On oc-cupation, there was an existing power connection which he and his companions used. He paid at least one bill rendered for service while the account remained in the former name and there is no suggestion that any bills for service during his period of occupancy went unpaid. He applied for service in his own name by filling out the company's form of applica-tion in or about November 6th, 1971 and at or about that time received a demand from the defendant for a security deposit in the amount of $60.00. He could not pay because he did not have the money. When the defendant insisted on payment or termination of power ser-vice, he procured the money from his father and paid the deposit on December 7th, 1971. On his departure from that address in May or June of 1972 he received the deposit back less the amount of a bill covering services up to the date of his departure from the prem-ises. 5 The plaintiff Waddell occupied residential premises at 2187 York Avenue, Vancou-ver in December of 1971. He took over from an earlier tenant who had an account with the defendant and he made use of the service. He applied for service from the defendant in late December of 1971 after using the power for some time. He found there was an unpaid account in the sum of $43.00 for service rendered to his predecessor. He did not want to have trouble with the defendant and, having the money at that time, he paid this old ac-count of $43.00, He did not say that he had been required to pay it by the defendant but he feared power interruption if it was not paid. He also paid $27.00 for power supplied to him and was then faced with a demand for a security deposit of $50.00. On the 30th of De-cember, 1971 he paid $25.00 towards the $50.00 security deposit. Later he was informed that if he did not pay the remainder of the security deposit his power would be cut off. Again there is no suggestion that any account rendered to him was unpaid. 6 Witnesses were called for the defendant who gave evidence of the system used by the defendant in requiring residential security deposits including the basis upon which the persons from whom deposits are demanded are selected. The policy of the defendant is set forth in Gas and Electrical Tariffs made, purportedly, under the powers contained in section 57 of the British Columbia Hydro and Power Authority Act, 1964, which gives a general power to make regulations. These tariffs provide that any customer may be re-quired at any time to deposit and maintain a security deposit in cash or its equivalent in an amount not less than the estimated billing for two months or $10.00, whichever sum is greater. They also provide that if the customer's bill is in arrears the defendant may apply the security deposit in whole or in part in payment of the bill, but the right of the defendant to cut off power in the event of non-payment is specifically reserved, notwithstanding the furnishing of the deposit. The regulations also provide for the return of the deposit after the final bill is paid. 7 According to the evidence, on January 31st of 1972 the defendant had some 620,000 residential electrical customers and some 180,000 residential gas customers. In

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the year 1971, 19,982 customers out of an estimated 265,000 new accounts were required to furnish security deposits. Some 23,624 deposits were held by the defendant on De-cember 31st, 1971 and on that date they totalled in value $1,041,443.00. These figures covered all types of accounts, commercial, industrial and residential. It was said that it was not possible to segregate the residential accounts but some of these funds would involve residential security deposits and one of the defendant's officers estimated that 25 to 40 residential applicants per day would be required to furnish deposits. These funds form part of the cash resources of the defendant and are used by the defendant. A record, of course, is kept and the books of the defendant show the deposits as a liability to individual deposi-tors but no interest is paid upon them. 8 It was said that security deposits were necessary in order to reduce losses attribut-able to unpaid accounts. Evidence was given in an effort to show that where the practice of requiring deposits was suspended in one city for a period of time, the rate of loss due to unpaid bills increased. This evidence was attacked by the plaintiffs as being valueless and I find it impossible to base any finding upon this evidence because of its equivocal nature. In any event, the rate of loss on residential accounts was given as .20 per cent. of the total billed for 1972 and whether this rate is increasing or decreasing and whether it has in-creased or decreased because of the presence or absence of security deposits, there can be no doubt that it is a very small rate of loss indeed. I refer to this evidence because it af-fords some background for this case. It does not seem to me, however, to be of great sig-nificance since the issue before me concerns the legality of the imposition of security de-posits and must be decided without reference to the wisdom of their use from an economic point of view. 9 Security deposits are required of poor credit risks, that is, people who the defendant considers might not pay. No deposit is required of a person who is a home owner or who has a previously established payment record with the defendant or who can show steady employment. If a person does not fit any one or more of these categories, he or she may be faced with a demand to furnish a security deposit. The persons from whom a deposit is demanded are chosen at the discretion of the officers of the defendant and failure to pay deposits can lead to termination of service. 10 Deposits can be reclaimed after the account is closed and the final bill paid or after one year with a good payment record or where a credit record has been established with the defendant by other means. It is clear that the defendant has carried out a policy of re-quiring security deposits as a condition of service or of continued service from a section of the community selected by the defendant on a consideration of financial reliability. Evi-dence was given of demands for deposits from other persons not named plaintiffs and of the actual cutting off of power in at least one case when a deposit was not paid. 11 The plaintiffs seek certain declarations to the effect that the defendant has no valid authority to require the posting of security deposits and for a return of the money so de-posited and for an injunction against the requiring of further deposits. 12 In the pleadings the defendant raised the question of the status of the plaintiffs and claimed that the named plaintiffs had no status to sue personally or as representatives of the class referred to in the pleadings. At the trial the defendant moved to strike out the

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plaintiffs' proceedings in a preliminary motion upon this basis. Argument was heard on the motion and judgment reserved and the case was heard on its merits. 13 The defendant argued that the policy of requiring security deposits is one which applies to the whole population and affects the whole population because any member of the public could be required to furnish a deposit by falling into any of the categories re-ferred to above. No individual, then, it was said, has any right to bring a suit because in its nature the matter is a public one. To bring such proceedings the plaintiff must have a spe-cial direct interest in the matter going beyond that of the public generally and this, it was contended, the plaintiffs do not have. Furthermore, the plaintiffs do not have any right to act or purport to act for a class since the members of the class, even if ascertained or as-certainable, have no such special interest which would enable them to sue individually on their own. To this the plaintiffs reply that the three named plaintiffs and all in like case clearly have a special and direct interest which gives them the right to sue. They have been selected from the public at the discretion of the defendant and have been required to pay, or have been threatened with a loss of power service in the event of non-payment, a sum of money not required of others and thus they have a direct interest separate and dis-tinct from any interest in the matter held by the public at large. 14 The defendant's contention was based on such authorities as Smith v. The Attor-ney-General of Ontario (1924) S.C.R. 331; Jamieson et al. v. The Attorney-General of British Columbia (1971) 21 D.L.R. (3d) 313; Cowan v. Canadian Broadcasting Corporation (1966) 56 D.L.R. (2d) 578; and Burnham v. Attorney-General of Canada (1970) 15 D.L.R. (3d) 6. From these authorities the law applicable to this objection emerges and is clearly stated in the Cowan case, supra, by Schroeder, J.A. at p. 580 in the following terms:

"A plaintiff, in attempting to restrain, control, or confine within proper limits, the act of a public or quasi-public body which affects the public generally, is an outsider unless he has sustained special damage or can show that he has some 'special interest, private interest, or sufficient in-terest'. These are terms which are found in the law of nuisance but they have been introduced into cases which also involve an alleged lack of authority. Therefore, in an action where it is alleged that a public or quasi-public body has exceeded or abused its authority in such a manner as to affect the public, whether a nuisance be involved or not, the right of the individual to bring the action will accrue as it accrues in cases of nui-sance on proof that he is more particularly affected than other people."

Leave to appeal from this judgment to the Supreme Court of Canada was refused. This statement is entirely consistent with what I take to be the leading case on the point in Canada, Smith v. The Attorney-General of Ontario, supra. 15 The plaintiffs contend that they do have such a special interest shared in their submission by members of the class they represent. They say there is nothing hypothetical about their situation. They have been subjected to demands for money and faced with a harsh penalty, that of the loss of power service if they do not comply and pay. Two of the named plaintiffs and certain members of the class they seek to represent have been com-pelled to pay money and some members of the class have had their power discontinued

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as a result of non-payment. If it can be said in respect of the plaintiffs Rankin and Waddell that the case is now academic since they have terminated their power connections and received a return of their deposits, it cannot be so said of the plaintiff Chastain who still faced, at the date of the commencement of these proceedings, the possibility of a power cut off because of her refusal to pay the security deposit. This is not a situation faced by the public at large. This is a problem faced by some members of the public only and those who are compelled to pay these deposits or suffer the consequence of non-payment have suffered a special injury and damage beyond that suffered by the community at large and they have thus acquired a status to sue. 16 With this argument I agree. The words used by Duff, J. in the Smith case, supra, at pp. 335 and 336 in distinguishing the case of Dyson v. The Attorney-General [1911] 1 K.B. 410; and Burghes v. Attorney General [1911] 2 Ch. 139; from the case then before him may also be applied to distinguish the facts in the case at bar from the Smith case. He said:

"The Finance Commissioners, having certain strictly defined powers by statute, delivered to the plaintiffs a list of questions with a peremptory demand that they should be answered within a nominated time, and the notice contained an intimation, which amounted to a threat, that, unless the demand was complied with, proceedings could be taken to recover the penalties authorized by the statute under which they professed to act. The time nominated was less than the time permitted by the Act; the an-swers demanded were not answers which the Act authorized the Com-missioners to require; and the demands therefore were illegal demands. These notices had been sent broadcast over the country under the au-thority of the Commissioners, and it may be added that the penalties to which the threat referred were penalties recoverable in the Supreme Court of Judicature, at the instance of the Attorney General. There was in each case a demand actually made by the Finance Commissioners, pro-fessing to act under the authority of statute, a demand which they were not entitled to make, accompanied by a threat that if the illegal demand were not complied with the person to whom the notice was addressed would be subjected to proceedings at the suit of the Attorney General for penalties.

Two points should be noted in relation to these authorities: first,

there was no decision upon a hypothetical state of facts, and secondly, the demand in each case was a personal demand and an illegal attempt to constrain the plaintiff personally by an illegal threat addressed t o him as an individual. These points appear, superficially at all events, to mark rather important distinctions between the circumstances of the decisions cited and those of the case now under appeal. As to the penalties, the appellant was subjected to no actual threat and no actual risk; only if the liquor ordered were actually shipped, that is to say, only in a contingency which has not happened, could the appellant be put in jeopardy."

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17 In the case at bar there is no hypothetical state of facts and the demand made for a deposit is actual and personal. In my view, the case at bar falls into the same category as the Dyson case, supra, and the plaintiffs have the status to approach the court for a de-termination of the legality of the demands made upon them and of which they complain. 18 It was objected by the defendant but not strenuously that this was not a case which the plaintiffs could bring as a class or representative action. Little authority was referred to, but in my view this case does not differ in this respect from Alden v. Gaglardi et al., Victoria Registry, 3065/70, where Dohm, J. in this court allowed the bringing of a class action. This case went on appeal to the British Columbia Court of Appeal and to the Supreme Court of Canada and in neither appellate court was any adverse comment made upon the class aspect of the action. In my view, the plaintiffs and the people they seek to represent form a group having the same interest in the cause and the action is well founded in accordance with O. 16, r. 9 of the Rules of the Supreme Court. 19 The plaintiffs argue that the defendant, as a public utility, is bound to provide its service to all who seek it as a matter of law and not of contract, charging only a reasonable price for such services and treating all consumers equally. To require some consumers to provide security deposits and not others is to make an unlawful distinction between con-sumers. It is also contended that if power is supplied by the defendant on a contractual ba-sis, then such contract requiring, as it does, a security deposit, is harsh, unconscionable and inequitable and contrary to the provisions of the Consumer Protection Act, S.B.C. 1967, Ch. 14. 20 The defendant contends that it is not a public utility but a super power authority created by statute for a special purpose and not bound by the Statutes of British Columbia and the general law relating to public utilities. Counsel for the defendant at trial conceded that if the defendant was a public utility its defence would fail but insisted that the defen-dant, because of the general terms of its statute and particularly the provisions of section 53 and 53A, was exempt from the provisions of the Public Utilities Act and the general law governing utilities. 21 To the claim under the Consumer Protection Act there is a short answer. Sections 53 and 53A of the British Columbia Hydro and Power Authority Act, 1964, effectively put the defendant beyond the reach of that statute and no effect may be given to that argu-ment. 22 Turning to the question of the nature of the defendant, I cannot give effect to the argument that it is not a public utility. The mere fact that the defendant is not subject to the provisions of the Public Utilities Act, R.S.B.C. Ch. 323, does not alter its essential charac-ter. It partakes so much of the nature of a public utility that it must be amenable to the law governing public utilities. For the great majority of the people of British Columbia and for all of the plaintiffs joined or represented in this action, the defendant has a monopoly on the supply of gas and electricity. It is clear from the statute that it was intended to have such a monopoly and it is also clear that in relation to the public it is a public utility. To accede to the defendant's argument and find otherwise would be to hold that the Legislature, in passing the British Columbia Hydro and Power Authority Act, 1964, intended to create a body with a monopoly on the generation and distribution of power for the greater part of the Province of British Columbia with an unfettered discretion to deliver service on differing

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terms and conditions to different members of the public and even to withhold service at its own discretion from parts of the public. I cannot find, in the language of the statute, any such intention. While the defendant is not subject to the provisions of the Public Utilities Act, it is to be noted that section 53A of the defendant's own statute provides that it shall be deemed to have been granted a certificate of public convenience and necessity under the Public Utilities Act. Reference to section 12 of the Public Utilities Act dealing with such certificates makes it clear that one of the purposes of the certificate is to provide for the protection of the public interest and the certificate is given to the recipient in its character as a public utility with the interest of the public in mind. The fact that the defendant's stat-ute deems such a certificate to have been given strengthens my view that it was intended to create a public utility for the public service. I find that the defendant is a public utility and amenable to the general law relating to public utilities, notwithstanding the fact that the particular provisions of the Public Utilities Act do not apply to it. 23 The obligation of a public utility or other body having a practical monopoly on the supply of a particular commodity or service of fundamental importance to the public has long been clear. It is to supply its product to all who seek it for a reasonable price and without unreasonable discrimination between those who are similarly situated or who fall into one class of consumers. The great utility systems supplying power, telephone and transportation services now so familiar may be of relatively recent origin, but special obli-gations to supply service have been imposed from the very earliest days of the common law upon bodies in like case, such as carriers, innkeepers, wharfingers and ferry opera-tors. This has been true in England and in the common law jurisdictions throughout the world. In Munn v. Illinois, 94 U.S. 113 in the Supreme Court of the United States, the his-torical roots of this principle were examined and they have been applied in the United States. In Canada the law has followed the same path. In St. Lawrence Rendering Com-pany Ltd. v. The City of Cornwall [1951] O.R. 669 at p. 683, Spence, J. then of the Ontario High Court, said:

"That a public utility was at common law compelled to treat all con-sumers alike, to charge one no more than the others and to supply the utility as a matter of duty and not as a result of a contract, seems clear: The Attorney-General of Canada v. The City of Toronto (1893), 23 S.C.R. 514; Scottish Ontario and Manitoba Land Co. v. City of Toronto (1899), 26 O.A.R. 345; The City of Hamilton v. The Hamilton Distiller Company; The Same v. The Hamilton Brewing Association (1907), 38 S.C.R. 239; 51 Corpus Juris, para 16."

24 This statement is well rooted in authority. In Attorney General of Canada v. Toronto (1893) 23 S.C.R. 514, the question arose whether a municipal by-law fixing a higher rate for the supply of water to non-tax-paying consumers than that charged tax-payers was valid. It was held invalid and Strong, C.J. said at p. 519-20:

"A good deal has been said in argument, and some allusion was also made to it in the judgments below, about the reasonableness of charging differential rates against persons not paying taxes. I am unable to recog-nize any force in this argument. The water-works were not constructed for

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the benefit of the rate-payers alone, but for the use and benefit of the in-habitants of the city generally, whether tax-payers or not. The provision embodied in section 480, sub-section 3 of the Municipal Act (which is re-ferred to above) has a most important bearing upon this. That provision makes it a duty obligatory upon the city to furnish water to all who may apply for it, thus treating the corporation not as a mere commercial ven-dor of a commodity but as a public body entrusted with the management of the water for the benefit of the whole body of inhabitants, and compel-ling them as such to supply this element, necessary not merely for the private purposes and uses of individuals but indispensable for the pres-ervation of the public health and the general salubrity of the city. It must therefore have been intended by the legislature that the water was to be supplied upon some fixed and uniform scale of rates for otherwise the city might, by fixing high and exorbitant prices in particular cases, evade the duty imposed by this section. In other words, the city, like its predeces-sors in title the water-works commissioners, is in a sense a trustee of the water-works, not for the body of rate-payers exclusively but for the benefit of the general public, or at least of that portion of it resident in the city; and they are to dispense the water for the benefit of all, charging only such rates as are uniform, fair and reasonable. This obligation is to be enforced by subjecting the by-laws indispensable for the legal enforce-ment and collection of rates, and which the city council have power to pass, to a judicial scrutiny in order to ascertain whether they comply with the conditions which, as before stated, it is a fair implication from the stat-ute they were intended to be subjected to, and also whether they conform to the requisites essential to the validity of all municipal by-laws in being, so far as the power to enact them is left to implication, consistent with public policy and the general law uniform in operation, fair and reason-able."

25 In The City of Hamilton v. The Hamilton Distillery Company; The Same v. The Hamilton Brewing Association (1907) 38 S.C.R. 239, discrimination between different kinds of manufacturers was held unlawful in the supply of water. Other authorities in New Zea-land such as McLean v. Municipal Council of Dubbo (1910) N.S.W.R. 911; and Wairoa Electric Power Board v. Wairoa Borough (1937) N.Z.L.R, 211, speak to the same effect and these principles are declared to be applicable in the United States in 73 Corpus Juris Secundum p. 999 - 1001, para. 7. It is of interest as well to note here that in the American case of Town of Wickenburg v. Sabin 200 P. (2d) p. 342, 68 Arizona Reports 75, security deposits of the kind imposed in the case at bar were held to be unlawful. There are American authorities to the contrary but the general trend of American authority appears to be consistent with the statement of Spence, J. quoted above. It follows that in the Province of British Columbia the defendant, as a public utility, must treat all residential consumers alike. To require some consumers to furnish a deposit for power to be supplied in the fu-ture as a condition of service or continued service and not to require the same deposit from all constitutes unequal treatment of consumers and is unlawful in the Province of British Columbia. It should be noted that this question was dealt with in section 36 of the

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Public Utilities Act where it was felt necessary to give specific power to utilities under that act to require security, a power not granted to the defendant under this statute. 26 It was argued that the authorities referred to above depended on particular statutes and by-laws governing the supply of the commodity concerned. There being no statutory requirement here for the delivery of power, these cases, it was said, do not support the plaintiffs' position. This argument I consider to be without merit. While it is true that in the Canadian decisions cited above there were statutory provisions imposing an obligation to supply a commodity to the public, nevertheless the judgments make it clear that the stat-utes in this respect are merely declarative of common law principles and in cases even outside the statute the duty to supply remains upon the utility. See Minister of Justice for the Dominion of Canada v. City of Levis [1919] A.C. 505, per Lord Parmoor at p. 513:

"It must be recognized, however, that water is a matter of prime neces-sity, and that, where waterworks have been established to give a supply of water within a given area for domestic and sanitary purposes, it would be highly inconvenient to exclude from the advantages of such supply Government buildings, on the ground that these buildings are not liable to water taxation. The respondents are dealers in water on whom there has been conferred by statute a position of great and special advantage, and they may well be held in consequence to come under an obligation to-wards parties, who are none the less members of the public and counted among their contemplated customers, though they do not fall within that class who are liable to taxation, and who being in the immense majority are expressly legislated for and made subject to taxation. Their Lordships are therefore of opinion that there is an implied obligation on the respon-dents to give a water supply to the Government building provided that, and so long as, the Government of Canada is willing, in consideration of the supply, to make a fair and reasonable payment. The case stands out-side of the express provisions of the statute, and the rights and obliga-tions of the appellant are derived from the circumstances and from the relative positions of the parties."

27 The defendant also sought to justify the security deposits on the basis of section 57 of the British Columbia Hydro and Power Authority Act, 1964, which is quoted hereunder:

"57. In order to give full force and effect to the meaning and intent of this Act the Lieutenant-Governor in Council may make any orders and regulations deemed necessary or advisable for carrying out the spirit, intent, and meaning of this Act in relation to matters for which no express provision has been made or for or in respect of which only partial or imperfect pro-vision has been made."

The deposits complained of were provided for in tariffs published by the defendant in the purported exercise of the power contained in section 57. It is undoubtedly true that the Legislature could, if it wished, by the use of appropriate language, authorize discrimination among residential consumers and authorize virtually any other form of discrimination in any manner it wished and even give a power to withhold service at its discretion. I cannot,

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however, agree that the Legislature has done so in the British Columbia Hydro and Power Authority Act, 1964. The Legislature will not be presumed to have intended to grant such powers in the absence of specific words adequate to confer them. In Attorney General of Canada v. Toronto, supra, Strong, J. said at p. 523:

"Had the Provincial legislature possessed plenary powers of legisla-tion, unfettered by any provision in the British North America Act, I should have considered that the by-laws which it empowered first the wa-ter-works commissioners and then the city to make must have been fair, reasonable and uniform regulations as regards rates. Of course in the case just supposed the exact case presented here could not have arisen, but even so, and assuming that the Provincial legislature could confer unlimited authority to impose arbitrary and discriminating rates for the water, they would not be deemed to have intended to do so from a power to make by-laws expressed in general terms."

And in The City of Hamilton v. The Hamilton Distillery Company, Davis, J. said at pp. 247-8:

"Alike, however, in that case as in these there is involved the validity of a city by-law claiming in one way or another to confer upon the city the power to differentiate or discriminate in the prices actually charged as between different members of the same class of customers for water supplied.

As to the power of the legislature to confer such powers upon a civic

corporation I do not entertain any doubt. It falls within those plenary pow-ers vested in those bodies by the 'British North America Act, 1867,' and if any of them in attempting to confer such powers used apt and proper language I conceive it would be the duty of this court to give the language its full and proper effect. The question would be and ought to be simply whether such language has been used as confers the power claimed."

28 There is nothing in the statute creating the defendant which would authorize it in the exercise of its power to make regulations to depart from the well established principles governing utilities. A statutory power to make regulations must be exercised within the framework of the statute and must be consistent with the purposes of the statute. In Pad-field and Others v. Minister of Agriculture, Fisheries and Food and Others (1968) 1 All E.R. 694, Lord Reid said at p. 699:

"It is implicit in the argument for the Minister that there are only two possible interpretations of this provision - either he must refer every com-plaint or he has an unfettered discretion to refuse to refer in any case. I do not think that that is right. Parliament must have conferred the discre-tion with the intention that it should be used to promote the policy and

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objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole, and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reason, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court."

This principle has been applied in many other cases such as McLean v. Municipal Council of Dubbo, supra, at p. 927; Re Kendrick and The Milk Control Board of Ontario [1935] O.R. 308; Brampton Jersey Enterprises Limited v. The Milk Control Board of Ontario (1956) S.C.R. 1; British Oxygen Co., Ltd. v. Board of Trade [1968] 2 All E.R. 177. 29 The British Columbia Hydro and Power Authority Act, 1964, in my view, clearly created a public utility and to construe section 57 as conferring a power on the defendant by regulation to depart from well settled principles of law, long held to be applicable to pub-lic utilities would be to frustrate the purpose of the Act and the tariffs of the defendant, in-sofar as they purport to authorize the requirement of security deposits on a selective basis, are invalid. 30 Furthermore, I find no merit in the defendant's contention that the plaintiffs, in sign-ing the application form for the delivery of power, effectively bound themselves by contract to take power on the defendant's terms and thus deprived themselves of the benefit of any obligation imposed by law on a public utility. The utility, in the words of Spence, J. in St. Lawrence Rendering Company Ltd. v. The City of Cornwall, supra, supplied power as a matter of law, not contract, and in any event the basis of the contract being tariffs unlaw-fully adopted, it cannot bind the plaintiffs. 31 I am asked to make several declarations and to order an injunction against the continuation of the practice complained of. An examination of the prayer for relief leads me to the conclusion that the real substance of the plaintiff's claim is set out in paragraphs (a) and (g). I therefore make the declaration that the defendant has no valid authority under the British Columbia Hydro and Power Authority Act, 1964, or any other statute, to require the plaintiffs to pay a security deposit before gas and electrical services are provided or are continued to be provided by the defendant authority. I also order the injunction prayed for in paragraph (g) of the prayer for relief, being a permanent injunction restraining the defendant, its servants, agents, representatives and persons acting on its behalf from de-manding, or collecting, or keeping security deposits as a condition precedent to the supply of gas or electrical power to residential consumers, or as a condition to the continuation of the supply of gas and electrical power to any of the plaintiffs or any member of the class represented in this action. 32 I make it clear that in this case I have not considered and I make no declaration in respect of commercial or industrial consumers of the defendant, and refer solely to resi-dential accounts. In addition to the above relief, the plaintiffs will have their costs. McINTYRE J. qp/s/qlkam/qlcla

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Editors’ note: Erratum released September 18, 2006. Original judgment has beencorrected, with text of erratum appended.

NOVA SCOTIA COURT OF APPEALCitation: Dalhousie Legal Aid Service v. Nova Scotia Power Inc.,

2006 NSCA 74

Date: 20060620Docket: CA 248695

Registry: Halifax

Between:Dalhousie Legal Aid Service

Appellantv.

Nova Scotia Power Inc.Respondent

Judge(s): Saunders, Freeman and Fichaud, JJ.A.

Appeal Heard: May 29, 2006, in Halifax, Nova Scotia

Held: Appeal is dismissed without costs, per reasons for judgment ofFichaud, J.A.; Saunders and Freeman, JJ.A. concurring.

Counsel: Claire McNeil and Vincent Calderhead, for the appellantDaniel Campbell, Q.C., for the respondentRichard Melanson, for Nova Scotia Utility and Review BoardStephen McGrath, for the Attorney General of Nova Scotia

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Reasons for judgment:

[1] Nova Scotia Power applied to the Utility and Review Board for a rateincrease. Dalhousie Legal Aid intervened and requested that the Board approve aprogram featuring power rate credits for low income customers. The Boarddeclined. The Board was of the view that the legislation did not authorize theBoard to reduce power rates based on the income level of the customer. DalhousieLegal Aid appeals. The issue is whether the Board committed reviewable error byconcluding that it had no statutory authority to adopt a rate assistance program forlow income customers.

Background

[2] Nova Scotia Power Incorporated (“NSP”) produces and supplies electricalenergy. As of December 31, 2003, NSP served approximately 460,000 customersthroughout Nova Scotia. NSP is the successor to the Nova Scotia PowerCorporation, a Crown corporation that was privatized in 1992. In January 1999,NSP became the principal subsidiary of what is now Emera Incorporated.

[3] NSP is a public utility regulated under the Public Utilities Act RSNS 1989,c. 380, as amended. Section 64(1) reads:

64 (1) No public utility shall charge, demand, collect or receive any compensationfor any service performed by it until such public utility has first submitted for theapproval of the Board a schedule of rates, tolls and charges and has obtained theapproval of the Board thereof.

The “Board” is the Nova Scotia Utility and Review Board, created by the Utilityand Review Board Act SNS 1992, c. 11, as amended (“URB Act”).

[4] In May 2004 NSP filed with the Board an application for approval ofincreased rates, followed by a revised application in June 2004. The applicationwould have resulted in an average overall increase of 12.4% for all classes ofcustomer.

[5] The Board gave notice by advertisement as provided in s. 86 of the PublicUtilities Act. Thirty-seven intervenors responded. One intervenor was theappellant Dalhouse Legal Aid Service (“DLA”).

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[6] The Board conducted a public hearing over 16 days between November 16,2004 and January 14, 2005. On March 31, 2005 the Board issued a decision (2005NSUARB 27). The decision dealt with NSP’s requested rate increase and relatedtopics. Only one topic is relevant to this appeal. That is DLA’s request that theBoard approve a Rate Assistance Program for low income consumers of power.

[7] The Board’s decision summarized DLA’s submission:

9.1 Rate Assistance Program (RAP)

[246] While DLAS has opposed the approval of a FAM [Fuel AdjustmentMechanism] and the SA [Settlement Agreement], and has detailed concernsregarding aspects of customer service provided by NSPI, its main focus at thehearing was the implementation of a proposed Rate Assistance Program (“RAP”)to help low-income customers meet their electricity costs.

[247] DLAS filed evidence from several individuals, including Dr. RichardShillington, a principal of Tristat Resources and Roger Colton, a principal ofFisher, Sheehan & Colton, with respect to this issue. Dr. Shillington, in his directevidence (Exhibit N-126), outlined the challenging costs of shelter and electricityfor low-income Canadians. Mr. Colton’s evidence focused on low-income energyassistance programs and his efforts, in a number of US states, in designing rateaffordability programs. Mr. Colton’s position is that NSPI should “... be directedtoward allowing low-income consumers to obtain quality utility service ataffordable prices within a reasonable budget constraint.” Mr. Colton also submitsthat the costs of such a program, to be shared by customers, are offset, althoughperhaps not fully, by savings realized by the Utility resulting from the adoption ofa ‘universal service program’.

Mr. Colton’s report summarized his fixed credit proposal:

Although a variety of percentage-of-income based approaches exists, Irecommend the delivery of rate affordability assistance using a fixed creditapproach. The fixed credit approach begins as an income-based approach. Inorder to be eligible for the rate, a household must meet both eligibility criteria: (1)that the household income is at or below the Low-Income Cutoff (LICO) forNova Scotia; and (2) that the household electric burden exceeds the burdendeemed to be affordable.

The fixed credit approach differs from a straight percentage of income approachin the calculation of the bill to the household. The fixed credit calculates what bill

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credit would need to be provided to the household in order to reduce thehousehold’s energy bill to a designated percent of income. To calculate the fixedcredit involves three steps: (1) calculating a burden-based payment; (2)calculating an annual bill; and (3) calculating the fixed credit necessary to reducethe annual bill to the burden based payment. Each step is explained below.

1. The first step in the fixed credit model is to calculate a burden-basedpayment. Assume that the household has an annual income of $8,000 andis required to pay three percent (3%) for its home energy bill. The requiredhousehold payment is thus $240. This is simply $8,000 x 3% = $240.

Distinctions are also made between heating and non-heating customers. Aheating customer should be asked to pay six percent (6%) of thehousehold’s income toward her home heating bill, while a non-heatingcustomer would be asked to pay three percent (3%) toward his or herelectric bill.

2. The next step is to calculate a projected annual household energy bill. Thiscalculation is to be made using whatever method NSPI currently uses toestimate annual bills for other purposes. NSPI, in other words, has anestablished procedure for estimating an annual bill for purposes of placingresidential customers (low-income or not) on a levelized Budget BillingPlan (where bills are paid in equal installments over 12 months). Let meassume for purposes of illustration that this existing process results in anestimated annual bill of $960.

3. The final step is to calculate the necessary fixed credit to bring the annualbill down to the burden-based payment. Given an annual bill projection of$960 and a burden-based payment of $240, the annual fixed credit wouldneed to be $720 ($960 - $240 = $720). The household’s monthly fixedcredit would be $60 ($720 / 12 = $60).

[8] The Board, in response to DLA’s request, cited s. 67(1) of the PublicUtilities Act:

67 (1) All tolls, rates and charges shall always, under substantially similarcircumstances and conditions in respect of service of the same description, becharged equally to all persons and at the same rate, and the Board may byregulation declare what shall constitute substantially similar circumstances andconditions.

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The Board accepted that “all customers, regardless of income, receive ‘substantially similar’ electrical service from NSP”. The Board concluded that ithad no power to consider DLA’s proposed Rate Assistance Program:

[256] After reviewing the submissions of DLAS, Board Counsel and the relevantprovisions of the Act, the Board finds that it does not have the statutory authorityto approve a RAP. The Board has the authority given to it by the Legislature toperform its duties in accordance with the provisions of the Act. The Board’s roleis to make decisions, based on fact and law, within the parameters of the statutoryauthority it has been given by the Legislature. The Board’s duty is to followpublic policy decisions made by the Legislature and expressed in statutes. TheBoard does not have jurisdiction to establish public policy. That is the role ofelected officials who are accountable to the public for this function. It seemsalmost certain that the RAP, as described by Mr. Colton, would result in theelectricity bills of certain customers, depending on their income, being subsidizedby other customers. In the Board’s view, this is a social and public policyquestion which falls within the purview of the Legislature rather than the Board. Should NSPI and DLAS wish to pursue this matter with Government, the Boardwould be pleased to offer assistance with respect to regulatory and ratemakingprinciples.

[9] DLA appeals under s. 30(1) of the URB Act, permitting an appeal based onan error of law or jurisdiction.

Issue

[10] The issue is whether the Board committed an appealable error by decliningto consider the merits of DLA’s proposed Rate Assistance Program for low incomeelectricity customers.

Standard of Review

[11] Under the pragmatic and functional approach, the court analyses thecumulative effect of four contextual factors: the presence, absence or wording of aprivative clause or statutory appeal; the comparative expertise of the tribunal andthe court on the appealed or reviewed issues; the purpose of the governinglegislation; and the nature of the question, fact, law or mixed. The ultimatequestion is whether the legislature intended that the issue under review be left tothe tribunal. From this analysis the court selects, for each issue, a standard ofreview of correctness, reasonableness or patent unreasonableness: Pushpanathan

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v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, at ¶ 26;College of Physicians and Surgeons of British Columbia v. Dr. Q., [2003] 1 S.C.R.226, at ¶ 26-35; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, at ¶27; Voice Construction Ltd. v. Construction and General Workers’ Union, Local92, [2004] 1 S.C.R. 609 at ¶ 15-19; Baker v. Canada (Minister of Citizenship andImmigration), [1999] 2 S.C.R. 817, at ¶ 55-62; Granite Environmental Inc. v. NovaScotia (Labour Relations Board), 2005 NSCA 141, at ¶ 21; Nova Scotia TeachersUnion v. Nova Scotia Community College, 2006 NSCA 22, at ¶ 11; The NovaScotia Government and General Employees Union v. Capital District HealthAuthority, 2006 NSCA 44, at ¶ 36.

[12] In Johnson (Re), 2005 NSCA 99, at ¶ 33-46, Justice Oland applied the fourcontextual factors to the expropriation powers of the Utility and Review Board,and concluded:

[46] After considering the four contextual factors of the functional andpragmatic approach, in my view the standard of review to be applied to questionsof law, such as any entitlement for compensation for owner’s time and forpension loss, the standard of review is correctness. For questions of mixed lawand fact, such as matters related to compensation for market value and injuriousaffection, the standard is patent unreasonableness. For findings of fact, thestandard is patent unreasonableness.

Though there is correspondence among the Board’s different functions, thepragmatic and functional analysis for expropriation is not necessarily commutableto rate-making. So I will consider the four contextual factors from the perspectiveof utility rating.

[13] Section 26 of the URB Act says that the Board’s findings of fact are “bindingand conclusive”, while s. 30(1) prescribes an appeal to this court on questions oflaw or jurisdiction. The Legislature contemplated a serious judicial role in thereview for legal error, particularly on threshold issues.

[14] Section 44 of the Public Utilities Act entitles the Board to fix rates “as itdeems just”. Section 67(1) quoted earlier directs equal charges for “similarcircumstances and conditions” of service and authorizes the Board to enactregulations that define “substantially similar circumstances and conditions”. TheBoard has a standing membership, repeatedly has examined NSP rate applications

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and has developed a body of governing jurisprudence. Clearly, the Board has moreexpertise than the court in the architecture of rate-making.

[15] In Nova Scotia (Public Utilities Board) v. Nova Scotia Power Corp. (1976),18 N.S.R. (2d) 692 (A.D.), at ¶ 17, Chief Justice MacKeigan summarized thepurposes of the Public Utilities Act:

17 The scheme of regulation established by the Act envisages and indeedcompels control by the Board of all aspects of a utility's operation in providing acontrolled service. Two great objects are enshrined - that all rates charged must bejust, reasonable and sufficient and not discriminatory or preferential, and that theservice must be adequately, efficiently and reasonably supplied to the public.Almost all provisions of the Act are directed toward securing these two objects -that a public utility give adequate service and charge only reasonable and justrates.

The legislation considered by Chief Justice MacKeigan included ss. 42 and 63(1),the equivalents to the current ss. 44 and 67(1) that are central to this appeal (see NS(PUB)at ¶ 15, 28).

[16] DLA says its argument is “jurisdictional” and therefore the standard ofreview must be correctness. It may be that, after the court reviews the fourcontextual factors, true jurisdictional issues usually will attract the correctnessstandard. But I disagree that every labelled “jurisdictional” argument is tethered tocorrectness, and I reiterate this court’s comment in NSGEU v. Capital DistrictHealth Authority:

[28] . . . The court no longer reviews for pigeonholed “jurisdictional errors.”The phrase “goes to jurisdiction” describes a type of issue for which the properstandard of review is correctness, after the reviewing court has performed thepragmatic and functional analysis. But the “jurisdictional” inquiry is not asubstitute for the pragmatic and functional approach. [Citing Pushpanathan at ¶28; Dr. Q. at ¶ 20 -25; Voice at ¶ 21; Granite at ¶ 41(b) and ATCO Gas &Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4 at ¶ 21-32.]

[17] A similar issue arose in ATCO Gas & Pipelines Ltd. v. Alberta (Energy andUtilities Board), 2006 SCC 4. A public utility applied to Alberta’s Energy andUtilities Board for approval of a sale of assets and allocation of the sale proceeds.The Board allocated a portion of the proceeds of sale to the rate-paying customers.On appeal from the judicial review, the Supreme Court of Canada considered

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whether the Board had statutory authority to allocate any sale proceeds to theratepayers. Despite the “jurisdictional” aspect of the issue, Justice Bastarache forthe majority said that the pragmatic and functional analysis was necessary:

23 In the case at bar, one should avoid a hasty characterizing of the issue as"jurisdictional" and subsequently be tempted to skip the pragmatic and functionalanalysis. A complete examination of the factors is required.

In ATCO, a threshold issue of statutory interpretation determined whether theBoard could exercise its core functions. Justice Bastarache selected a correctnessstandard, having reasoned as follows:

30 While at first blush the purposes of the relevant statutes and of the Boardcan be conceived as a delicate balancing between different constituencies, i.e., theutility and the customer, and therefore entail determinations which are polycentric(Pushpanathan, at para. 36), the interpretation of the enabling statutes and theparticular provisions under review (s. 26(2)(d) GUA and s. 15(3)(d) AEUBA) isnot a polycentric question, contrary to the conclusion of the Court of Appeal. It isan inquiry into whether a proper construction of the enabling statutes gives theBoard jurisdiction to allocate the profits realized from the sale of an asset. TheBoard was not created with the main purpose of interpreting the AEUBA, theGUA or the PUBA in the abstract, where no policy consideration is at issue, butrather to ensure that utility rates are always just and reasonable (see Atco Ltd., atp. 576). In the case at bar, this protective role does not come into play. Hence, thisfactor points to a less deferential standard of review.

31 Fourth, the nature of the problem underlying each issue is different. Theparties are in essence asking the Court to answer two questions (as I have set outabove), the first of which is to determine whether the power to dispose of theproceeds of sale falls within the Board's statutory mandate. The Board, in itsdecision, determined that it had the power to allocate a portion of the proceeds ofa sale of utility assets to the ratepayers; it based its decision on its statutorypowers, the equitable principles rooted in the "regulatory compact" (see para. 63of these reasons ) and previous practice. This question is undoubtedly one of lawand jurisdiction. The Board would arguably have no greater expertise with regardto this issue than the courts. A court is called upon to interpret provisions thathave no technical aspect, in contrast with the provision disputed in Barrie PublicUtilities v. Canadian Cable Television Assn., [2003] 1 S.C.R. 476, 2003 SCC 28,at para. 86. The interpretation of general concepts such as "public interest" and"conditions" (as found in s. 15(3)(d) of the AEUBA ) is not foreign to courts andis not derived from an area where the tribunal has been held to have greaterexpertise than the courts. ...

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32 In light of the four factors, I conclude that each question requires a distinctstandard of review. To determine the Board's power to allocate proceeds from asale of utility assets suggests a standard of review of correctness. As expressed bythe Court of Appeal, the focus of this inquiry remains on the particular provisionsbeing invoked and interpreted by the tribunal (s. 26(2)(d) of the GUA and s.15(3)(d) of the AEUBA) and "goes to jurisdiction" (Pushpanathan, at para. 28).Moreover, keeping in mind all the factors discussed, the generality of theproposition will be an additional factor in favour of the imposition of acorrectness standard, as I stated in Pushpanathan, at para. 38:

... the broader the propositions asserted, and the further the implications ofsuch decisions stray from the core expertise of the tribunal, the lesslikelihood that deference will be shown. Without an implied or expresslegislative intent to the contrary as manifested in the criteria above,legislatures should be assumed to have left highly generalizedpropositions of law to courts.

[18] The Board’s rate-making power is a core function entitled to deference. Butthe issue here is whether the statute precludes the Board from exercising thatpower. After considering the four contextual factors, and given the statutory rightof appeal and the comments in ATCO, in my view the Legislature intended nodeference on that issue. The threshold legal question is governed by a correctnessstandard.

Did the Board err in law by declining to consider the Rate Assistance Program?

[19] This is a question of statutory interpretation. The words of a statute are readin their entire context and in their grammatical and ordinary sense, harmoniouslywith the scheme of the Act, the object of the Act and the intention of theLegislature: Parry Sound (District) Social Services Administration Board v.Ontario Public Service Employees Union, Local 324, 2003 SCC 42, at ¶ 41; R. v.Sharpe, [2001] 1 S.C.R. 45 at ¶ 33; Nova Scotia (Minister of Health) v. R.G., 2005NSCA 59, at ¶ 24; Doctors Nova Scotia v. Nova Scotia (Department of Health),2006 NSCA 59, at ¶ 25.

[20] DLA focusses on the grammatical and ordinary meaning of the Board’sgeneral rate-making power in s. 44 of the Public Utilities Act:

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44 The Board may make from time to time such orders as it deems just inrespect to the tolls, rates and charges to be paid to any public utility for servicesrendered or facilities provided, and amend or rescind such orders or make neworders in substitution therefor.

DLA submits that the Board is mandated to consider whether a rate assistanceprogram for low income customers is “just”.

[21] The court must also grapple with the basis of the Board’s ruling, s. 67(1):

67 (1) All tolls, rates and charges shall always, under substantially similarcircumstances and conditions in respect of service of the same description, becharged equally to all persons and at the same rate, and the Board may byregulation declare what shall constitute substantially similar circumstances andconditions.

DLA says that its Rate Assistance Program would provide a credit against the rate,but would not alter the rate itself. DLA says that s. 67(1) refers to pure “rates”, notcredits, and is irrelevant to DLA’s Program.

[22] In my respectful view, DLA’s rate/credit distinction is artificial andanalytically flawed. A gross rate subject to an automatic credit is just a net ratecharged to the customer by NSP. The “charge” under s. 67(1) is the net amount.The Board’s “rate” making power is not a blind stab at gross revenue. The ratinginvolves a projection of NSP’s expenses, net income and rate of return. The Boardmust consider the effect of a credit against rates just as it must consider NSP’sexpenses to generate power. DLA cites s. 44 of the Public Utilities Act as authorityfor its Rate Assistance Program, including the credit. Yet, s. 44, quoted earlier,empowers the Board to approve “tolls, rates and charges”, saying nothing of“credits”. Rate credits are integrated with “rates and charges” in s. 67(1) no lessthan rate credits pertain to the Board’s “rating” power in s. 44, upon which DLArelies.

[23] DLA’s factum said that low income customers do not have “substantiallysimilar circumstances” to higher income customers. So, different rates would notbe barred by s. 67(1). At the appeal hearing DLA’s counsel retreated somewhatfrom this submission.

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[24] With respect, the factum’s submission misinterprets s. 67(1). The provisionrefers to “substantially similar circumstances and conditions in respect of serviceof the same description.” To justify a rate difference, the relevant dissimilarity isnot in customers’ incomes. It is in the service from NSP. The Board accepted, andthere is no basis to question, that NSP provides substantially similar electricalservice whatever the domestic customer’s income.

[25] Section 67(1) is mandatory. The rates and charges “shall always . . . becharged equally” to persons of similar circumstances and conditions in respect ofservice. The statute does not endow the Board with discretion to consider the socialjustice of reduced rates for low income customers. It is not for the Board or thiscourt to read into s. 67(1) the words:

. . . similar circumstances and conditions in respect of the income level ofcustomers and service of the same description,

It is for the Legislature to decide whether to expand the Board’s purview with theitalicized words.

[26] This point is illustrated by Allstream Corp. v. Bell Canada, 2005 FCA 247,cited by DLA. The Federal Court of Appeal upheld the decision of the CRTC toprovide low rates to schools and municipalities for fibre optic service. DLA’sfactum says:

This case stands for the proposition that the jurisdiction to regulate utilitiesincludes non cost-based rates and by analogy would include programs similar to arate assistance program for low income consumers. [emphasis in original]

[27] I disagree with DLA’s measure of Allstream’s reach. The Federal Court ofAppeal said:

34. ... It is apparent that the Commission was greatly concerned about the effectof a denial of services on the communities concerned and the dislocation ofcomplex equipment and facility configurations at a significant cost and to thedetriment of school boards and municipalities in the relevant areas and that suchconcerns outweighed, in its view, Bell’s failure to seek prior approval of theserates. These are considerations that a specialized board can entertain and weighrelative to other considerations. It is true that these considerations are not purelyeconomic in the sense referred to by the appellant such as costs, investment,allowance for necessary working capital, rate of return, etc. These considerations,

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however, are part of the Commission’s wide mandate under section 7, a mandateit alone possesses and are quite distinct from the grant of a rate under paragraph27(6)(b) of the Act, a power the Commission did not invoke. [emphasis added]

Section 47(a) of the Telecommunications Act, S.C. 1993, c. 38 directed the CRTCto implement the telecommunications policy objectives from s. 7. Those includedenriching the “social and economic fabric”, rendering “affordable” and“accessible” service, and responding to “the economic and social requirements ofusers.” [legislation quoted in ¶ 10 of Allstream]. Nova Scotia’s Utility and ReviewBoard has no such statutory mandate.

[28] The grammatical and ordinary interpretation of s. 67(1), outlined above, isconsistent with the statutory context, scheme and object of the Act, and intention ofthe Legislature.

[29] The Act connects the Board’s rate-making to NSP’s “service”. Section 2(f)of the Public Utilities Act defines “service” as including:

(iii) the production, transmission, delivery or furnishing to or for the public by apublic utility for compensation of electrical energy for purposes of heat, light andpower,

Section 44 authorizes the Board to make rates “for services rendered or facilitiesprovided”. Section 52 requires the public utility to “furnish services and facilitiesthat are adequate, just and reasonable”. Section 64(1) prohibits the utility fromcharging compensation for any “service” until the Board has approved the rate forthat service. Section 107, entitled “offence and penalty for unjust discrimination”,prohibits the utility from charging “for any service” a rate that is higher or lowerthan charged to any other person “for a like and contemporaneous service”.

[30] Section 73 of the Public Utilities Act allows preferential rates for

(3) . . . a senior citizens club, service club, volunteer fire department, a RoyalCanadian Legion, community hall or recreational facility owned by a communityand used for general community purposes, a charitable or religious organizationor institution . . .

and authorizes the Lieutenant Governor-in-Council to extend this list by order-in-council.

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[31] The legislative context ties the Board’s rate levels to the utility’s services.The Legislature enacts, or assigns to order-in-council, non-compliant rates forspecific classes of customer based on social criteria.

[32] The Board sets rates for a utility that has a virtual monopoly on the supply ofelectric power. The Board’s decision discusses this process: (2005 NSUARB27)

[17] . . . NSPI is not like an unregulated retailer. It is a virtual monopoly whichoperates its business on a cost-of-service basis. Providing electricity to allcommunities in the Province was not (and likely still is not) financially feasiblefor private, competitive companies. For that reason, the Province’s electricservice supplier is a cost-of-service monopoly. In return for undertaking andcontinuing the costs of electrification of the Province, the utility is permitted,under the Act, to recover the reasonable and prudent costs of providing theservice. Because it is a monopoly, regulation operates as a surrogate forcompetition. One of the regulator’s tasks is to balance the need for the Utility torecover its reasonable and prudent costs with the need to ensure that ratepayersare charged fair and reasonable rates.

[18] It is in the interests of all Nova Scotians to ensure that NSPI continues tobe a stable and financially sound company. This is a reality which the Board mustconsider when determining what, if any, rate increase is warranted.

[19] In short, rates charged to customers are based on costs incurred by theUtility in providing service. If the Board finds certain costs to be imprudent orunreasonable, it can (and has) disallowed such expenditures and reducedproposed rate increases accordingly.

[33] I agree with this portrayal of the background to the Board’s rate-makingfunction. The Board’s regulatory power is a proxy for competition, not aninstrument of social policy.

[34] DLA points to the Board’s approval of rates that prefer large industrialpower customers. In Re Nova Scotia Power Inc., [2000] NSURBD No. 72, theBoard approved NSP ‘s application for a load retention rate. This rate would bedetermined between the individual customer and NSP, then submitted to the Boardfor approval. Paragraph 5 of the Board’s decision describes the features of NSP’sproposed load retention rate:

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5 NSPI states in its application that "the proposed rate is an appropriateapproach to retaining existing customers who, in the absence of this rate, wouldreduce their purchases from the Company, to the detriment of all othercustomers". The rate would be available to customers "who are considering analternate supply of at least 2000 KVA or 1800 KW". It would not be available fornew load. The rate would only be available if the following conditions aresatisfied:

1. The customer's option to use a supply of power and energy (alternatesupply) other than NSPI's is both technically and economically feasible.

2. Retaining the customer's load, at the price offered by this rate, is betterfor other electric customers than losing the customer load in question.

3. The price offered by this rate is not less than that necessary to make thecustomer in question indifferent with respect to alternate supply versuscontinuing to purchase the electric power and energy from NSPI.

DLA says that, if the Board can approve a load retention rate for large industrialcustomers, then it can approve a rate assistance program for low income customers.

[35] The Board’s decision in [2000] NSURBD No. 72 is not under appeal.Neither are its decisions on similar issues such as the extra large industrialinterruptible rate: Re Nova Scotia Power Inc., [2003] NSUARB No. 6 and ReNova Scotia Power Inc., [2003] NSUARB No. 91. I make no comment on thoserulings, except to say that they do not support DLA’s submission here that theBoard can implement social policy. The Board’s approval of the load retentionrate was premised on the finding that, otherwise, the large customer could leaveNSP, obtain its energy from another source, and this would hike NSP’s rates to itsremaining customers. The Board’s approach affirms the Board’s role as acompetition surrogate. The Board’s load retention rate recognizes themicroeconomic reality that NSP is not an absolute energy monopoly with a verticalcustomer demand curve, and is subject to elastic demand from high volumecustomers with other energy options. No such factors govern DLA’s proposed RateAssistance Program.

[36] DLA says that legislation should be interpreted in a manner that is consistentwith the Charter of Rights and Freedoms. DLA’s counsel makes a forcefulsubmission that the impoverished are a protected category under s. 15 and,

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following Eldridge v. British Columbia (Attorney General), [1997] 3 S.C.R. 624,this court may direct the institution of a program to ameliorate their disadvantage. DLA’s submission is interpretive and does not challenge the validity of thelegislation.

[37] I make no comment on s. 15. The statutory language does not accommodatethe suggested construction.

[38] The constructive principle applies only when the statute is ambiguous. In R.v. Rodgers, 2006 SCC 15, at ¶ 18, Justice Charron for the majority said:

It has long been accepted that courts should apply and develop common law rulesin accordance with the values and principles enshrined in the Charter: RWDSU v.Dolphin Delivery Ltd., [1986] 2 S.C.R. 573, at p. 603; Cloutier v. Langlois,[1990] 1 S.C.R. 158, at p. 184; R. v. Salituro, [1991] 3 S.C.R. 654, at p. 675; R. v.Golden, [2001] 3 S.C.R. 679, 2001 SCC 83, at para. 86; R. v. Mann, [2004] 3S.C.R. 59, 2004 SCC 52, at paras.17-19. However, it is equally well settled that,in the interpretation of a statute, Charter values as an interpretative tool can onlyplay a role where there is a genuine ambiguity in the legislation. In other words,where the legislation permits two different, yet equally plausible, interpretations,each of which is equally consistent with the apparent purpose of the statute, it isappropriate to prefer the interpretation that accords with Charter principles.However, where a statute is not ambiguous, the court must give effect to theclearly expressed legislative intent and not use the Charter to achieve a differentresult. In Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002SCC 42, at para. 62, Iaccobuci J., writing for a unanimous court, firmly reiteratedthis rule:

... to the extent this Court has recognized a "Charter values" interpretiveprinciple, such principle can only receive application in circumstances ofgenuine ambiguity, i.e., where a statutory provision is subject to differing,but equally plausible, interpretations. [Emphasis in original.]

To the same effect: Bell ExpressVu Ltd. Partnerships v. Rex, [2002] 2 S.C.R. 559at ¶ 27 - 30, 60 - 66.

[39] Section 67(1) is not ambiguous: “rates . . . shall always . . . be chargedequally to all persons and at the same rate” in substantially similar “circumstances and conditions in respect of service of the same description”. The Board cannotreduce the rate to a low income customer who receives the same service as a highincome customer. There is no latitude for the interpretive presumption.

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Conclusion

[40] The Board did not err in its conclusion that s. 67(1) precludes the Boardfrom considering DLA’s rate assistance program for low income customers. Iwould dismiss the appeal without costs.

Fichaud, J.A.

Concurred in:

Saunders, J.A.

Freeman, J.A.

NOVA SCOTIA COURT OF APPEALCitation: Dalhousie Legal Aid Service v. Nova Scotia Power Inc.,

2006 NSCA 74

Date: 20060620Docket: CA 248695

Registry: Halifax

Between:Dalhousie Legal Aid Service

Appellantv.

Nova Scotia Power Inc.Respondent

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Page: 17

Revised judgment: The text of the original judgment has been correctedaccording to this erratum dated September 18, 2006.

Judge(s): Saunders, Freeman and Fichaud, JJ.A.

Appeal Heard: May 29, 2006, in Halifax, Nova Scotia

Held: Appeal is dismissed without costs, per reasons for judgment ofFichaud, J.A.; Saunders and Freeman, JJ.A. concurring.

Counsel: Claire McNeil and Vincent Calderhead, for the appellantDaniel Campbell, Q.C., for the respondentRichard Melanson, for Nova Scotia Utility and Review BoardStephen McGrath, for the Attorney General of Nova Scotia

Erratum:

[1] In ¶ 27 “Section 47(1) of the Telecommunications Act” should read “Section47(a) of the Telecommunications Act”.

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TAB 5

PUBLIC SERVICE COMMISSION OF TilE DISTRICT OF COLUMBIA 1625 I Street, N.w •• Washington, D.C. 20006

Order No. 5542

IN ~ MATTER OF

Application of W/,SLHNGTON GAS LIGHT ) COMPANY for Authority to Increase )

Octobe:r 26, 1972

Existing Rat~a, Tolls, Charges and ) Formal Case No. 567 Schedules for Gas Service. )

FINDINGS, OPINION AND ORDER - PHASE Il

I

PHASE 11 PROCEEDINGS

On August 2, 1972. we issued Order No. 5522, deciding the issues in Phase I of this proceeding. We there determined that Washington Gas Light Company ("WGL" or ,.Company") required an increase in District or Columbia gross revenues totalling $1,611,000. We

· directed WGL to file new rate schedules providing an increase in that amount by August 11, 1972. WGL complied with that directive, filing new tariffs and supporting testiMony and exhibits.

The WGL filing may be summarized as follows:

1. The General Service (A) Schedule

(a) The minimum bill will be raised fro• $1.55 1/ to $2.00 for the first five therms or less. -

(b) Each rate block thereafter would be r~ised about 1%.

~/ Includes a Purchased Gas Adjusonent of 1.08¢ per therm.

Order No. 5542 Page 2

(c) The three final rate blocks covering usage over 6,000 therms in the preaent tariff would be replaced by a single final rate block for 6,000 the~a or over.

(d) A new rider, applicable to certain standby or inter­mittent service, would impose a monthly demand charge of $15 per tnenn of maximum hourly rated input re11uirement.

{e) The chargn for service lines for unmetered gas lighting would ba baaed on actual cost, rather than $1.00 per foot, for footage in excess of 25 feet •.

2. The Air Conditioning (AC) Rate Schedule

(a) The minimum bill rate and the next two rate blocks would be changed as in the uAn rate schedule. The final two rate blocks would increase, respectively, from 9.58¢ 2/ to 10.75¢ per therm and 7.58¢ !/ to 8.75¢ per therm.

(b) For non-residential customers, the uAC11 rate schedule would be available only in May through October rather than May through November.

3. The Seasonal Off Peak (E) Schedule

(a) The rate per therm in each of the tw~ blocks provided in this schedule would be increased from 13.38¢ £/ and 9.38¢ 2/ to 14.50¢ and 10.50¢, respectively.

(b) The service would be available only in May through October, rather than April through November.

4. The Interruptible (I) Schedule

(a) The present rate is 5.95¢ 11 per therm year round. The new rate would be 6¢ per therm in May through October and 8¢ per therm in Nov~ber through April.

~/ Includes a Purchased Gas Adju: .. tment of 1.08¢ per therm.

!/ Includes a rurchaaed Gas Adjustment of .45¢ per therm.

Order No. 5542 Page .3

(b) There would be a new requirement that at least 40% of the customer's annual requirements apply during the summer period.

(c) The minimum bill is presently $550 per month. The new min~um bill would be computed seasonally. It would be 70% times the 11Iu gas quantity specified in the contract for each season, but not less than $3,600 for the summer season nor $4,800 for the winter season.

Rates

5. Watergate Service

(a) Present and proposed rates are as foll~s:

Demand (Per MBtu/hr. of Contract Demalld):

Steam Chil ted \~ater

Commodity (Per MMBtu):

Steam Chilled Water

Monthly Rates Present Proposed

$0.0876 4/ $0.0997 $0.4166 5/ $0.4764

$0.9308 6/ $1.0839 $2.0944 7/ $2.1492

(b) The fuel escalator clause would be changed to include changes in oil costs.

(c) A new escalator clause would be applicable to changes in the cost of purchased power.

(d) Base dates are changed in other escalator provisions.

~· .Xncludes an escalator labor adjusonent of $.0100 5/ Includes· an escalator labor adjustment of $.0316 6/ Includes an escalator. fuel adjustment of $.0477 1! Includes an escalator fuel adjustment of $.0755 - .

Order No. 5542 Page 4

6. General Service Provisions

A variety of changes in the General Service provisions is propused.

A hearing was held on September 1, 1972, at which WGL•s filing was received in evidence and cross-examined by all parties eo desiring. We will take up the issues Which were raised at that hearins.

II

DISCUSSION OF ISSUES

1. Interruptible sales.

Under WGL•s existing tariffs, interruptible gas is sold at a rate of 5.95¢ 8/ per therm. Their proposed tariff sets new rates for int~rruptible gas of 8¢ per therm in the winter months (November through April) and 6¢ per thetm in the sunmer months (May through October). The suppor~ing exhibits indicated that the effect of this change would be an increase in revenues of $156,765. This increase was computed by applying the new rates to the amount of interruptible sales experience6 in the test year.

An issue was raised at the hearing, and in the brief of the General Services Administration ('•GsA") as to the revenue projections reflected in WGLts exhibits for sales of interruptible (I) gas. The problem may be briefly stated.

\~L is facing severe supply problems. As of February 29, 1972, it ceased taking new commitments for gas sales. As a result of these restrictions, the Company expects that its 11Iu gas sales in the ccming winter will be substantially below those experienced in the test year. At the same time, the record reflects that its firm sales will be higher than during the test year, assuming weather normalization. On the basis of these facts, GSA suggests that, in effect, .,!11 gas sales will be

u converted" to ~irm sales. Because firm sales have a higher rate than "I." gas sales, it is suggested that the revenue projections, which are based on teat·year therm sales at new rates, are understated.

~/ Includes a Purchased Gas Adjustment of 1.03¢ per therm.

Order No. 5542 Page 5

In response, the Company states that this analysis is an un­sound departure from the test year concept of rate-making. We believe the Company is correct in this contention. Rate-making is undertaken on the basis of comparing teat year revenues with test year expenses. The GSA argument would have the effect of altering the revenue side of this comparison without taking into account the impact on expenses. As the Company points out, growth in firm sales requires additional expense for demand charges, peaking facilities. and additional dis­tribution facilities. Nor are such additional expenses a matter of theory in this particular instance. The record indicates that the Company contracted for 31,000 Mcf per day of demand since the teat y~~r ended. The additional expense entailed in that additional contract demand is not reflected in teat year expenses. We consider it to be sounder rate-making to base our rate structure decision on test year revenue and expense levels. Hence, we will accept the Company's rev­enue projections f"r 11! 11 sales.

GSA urges that the increase proposed for 11111 rates is excessive. They claim that it is not justified on either a cost-of-service or value-of-service basis. We disagree. The increase in "I" rates is, 1-.l. our judgment., fully justified on a value-of-service basis. Natural gas is a premium fuel whose true value probably even exceeds the cost of alternate fuels. Interruptible sales are made by gas distributors as a means of balancing their load. The price at which this gas is sold is quite low when compared with other gas sales and with the value inherent in this product. The price for these inte~ruptible sales should be sat as high as possible given the cost of competitive fuels and the desire not to discourage such interruptible service altogether. These considerations are accentuated in today•s gas shortage conditions. It could be argued that this scarce and valuable resource should not be burned at all in large boilers which are capable of using alternative fuels, a common type of interruptible use. It would be anomalous indeed to accept GSA's argument and reduce the proposed rate for uru gas, thus in effect encouraging such sales. We believe the rate pro­posed by WGL is fully justified.

2. uE11 Rate Sales.

As noted above, the Company proposes to reduce the availability period for 11Eu gas from 8 months (April through November) to 6 months (May through October) and we will approve this adjustment. The method used by the Company in making its revenue adjustment requires some

Order No. 5542 Page 6

comment however. In ita supporting exhibits) the Company simply de­ducted the rtEn rate revenues from its revenue projections. reflecting a reductlon of test year therms and revenues. The Company now rec­ognizes that at least the cost of this gas must also be deducted and that its figures were thus overstated. In the light of the testimony of record, we believe, that inasmuch as the therms thus omitted were part of test year sales volume included in test year revenues and expenses, they should be included in the pricing of new rates. Ac­cordingly, we will determine the equivalent revenae of such omitted therms at the proposed 11E11 rates and make an approprlate adjustment in our own Phase II computations.

3. Steam and Chilled ttlater Rates.

The Watergate project in Northwest Washington is a major cus­tomer of l-IGL. However, rather than simply supplying the complex with natural gas, \K;L operates a plant which uses interruptible gas for the production of steam and chilled water which is then sold to the Watergate buildings for heating and air conditioning.

None of the owners of these buildings were partjtJ to this proceeding until the final hearing day., on which the Phase II tes­timony ~aa taken. On that date 9 three corporations owning Watergate buildings sought and were granted intervention. These parties asked for a postponement of the hearings, stating that they had learned only a few days before the Phase II hearing of l~L's proposal to raise their rates. We denied their request, feeling that they had had constructive notice through the variety of public notices published in connection with these proceedings. We did, however, allow two weeks for the filing of briefs on all issues, including those involving Watergate.

In their brief, the Watergate intervenors pointed out, for the first time$ that WGL had captioned its application as an application for increase ·in gas rates and had not mentioned steam and chilled water rates. Our notices, of course, tracked their application. Hence, Watergate argued, there had been no constructive notice that t:heir rates for steam and chilled water were here involved.

WGL accepted the validity of this contention and proposed to stipulate that an additional hearing be held before its steam and chilled water rates were changed and that a ninety-day period be allowed in which WGL aud Watergate would attempt to negotiate rates. The Company

Order No. 5542 Page 7

made it clear that, should its proposed Watergate increase he reduced, it will not seek to make up the lost revenue through further changes in gas rates~

We took steps to deal wHi1 th·~ issu~s raised concerning the increase in Watergate rates on Octcher 6, 1972, when we issued Order No. 5536. As indicated in that order, we see no need to rule upon the notice question at this time. However, we determined to provide the Watergate intervenors with an opportunity for further hearing with regard to the Company's testimony on steam and chilled water rates. A specific date for that hearing was established in Order No. 5536. Thus, changes in the rates for steam and chilled water service to the Watergate project will await the completion of the further hearings provided for in Order No. 5536.

In light of the Company's undertaking that it will seek no change in gas rates should its proposed increase to Watergate be reduced, the ultimate outcome on the Watergate question ~an have no impact on the rates for gas service approved in this Order. Tite Company's need for additional revenues was clearly established in Phase I and gas rate­payars have had a full opportunity for hearing on changes in gas rates in Phase II. Hence, there is no need to withhold action on gas rates while procedural requirements applicable to steam and chilled water rates are met. Gas rate increases will be established by this Order. If the revenue increase from steam and chilled water rates is reduced below the level proposed by the Company as a result of the hearings scheduleo by Order No. 5536, the revenue reduction will simply have to be absorbed by WGL's stockholders in the form of reduced profits.

4. The "A" and "AC" Rate Schedules.

The post-hearing briefs did not raise any direct challenges to the proposed changes in the Company's 11Au and 11AC" rates, the rate schedules applicable to most customers. There were, however, some

·questions raised with regard to these rates in the course of the Phase II hearings and we will discuss those points.

(a} The 1-U.ni.Jnum Bill.

The Company proposed to raise the minimum bill under the "A11

and the uAC" rate schedules from $1.55 2/ to $2.00 for the first

i/ Includes a Purchased Gas Adjustment of 1.08¢ per therm.

Order No. 5542 Page 8

five therms, an increase of $0.45, or 29%. The increase in the other rate blocks is approximately 1%. The question arises whether this pattern of increase unduly burdens the small user. We have considered the evidence and have decided to accept this proposal.

We base this decision, first, on the fact that the minim~ rate is fully justified. The Company incurs certain costs for each c•tstotrer connection, for metering, meter reading, billing, and investment in connecting facilities, whether or not that customer uses any gas at all. It was shown on this record that these costs amount to about $4.00 per month. In add1tion1 it was shown that these costs have increased substantially since the last rate proceeding. We see no inequity in requiring each customer to meet at least 50% of the fixed costs of pro•r.tding him a connection each month.

Second• we are not unmindful that, while the percentage increase is high, the increase. in absolute dollar terms is a modest one, only $0.45. We are not unmindful that even this amount can be important to some economic groups in the city. However, we.do not believe that an increase of this magnitude, where it is, as here supported by an equitable cost analysis, will impose injustice or hardship on WGL's customers.

(b) The Price Break for Air Conditioning Gas.

Under WGL's existing rates, a customer who purchases gns air conditioning can obtain gas to operate that unit in the summer months at a price which is approximately 40% below the nA" schedule rate which would otherwise be applicable. WGL's proposed rates would reduce this price break to about 30%. We have considered whether the air conditioning customer is fairly treated by this change in the rates on the basis of which he purchased gas air conditioning. We believe that the change is fair. A primary consideration in establishing this price break was to make the operating cost of gas air conditioning competitive with electric unit operating costs. Because electric rates have also increased, this relationship is maintained. Moreover, the proposed rate will still permit the existing customer to recoup within a reason­able period the higher capital cost of gas air conditioning equipment.

(c) The "AS" Rider.

Th.e Company proposed a rider to its nAn schedule which would be applicable to "gas service to equipra1ent for certain uses such as standby,

Order No. 5542 Page 9

intermittent alternate or other supplementary use in conjunction with another form of energy, or for other uses having similar load charac­teria tics. 11 Service thus described would bear a demand charge of. $15.00 per therm of the maximum hourly rated input requirement of gas for the equipment involved.

There are no existing customers in the District of Columbia to whom this provision would apply. Further, since.no new customers are being accepted by WGL, the rider could not be used until such time as the sales restriction is lifted. Hence, the issues raised by this rider are purely theo·retical.

We accept the validity of such a charge in theory. The nAn 6cbedule imposes only a commodity charge. If no gas is taken, no charge, other than the minimum bill, is impo;;ed. There would be costa to WGL arising from the connection to its system of gas burning equip·· mnnt of substantial capacity. However, if the equipment is used only infrequently such costs might not be recovered through a commodity charge. Hence, a demand compoo~nt in such circumstance would be justifi~ble.

Despite our acceptance of the theoretical validity of such a charge, we will not approve the "AS11 rider at this time. We believe that the tariff lang\~ge presented to us does not define with sufficient pre­cision the circumstances in which the rider will apply. If the problem were one of ~diate concern, we would require appYopriate revision and accept an amended rider. However, we see no need for ~uch a rider at this time. Further, we feel· that the definitional problem might be clarified when the Company is faced with actual situations in which such a rider might be needed. Renee, we will deny approval of the "AS 11 rider. Instead, we will require the Company to continue the pro­vieion presently set out in Section 15 of the Company's General Terms and Conditions which deals with this sanw situation by prohibiting gas service on a standby basis for equipment requiring an aggregate of more than 200 cubic feet per hour.

Page 10

5. Credit and Deposit Policies.

Friendship Uouae Association, an intervenor, raised a number of questions conce~ning WGL'a credit and deposit policies.

(a) Credit Record Problems.

Pursuant to our orders in Formal Case No. 533, the Company has now instituted a deposit policy pursuant to which initial deposits are not required. However, a deposit may be required if a customer is delinquent in meeting his monthly bill twice within a twelve-month period. Friendship House contends that this policy is unfair and should be modified. They argue that some persons in low income brackets may be unable to meet on a current basis the high monthly bills in the heating season. These persons might self-budget in response to the problem, deferring payment of some portion of these bills until later months. This practice, contends Friendship House, will lead to demands for a deposit when the credit risk is, in fact, low.

We share Friendship House's concern of whether WGL's deposit policy works in a fair and equitable manner. Our actions in Formal Case No. 533 demonstrate that concern. We do not think, however, that Friendship House has demonstrated a need for action here. There has been no showing that WGL will demand a deposit in every situation like that posited by Friendship Rouse. It is certainly not the inevitable result of their st:ated polic~·, which • permits but does not require a depo.Jit. Friendship Rouse did present testimony from one custotn·:~-·~ who was asked for a deposlt in a situation of the kind they debcribe but we have no way of knowing whether that situation is normal or abe~rational. Moreover, the Company's credit proceuures include a budgeting plan which, the Company now informs us, will shortly be changed to permit budget payments over an eleven•month period, rather than the present eight.

We wish to make it clear that we would not favorably view a rigid administration of the Company's new deposit policy under which deposits were invariably requir~d in every instance in which two bills were paid late. We would e~pect the policy to have sufficient flexibility to recognize and accomodate situations in which there was no real credi~ risk. We do not feel we are confronted with an overly

Order No. 5542 Page 11

rigid policy on this rcc~rd. Our Staff is involved on a continuing basis in reviewing individual credi.t problems: They will have an opportunity to discern the degree of flexibility in the Co~pauy 8 s administration of its policy. We are certain that if they believe the policy is being administered in an unjust or discriminatory mannert they will bring it to our attention. It is aleo open to the ratepaying public to involve our formal procedures, as was done in Formal Case No. 533. For now, however, we believe that the new policy should be given an opportunity to operate so that a meaningful record of experience can be built.

(b) Public Information on Policies.

Friendohip House suggests that WGL should have an l.tutomatic and effective procedure for informing customers of the Company's policies and cust~er 1 s rights, including appeal rights. We agree and we will impose the same requirement in this regard as we outlined in our recent Potomac Electric Power Company decision. See Order No. 5521, p. 9.

(c) Interest Rate on Deposits.

Friendship House proposes that the interest rate on deposits be raised to 1% from its current 6% level. we do not agree. The customer making a deposit is entitled to a fair rate of interest. On the other hand, since this interest expense is a factor in rate determination, its burden must be borne by all ratepayers. Hence, a balancing process must take place. Friendship Rouse argues that the customer should get a higher interest r~te than available at a savings bank, since the deposit is involuntary. However, the six percent rate meets that standard. Savings bank rates are generally below 6%. It must be recognized that the amounts of these individual deposits are relat~.vely small and we think that a 7% interest rate on such amounts would not be generally available. Accordingly, we will not require any change in the 6% interest rate applicable to deposita.

(d) The Reconnect Rate.

Friendship House objects to the proposed $7.50 charge for reconnection of service. The current rate is $2.00. There is evidence of record, which is uncontradicted, that the cost Ctf reconnection is

OrdEn: No. 5542 Page 12

more than $11.00. Some increase in the charge is~' therefore, clearly cost justified. We are troubled, however, by the magnitude of the proposed increase. We believe that a more equitable rate at the present time would be $5.00 and we will require this change in WGL's proposal. The reduced revenue projection caused thereby is approximately offset by the Company's excess reduction in 11E11 rate revenues discussed at p. s. supra.

6. Rates Based on Ability to Pay.

Senior Neighbors and Companions (i'SNA<;"), an inner .. city group composed largely of senior citizens, has proposed that no increase in rates be established for residential customers 62 years of age or older who share their dwelling solely with other eligible senior citizens or with their spouses, dependent children, roomers or boarders. In addition, these senior citizens would have to be recipients of social security benefits, railroad retirement income, old age or disability assistance, or aid to the blind, in order to qualify for the preferential rates. Similar rate relief is requested by Friendship Honse for all households in t•te District of Columbia that are eligible to purchase food stamps.

The proposals for preferential rates are premised basically on the argument that these customeTs are already burdened by the cost of living and that they spend a larger percentage of their tncomes on essential gas service than do persons having middle or high incomes. Our attention is called also to the claim that the majority of the elderly live in multiple units, and accordingly,. receive no benefits from expenditures made by the Company for facilities for new customers in the single-family residential market.

While the Commission is deeply sympathetic with the gravity of the financial difficulties besetting the elderly and those with low or fixed incomes, we have no choice but to reject the proposals made on their behalf. We reluctantly find that tile present state of the law does not permit a contrary conclusion. Even were that not the case, there is no factual basis in this record on which to support the preferential rates proposed.

Order No. 5542 Page 13

The Conmission reached a similar decision two years ago in Potomac Electric Power Comeany, 84 P.U,R. 3d 250 (D.C. v.s.c. 1970), and we ere compelled to follow it. We also note that the Ne~ Yol'k Public Service Commission has reached a like result and rejected a proposal which would have exempted residential customers over 65 from en increase in the mini.mum monthly rete for electricity. Consolidated Edison Company of New York, Inc., 85 P.U.R. 3d 276 (N.Y.P.S.C. 1970).

Section 43~301 of the D.C. Code requires this Commission to establish rates which are not unjustly discriminatory. Were we to grant the preferential rates requested; we would be obliged to raise further the rate increases now being imposed on other customers, who may or may not be able to afford it. The magnitude of these burdens cannot be determined with precision; neither SNAC nor Friendship House point us to any evidence indicating the revenue effect of their rate proposal. Nor is there ~ny data in the record by which it could be determined how many persons would be exempt from an increaae or how much additional cost the Company would incur to implement the exemption. Furthermore, there is no indication that the pattern of consumption or cost of serving either senior citizens or low-income families is nny different from that of residential gas customers in general. 'rhus, the considerations lvhich support un off-peak special bus fare for senior citizens, for example. are not dpplicable in this case. See Order No. 1037, Afplication of W.V.&M. Coach Company for ~uthority to Increase FaresL Washington Metropolitan Area Transit Commission) Docket No. 208, April 23, 1970. Moreover, even though the impetus for the establishment of economy telephone rates may have been concern for those with low or fixed incomes~ the rates were availnble to any customer who chose that form of service. See, ~' New England Telephone and Telegraph Company, 89 P.U.R. 3d 417 (R.I.~.u.c.) 1971).

Age alone is not a proper basis for classification of gas service. New England Telephone and Telegraph Compan~, supra. n[T]he ability of a customer to pay the increase," whether taken alone or in conjunction with an age limitation, 11is too subjective and too indefinite to provide a sound basis on which to base an obvious rate discrimination." Potomac Electric Power Comeany, supra, 84 P.U.R. 3d at 256. l.f the rntc preference proposnl were accepted, i.t \o.Outd,

Order No. 5542 Page .14

tn affect, tax WGL' s other customers in order to make up the revenue deficiency. The method of spreading such a burden among the populace b normally one undertaken hy a legislative rathar than a regulatory body, and there is no recwon at this time to depart from such custom. Indeed, doing ao could result in th~ imposition of unduly discrim• inatory rates and be contrary to the statutory mandate under which tbi6 Commission exercises its authority. In the final analysis, the problem presented by SNAC and Friendship House is one which should be resolved by the legislatur~.

Even if there were a sufHcient legal basis for us to grant the relief requested, tile would be constrained on the basis of the record before us to reject it. The thrust of SNAC 1 s argument is that peraons over 62 who ~eceive social security or similar types of benefits spend a greater proportion o[ their income for gas service than do other pert~ons who have higher or more flexible incomes. However, the evidence of this comes not from the record, but only from the brief submitted on b~half of SNAC. We know nothing of the incomes or gas consumption of the majority of the District•s senior citizens. Moreover, on its face, SNAC's proposal would apply for example, to almost anyone 62 years and older who receives social security-- regardless of th~t person's income from any other sources.

Nor can we accept SNAC's argument that only new customers arc benefited by investment of funds generated from the rate increase. The evidence in the record, though scant, does seem to indicate that the gas consumption level of the customers represented by SNAC is large and on-peak. WCL serves these customers from facilities dedicated to the public use and it is entitled by law to receive a fair and reasonable return on its investment. We find nothing on which to base a different return for the elderly than for other residential customers receiving the same type and quality of service.

Finally, a word should be said concerning the practicnl difficulties which would necessnrf.ly occur in trying to ascertain those customers who would fall into the proposed exempt category. In the Peeco case, we recognize the problem of determining the class of customers entitled to a preference, i. e.J. those having an annual income of lesR than $5.500 for a family of four and those on \ielfare, social aecurity or unemployment compensation. Potomac i<;lect:ric Power Company, supra, 81., P.U.R. 3d at 255-56. The suggestion made by

Order No. 5542 Page lS

Friendship ltouse to define the exempt class as those households receiving food stamps, in part alleviates our concen\s regarding th~ workability of the scheme proposed by that intervenor. The same, however~ cannot be aald for ' he SNAC proposaL It does not lend itself to such definitional niceties, and we again coma face to face with the practical difficulty of ascertaining the class entitled to receive the preference. As noted, these problems can, and should, if possible, be resolved through the appropriate legislative process.

In view of all of the above, we must reject the rate preference proposals submitted by Senior Neighbors and Companions and Friendship House.

7. Jurisdictional Allocation Studies.

We discussed the Company's jurisdictional allocation study in our Phase I order. It has formed the basis for determining the District of Columbia revenue requirement. It also underlies the revenue projections applicable to the rates we here approve. Because of the importance of jurisdictional allocation to our revenue review, we will require WGL to file a jurisdictional allocatJ.on study with this Commission annually.

THEREFORE, IT IS 9RDERED:

Section 1. That, as modified to comply with this Order, the rate schedules and regulations proposed by Washington Gas Light Company in this proceeding, with the exception of the tariff entitled "Steam and Chilled Water Raten for Service to the Watergate Project" are hereby approved and found to be juut 1 reasonable and non-discrim­inatory, and shall become effective for service furnished to customers in the District of Columbia on and after November 1, 1972, and as to the revised late payment reg·llations, commencing with the first bills rendered covering an entire month at the rates approved in this Order.

Section 2. That, on or befor~ October 31, 1972, Washington Gas Light Company shall file new r.rot~ schedules and regulations complying with the provisions of this Order.

Order No. 5542 Page 16

Section 3. That the Washington Gas Light Company shall suitably inform its customers within a reasonable time, and from time to time as may be appropriate, with respect to its credit and deposit policies, ita budget plan for payment of chargea and with respect to procedures available to the customer for seeking review of decisions made pursuant to those policies.

Section 4. That WaahingtulL Gas Light Company shall each year file, concurrently with its annual report to the Commission, a jurisdictional study substantially similar to that approved in Order No. 5522.

Section 5. That the rate surcharge provided by Order No. 5517 shall be discontinued upon the implementation of the rates approved herein and that pursuant to Order No. 5517, refund with interest of all excess charges collected shall be made by credit to the first bill rendered covering em entire month at the rates approved in this Order.

A TRUE COP'i: By the Commission:

~c~~-( c,t,v~:b.L4~ ~emiah C. Waterman

Chairman

TAB 6

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Harry Phillip Rawluk Appellant

v.

Jacqueline Dorothy Rawluk Respondent

INDEXED AS: RAWLUK V. RAWLUK

File No.: 20736.

1989: October 6; 1990: January 25.

Present: Dickson C.J. and Wilson, La Forest, L'Heureux-Dube, Sopinka, Cory and McLachlin 11.

ON APPEAL FROM THE COURT OF APPEAL FOR.

ONTARIO

a

b

c

Harry Phillip Rawluk Appelant

c.

Jacqueline Dorothy Rawluk Intimee

REPERTORIE: RAWLUK c. RAWLUK

No du greffe: 20736.

1989: 6 octobre; 1990: 25 janvier.

Presents: Le juge en chef Dickson et les juges Wilson, La Forest, L'Heureux-Dube, Sopinka, Cory et McLachlin.

EN APPEL DE LACOUR D'APPEL DE L'ONTARIO

Family law - Property - Constructive trust Wife contributing to accumulation of assets held in husband's name - Act providing for equal division of value of family assets as determined on valuation day - Assets appreciating significantly after valuation day - Whether or not the constructive trust applicable where the Family Law Act, 1986 provides a remedy for unjust enrichment- Family Law Act, 1986, S.O. 1986. c. 4, ss. 4(1}, 5(6}, 10(1), 14, 64(1), (2), (3).

Droit de Ia famille - Biens - Fiducie par interpre­tation - Contribution de !'epouse ii !'acquisition de biens detenus au nom de f'epoux - Loi prevoyant le

d part age ega! de Ia valeur des biens familiaux ii Ia date d'evaluation - Augmentation importante de Ia valeur des biens apres Ia date d'evaluation - Peut-il y avoir fiducie par interpretation quand Ia Loi de 1986 sur le droit de Ia famille prevoit un recours pour l'enrichisse-

e ment sans cause? - Loi de 1986 sur le droit de Ia famille, L.O. 1986, ch. 4, art. 4(1), 5(6), 10(1), 14, 64(1), (2), (3).

Trusts and trustees - Constructive trust - Family assets - Act providing for equal division of value of family assets as determined on valuation day - Assets f appreciating significantly after valuation day -Whether or not the constructive trust applicable where the Family Law Act, 1986 provides a remedy for unjust enrichment.

Fiducies et fiduciaires - Fiducie par interpretation -Biens familiaux- Loi prevoyant le part age ega! de Ia valeur des biens familiaux ii Ia date d'evaluation­Augmentation importante de Ia valeur des biens apres Ia date d'evaluation - Peut-il y avoir fiducie par interpretation quand Ia Loi de 1986 sur le droit de Ia famil/e prevoit un recours pour !' enrichissement sans

g cause?

The Rawluks were married in 1955 and Jived and worked together for twenty-nine years. They had a farm and a farm equipment sales and service business. In the early years of their marriage, the wife cared for their children and looked after farm chores. By the early h 1960s, she was also assisting with customers in the shop of the farm implement business. In 1969, the wife assumed a major role in its operation and maintained her involvement in all aspects of the farming operation. She contributed to the assets the parties acquired during the marriage. At the time of separation in 1984, the Rawluks held a number of properties, all but one of which were registered in the name of the husband. The Family Law Act, 1986 provided that family assets be valued and divided equally. The valuation date here was j the date of separation. In the years between separation and the trial of the action, the value of these properties increased dramatically. The trial judge and the Court of Appeal held that the property in question was impressed

Les Rawluk se sont maries en 1955 et ils ont vecu et travaille ensemble pendant vingt-neuf ans. Ils posse­daient une exploitation agricole et une entreprise de service de vente et d'apn!s-vente de materiel agricole. Au cours des premieres annees du mariage, l'epouse a pris soin des enfants et s'est occupee de travaux de ferme. Au debut des annees 60, elle s'occupait egale­ment des clients de l'entreprise de materiel agricole. En !969, l'epouse a joue un role dominant dans )'exploita­tion de l'entreprise et continue de participer a taus les aspects de !'exploitation agricole. Elle a contribue a !'acquisition des biens des parties au cours du mariage. Au moment de Ia separation en 1984, les Rawluk posse­daient un certain nombre de biens, qui etaient taus au nom de l'epoux a !'exception d'un seul. La Loi de 1986 sur le droit de Ia famil!e prevoit que les biens familiaux doivent etre evalues et partages egalement. En l'espece, Ia date d'evaluation etait la date de Ia separation. Au cours des annees ecoulees entre ]a separation et l'audi-

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with a constructive trust which gave the wife a benefi­cial half interest in the property at the time of separa­tion and therefore entitled her to participate as owner in the value of the property after separation. At issue here is whether or not the constructive trust finds application where the Family Law Act, 1986 already provides a remedy for the unjust enrichment complained of.

Held (La Forest, Sopinka and McLachlin JJ. dissent­ing): The appeal should be dismissed.

tion de !'action en premiere instance, Ia valeur de ces biens a augmente considerablement. Le juge de pre­miere instance et Ia ·cour d'appel ont conclu que les biens en question faisaient !'objet d'une fiducie par

a interpretation qui conferait a l'epouse un interet benefi­ciaire de moitie dans les biens a l'epoque de Ia separa­tion lui permettant done, comme proprietaire, d'avoir une part dans !a valeur des biens apres Ia separation. La question en l'espece est de savoir si Ia fiducie par

h interpretation s'applique quand Ia Loi de 1986 sur le droit de Ia famille prevoit deja un recours pour l'enri­chissement sans cause reproche.

Arret (les juges La Forest, Sopinka et McLachlin sont dissidents): Le pourvoi est rejete.

Le juge en chef Dickson et lcs juges Wilson, L'Heureux-Dube et Cory: Loin d'abroger Ia theorie de Ia fiducie par interpretation, Ia Loi de 1986 sur le droit de Ia famil/e fait du recours a Ia fiducie par interpreta­tion une partie integrante du processus de determination du droit de propriete et d'egalisation etabli par cette loi. En regie generale, le legislateur est presume ne pas s'ecarter du droit existant sans exprimer de fa9on incon­testablement claire son intention de le faire. Meme sans cette presomption, Ia Loi de 1986 sur le droit de Ia

Per Dickson C.J. and Wilson, L'Heureux-Dube and c Cory JJ.: Far from abolishing the constructive trust doctrine, the Family Law Act, 1986 incorporates the constructive trust remedy as an integral part of the process of ownership determination and equalization established by that Act. As a general rule a legislature is d presumed not to depart from prevailing law without expressing its intentions to do so with irresistible clear­ness.· But even aside from this presumption, the Family Law Act, 1986. intended to both recognize and accom­modate the remedial constructive trust. e famille visait a reconnaltre et a rendre applicable le

recours a Ia fiducie par interpretation.

Before property can be equalized under s. 5 of the Family Law Act, 1986, a court is required by s. 4 to determine the "net family property" of each spouse on the valuation date. "Property" is defi.ned as "any inter­est, present or future, vested or contingent, in real or personal property" and accordingly includes not only legal but beneficial ownership. The remedial construc­tive trust therefore should be included in the list of equitable principles or remedies that may be used to calculate the beneficial ownership of net family prop­erty. It can be recognized as having come into existence from the time when the unjust enrichment first arose, even though it is ju~icially deClared at a later date.

The distinction between ownership and a share on equalization is more than an exercise in judicial formal­ism. It involves conceptual and practical differences for ownership which encompass far more than a mere share in the value of property.

Avant de pouvoir egaliser les biens en vertu de !'art. 5 de Ia Loi de 1986 sur le droit de Ia famille, un tribunal doit, en vertu de !'art. 4, determiner les «biens familiaux

f nets» de chaque conjoint a Ia date d'evaluation. «Bien" est defini comme un «droit actuel ou futur, acquis ou eventuel, sur un bien meuble ou immeuble» et comprend done non seulement Ia propriete en common law mais aussi Ia propriete beneficiaire. Le recours a Ia fiducie

g par interpretation devrait done etre inclus dans Ia liste des principes ou reparations en equity qui peuvent etre utilises pour etablir Ia propriete beneficiaire des biens familiaux nets. On peut reconnaltre qu'elle prend nais­sance des le moment ou survient l'enrichissement sans

h cause meme si Ia declaration judiciaire de Ia fiducie intervi.ent plus tard.

La distinction entre une part dans Ia propriete et une part de l'egalisation est plus qu'un exercice de forma­lisme judiciaire. Elle comporte des differences concep­tuelles et pratiques parce que le droit de propriete comprend beaucoup plus qu'une simple part dans Ia valeur du bien.

Where the property at issue is one to which only one spouse has contributed, it is appropriate that the other j spouse receive only an equalizing transfer of money. But where both spouses have contributed to the acquisition

Lorsque le bien en cause est un bien auquel un seul conjoint a contribue, il est juste que !'autre conjoint re9oive uniquement Ia somme provenant de l'egalisation. Mais lorsque les deux conjoints ont contribue a l'acquisi-

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tion ou a l'entretien du bien, le conjoint qui ne detient pas le titre de propriete devrait pouvoir revendiquer un droit sur le bien au moyen de Ia fiducie par interpreta­tion et profiter des avantages que le droit de propriete

or maintenance of the property, the spouse who does not hold legal title should be able to claim an interest in that property by way of a constructive trust and realize the benefits that ownership may provide. The imposition of a constructive trust recognizes that the titled spouse is holding property that has been acquired, at least in part, through the money or effort of another.

a peut apporter. L'imposition d'une fiducie par interpreta­tion reconna!t que l'epoux titulaire detient le bien dont !'acquisition s'est faite, au moins en partie, au moyen de sommes d'argent ou d'efforts fournis par une autre personne.

En vertu de Ia Loi, le tribunal doit d'abord determiner les droits de propriete des conjoints. C'est a cette etape qu'il doit examiner et trancher les demandes relatives aux fiducies par interpretation. La deuxieme etape con­siste a faire les calculs d'egalisation. La troisieme etape

Under the Act a court is, as a first step, required to b determine the ownership interests of the spouses. It is at that stage that the court must deal with and determine the constructive trust claims. The second step requires that the equalization be calculated. The third step requires that the court assess whether equalization is unconscionable, pursuant to s. 5(6). This step in the process must be kept distinct from the preliminary determinations of ownership.

c exige que le tribunal determine si l'egalisation est inad­missible, en vertu du par. 5(6). Cette etape du processus doit etre distincte des questions preliminaires concernant Ia propriete.

L'article 10 de Ia Loi de 1986 sur le droit de Ia Section 10 of the Family Law Act, 1986 reinforces the Act's emphasis on the importance of individual ownership, even within a regime of deferred sharing. A spouse can apply to a court to determine a question of ownership or possession prior to equalization, and thus to assert some degree of control over matrimonial prop­erty during cohabitation. It would be inconsistent to deny a spouse the same remedy when it is sought after a

d famille renforce !'accent qui est mis dans Ia Loi sur !'importance du droit de propriete individuel, meme a l'interieur d'un regime de partage differe. Un conjoint peut demander au tribunal de regler une question rela­tive a Ia propriete ou au droit a Ia possession avant

separation.

e l'egalisation, et done faire valoir un certain degre de controle sur les biens familiaux pendant Ia cohabitation. II serait illogique de priver un conjoint du meme recours lorsque Ia demande en est faite apres une separation.

Section 14 specifically refers to the doctrine of result­ing trust. It is not intended to specifically preserve that f trust, and by implication abolish all other non-express trusts, but rather is intended to modify the resulting trust doctrine as it applies in the context of the Family Law Act, 1986. The combination of these modifying provisions and the legislature's silence on the subject of g remedial constructive trust indicate that the constructive trust is maintained in an unmodified form.

The constructive trust remedy can be utilized by unmarried cohabitants. It would not only be inequitable but would also contravene the provisions of s. 64(2) if married persons were precluded by the Family Law Act, 1986 from utilizing the doctrine of remedial constructive trust which is available to unmarried persons.

h

Per La Forest, Sopinka and McLachlin JJ. (dissent­ing): The doctrine of constructive trust is not a property j right but a proprietary remedy for unjust enrichment. The availability of other remedies for the unjust enrich-

L'article 14 mentionne expressement Ia theorie de Ia fiducie par deduction. L'article 14 n'a pas pour but de preserver specifiquement cette fiducie, et done d'abroger implicitement toutes les autres fiducies non expresses; il vise plutot a modifier Ia theorie de Ia fiducie par deduc­tion telle qu'elle s'applique dans le contexte de !a Loi de 1986 sur le droit de Ia famille. L'effet combine de ces dispositions modificatives et du silence du Iegislateur sur le recours a Ia fiducie par interpretation indique que Ia fiducie par interpretation est maintenue sans modifica­tion.

Le recours a !a fiducie par interpretation peut etre utilise par des personnes qui cohabitent sans etre mariees. II serait non seulement inequitable mais egale­ment contraire aux dispositions du par. 64(2) de priver les personnes mariees, en vertu de Ia Loi de 1986 sur le droit de Ia famille, du recours a Ia theorie de Ia fiducie par interpretation qui est offert aux personnes non mariees.

Les juges La Forest, Sopinka et McLachlin (dissi­dents): La theorie de Ia fiducie par interpretation ne confere pas un droit de propriete mais constitue un recours sur Ia propriete contre l'enrichissement sans

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ment must accordingly be considered before declaring a constructive trust. The doctrine of constructive trust should not be applied in this case because the Family Law Act, 1986 provides a remedy for the unjust enrich­ment of the husband to the detriment of the wife.

The fundamentals of the Canadian approach to con­structive trust in relation to unjust enrichment are: (1) its purpose is to remedy an unjust enrichment; (2) it is remedial rather than substantive; and (3) it is but one of many remedies that may be available to correct unjust enrichment. A plaintiff should exhaust his personal remedies before the remedy of constructive trust is imposed.

In Canada the constructive trust, at least in the context of unjust enrichment, is a remedy and not a doctrine of substantive property law. It does not arise automatically when the three conditions set out in Pett­kus v. Becker are established. Rather, the court must go on to consider what other remedies are available to remedy the unjust enrichment in question and whether the proprietary remedy of constructive trust is appropri­ate. The doctrine of constructive trust does not permit the court to confer retrospectively a property interest solely on the basis of contri·bution of one spouse and enrichment of the other. A further inquiry must be made to determine if the remedy of constructive trust is necessary or appropriate given the presence of another remedy.

cause. ll faut done determiner s'il existe d'autres recours contre J'enrichissement sans cause avant de declarer !'existence d'une fiducice par interpretation. La theorie de Ia fiducie par interpretation ne devrait pas etre

a appliquee en l'espece parce que Ia Loi de 1986 sur le droit de Ia famille prevoit un recours dans le cas de J'enrichissement sans cause du mari au detriment de l'epouse.

Les fondements de !'application de Ia fiducie par b interpretation au Canada, en matiere d'enrichissement

sans cause, soot les suivants: (1) elle a pour objet de remedier a l'enrichissement sans cause; (2) elle est un recours plutot qu'une regie de fond; (3) elle n'est qu'un parmi d'autres recours possibles pour corriger J'enrichis-

c sement sans cause. Le demandeur devrait done epuiser les recours dont il dispose avant que Ia fiducie par interpretation soit imposee.

Au Canada, Ia fiducie par interpretation, du mains dans le contexte de l'enrichissement sans cause, est un

d recours et non une regie de fond en droit des biens. Elle n'existe pas automatiquement lorsque les trois condi­tions requises dans !'arret Pettkus c. Becker soot eta­blies. Le tribunal doit plutot se demander quels autres recours existent pour remedier a l'enrichissement sans

e cause et si Ia fiducie par interpretation comme recours sur Ia propriete est appropriee. La theorie de Ia fiducie par interpretation ne permet pas au tribunal de conferer retroactivement un droit de propriete en se fondant uniquement sur Ia contribution d'un conjoint et l'enri-

/ chissement de !'autre. II faut se demander en outre si, compte tenu de !'existence d'un autre recours, le recours a Ia fiducie par interpretation est necessaire ou approprie.

Given an unjust enrichment arose from the fact that the property to which the wife contributed was in the g husband's name, the Family Law Act, 1986 provides a remedy which makes it unnecessary to resort to the doctrine of constructjve trust. Both the statutory remedy and the remedy of constructive trust are directed to the same end. The Act provides for the equalization to be h accomplished by a payment of money based on the value

Puisque l'enrichissement sans cause provient du fait que les biens auxquels l'epouse a contribue etaient au nom de l'epoux, Ia Loi de 1986 sur le droit de Ia famille prevoit un redressement qui rend inutile !'utilisation de Ia theorie de Ia fiducie par interpretation. Le recours prevu par Ia Loi et celui qu'offre Ia fiducie par interpre-tation visent le meme but. La Loi prevoit que l'egalisa­tion s'effectue par le paiement d'une somme calculee

of the property at the time of separation (a remedy in personam) while the doctrine of constructive trust would give a beneficial interest in the land which persists to the date of trial (a proprietary remedy).

The Family Law Act, 1986 provides complete com­pensation for the wife's contribution to the date of separation. Any disproportionate enrichment must occur because of the increase in value due to changing market conditions after that date. But that does not constitute

seton Ia valeur des biens au moment de Ia separation (un recours in personam) alors que Ia theorie de Ia fiducie par interpretation confererait un interet beneficiaire dans le bien-fonds qui subsiste jusqu'a Ia date de !'au­dience (un recours sur Ia propriete).

La Loi de 1986 sur le droit de Ia famille prevoit une compensation complete de Ia contribution de J'epouse jusqu'a Ia date de Ia separation. Apres cela, tout enri­

j chissement disproportionne resulte de !'augmentation de valeur due aux conditions changeantes du marche. Mais

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an unjust enrichment under the principles set forth in Pettkus v. Becker, given that the wife made no contribu­tion after that date. As a rriatter of legal principle, given the fact that the Legislature provided a remedy for the unjust enrichment which would otherwise. have occurred, it is not for this Court to impose an additional equitable remedy aimed at correcting the same wrong. To graft the remedy of constructive trust to the statutory scheme would pose practical problems, add uncertainty and promote litigation, and perhaps adversely affect the rights of third parties.

The suggestion that the wife should not be in a worse position than had the parties not been married is met by the fact that the Legislature, acting within the proper scope of its authority, chose to confine the Act to married persons.

The fact that a married person might be able to obtain a declaration of constructive trust before but not after separation is not anomalous. The equalization provisions of the Act provide an alternative remedy to which the spouse becomes entitled upon separation. The fact that that remedy may not be as advantageous in some cases as the remedy of constructive trust does not justify the court in altering the doctrine of constructive trust.

Very different provisions govern the division of mari­tal property in the various provinces. There can be no simple or universally applicable answer to the question of whether the doctrine of constructive trust will apply in a statutory context: in each case, the circumstances of the case and the efficacy of alternative remedies con­ferred by the applicable legislation must be examined to ascertain whether, in that situation, a deClaration of constructive trust should be declared.

Cases Cited

By Cory J.

ce n'est pas un enrichissement sans cause selon les principes etablis dans !'arret Pettkus c. Becker puisque l'epouse n'a fait aucune contribution apn!s cette date. Selon les principes juridiques, lorsque le legislateur a

a prevu un moyen de remedier a l'enrichissement sans cause qui se serait produit en l'espece, il n'appartient pas a cette Geur d'imposer une reparation additionnelle en equity pour corriger le meme tort. Greffer le mecanisme de Ia fiducie par interpretation a ce regime legislatif

b entralnerait des problemes pratiques, ajouterait a !'in­certitude, susciterait des litiges et pourrait meme porter atteinte aux droits de tiers.

A !'argument que Ia situation de l'epouse ne devrait pas etre pire que celle dans laq uelle elle se trouverait si

c les parties n'avaient pas ete mariees, Ia reponse est que le legislateur, agissant dans le cadre de ses pouvoirs, a decide que Ia Loi ne s'appliquerait qu'aux personnes mariees.

Le fait qu'une personne mariee puisse obtenir une d declaration de fiducie par interpretation avant mais pas

apres Ia separation n'est pas anormal. Les dispositions de Ia Loi sur l'egalisation offrent au conjoint un autre recours au moment de Ia separation. Le fait que ce recours puisse ne pas etre aussi avantageux dans certains

e cas que Ia fiducie par interpretation ne justifie pas le tribunal de modifier Ia theorie de Ia fiducie par interpretation.

Des dispositions tres differentes regissent le partage des biens familiaux dans les provinces autres que I'Onta-

/ rio. II n'existe aucune reponse facile ou universelle a Ia question de sa voir si Ia theorie de Ia fiducie par interpre­tation doit s'appliquer en contexte legislatif: dans chaque cas, les circonstances de l'espece et l'efficacite d'autres recours prevus par les lois applicables doivent

g etre examinees pour evaluer si, dans un cas donne, il y a lieu d'imposer une fiducie par interpretation.

Jurisprudence

Citee par le juge Cory h

Considered: Murdoch v. Murdoch, (1975) I S.C.R. 423; Sorochan v. Sorochan, [ 1986] 2 S.C.R. 38; Rath­well v. Rathwell, [ 1978) 2 S.C.R. 436; Pettkus v. Becker, [ 1980) 2 S.C.R. 834; referred to: Thompson v. Thompson, [ 1961] S.C.R. 3; Trueman v. Trueman (1971), 18 D.L.R. (3d) 109; Pettitt v. Pettitt, [1969] 2 All E.R. 385; Gissing v. Gissing, [ 1970) 2 All E.R. 780; Hussey v. Palmer, [1972]1 W.L.R. 1286; Hunter Engi­neering Co. v. Syncrude Canada Ltd., (1989) 1 S.C.R. 426; Nuti v. Nuti ( 1980), 28 O.R. (2d) I 02; Vedovato v. Vedovato (1984), 39 R.F.L. (2d) 18; Thoreson v. j Thoreson (1982), 137 D.L.R. (3d) 535; Leatherdale v. Leatherdale, [1982) 2 S.C.R. 743; Seed v. Seed (1986),

Arrets examines: Murdoch c. Murdoch, [1975] 1 R.C.S. 423; Sorochan c. Sorochan, [1986) 2 R.C.S. 38; Rathwell c. Rathwell, [ 1978) 2 R.C.S. 436; Pettkus c. Becker, [ 1980] 2 R.C.S. 834; arrets mentionnes: Thompson v. Thompson, [1961] R.C.S. 3; Trueman v. Trueman (1971), 18 D.L.R. (3d) 109; Pettitt v. Pettitt, [ 1969) 2 All E.R. 385; Gissing v. Gissing, [.1970) 2 All E.R. 780; Hussey v. Palmer, [ 1972] I W.L.R. 1286; Hunter Engineering Co. c. Syncrude Canada Ltee, [ 1989] 1 R.C.S. 426; Nuti v. Nuti ( 1980), 28 O.R. (2d) I 02; Vedovato v. Vedovato ( 1984), 39 R.F.L. (2d) 18; Thoreson v. Thoreson ( 1982), 137 D.L.R. (3d) 535; Leatherdale c. Leatherdale, [ 1982] 2 R.C.S. 743; Seed

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5 R.F.L. (3d) 120; Leslie v. Leslie and Clyde (1987), 9 R.F.L. (3d) 82; Cowan v. Cowan (1987), 9 R.F.L. (3d) 401; Re Corless and Corless (1987), 58 O.R. (2d) 19; Benke v. Benke ( 1986), 4 R.F.L. (3d) 58; Leonard v. Leonard, [1987] O.J. No. 1488, unreported; Goodyear Tire & Rubber Co. of Canada v. T. Eaton Co., [1956] a S.C.R. 610.

By McLachlin J. (dissenting)

v. Seed (1986), 5 R.F.L. (3d) 120; Leslie v. Leslie and Clyde (1987), 9 R.F.L. (3d) 82; Cowan v. Cowan (1987), 9 R.F.L. (3d) 401; Re Corless and Corless (1987), 58 O.R. (2d) 19; Benke v. Benke (1986), 4 R.F.L. (3d) 58; Leonard v. Leonard, [1987] O.J. No. 1488, inedit; Goodyear Tire & Rubber Co. of Canada v. T. Eaton Co., [1956] R.C.S. 610.

Citee par le juge McLachlin (dissidente)

Hussey v. Palmer, [1972] I W.L.R. 1286; Murdoch b Hussey v. Palmer, [1972] I W.L.R. 1286; Murdoch c. Murdoch, [1975] I R.C.S. 423; Pettitt v. Pettitt, [1970] A.C. 777; Gissing v. Gissing, [1971] A.C. 886; Rathwell c. Rathwell, [1978] 2 R.C.S. 436; Pettkus c. Becker, [1980] 2 R.C.S. 834; Sorochan c. Sorochan, [1986] 2 R.C.S. 38; McDonald v. McDonald (1988), II

v. Murdoch, [1975] 1 S.C.R. 423; Pettitt v. Pettitt, [1970] A.C. 777; Gissing v. Gissing, [1971] A.C. 886; Rathwell v. Rathwell, [1978] 2 S.C.R. 436; Pettkus v. Becker, [ 1980] 2 S.C.R. 834; Sorochan v. Sorochan, [1986] 2 S.C.R. 38; McDonald v. McDonald (1988), II R.F.L. (3d) 321. c R.F.L. (3d) 321.

Statutes and Regulations Cited Lois et reglements cites

Loi de 1978 sur Ia reforme du droit familial, S.O. 1978, Family Law Act, 1986, S.O. 1986, c. 4, ss. 4, 5, 10, 14, 64 ..

Family Law Reform Act, R.S.O. 1980, c. 152, s. 8. Family Law Reform Act, 1978, S.O. 1978, c. 2.

d ch. 2. Loi de 1986 sur le droit de Ia famille, L.O. 1986, ch. 4,

art. 4, 5, 10, 14, 64. Loi portant reforme du droit de Ia famille, L.R.O.

1980, ch. 152, art. 8.

Authors Cited e Doctrine citee

Bogert, George Gleason, and George Taylor Bogert. The Law of Trusts and Trustees, 2nd ed. St. Paul, Minn.: West Publishing Co., 1979.

McClean, A. J. "Constructive and Resulting Trusts - f Unjust Enrichment in a Common Law Relationship - Pettkus v. Becker" (1982), 16 U.B.C. Law Rev. 155.

McLeod, James. Annotation to Benke v. Benke ( 1986), 4 R.F.L (3d) 58.

Ontario. Law Reform Commission. Report on Family g Law, Part IV. Toronto: Law Reform Commission, 1974.

Bogert, George Gleason, and George Taylor Bogart. The Law of Trusts and Trustees, 2nd ed. St. Paul, Minn.: West Publishing Co., 1979.

McClean, A. J. «Constructive and Resulting Trusts -Unjust Enrichment in a Common Law Relationship - Pettkus v. Becker» (1982), 16 U.B.C. Law Rev. !55.

McLeod, James. Annotation to Benke v. Benke (1986), 4 R.F.L. (3d) 58.

Ontario. Commission de reforme du droit de !'Ontario, Report on Family Law, Partie IV. Toronto: Commis­sion de reforme du droit, 1974.

Oosterhoff, A. H. and E. E. Gillese. A. H. Oosterhoff' Text, Commentary and Cases on Trusts, 3rd ed.

Oosterhoff, A. H. and E. E. Gillese. A. H. Oosterhoff Text, Commentary and Cases on Trusts, 3rd ed. Toronto: Carswells, 1987. ' h Toronto: Carswells, 1987.

Paciocco, D. M. «The Remedial Constructive Trust: A Principled Basis for Priorities over Creditors» ( 1989), 68 R. duB. can. 315.

Paciocco, D. M. "The Remedial Constructive Trust: A Principled Bases for Priorities over Creditors" ( 1989), 68 Can. Bar Rev. 315.

Pettit, Philip H. Equity and the Law of Trusts, 4th ed. London: Butterworths, 1979.

Scott, Austin Wakemah. Law of Trusts, vol. 5, 3rd ed. Boston: Little, Brown & Co., 1967.

Scott, Austin Wakeman, and William Franklin Fratch­er. The Law of Trusts, vol. 5, 4th ed. Boston: Little, Brown & Co., 1989. ·

Waters, D. W. M. Law of Trusts in Canada, 2nd ed. j Toronto: Carswells, 1984.

Waters, Donovan. Comment ( 1975), 53 Can. Bar Rev. 366.

Pettit, Philip H. Equity and the Law of Trusts, 4th ed. London: Butterworths, 1979.

Scott, Austin Wakeman. Law of Trusts, vol. 5, 3rd ed. Boston: Little, Brown & Co., 1967.

Scott, Austin Wakeman, and William Franklin Frat­cher. The Law of Trusts, vol. 5, 4th ed. Boston: Little, Brown & Co., !989.

Waters, D. W. M. Law of Trusts in Canada, 2nd ed. Toronto: Carswells, 1984.

Waters, Donovan. Comment (I 975), 53 R. du B. can. 366.

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APPEAL from a judgment of the Ontario Court of Appeal (1987), 61 O.R. (2d) 637, 10 R.F.L. (3d) 113, dismissing an appeal from Walsh J. (1986), 55 O.R. (2d) 704,- 3 R.F.L. (3d) 113. Appeal dismissed, La Forest, Sopinka and McLachlin JJ. dissenting.

Malcolm C. Kronby, Q.C., for the appellant.

Melanie A. Manchee, for the respondent.

The judgment of Dickson C.J. and Wilson, L'Heureux-Dube and Cory JJ. was delivered by

POUR VOl contre un arret de Ia Cour d'appel de !'Ontario (1987), 61 O.R. (2d) 637, 10 R.F.L. (3d) 113, qui a rejete un appel de Ia decision du juge Walsh ( 1986), 55 O.R. (2d) 704, 3 R.F.L.

a (3d) 113. Pourvoi rejete, les juges La Forest, Sopinka et McLachlin sont dissidents.

b

Malcolm C. Kronby, c.r., pour l'appelant.

Melanie A. Manchee, pour l'intimee.

Version frant;;aise du jugement du juge en chef Dickson et des juges Wilson, L'Heureux-Dube et Cory rendu par

CORY J.-At issue in this appeal is whether the c

doctrine of constructive trust can be applied to determine the ownership of assets of married spouses under the provisions of the Family Law

LE JUGE CoRv-Ce pourvoi pose Ia question de savoir si Ia theorie de Ia fiducie par interpretation peut servir a determiner Ia propriete des biens des epoux en vertu des dispositions de Ia Loi de 1986 sur le droit de !a famille, L.O. 1986, ch. 4. Act, 1986, S.O. 1986, c. 4.

Factual Background

Jacqueline and Harry Rawluk were married in 1955 when Harry Rawluk was 24 years old and Jacqueline was 21. For the next 29 years, until they separated permanently in 1984, the Rawluks worked together in two business operations. The first was a farm machinery sales and service busi­ness. The second was a cash-crop and livestock farming operation carried on at different times and in different places throughout the marriage.

d

Les faits

Jacqueline et Harry Rawluk se sont maries en 1955 alors qu'ils etaient ages de 21 et 24 ans

e respectivement. Au cours des 29 annees suivantes, jusqu'a leur separation definitive en 1984, les Rawluk ont travaille ensemble a deux entreprises commerciales. La premiere etait un service de vente et d'apres-vente de materiel agricole. La

I deuxieme, exploitee a differentes epoques du mariage et en divers endroits, etait une entreprise de cultures commerciales et d'elevage.

Two years prior to the marriage Mr. Rawluk had bought a New Holland Farm Equipment fran- g chise for the region of Newmarket, north of Toronto. He also farmed a modest rented acreage on a cash-crop basis. Shortly after the marriage Mr. Rawluk's father died. The spouses then took over the farm that had been run by his parents. h

Deux ans avant le mariage, M. Rawluk avait acquis une concession de New Holland Farm Equipment pour Ia region de Newmarket, au nord de Toronto. II avait egalement loue une petite exploitation agricole a des fins de cultures com­merciales. Peu de temps apres le mariage, le pere

For the first few years of the marriage Mrs. Rawluk devoted most of her time to raising the couple's three children and performing a wide range of farm chores. During the early 1960s, however, she began helping her husband in the farm machinery shop. In 1964 the Rawluks moved to a new family farm on a twenty-three acre parcel in Newmarket. Five years later, the farm rna-

de M. Rawluk est dec6de. Les epoux ont alors repris l'entreprise agricole exploitee par ses parents.

Au cours des premieres annees du mariage, Mmc Rawluk a consacre l'essentiel de son temps a !'edu­cation de leurs trois enfants et a un vaste eventail de travaux agricoles. Au debut des annees 60, elle a commence a aider son mari dans le magasin de

j materiel agricole. En 1964, les Rawluk se sont installes dans une nouvelle exploitation agricole familiale de 23 acres a Newmarket. Cinq ans plus

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chinery operation was moved to this farm when the building that had housed the business burned down. From that time on, Mrs. Rawluk played a large role in running the farm machinery business. She performed all the bookkeeping functions, did most of the invoicing and banking and operated the parts department. At the same time, she main­tained her active involvement in all aspects of the farming operations. In addition to the usual daily farm chores, she took care of birthings, needling and feeding of the animals, did the employee payroll and bookkeeping, assisted with augering wheat and helped to transport employees and crops at harvest.

Throughout the late 1950s and_! 960s the Rawl­uks acquired a number of parcels of land. In 1958 they purchased two lots on Faulkner Avenue, in the Township of Whitchurch-Stouffville, adjoining a lot the husband had bought before the marriage. In 1963 they bought a cottage property in Hali­burton. In t~e same year they acquired a nine-acre parcel in Newmarket that was used primarily as farmland but also to store equipment from the machinery business. In 1964 they acquired the matrimonial home farm, located adjacent to this nine-acre parcel. In 1966 they bought another ten-acre parcel near Sharon, Ontario. Title to all these properties was registered in Harry Rawluk's name except for the cottage which was originally in joint tenancy until Mr. Rawluk transferred it into his wife's name for tax purposes.

tard, ils ont demenage l'entreprise de materiel agricole sur cette ferme parce que !'edifice qui abritait l'entreprise avait ete detruit par un incen­die. A compter de ce moment, Mmc Rawluk a joue

a un role important dans !'exploitation de !'entre­prise de materiel agricole. Elle etait responsable de Ia tenue des livres, de Ia plupart des operations de facturation et des operations bancaires ainsi que du service des pieces, tout en continuant i partici-

b per activement i tous les aspects de !'exploitation agricole. En plus des travaux agricoles quotidiens, elle s'occupait des animaux, notamment des mises i bas, des soins et de leur alimentation, elle voyait

c au paiement des salaires des employes et i Ia tenue des livres, elle participait i Ia manutention du ble et aidait au transport des employes et des cultures au moment des recoltes.

d A Ia fin des annees 50 et pendant les annees 60, les Rawluk ont acquis plusieurs terrains. En 1958, ils ont acquis deux lots de !'avenue Faulkner, dans le canton de Whitchurch-Stouffville, qui etaient adjacents i un lot que le mari avait achete avant le

e mariage. En 1963, ils ont achete une residence secondaire a Haliburton ainsi qu'un lot de neuf acres i Newmarket, utilise principalement comme terre agricole mais egalement pour stocker l'equi­pement de l'entreprise de materiel agricole. En

f 1964, ils ont acquis la ferme adjacente ice lot de neuf acres qui devint le foyer conjugal. En 1966, ils ont acquis un autre lot de 10 acres pres de Sharon en Ontario. Tous les titres de propriete etaient au nom de Harry Rawluk i !'exception de

g Ia residence secondaire qui etait i l'origine en propriete conjointe jusqu'i ce que M. Rawluk Ia transfere au nom de son epouse pour des raisons fiscales.

The money required to buy these properties and h

run the businesses came from a single bank account. Over the years the account was virtually always maintained in the husband's name. The sole exception was during a ~pan of about one year when the husband converted it to a joint account, a period that coincided with Mrs. Rawluk's decision

L'argent necessaire i !'acquisition de ces pro­prietes et i !'exploitation des entreprises provenait d'un seul compte en banque. Pendant toutes ces annees, le compte a presque toujours ete au nom de l'epoux i Ia seule exception d'une periode d'en­viron un an, quand l'epoux l'a converti en compte conjoint, i l'epoque ou Mme Rawluk a decide d'in­vestir 7 000 $ provenant de Ia succession de sa mere dans les entreprises commerciales.

to put $7,000 of her inheritance from her mother's estate into the business operations.

j Much of the cash generated by property rents

and machinery sales never reached the ·bank Une large part des sommes provenant des loca­

tions de lots et des ventes de materiel n'ont jamais

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account. For many years the spouses deposited and stored the cash in a teapot in a china cabinet in their home. Both husband and wife, as their cash requirement dictated, dipped into this teapot. Unfortunately this casual arrangement became a source of friction and discord. Mrs. Rawluk com­plained that her husband was miserly and that she was unable, without an argument, to use any money to satisfy the needs of herself and her children. Mr. Rawluk, on the other hand, viewed his wife as a spendthrift who turned too readily to the teapot.

Spurred on by a desire to gain an independent income, Mrs. Rawluk went to night school in the early 1970s and qualified as a registered nursing assistant. In 1974 she worked full-time at a New­market hospital. Mr. Rawluk complained about her absence from the business operations. As a result, from 1975 until just before the Rawluks' first separation, she worked only part-time, mostly in the evenings, so that she could continue her previous work in the farming and farm machinery businesses.

The Rawluks first separated in early 1982 when Mr. Rawluk left the home. In the fall of that year they reconciled and Mr. Rawluk returned. During that year Mr. Rawluk gave up his farm machinery franchise and devoted much of his time to attend­ing auction sales, particularly of antiques. Mrs. Rawluk continued her nursing at the hospital in Newmarket, but now on a full-time basis. By the late spring of 1984 the Rawluks' relationship had significantly deteriorated. On June 1, 1984 they agreed that they were, in fact, living separate and apart under the same roof. ·

After the couple's first separation Mrs. Rawluk had begun proceedings under The Family Law Reform Act, R.S.O. 1980, c. 152. She sought an unequal division of family assets and a division of non-family assets and additionally or alternatively brought her claim under s. 8 of that Act. That action, suspended following reconciliation, was reactivated in 1984. At the trial that took place in 1986, Mrs. Rawluk requested a distribution of matrimonial property under the Family Law Act,

ete deposees dans le compte en banque. Durant plusieurs annees, les Rawluk ont conserve !'argent dans une theiere placee dans un vaisselier de leur domicile. lis prenaient dans cette theiere !'argent

a dont ils avaient besoin. Malheureusement, cet arrangement informel est devenu une source de friction et de discorde. Madame Rawluk se plai­gnait que son mari etait pingre et qu'elle ne pou­vait prendre !'argent dont elle et ses enfants

b avaient besoin sans qu'il y ait de dispute. D'autre part, M. Rawluk trouvait que son epouse etait depensiere et recourait trop facilement a Ia theiere.

Souhaitant gagner un revenu independant, Mm• c Rawluk a suivi des cours du soir au debut des

annees 70 et a obtenu un diplome d'infirmiere auxiliaire autorisee. En 1974, elle a travaille a temps plein dans un hOpital de Newmarket mais

d M. Rawluk se plaignait de son absence des entre­prises. C'est pour cela que, de 1975 jusqu'a peu avant leur premiere separation, elle n'a travaille qu'a temps partie!, surtout le soir, pour continuer son travail anterieur dans !'exploitation agricole et

e l'entreprise de materiel agricole.

Les Rawluk se sont d'abord separes au debut de 1982 lorsque M. Rawluk a quitte le domicile. Ils se sont reconcilies l'automne suivant et M. Rawluk

J est revenu. Cette annee-la, M. Rawluk s'est departi de sa concession de materiel agricole et a passe Ia plus grande part de son temps a assister a des ventes a l'encan, particulierement de meubles et d'objets anciens. Madame Rawluk a continue a

g exercer ses fonctions d'infirmiere a l'hopital de Newmarket, mais cette fois-ci a temps plein. A Ia fin du printemps 1984, les rapports entre les Rawluk s'etaient considerablement deteriores. Le I •• juin 1984, ils ont convenu que, dans les faits, ils

h vivaient separement sous le meme toit.

Apres la premiere separation, Mm• Rawluk avait entame des· procedures en vertu de la Loi portant rejorme du droit de la jamille, L.R.O. 1980, ch. 152. Elle demandait le partage inegal des biens familiaux et le partage des biens autres que fami­liaux, fondant de plus ou subsidiairement sa demande sur !'art. 8 de cette loi. Cette action,

j suspendue a Ia suite de Ia reconciliation, a ete reprise en 1984. A !'audience en 1986, Mm• Rawluk a demande le partage des biens familiaux

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1986 which had come into force on March 1, 1986. The spouses disagreed as to what each owned on June 1, 1984 which, pursuant to s. 4 of the Act, became the valuation date.

Under the Family Law Act, 1986 deferred shar­ing regime, equalization of matrimonial property is calculated according to the value of the property at valuation date. As of the valuation date of June 1, 1984, the Newmarket farm and machinery lot had been valued at $400,000 and the Sharon prop­erty at $139,000. In the Rawluks' case the value of the matrimonial property, particularly the New­market home farm and machinery lot, had increased dramatically by the time of the trial iri 1986 and has continued to do so since then. In order to share in one-half of the increase in value, Mrs. Rawluk claimed by way of a remedial con­structive trust a beneficial one-half interest in the home farm and machinery lot and the Sharon property.

There can be no doubt that the industry and dedication of Mrs. Rawluk was such that they would, apart from the Family Law Act, 1986, entitle her to have her. proprietary interest in the properties in issue recognized. Indeed it is conced­ed by the appellant that the facts of this case would support a declaration of constructive trust unless, as he contends, the remedy is abolished and superceded by the Family Law Act, 1986. As an owner, Mrs. Rawluk would be entitled to a share in the property to the extent of its value as of the date of trial.

The Judgments Below

Supreme Court of Ontario (1986), 55 O.R. (2d) 704, 3 R.F.L. (3d) 113

en vertu de la Loi de 1986 sur le droit de Ia famille, entree en vigueur le 1 ., mars 1986; Les epoux n'etaient pas d'accord sur les biens dont chacun etait proprietaire au 1 er juin 1984, la date

a d'evaluation selon !'art. 4 de la loi.

Selon le regime de partage differe prevu par Ia Loi de I 986 sur le droit de Ia famille, l'egalisation des biens familiaux est calculee selon Ia valeur des

b biens a Ia date d'evaluation. A Ia date d'evaluation du 1 cr juin 1984, !'exploitation agricole et !'entre­prise de materiel agricole a Newmarket avaient ete evalues a 400 000 $ et le lot de Sharon a 139 000 $. Dans Ie cas des Rawluk, Ia valeur des

c biens familiaux, particulierement !'exploitation agricole familiale de Newmarket et l'entreprise de materiel agricole, avait considerablement aug­mente a Ia date de !'audience en 1986 et a aug-

d mente encore par Ia suite. Pour avoir droit a Ia moitie de !'augmentation de Ia valeur, Mm• Rawh.ik a invoque Ia fiducie par interpretation pour obtenir un interet beneficiaire de moitie dans le lot sur lequel se trouvaient !'exploitation agricole fami-

e liale et l'entreprise de materiel agricole ainsi que dans Je lot de Sharon.

11 ne fait pas de doute que le travail et le devouement de Mm• Rawluk meriteraient, indepen-

f damment de la Loi de 1986 sur le droit de Ia famille, que son droit a titre de proprietaire dans les biens en l'espece soit reconnu. L'appelant admet d'ailleurs que les faits de l'espece justifie­raient !'existence d'une fiducie par interpretation

g si, comme il le pretend, le redressement n'avait pas ete aboli et remplace par Ia Loi de 1986 sur le droit de Ia famille. A titre de proprietaire, Mm• Rawluk aurait droit a une part dans les biens dans Ia mesure de leur valeur a Ia date de !'audience.

h Les decisions des juridictions inferieures

La Cour supreme de !'Ontario (1986), 55 O.R. (2d) 704, 3 R.F.L. (3d) 113

At trial, Walsh J. held that a remedial construc­tive trust could be imposed by the court to deter­mine the ownership of assets of married spouses under the Family Law Act, 1986. He determined that the Family Law Act, 1986 requires a court to j

decide issues of ownership prior to equalizing net family property. He held that in determining own-

En premiere instance, le juge Walsh a conclu qu'un tribunal pouvait recourir a Ia fiducie par interpretation pour determiner Ia propriete des biens des epoux en vertu de Ia Loi de 1986 sur le droit de fa famille. 11 a decide que cette loi obligeait le tribunal a trancher les questions de propriete avant d'egaliser les biens familiaux nets.

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ership a court must look to both legal and benefi­cial interests, including an interest arising by means of constructive trust. He observed that it was unlikely that the Ontario legislature would deny married spouses a remedy that they would have had if unmarried. Having decided that the constructive trust doctrine survived the enactment of the Family Law Act, 1986, he found that the facts supported a declaration of constructive trust with regard to the Newmarket home farm and machinery lot and awarded Mrs. Rawluk a one­half interest in the contested property.

Ontario Court of Appeal (1987), 61 O.R. (2d) 637, 10 R.F.L. (3d) 113

rt a conclu que, pour determiner Ia propriete, le tribunal devait prendre en compte les interets en common law et les interets beneficiaires, y compris les interets resultant d'une fiducie par interpreta-

a tion. II a souligne qu'il etait peu probable que le legislateur ontarien prive des epoux d'un recours qu'ils auraient eu s'ils n'avaient pas ete maries. Ayant decide que Ia th€:orie de Ia fiducie par interpretation avait survecu a !'adoption de Ia Loi

b de 1986 sur le droit de Ia famille, il a conclu que les faits justifiaient !'imposition d'une fiducie par interpretation pour Ia ferme familiale et !'entre­prise de materiel agricole a Newmarket et a

c accord€: a Mm• Rawluk un interet de moitie dans les biens en litige.

LaCour d'appel de !'Ontario (1987), 61 O.R. (2d) 637, 10 R.F.L. (3d) 113

d The Court of Appeal affirmed Walsh J.'s deci- La Cour d'appel a confirm€: la decision du juge

sion. It decided that the provisions of the Family Walsh. Elle a decide que les dispositions de Ia Loi Law Act, 1986 far from superceding the construe- de 1986 sur le droit de Ia famille, loin d'abolir la tive trust, appear to incorporate that doctrine into fiducie par interpretation, paraissaient avoir incor-the process of determining ownership and equaliz- e pore cette theorie dans le processus de determina-ing net family property. The Act's provisions, it tion de Ia propriete et d'egalisation des biens fami-was said, clearly direct a court to determine own- liaux nets. Elle a affirm€: que les dispositions de la ership prior to ordering equalization. Accordingly, Loi obligeaient clairement le tribunal a determiner the constructive trust remedy should be applied as Ia propriete avant d'ordonner l'egalisation. Par a part of the first step of ownership determination. f consequent, la reparation sous forme de fiducie par The court reviewed several provisions of the Act in interpretation s'appliquait dans le cadre de Ia pre-order to demonstrate that to deny the constructive miere etape du processus de determination de Ia trust remedy to married spouses in Ontario would propriete. La cour a examine plusieurs dispositions create inconsistencies and inequalities. The court· de Ia Loi pour demontrer que priver des epoux en declined to decide whether a constructive trust can g Ontario du recours a Ia fiducie par interpretation be forced upon a beneficiary to require that person entra!nerait des anomalies et des inegalites. La to share in a decline in the value of property cour a refuse de decider si une fiducie par interpre-following valuation date. It simply noted that s. tation pouvait etre imposee a un beneficiaire de 5(6) of the Act might be used in such a situation h fa~on que cette personne participe a Ia diminution to award an amount that differs from the standard de valeur du bien apres Ia date d'evaluation. Elle a equalization payment. simplement souligne que le par. 5(6) de Ia Loi

pourrait etre utilise dans une telle situation pour accorder un montant different du paiement normal au titre de l'egalisation des biens.

Position of the Appellant

The appellant contended, however, that ·the equalization provisions of the Family Law Act, j 1986 supercede and implicitly abolish the remedy of constructive trust a5 it applies to the division of

La theorie de l'appelant

L'appelant pretend cependant que les disposi­tions de Ia Loi de 1986 sur le droit de Ia famille concernant l'egalisation des biens ont remplace et implicitement aboli le recours a la fiducie par

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matrimonial property held by married persons in Ontario.

The Historical Background

interpretation pour le partage des biens familiaux detenus par des personnes mariees en Ontario.

Le contexte historique

Le litige dans ce pourvoi provient de Ia rencon­tre exceptionnelle de regles de common law et de dispositions legislatives, toutes deux relativement recentes. Le droit canadien en matiere de fiducie applicable aux biens familiaux en etait seulement a ses debuts lorsque Ia Commission de reforme du droit de !'Ontario a propose pour !a premiere fois un regime de partage egalitaire differe des biens familiaux dans son rapport de 1974 intitule Report

The issue presented by this appeal arises from a a unique convergence of common law and statutory provisions, both of which are of relatively recent origin. The Canadian law of trusts with regard to matrimonial property was only in its infancy when b

the Ontario Law Reform Commission first pro­posed a matrimonial property regime of deferred equal sharing in its 1974 Report on Family Law (Ontario Law Reform Commission, Report on Family Law, Part IV, 1974, at p. 55). The Ontario legislature used that Report as a model for the provisions of the Family Law Act, 1986 but declined to expressly clarify the relationship be­tween the provisions of the Act and the doctrine of constructive trust, as it had evolved during the late d

1970s and early 1980s.

c on Family Law (Commission de reforme du droit de !'Ontario, Report on Family Law, Partie IV, 1974, a Ia p. 55). Le legislateur ontarien a utilise ce rapport comme modele pour les dispositions de Ia Loi de 1986 sur le droit de !a fa mille, mais sans definir clairement le rapport entre les dispositions de Ia loi et Ia theorie de Ia fiducie par interpreta-tion au stade d'evolution ou elle etait parvenue a Ia fin des annees 70 et au debut des annees 80.

(a) The Doctrine of Constructive Trust and Its e a) La theorie de Ia fiducie par interpretation et Application in Matrimonial Cases son application aux affaires matrimoniales

The evolution of the remedial constructive trust doctrine in Canada and its application to the divi­sion of marital property can be tra.ced through a series of well-known decisions of this Court begin­ning with the dissenting reasons of Laskin J. (as he then was) in Murdoch v. Murdoch, [1975] 1 S.C.R. 423, and culminating in Dickson C.J.'s decision for a unanimous Court in Sorochan v. Sorochan, [1986] 2 S.C.R. 38. The doctrine devel­oped when it appeared that the traditional approach to resolving property disputes was inap­propriate and inequitable when applied to situa­tions.of marital breakdown.

On peut retracer !'evolution de Ia theorie de Ia fiducie par interpretation comme recours au

1 Canada et son application au partage des biens matrimoniaux dans une serie d'arrets bien connus de notre Cour commen9ant par !'opinion dissidente du juge Laskin (plus tard Juge en chef) dans !'arret Murdoch c. Murdoch, [1975] 1 R.C.S. 423,

g et culminant dans le jugement unanime de notre Cour rendu par le juge en chef Dickson dans !'affaire Sorochan c. Sorochan, [ 1986] 2 R.C.S. 38. La theorie a vu le jour parce que le mode traditionnel de resolution des litiges en matiere de

h biens s'etait avere inequitable et inadapte aux situations de rupture du mariage.

Prior to Murdoch v. Murdoch, supra, Canadian Avant !'arret Murdoch c. Murdoch, precite, le trust law offered few avenues for a non-titled droit canadien en matiere de fiducie offrait peu de spouse to gain an interest in matrimonial property . recours permettant au conjoint sans titre de pro-held in the name of the other spouse. In the priete d'obtenir un interet dans les biens familiaux absence of an express trust or a contract a spouse detenus au nom de l'autre conjoint. En !'absence had to establish the existence of a resulting trust. de fiducie expresse ou de contrat, un conjoint In order to do this the applicant spouse was j devait etablir !'existence d'une fiducie par deduc-required to show that he or she had made a tion. Pour ce faire, le conjoint requerant devait contribution to the purchase price of the property etablir sa contribution a !'acquisition du bien et, de.

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and, as well, that there was a common intention that the non-titled spouse should have a beneficial interest in that property.

plus, !'intention commune que le conjoint non titu­laire du droit de propriete ait un interet benefi­ciaire dans ce bien.

Les elements de «COntribution» et ud'intention», essentiels a ]'existence d'une fiducie par deduction, etaient des concepts difficiles a cerner qu'on fa~on­naient parfois de maniere a les adapter aux affai-

The elements of "contribution" and "intent" a

essential to a finding of resulting trust were elusive concepts that were not infrequently molded so that they could be adapted to matrimonial property cases. In Thompson v. Thompson, [1961] S.C.R. b res matrimoniales. Dans !'arret Thompson v. 3, this Court had denied a wife a beneficial inter­est in property held by her husband on the grounds that she had made no financial contribution to the property's acquisition. However, Judson J., writing for the majority, noted at p. 14 that the Court might properly exercise its discretion in awarding a resulting trust "when there is no financial contri­bution when the other attributes of the matrimoni-al partnership are present". His statement was used by the Alberta Court of Appeal in Trueman v. Trueman (1971), 18 D.L.R. (3d) 109, as au­thority for the principle that an indirect contribu­tion was sufficient to raise a resulting trust.

Under the traditional English view the construc­tive trust was regarded as a substantive institution very similar to an express trust. It was only applied in very narrow circumstances. In Pettitt v. Pettitt, [1969] 2 All E.R. 385, and Gissing v. Gz'ssing, [ 1970] 2 All E.R. 780, the House of Lords empha­sized the need for courts to find an actual or presumed intention on the part of the parties before they could reallocate property interests pur­suant to trust doctrine. In discussing trust doctrine the House of Lords used the phrase "implied, resulting or constructive trust" without making any distinction among the three. At the same time, however, the Court of Appeal had granted judicial recognition to a "new model" constructive trust that could be imposed, in the words of Lord Den­ning M.R. in Hussey v. Palmer, [1972] 1 W.L.R. 1286 (C.A.), at p. 1290, "whenever justice and good conscience require it".

Thompson, [1961] R.C.S. 3, notre Cour avait refuse a une epouse un interet ben6ficiaire dans un bien detenu par son conjoint parce qu'elle n'avait apporte aucune contribution financiere a l'acquisi-

c tion du bien. Cependant, le juge Judson, au nom de Ia majorite, avait souligne, a Ia p. 14, que Ia Cour pourrait a bon droit exercer son pouvoir discretionnaire en reconnaissant !'existence d'une fiducie par deduction [TRADUCTION] u]orsqu'i] n'y

d a eu aucune contribution financiere mais que les autres attributs de Ia societe conjugale sont pre­sents». La Cour d'appel de !'Alberta a utilise cette affirmation dans !'arret Trueman v. Trueman

e (1971), 18 D.L.R. (3d) 109, pour etayer le prin­cipe qu'une contribution indirecte suffisait pour etablir une fiducie par deduction.

Seton Ia conception traditionnelle anglaise, Ia f fiducie par interpretation etait consideree comme

une institution de fond tres semblable a Ia fiducie expresse. Elle n'etait appliquee que dans des cir­constances bien d6finies. Dans les arrets Pettitt V.

g Pettitt, [1969] 2 All E.R. 385, et Gissing v. Cis­sing, [1970] 2 All E.R. 780, Ia Chambre des lords a souligne que les tribunaux devraient conclure a !'existence d'une intention reelle ou presumee chez Jes parties avant de pouvoir reattribuer les droits

h sur des biens en conformite avec Ia theorie des fiducies. En analysant Ia theorie des fiducies, Ia Chambre des lords a utilise !'expression [TRADUC­

TION] ufiducie implicite, par deduction OU par interpretation» sans faire de distinction entre les trois. Cependant, en meme temps, Ia Cour d'appel reconnaissait un «nouveau modele» de fiducie par interpretation qui pouvait etre impose [TRADUC­

TION] ulorsque Ia justice et Ia conscience l'exi-j gent», selon les propos de lord Denning, maitre des

roles, dans !'arret Hussey v. Palmer, [1972] 1 W.L.R. 1286 (C.A.) a Ia p. 1290.

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In the United States, on the other hand, the constructive trust had long been recognized not as an institution, but as a broad restitutionary device that could be invoked in a wide variety of situa­tions to compel the transfer of property to a claim­ant by the defendant in order to prevent the unjust enrichment of the title holder. As stated in Scott, The Law of Trusts, vol. 5 (4th ed. 1989), at p. 304:

A constructive trust arises where a person who holds title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.

In the Murdoch v. Murdoch case Mrs. Murdoch had claimed a beneficial interest in a ranch held in her husband's name basing her claim on a result­ing trust arising from her contributions of money and labour. A majority of this Court denied her claim, applying a resulting trust analysis and fol­lowing the House of Lords' judgments, in Pettitt v. Pettitt, supra, and Gissing v. Gissing; supna"

Par ailleurs, aux Etats-Unis, Ia fiducie par inter­pretation avait ete reconnue depuis longtemps non pas comme une·institution, mais comme un meca­nisme general de restitution qui pouvait etre invo-

a que dans des situations tres diverses pour obliger Ie defendeur a transferer le bien au demandeur pour prevenir I'enrichissement sans cause du titulaire d'un droit. Comme I'affirme Scott dans son ouvrage The Law of Trusts, vol. 5 ( 4e ed. 1989), a

b Ia p. 304:

[TRADUCTION] II y a fiducie par interpretation lors­que le titulaire du droit de propriete est assujetti a !'obligation en equity de le transferer a une autre per­

c sonne parce qu'il s'enrichirait injustement s'il lui etait permis de le conserver.

Dans !'arret Murdoch c. Murdoch, Mme Mur­doch avait revendique un interet beneficiaire dans

d une ferme d'elevage dont le titre etait au nom de son mari, en fondant sa demande sur une fiducie par deduction decoulant de sa contribution en argent et en travail. Notre Cour, a Ia majorite, a rejete sa demande apres avoir fonde son analyse

e sur Ia fiducie par deduction et suivi les arrets Pettitt v. Pettitt, et Gissing v. Gissing, precites, de Ia Chambre des lords.

Laskin J., in dissent, would have held in the 1 wife's favour. He based his decision primarily on the ground that the constructive trust could be interpreted as an equitable instrument, the purpose

Le juge Laskin, dissident, aurait statue en faveur de l'epouse. II a essentiellement fonde sa decision sur !'idee que Ia fiducie par interpretation pouvait etre consideree comme un mecanisme d'equity dont le but etait de prevenir I'enrichisse-of which was to prevent unjust enrichment. He

wrote at p. 454: g ment sans cause. II a ecrit, a Ia p. 454:

The appropriate mechanism to give relief to a wife who cannot prove a common intention or to a wife whose contribution to the acquisition of property is physical labour rather than purchase money is the constructive

. trust which does not depend on evidence of intention. h

Le mecanisme approprie pour rendre justice a une femme qui ne peut faire Ia preuve d'une intention com­mune ou a une femme dont !a contribution a !'acquisi­tion du bien consiste en un travail physique plutot que dans un prix d'achat, c'est Ia fiducie par determination de Ia loi [fiducie par interpretation), qui ne depend pas d'une preuve d'intention.

Although Laskin J. did not expressly adopt the American approach, his reasons indicate that he was closely aligned to it. For example, in the same paragraph in which he first suggested that a con­structive trust should be applied to the Murdochs' situation, Laskin J. relied on citations. from the writings of Professor Scott and the reasons of Cardozo J. to help define the doctrine.

Bien que le juge Laskin n'ait pas expressement adopte !'interpretation americaine, ses motifs indi­quent qu'il s'en rapprochait considerablement. Par exemple, dans le paragraphe ou il a suggere qu'il y avait lieu d'appliquer Ia theorie de Ia fiducie par

j interpretation a Ia situation des Murdoch, le juge Laskin citait Ie professeur Scott et les motifs du juge Cardozo pour definir Ia theorie.

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In Rathwell v. Rathwell, [ 1978] 2 S.C.R. 436, Mrs. Rathwell had made a direct financial contri­bution to the acquisition of the disputed farmland and the majority were content to use a resulting trust analysis to award a one-half interest to the wife. Dickson J. (as he then was) enlarged upon the concept of constructive trust. Writing for Laskin C.J. and Spence J ., he held that Mrs. Rathwell could succeed on the basis of either a resulting trust or a constructive trust. At page 455, Dickson J. reiterated the equitable foundations of this doctrine and defined the requisite elements for a finding of constructive trust:

The constructive trust ... comprehends the imposition of trust machinery by the court in order to achieve a result consonant with good conscience. As a matter of principle, the court will not allow any man unjustly to appropriate to himself the value earned by the labours of another. That principle is not defeated by the existence of a matrimonial relationship between the parties; but, for the principle to succeed, the facts must display an enrichment, a corresponding deprivation, and the absence of any juristic reason ~ such as a contract or disposition of law- for the enrichment.

The validity of the doctrine of constructive trust was accepted by a majority of this Court in Pett­kus v. Becker, [ 1980] 2 S.C.R. 834. In this deci­sion Dickson J. extended the constructive trust principle to a common law relationship, awarding Mrs. Becker a one-half interest in the farmlands and a bee-keeping business developed by herself and Mr. Pettkus. Although the minority found a contribution of both money and labour sufficient

Dans !'affaire Rathwell c. Rathwell, [1978] 2 R.C.S. 436, Mm" Rathwell avait fait une contribu­tion financiere directe a !'acquisition de Ia Jerme en cause et les juges, a Ia majorite, se sont conten-

a tes d'utiliser une analyse fondee sur Ia fiducie par interpretation pour lui accorder le droit a Ia moitie des biens. Le juge Dickson (maintenant Juge en chef) a etendu Ia notion de fiducie par interpreta­tion. S'exprimant au nom du juge en chef Laskin

b et du juge Spence, il a conclu que Mme Rathwell pouvait avoir gain de cause en invoquant soit Ia fiducie par deduction soit Ia fiducie par interpreta­tion. A Ia page 455, le juge Dickson a rappele les

c fondements en equity de cette theorie et defini les elements requis pour conclure a ]'existence d'une fiducie par interpretation:

La fiducie par interpretation [ ... ] comporte !'impo­sition par le tribunal du mecanisme fiduciaire pour

d atteindre un resultat conforme a ce que dicte Ia cons­cience. En principe, le tribunal ne permettra pas a quelqu'un de s'approprier injustement des biens acquis par le travail d'un autre. Le lien du mariage entre les parties ne met pas en echec ce principe; mais pour qu'il

e l'emporte, les faits doivent demontrer un enrichissement, un appauvrissement correspondant et !'absence de tout motif juridique - tel un contrat ou une disposition legale- a ]'enrichissement.

Dans !'arret Pettkus c. Becker, [1980] 2 R.C.S. f 834, notre Cour, a Ia majorite, a accepte Ia validite

de Ia theorie de Ia fiducie par interpretation. Dans cet arret, le juge Dickson a etendu le principe de Ia fiducie par interpretation a une relation de fait,

g accordant a M"'e Becker le droit a Ia moitie des

to support a resulting trust, Dickson J., for the majority, emphasized that the trial judge had h

found no common intention and that the Ontario Court of Appeal had not overruled that finding. Dickson J. commented upon the artificiality and inadequacy of the resulting trust, quoting at p. 843, with approval, Professor Donovan Water's comment that the "discovery" of an implied common intention is a "mere vehicle or formula" for achieving equity, a constructive trust approach masquerading as a resulting trust j approach" (Waters (1975), 53 Can. Bar Rev. 366,

terres agricoles et de !'exploitation apicole mise sur pied par elle-meme et M. Pettkus. Bien que Ia minorite ait conclu a !'existence d'une contribution en argent et en travail suffisante pour justifier une fiducie par deduction, le juge Dickson, au nom de Ia majorite, a souligne que le juge de premiere instance avait conclu a !'absence d'intention com­mune et que Ia Cour d'appel de !'Ontario n'avait pas infirme cette conclusion. Le juge Dickson a souligne le caractere artificiel et inadequat de Ia fiducie par deduction, citant et approuvant, a Ia p. 843, le commentaire du professeur Donovan Waters que Ia ((decouverte» d'une intention com­mune implicite est un «simple moyen ou formuJe,, pour rendre une decision equitable OU «Une fiducie par interpretation qui se deguise en une fiducie par at p. 368). His reasons clearly demonstrate the

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broad and equitable nature of the remedial con­structive trust and its applicability to any property dispute.

The importance of Pettkus v. Becker was emphasized in Hunter Engineering Co. v. Syn­crude Canada Ltd., [1989] I S.C.R. 426. At page 471 Dickson C.J. stated:

The constructive trust has existed for over two hun­dred years as an equitable remedy for certain forms of unjust enrichment .... Until the decision of this Court in Pettkus v. Becker, the constructive trust was viewed largely in terms of the law of trusts, hence the need for the existence of a fiduciary relationship. In Pettkus v. Becker, the Court moved to an approach more in line with restitutionary principles by explicitly recognizing constructive trust as one of the remedies for. unjust enrichment.

Subsequently, this Court has made it clear that the constructive trust remedy will also apply to circumstances where a spouse has contributed not to the acquisition of property but to its preserva­tion, maintenance or improvement. In Sorochan v. Sorochan, supra, a woman was awarded an inter­est in a farm owned by her common law spouse of 42 years on the basis of the labour she had con­tributed over the years to preserVing and maintain­ing the farm, performing domestic labour and raising the parties' six children. Dickson C.J., writ­ing for a unanimous Court, reiterafed the three­part test requiring an enrichment, a corresponding deprivation and the absence of any juristic reason therefor. In light of the particular facts of the case, he concentrated on defining the requirement for a causal connection between the deprivation and the property involved. He wrote at p. 50:

These cases reveal the need to retain flexibility in applying the constructive trust. In my view, the con­structive trust remedy should not be confined to c.ases ·· involving property acquisition. While it is important to require that some nexus exist between the claimant's deprivation and the property in question, the link need not always take the form of a contribution to the actual acquisition of the property. A contribution relating to the preservation, maintenance or improvement of prop-

deduction» (Waters (1975), 53 R. duB. can. 366, a Ia p. 368). Ses motifs indiquent clairement le caractere etendu et 'equitable du recours a Ia fidu­cie par interpretation et son applicabilite a tous les

a litiges portant sur les biens.

L'importance de !'arret Pettkus c. Becker a ete soulignee dans !'arret Hunter Engineering Co. c. Syncrude Canada Ltee, [ 1989] 1 R.C.S. 426. A Ia

h page 4 71, Ie juge en chef Dickson a affirme: La fiducie par interpretation existe depuis plus de

deux cents ans ~ titre de redressement en equity contre certaines formes d'enrichissement sans cause [ ... ) Jus­qu'a !'arret de cette Cour Pettkus c. Becker, Ia fiducie

c par interpretation Ctait pen;ue surtout sous !'angle du droit des fiducies, d'ou Ia necessite d'une relation fidu­ciaire. Dans !'arret Pettkus c. Becker, cette Cour a choisi d'adopter un point de vue plus conforme aux principes de restitution en reconnaissant explicitement

d que Ia fiducie par interpretation constitue l'un des redressements contre l'enrichissement sans cause.

Ulterieurement, notre Cour a clairement indique que Ia fiducie par interpretation comme recours

e s'appliquera egalement dans des circonstances ou un conjoint a contribue non pas a !'acquisition du bien mais a sa conservation, a son entretien ou a son amelioration. Dans !'arret Sorochan c. Sora­chan, precite, elle a accorde a une femme un droit

f dans Ia ferme appartenant a son conjoint de fait, avec lequel elle avait vecu 42 ans, en raison du travail qu'elle avait fourni au cours des ans pour conserver et entretenir Ia ferme, en executant des travaux domestiques et en elevant les six enfants

g des parties. Le juge en chef Dickson, au nom de Ia Cour unanime, a rappele les trois volets du critere qui exigent un enrichissement, un appauvrissement correspondant et !'absence de tout motif juridique.

h Compte tenu des faits particuliers de !'affaire, il a porte son attention sur Ia definition de l'exigence d'un lien causal entre l'appauvrissement et le bien en cause. II a ecrit, a Ia p. 50:

Cette jurisprudence revete Ia necessite de souplesse dans !'application du principe de Ia fiducie par interpre­tation. Seton moi, le redressement qu'est Ia fiducie par interpretation ne doit pas etre accorde uniquement dans les affaires ou il y a eu acquisition de biens. Certes, il importe d'exiger un certain lien entre l'appauvrissement

j du requerant et les biens en cause, mais il n'est pas necessaire que ce lien revete toujours Ia forme d'une contribution a !'acquisition comme telle des biens. Une

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erty may also suffice. What remains primary is whether or not the services rendered have a "clear proprietary relationship", to use Professor McLeod's phrase. When such a connection is present, proprietary relief may be appropriate. Such an approach will help to ensure equi­table and fair relief in the myriad of familial circum­stances and situations where unjust enrichment occurs.

These cases show that in Canada the doctrine of remedial constructive trust has been accepted for almost a decade as an important remedial device whose prime function is to remedy situations of unjust enrichment. It is clear that at the time that the Family Law Act, 1986 was enacted, the con­structive trust was widely recognized as the pre­eminent common law remedy for ensuring the equitable division of matrimonial property. The validity and importance of the remedy designed, as it is, to achieve a measure of fairness between married persons and those in a marital relation­ship, must have been well known to the framers of the legislation. It would seem unlikely that they would, without a precise and specific reference, deprive parties of access to such an equitable remedy.

(b) The Ensuing Legislation

(i) The Family Law Reform Act

contribution reliee a Ia preservation, a l'entretien ou a !'amelioration des biens peut egalement suffire. 11 reste cependant que Ia question fondamentale est de savoir si les services rendus [TRADUCTION] «Se rapportent claire-

a ment aux biens», pour reprendre !'expression du profes­seur McLeod. Lorsqu'un tel lien existe, il peut etre approprie d'accorder un redressement foncier. Cette fa9on de proceder permettra d'assurer un redressement equitable et juste dans les nombreuses situations familia-

b les ou il y a enrichissement sans cause.

Ces arri~ts indiquent qu'au Canada Ia theorie de Ia fiducie par interpretation est acceptee depuis pres d'une decennie comme un important meca­nisme de reparation dont Ia fonction premiere est

c de remedier aux situations d'enrichissement sans cause. 11 est clair qu'a l'epoque de l'adoption de Ia Loi de 1986 sur le droit de Ia famille, Ia fiducie par interpretation etait Iargement reconnue

d comme Ie recours par excellence, en common law, pour assurer Ie partage equitable des biens fami­Iiaux. La validite et !'importance du recours, tel qu'iJ etait COn\(U pour parvenir a une certaine equite entre les personnes mariees et celles qui

e vivent dans une relation de fait, devaient etre bien connues des redacteurs de Ia loi. II est peu proba­ble qu'ils aient prive les parties du recours a cette reparation d'equity sans le mentionner de maniere precise et specifique.

f b) Les nouvelles lois

(i) La Loi de 1978 sur Ia reforme du droit familial

In Rathwell v. Rathwell, supra, Dickson J. had g

observed at p. 443 that "Canadian legislatures generally have given little or no guidance for the resolution of matrimonial property disputes". Within two years of that decision all nine common

h law provinces had enacted legislation aimed at the

Dans !'arret Rathwell c. Rathwell, precite, le juge Dickson a souligne, a Ia p. 443, que <des legislatures canadiennes ont generalement donne peu ou pas de directives permettant de resoudre les litiges en matiere de biens matrimoniaux)). Dans les deux annees qui ont suivi cet arret, les neuf provinces de common law ont adopte des lois visant a resoudre ces litiges. Le legislateur ontarien a adopte Ia Loi de 1978 sur Ia reforme du droit familial, S.O. 1978, ch. 2. L'article 4 prevoyait le partage des biens familiaux et !'art. 8 une version legislative du recours a Ia fiducie par interpreta­tion. L'article 8 conferait aux tribunaux le pouvoir discretionnaire de dedommager les conjoints non titulaires d'un droit de propriete pour leur apport a !'acquisition, a l'entretien et a !'amelioration des biens autres que familiaux.

resolution of these disputes. The Family Law Reform Act, 1978, S.O. 1978, c. 2, was passed by the Ontario legislature in 1978. It provided for a division of family assets under s. 4 and created under s. 8 a statutory version of the constructive trust remedy. Section 8 granted courts a discre­tionary power to compensate spouses who did not have title to the property for contributions made towards the acquisition, maintenance or improve- j

ment of non-family assets.

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Courts across Canada reached varied conclu­sions with regard to the relationship between the constructive trust doctrine and its statutory equivalent found in a number of provincial stat­utes. In Nuti v. Nuti (1980), 28 O.R. (2d) 102, J. Holland J. determined that a wife was entitled to a beneficial interest in her husband's property under both s. 8 and the constructive trust doctrine. He wrote at p. 115:

Following the passage of the Family Law Reform Act, 1978, the cases in this Province largely follow the dictates of the statute rather than trust concepts. It may be that the language employed in s. 8 bears close resemblance to that in Rathwe/l. However, I do not read s. 8 as removing from consideration the common law. The plaintiff may avail herself of the common law relating to constructive trust or the rights granted under s. 8.

In Vedovato v. Vedovato (1984), 39 R.F.L. (2d) 18, the British Columbia Supreme Court reached a similar decision with regard to its equivalent statutory provisions. Although the wife in that case was ultimately unsuccessful in raising a construc­tive trust, the court held at p. 21 that:

... a trust action can properly proceed independent of the Family Relations Act and even, as in this case, where the action with resp.ect to family assets under the provincial legislation was dismissed.

On the other hand, in Thoreson v. Thoreson (1982), 137 D.L.R. (3d) 535, Cameron J.A.,'writ­ing for the Saskatchewan Court of Appeal, stated at p. 544:

As thus modified by statute, the common law princi­ples of trust were still available in limited circumstances but, in my opinion, their application in this case -particularly in view of the reach of the statutory discre­tion -was neither required, nor helpful.

Partout au Canada, les tribunaux sont parvenus a des conclusions diverses quant aux rapports entre Ia theorie de Ia fiducie par interpretation et son equivalent legislatif dans certaines lois provincia-

a Ies. Dans !'arret Nuti v. Nuti (1980), 28 O.R. (2d) 102, Ie juge J. Holland a conclu qu'une epouse avait droit a un interet beneficiaire dans les biens de son epoux tant en vertu de !'art. 8 que de Ia theorie de Ia fiducie par interpretation. II a ecrit, a

b lap.115:

[TRADUCTION] A Ia suite de !'adoption de Ia Loi de 197 8 sur Ia reforme du droit familial, les decisions rendues dans cette province suivent en bonne partie les

c prescriptions de Ia loi plut6t que les notions applicables aux fiducies. Peut-etre est-ce parce que les termes employes a !'art. 8 reprennent largement ceux de !'arret Rathwell. Cependant, je ne pense pas que !'art. 8 exclue l'examen de Ia common law. La demanderesse peut

d invoquer Ia common law applicable a Ia fiducie par interpretation ou les droits accordes en vertu de !'art. 8.

Dans Vedovato v. Vedovato (1984), 39 R.F.L. (2d) 18, Ia Cour supreme de Ia Colombie-Britanni­que est parvenue a une decision semblable quant a

e des dispositions legislatives analogues dans cette province. Bien que, dans cette affaire, l'epouse n'ait finalement pas eu gain de cause en invoquant Ia fiducie par interpretation, Ia cour a conclu, a Ia

1 p. 21, que: [TRADUCTION] ... une action fondee sur Ia fiducie peut tres bien etre intentee independamment de Ia Family Relations Act et meme, comme en l'espece, lorsque !'action portant sur les biens familiaux en vertu de Ia loi

g provinciale a ete rejetee.

Par ailleurs, dans !'arret Thoreson v. Thoreson (1982), 137 D.L.R. (3d) 535, 1e juge Cameron, au nom de Ia Cour d'appel de Ia Saskatchewan, a

h affirme, a Ia p. 544: [TRADUCTION] Dans leur forme modifiee par Ia loi,

les principes de common law en matiere de fiducies pouvaient encore etre invoques dans des circonstances restreintes mais, a mon avis, leur application en l'espece - compte tenu particulierement de Ia portee du pouvoir discretionnaire confere par Ia loi- n'etait ni necessaire ni utile.

The issue of the relationship between s. 8 of The Family Law Reform Act, 1978 and the common j

law constructive trust doctrine was touched upon but not determined in this Court's decision in

Dans !'arret Leatherdale c. Leatherdale, [1982] 2 R.C.S. 743, notre Cour a aborde, mais sans Ia trancher, Ia question du rapport entre !'art. 8 de Ia Loi de 1978 sur Ia reforme du droit familial et les

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Leatherdale v. Leatherdale, [1982] 2 S.C.R. 743. In that case Mrs. Leatherdale had sought a divi­sion of non-family assets either under s. 8 of The Family Law Reform Act, 1978 or alternatively on the basis of the doctrines of resulting or construc­tive trust. Laskin C.J., writing for the majority, expressly declined to decide whether the trust doc­trines had survived the enactment of The Family Law Reform Act, 1978. He stated at p. 760:

It remains to say that the disposition made here on the basis of specific statutory provisions of the only assets that were in issue leaves no room to consider the application of constructive or resulting trusts. Whether these institutions survive The Family Law Reform Act in other circumstances need not be considered here.

Although it appears that the majority of provincial courts, including Ontario, found that a spouse could claim an interest in property either by means of a constructive claim or pursuant to the pertinent legislation, the issue was thus never resolved by this Court.

(ii) The Family Law Act, 1986

In 1986, the Family Law Reform Act was replaced by the Family Law Act, 1986. In contrast to s. 8 of the Family Law Reform Act, the provi­sions of the Family Law Act, 1986, did not attempt to duplicate the constructive trust remedy. Instead, the statute provided th(lt all property should be equalized upon separation through the transfer of money from the title-holding or owning to the non-owning spouse.

Prior to this case the trial courts in Ontario have followed one of two approaches in deciding wheth-

theories de common law sur Ia fiducie par inter­pretation. Dans cette affaire, Mm" Leatherdale demandait le partage des biens autres que fami­Iiaux so it en vertu de I' art. 8 de Ia Loi de 197 8 sur

a Ia reforme du droit familial soit, subsidiairement, en vertu des doctrines de Ia fiducie par deduction ou par interpretation. Le juge en chef Laskin, au nom de Ia majorite, a refuse expressement de decider si les theories de Ia fiducie avaient survecu

b a !'adoption de Ia Loi de 1978 sur Ia reforme du droit familial. Il a affirme, a Ia p. 760:

II me reste a dire que Ia distribution des seuls biens en cause sur le fondement de dispositions de Ia Loi ne laisse

c done pas de place a !'analyse de l'applicabilite des notions de fiducie virtuelle ou de fiducie presumee. Point n'est besoin en l'espece de determiner si, dans d'autres circonstances, ces institutions survivent a Ia Loi sur Ia reforme du droit familial.

d Bien que Ia majorite des tribunaux provinciaux y compris ceux de !'Ontario, paraissent avoir conclu qu'un conjoint peut revendiquer un droit dans un bien soit en vertu d'une fiducie par interpretation soit en vertu de Ia loi applicable, notre Cour ne

e s'est ainsi jamais prononcee sur Ia question.

(ii) La Loi de 1986 sur le droit de lafamil/e

En 1986, Ia Loi de 1986 sur le droit de Ia f famille a remplace Ia Loi portant reforme du droit

de la famille. Contrairement a !'art. 8 de Ia Loi port ant reforme du droit de la famille, les disposi­tions de Ia Loi de 1986 sur le droit de Ia famille ne tentaient pas de reproduire le recours fonde sur

g Ia fiducie par interpretation. La loi prevoyait plutot l'egalisation de tous les biens lors de Ia separation au moyen d'un transfert d'argent effec­tue par le titulaire du titre ou le proprietaire en faveur du conjoint non proprietaire.

h

er these equalization provisions implicitly abolish the use of the constructive trust in the matrimonial property context. The majority of the decisions followed the reasoning of Walsh J. in the case at bar even before it was affirmed by the Ontario Court of Appeal: see Seed v. Seed (1986), 5 R.F.L. (3d) 120; Leslie v. Leslie and Clyde j (1987), 9 R.F.L. (3d) 82; Cowan v. Cowan (1987),

Avant Ia presente affaire, les tribunaux de pre~ miere instance en Ontario ont suivi une de deux interpretations pour decider si ces dispositions sur l'egalisation abolissaient implicitement le recours a Ia fiducie par interpretation dans le contexte du partage des biens matrimoniaux. Dans Ia majorite des decisions, les tribunaux ont suivi le raisonne­ment du juge Walsh en l'espece avant meme que sa decision soit confirmee par la Cour d'appel de !'Ontario: voir Seed v. Seed (1986)~ 5 R.F.L. (3d) 120; Leslie v. Leslie and Clyde ( 1987), 9 R.F.L. 9 R.F.L. (3d) 401, and Re Corless and Corless

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(1987), 58 O.R. (2d) 19. This approach was rejected, however, in two lower court decisions: Benke v. Benke (1986), 4 R.F.L. (3d) 58, and Leonard v. Leonard, [1987] O.J. No. 1488, unreported.

(3d) 82; Cowan v. Cowan (1987), 9 R.F.L. (3d) 401 et Re Corless and Corless (1987), 58 O.R. (2d) 19. Cette interpretation a cependant ete reje­tee dans deux decisions de juridictions inferieures:

a Benke v. Benke (1986), 4 R.F.L. (3d) 58, et Leo­nard v. Leonard, [1987] O.J. No. 1488, inedite.

The reasoning set forth in the Benke decision was adopted by the appellant. In that case, the wife had claimed an interest in her husband's farm b

L'appelant a retenu le raisonnement suivi dans Ia decision Benke. Dans cette affaire, l'epouse avait revendique un interet dans !'exploitation agricole du mari en invoquant les principes de Ia on resulting or constructive trust principles. The

trial judge denied her claim, holding that the constructive trust could not be applied in the con­text of the Family Law Act, 1986 and that the facts did not support a finding of resulting trust. In his opinion, the Family Law Act, 1986 fully addressed the question of unjust enrichment be­tween spous'es by providing for monetary equaliza­tion based on the value of property at the" time of separation. As he stated at p. 78:

What Laskin J. (in Murdoch) declared to be "the better way" is now in place. The less adequate way was the doctrine of constructive trusts, and that less adequate way should no longer be available to, in effect, change the date of valuation whenever, either because of defla­tion or inflation, it suits the interests of one of the spouses to seek to advance it. If, in the total scheme of things, some injustice continues, it will be an injustice that arises from the application of an act of the legisla­ture, and it will be for the legislature to correct it.

This position has been criticized. As Professor James McLeod comments in his Annotation to Benke v. Benke, at p. 60:

In the end, cases such as Benke v. Benke ... reflect an unwillingness on the part of the judiciary to investigate the realities of a relationship. It is easier to strictly apply an equal division in all cases than to determine whether such divisiOJ? is fair to the particular parties. It is easier, but is it fair?

fiducie par deduction ou par interpretation. Le juge de premiere instance a rejete sa demande, concluant que Ia fiducie par interpretation ne pou-

c vait s'appliquer dans le contexte de Ia Loi de 1986 sur le droit de Ia famille et que les faits ne permettaient pas de conclure a !'existence d'une fiducie par deduction. A son avis, Ia Loi de 1986

d sur le droit de Ia famille avait d6finitivement regie Ia question de l'enrichissement sans cause entre les conjoints en prevoyant l'egalisation par le paie­ment d'un montant fixe en fonction de Ia valeur des biens a l'epoque de Ia separation. II a affirm€: a

e Ia p. 78: [TRADUCTION] Ce que le juge Laskin (dans !'arret Murdoch) a dit etre «le meilleur moyen» existe mainte­nant. Le moyen mains approprie etait Ia theorie des fiducies par interpretation et ce moyen mains approprie

f ne devrait plus etre invoque pour changer dans les faits Ia date d'evaluation lorsque, en raison de Ia deflation ou de !'inflation, il est dans !'interet d'un conjoint de l'invo­quer. Si, dans ce regime global, il subsiste une certaine injustice, cette injustice decoule de !'application d'une

g loi du legislateur et illui appartient de Ia corriger.

Cette position a ete critiquee. Comme le professeur James McLeod le fait remarquer dans ses com­mentaires sur Ia decision Benke v. Benke, a Ia

h p. 60: [TRADUCTION] Finalement, des decisions comme

Benke v. Benke [ ... ] font etat du refus de Ia magistra­ture d'examiner les realites d'une relation. II est plus facile d'appliquer strictement un partage ega] dans taus les cas que de determiner si ce partage est jusle a l'egard des parties en cause. C'est plus facile, mais est-ce juste?

I prefer the approach taken by Walsh J. and the Ontario Court of Appeal. In my view, far from abolishing the constructive trust . doctrine, the j Family Law Act, 1986 incorporates the construc­tive trust remedy as an integral part of the process

Je prefere !'interpretation du juge Walsh et de Ia Cour d'appel de !'Ontario. A mon avis, loin d'abroger Ia theorie de ·Ia fiducie par interpreta­tion, Ia Loi de 1986 sur le droit de Ia famille fait du recours a Ia fiducie par interpretation une

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of ownership determination and equalization established by that Act.

Provisions of the Family Law Act, 1986 Which Indicate That the Constructive Trust Doctrine Should Continue to Play a Role in Determining the Assets of Spouses and Their Division

It is trite but true to state that as a general rule a legislature is presumed not to depart from pre­vailing law "without expressing its intentions to do so with irresistible clearness" (Goodyear Tire & Rubber Co. of Canada v. T. Eaton Co., [1956] S.C.R. 610, at p. 614). But even aside from this presumption, when the structure of the Family Law Act, 1986 is examined and the ramifications of a number of its provisions are studied, it becomes apparent that the Act recognizes and accommodates the remedial constructive trust.

At the outset, the Act's preamble recognizes not only the need for the "orderly and equitable settle­ment of the affairs of the spouses", but also "the equal position of spouses as individuals within marriage" and the fact that marriage is a "form of partnership". These fundamental objectives are furthered by the use of the constructive trust remedy in appropriate circumstances. It provides a measure of individualized justice and fairness which is essential for the protection of marriage as a partnership of equals. Thus the preamble itself is sufficient to warrant the retention and application of this remedy.

In addition, various provisions of the Act lead to the same conclusion.

(a) Sections 4 and 5

Sections 4 and 5 of the Family Law Act, 1986 create a two-step property division process that emphasizes the distinction between the determina­tion of legal and equitable ownership and the equalization of net family property. These sections require a court first to determine individual "own­ership piles" and then to equalize the spouses' assets by ordering the spouse with the larger own­ership pile to pay money to the spouse with the smaller pile.

partie integrante du processus de determination du droit de propriete et d'egalisation etabli par cette loi.

Les dispositions de Ia Loi de 1986 sur le droit de a Ia famille indiquant que Ia th6orie de Ia fiducie

par interpretation devrait continuer a jouer un role pour determiner et partager les biens des conjoints

II est banal mais juste d'affirmer qu'en regie b generale le legislateur est presume ne pas s'ecarter

du droit existant [TRADUCTION] «Sans exprimer de fa(_ton incontestablement claire son intention de le fa ire)) (Goodyear Tire & Rubber Co. of Canada v. T. Eaton Co., [1956] R.C.S. 610, a Ia p. 614).

c Mais meme sans cette presomption, lorsqu'on exa­mine l'economie de Ia Loi de 1986 sur le droit de Ia famille et les ramifications d'un certain nombre de ses dispositions, il devient clair que Ia Loi visait

d a reconnaltre et a rendre applicable le recours a Ia fiducie par interpretation.

e

La Loi, dans son preambule, reconnalt non seu­lement le besoin d'un «reglement ordonne et equi­table des affaires des conjoints)) mais aussi «l'ega-lite des conjoints dans le mariage)) et le fait que le mariage est une «societe». Le recours a Ia fiducie par interpretation permet aussi, dans les circons­tances appropriees, Ia realisation de ces objectifs

1 fondamentaux. Elle fournit une certaine mesure de justice et d'equite individualisees, essentielle a Ia protection du mariage comme forme de societe entre egaux. En consequence, le preambule justi­fierait a lui seul de retenir et continuer d'appliquer

g ce recours.

De plus, diverses autres dispositions de Ia Loi menent a Ia meme conclusion.

a) Les articles 4 et 5 h

Les articles 4 et 5 de Ia Loi de 1986 sur le droit de Ia famille etablissent un processus de partage des bien's en deux temps qui fait ressortir Ia dis­tinction entre Ia determination de Ia propriete en common law et en equity et l'egalisation des biens familiaux nets. Ces articles exigent que le tribunal etablisse d'abord Ia liste des biens dont chaque conjoint est seul proprietaire et precede ensuite a

j l'egalisation des biens des conjoints en ordonnant a celui qui en a le plus de verser une somme a celui qui en a le moins.

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Before property can be equalized under s. 5 of the Family Law Act, 1986, a court is required by s. 4 to determine the "net family property" of each spouse. Under section 4(1) this is defined as "the value of all property ... that a spouse owns on the valuation date". "Property" is defined in the same subsection as "any interest, present or future, vested or contingent, in real or personal property". This all-encompassing definition is wide enough to include not only legal but beneficial ownership. The appellant has conceded that "property" as defined under s. 4(1) includes a beneficial interest arising from an express or resulting trust. I see no reason why the remedial constructive trust should not be included in the list of equitable principles or remedies that may be used to calculate the benefi­cial ownership of net family property.

Avant de pouvoir egaliser les biens en vertu de !'art. 5 de Ia Loi de 1986 sur le droit de lafamille, un tribunal doit, en vertu de !'art. 4, determiner les «biens familiaux nets» de chaque conjoint. En vertu

a du par. 4( 1 ), cette expression est definie com me Ia «Valeur de tousles biens [ ... ] dont le conjoint est le proprietaire a Ia date d'evaluation». «Bien» est defini dans le meme paragraphe comme un «Droit, actuel ou futur, acquis ou eventuel, sur un bien

b meuble ou immeubb. Cette definition generale est assez vaste pour inclure non seulement la pro­priete en common law mais aussi Ia propriete beneficiaire. L'appelant a reconnu que le terme

c «bien», tel qu'il est defini au par. 4(1 ), comprend un interet beneficiaire resultant d'une fiducie expresse ou par deduction. Je ne vois aucune raison de ne pas inclure le recours a Ia fiducie par interpretation dans ]a liste des principes ou repara-

d tions en equity qui peuvent etre utilises pour eta­blir Ia propriete beneficiaire de biens familiaux nets.

It is important in this respect to keep in mind e

that a property interest arising under a construc­tive trust can be recognized as having come into existence not when the trust is judicially declared but from the time when the unjust enrichment first arose. As Professors Oosterhoff and Gillese state, f "the date at which a constructive trust arises ... is now generally accepted to be the date upon which

A cet egard, il est important de ne pas oublier qu'un droit sur un bien decoulant d'une fiducie par interpretation peut etre reconnu comme ayant pris naissance non pas au moment de Ia declaration judiciaire de Ia fiducie mais des le moment ou est survenu l'enrichissement sans cause. Comme les professeurs Oosterhoff et Gillese l'affirment, [TRA-

DUCTION] «il est maintenant generalement accepte que Ia date a laquelle une fiducie par interpreta­tion prend naissance est Ia date a laquelle une obligation de restitution survient» (Oosterhoff and

a duty to make restitution occurs" (Oosterhoff and Gillese, A. H. Oosterhoff Text, Commentary and g Cases on Trusts (3rd ed. 1987), at p, 579). Profes­sor Scott has stated in Law of Trusts, op. ciL, at pp. 323-24, that:

Gillese, A. H. Oosterhoff Text, Commentary and Cases on Trusts (3• ed. 1987), a Ia p. 579). Le professeur Scott a affirme dans son ouvrage Law

h of Trusts, op. cit., aux pp. 323 et 324, que:

The beneficial interest in the property is from the begin­ning in the person who has been wronged. The construc­tive trust arises from the situation in which he is entitled to the remedy Gf restitution, and it arises as soon as that situation is created .... It would seem that there is no foundation whatever for the notion that a constructive trust does not arise until it is decreed by a court. It arises when the duty to make restitution arises, not when that duty is subsequently enforced.

[TRADUCTION] L'interet beneficiaire dans le bien appartient des le depart a Ia personne lesee. La fiducie par interpretation decoule de Ia situation dans laquelle Ia personne a droit a Ia restitution et elle prend nais­sance des que Ia situation existe [ ... ] II semblerait n'y avoir aucun fondement a Ia notion qu'une fiducie par interpretation n'existe qu'au moment ou le tribunal le declare. Elle existe lorsque !'obligation de restitution

j prend naissance, non pas lorsque cette obligation est rendue executoire ulterieurement.

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I agree completely with the position taken on this issue by the authors of these helpful texts.

As well in Hussey v. Palmer, supra, at p. 1290 (quoted by Dickson J. in Rathwell v. Rathwell, supra, at p. 455), Lord Denning M.R. noted that a constructive trust "may arise at the outset when the property is acquired, or later on, as the circum­stances may require". As a result, even if it is declared by a court after the parties have already separated, a constructive trust can be deemed to have arisen when the duty to make restitution arose. It should therefore be considered as part of the property owned by the beneficiary at valuation date.

It must be emphasized that the constructive trust is remedial in nature. If the Court is asked to grant such a remedy and determines that a decla­ration of constructive trust is warranted, then the proprietary interest awarded pursuant to that remedy will be deemed to have arisen at the time when the unjust enrichment first occurred. But, as Professor Scott makes clear, the fact that the proprietary interest is deemed to have arisen before the remedy was granted is not inconsistent with the remedial characteristics of the doctrine.

The distinction between a share in ownership and a share in property value through an equaliz­ing transfer of money is more than an exercise in judicial formalism. This distinction not only fol­lows the two-step structure of the Family Law Act, 1986 but reflects conceptual and practical differ­ences between ownership and equalization. Owner­ship encompasses far more than a mere share in the value of property. It includes additional legal rights, elements of control and increased legal responsibilities. In addition, it may well provide psychological benefits derived from pride of own­ership. Where the property at issue is one to which only one spouse has contributed, it is appropriate that the other spouse receive only an equalizing transfer of money. But where both spouses have contributed to the acquisition or maintenance of the property, the spouse who does not hold legal title should be able to claim an interest in that property by way of a constructive trust and realize

J e suis tout a fait d'accord sur ce point avec !'opinion des auteurs de ces textes utiles.

Ainsi, dans !'arret Hussey v. Palmer, precite, a a la p. 1290 (cite par le juge Dickson dans !'arret

Rathwell c. Rathwell, precite, a Ia p. 455), lord Denning, maitre des roles, a souligne qu'une fidu­cie par interpretation [TRADUCTION] «peut naitre des le debut, des l'achat du bien, ou plus tard selon

b les circonstanceS». Par consequent, meme si la cour en declare !'existence apres Ia separation des par­ties, une fiducie par interpretation peut etre repu­tee avoir existe des que !'obligation de restitution a pris naissance. On devrait done considerer qu'elle

c fait partie des biens appartenant au beneficiaire a Ia date d'evaluation.

II faut souligner le caractere reparateur de Ia fiducie par interpretation. Si on demande a Ia

d Cour cette forme de reparation et que Ia Cour decide qu'une declaration de fiducie par interpre­tation se justifie, le droit sur Ia propriete accorde de cette maniere est repute avoir pris naissance des que l'enrichissement sans cause est survenu.

e Cependant, comme le dit clairement le professeur Scott, le fait que le droit sur Ia propriete est repute exister avant que Ia reparation soit accordee n'est pas incompatible avec le caractere reparateur de Ia

f theorie.

La distinction entre une part dans Ia propriete et une part dans Ia valeur du bien au moyen d'un transfert d'argent par egalisation est plus qu'un

g exercice de formalisme judiciaire. La distinction ne decoule pas seulement du processus en deux eta pes de la Loi de 1986 sur le droit de fa fa mille mais denote des differences conceptuelles et prati­ques entre le droit de propriete et l'egalisation. Le

h droit de propriete comprend beaucoup plus qu'une simple part dans Ia valeur du bien. II comprend d'autres droits, des elements de controle et des obligations juridiques plus importantes. En outre, il peut procurer des avantages psychologiques qui decoulent de Ia fierte d'etre proprietaire. Lorsque le bien en cause est un bien auquel un seul conjoint a contribue, il est juste que !'autre conjoint re~oive uniquement Ia somme provenant de l'egalisation.

j Mais lorsque les deux conjoints <mt contribue a !'acquisition ou a l'entretien du bien, le conjoint non titulaire du titre de propriete devrait pouvoir

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revendiquer un droit sur le bien au moyen de Ia fiducie par interpretation et profiter des avantages que le droit de propriete peut apporter. L'imposi­tion d'une fiducie par interpretation reconnait que

the benefits that ownership may provide. The imposition of a constructive trust recognizes that the titled spouse is holding property that has been acquired, at least in part, through the money or effort of another. The non-titled spouse's construc­tive trust interest in this property is distinct from the right to an equalizing share of property value that is derived not from an independent property right but from the status as a married person.

a !'epoux titulaire detient le bien dont !'acquisition s'est faite, au moins en partie, au moyen de sommes d'argent ou d'efforts fournis par une autre personne. Le droit sur ce bien que Ia fiducie par interpretation confere au conjoint non titulaire est

h distinct du droit a une part egalisee dans Ia valeur du bien, qui decoule non pas d'un droit de pro­priete independant mais du statut de personne mariee.

(b) Section 5(6) c b) Le paragraphe 5(6)

Section 5(6) of the Family Law Act, 1986 allows a court to "award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion d

that equalizing the net family properties would be unconscionable". The Court of Appeal observed that if a post-valuation date increase or decrease in property values is significant enough to render a

e simple equalization unconscionable, a court might utilize s.5(6) to remedy the resultant inequities. I need not and do not express any opinion as to whether s. 5(6) could be used in that way or whether the Court of Appeal's observation is cor- 1 rect. I have assumed solely for the purposes of argument that s. 5(6) might be available in some cases as an alternative remedy for dealing with post-valuation date changes in value. Even so, the section does not have the effect of supplanting the g

constructive trust remedy. The constructive trust is used in the matrimonial property context to allo­cate proprietary interests, a function that is totally distinct from the process of determining how the value of matrimonial property should be distribut- h

ed under the equalization process.

Under the Act a court is, as a first step, required to determine the ownership interests of the spouses. It is at that stage that the c9urt must deal j

with and determine the constructive trust claims. The second step that must be taken is to perform

Selon le par. 5(6) de Ia Loi de 1986 sur le droit de Ia Jamille, un tribunal peut ((accorder a un conjoint un montant qui est inferieur ou superieur a la moitie de Ia difference entre les biens fami­liaux nets qui appartiennent a chacun des conjoints si le tribunal est d'avis que l'egalisation des biens familiaux nets serait inadmissible». La Cour d'ap­pel a fait observer que si le deplacement de Ia date d'evaluation entraine une augmentation ou une diminution de Ia valeur des biens qui est suffisam-ment importante pour rendre une simple egalisa­tion inadmissible, un tribunal pourrait utiliser le par. 5( 6) pour corriger les inegalites qui en resul­tent. Comme cela n'est pas necessaire, je n'ex-prime aucune opinion quanta savoir si le par. 5(6) pourrait etre utilise de cette maniere ou si !'obser­vation de la Cour d'appel est exacte. Je prends pour acquis, aux seules fins du debat, que le par. 5(6) pourrait etre utilise dans certains cas comme autre recours lorsque Ie deplacement de la date d'evaluation change !a valeur du bien. Meme dans cette hypothese, il n'a pas pour effet de supplanter le recours a la fiducie par interpretation. La fidu­cie par interpretation est utilisee en matiere matri-moniale pour repartir les droits sur les biens, un role qui est tout a fait distinct de celui de determi­ner comment repartir la valeur des biens familiaux dans le processus d'egalisation.

En vertu de la Loi, le tribunal doit d'abord determiner les droits de propriete des conjoints. C'est a cette etape que le tribunal doit examiner et trancher les demandes relatives aux fiducies par interpretation. La deuxieme etape consiste a faire

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the equalization calculations. Once this is done, a court must assess whether, given the facts of the particular case, equalization is unconscionable. The section 5(6) analysis, even if it could be considered, would be a third step - a last avenue of judicial discretion which might be used in order to bring a measure of flexibility to the equalization process. This step in the process, if it could be used, would have to be kept distinct from the preliminary determinations of ownership.

(c) Section 10

les calculs d'egalisation. Apres cela, le tribunal doit decider si, compte tenu des faits particuliers de l'affaire, l'egalisation est inadmissible. L'ana­lyse en vertu du par. 5(6) - si elle pouvait etre

a envisagee - constituerait done une troisieme etape, une derniere possibilite d'utiliser le pouvoir discretionnaire du tribunal pour apporter une cer­taine souplesse au processus d'egalisation. Cette etape du processus si elle pouvait etre utilisee

b devrait toujours etre distincte des decisions preli­minaires concernant Ia propriete.

c) L' article 10

Section 10 of the Family Law Act, 1986 rein- c L'article 10 de Ia Loi de 1986 sur le droit de Ia forces the Act's emphasis on the importance of famille renforce l'accent qui est mis dans Ia Loi individual ownership, even within a regime of sur !'importance du droit de propriete individuel, deferred sharing. This section allows a spouse to meme a l'interieur d'un regime de partage differe. apply to a court to determine a question of owner- Cet article permet a un conjoint de demander au ship or possession prior to equalization, and thus to d tribunal de regler une question relative a la pro-assert some degree of control over matrimonial priete ou au droit a la possession avant l'egalisa-property during cohabitation. Section 1 0(1) pro- tion, et done de faire valoir un certain degre de vides that: contrO!e sur les biens familiaux pendant Ia cohabi-

e tation. Le paragraphe 10(1) prevoit que:

10.-( I) Une personne peut, par voie de requete contre le conjoint ou !'ancien conjoint, demander au tribunal de regler une question relative a Ia propriete ou au droit a Ia possession d'un bien precis, a !'exception

10.-( I) A person may apply to the court for the determination of a question between that person and his or her spouse or former spouse as to the ownership or right to possession of particular property, other than a question arising out of an equalization of net family properties under section 5, and the court may,

f d'une question resultant de l'egalisation des biens fami­liaux nets en vertu de !'article 5. Le tribunal peut prendre les mesures suivantes:

(a) declare the ownership or right to possession;

(b) if the property has been disposed of, order pay- g ment in compensation for the interest of either party;

(c) order that the property be partitioned or sold for the purpose of realizing the interests in it; and

(d) order that either or both spouses give security, including a charge on property, for the perform­ance of an obligation imposed by the order,

and may make ancillary orders or give ancillary directions.

h

The creation under s. 10 of a proprietary remedy that can be commenced during cohabita­tion provides further evidence that the Ontario j legislature could not have intended the provisions of the Family Law Act, 1986 to completely super-

a) declarer qui est proprietaire du bien ou a droit a sa possession;

b) si le bien a ete aliene, ordonner un versement com pens a toire;

c) ordonner le partage ou Ia vente du bien en vue de Ia realisation des droits des parties;

d) ordonner que les conjoints ou l'un d'eux donnent une silrete, y compris une charge sur un bien, pour garantir !'execution de !'obligation qu'impose !'ordonnance.

Le tribunal peut aussi rendre des ordonnances ou donner des directives accessoires.

L'etablissement en vertu de !'art. 10 d'un recours en matiere de propriete qui peut etre uti­lise pendant Ia cohabitation est une preuve supple­mentaire que le legislateur ontarien ne pouvait vouloir que les dispositions de Ia Loi de 1986 sur le

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sede the remedial constructive trust. Section I 0 enables non-titled spouses to assert control over matrimonial property during cohabitation to the extent that their beneficial interests entitle them to do so. Even if the appellant's argument that the Family Law Act, 1986 equalization provisions replace the constructive trust remedy were to be accepted, this would not prevent a deserving spouse from obtaining a declaration of constructive trust in his or her spouse's property during cohabi­tation pursuant to s. I 0. Certainly such an applica­tion will not necessarily be followed by separation and equalization of property.

Since a spouse can thus obtain a constructive trust remedy prior to separation, it would be incon­sistent to deny a spouse the same remedy when it is sought after a separation. To take such a posi­tion would encourage spouses to apply for a con­structive trust interest early in a marriage, perhaps thereby creating unnecessary marital stress, foster­ing costly litigation and penalizing those spouses who waited until separation to enforce their common law rights. It is unlikely that the legisla­ture intended a spouse's rights to depend on whether or not a constructive trust had been declared before or after the separation.

(d) Section 14

Section I4 contains the Family Law Act, 1986's only explicit reference to trust doctrine. It provides that:

14. The rule of law applying a presumption of a resulting trust shall be applied in questions of the owner­ship of property betwe.en husband and wife, as if they were not married, except that,,

droit de Ia famille supplantent completement le recours a Ia fiducie par interpretation. L'article I 0 permet aux conjoints non titulaires de faire valoir un droit sur les biens familiaux pendant Ia cohabi-

a tation dans Ia mesure ou leurs interets beneficiai­res le leur permettent. Meme si !'on acceptait !'argument de l'appelant que les dispositions de Ia Loi de 1986 sur le droit de lafamille sur l'egalisa­tion remplacent le recours a Ia fiducie par inter-

b pretation, cela n'empecherait pas un conjoint qui y a droit d'obtenir en vertu de !'art. 10 une declara­tion de fiducie par interpretation a l'egard des biens de son conjoint pendant Ia cohabitation. II

c est certain qu'une telle demande ne sera pas neces­sairement suivie du partage et de l'egalisation des biens.

Puisqu'un conjoint peut ainsi invoquer Ia fiducie d par interpretation avant Ia separation, il serait

illogique de priver un conjoint du meme recours lorsque Ia demande en est faite apres Ia separation. Adopter une telle interpretation inciterait les con­joints a demander Ia reconnaissance d'une fiducie

e par interpretation au debut d'un mariage, ce qui creerait peut-etre alors une tension inutile dans le mariage, encouragerait des litiges couteux et pena­liserait les conjoints qui ont attendu jusqu'a Ia separation pour faire reconnaltre leurs droits de

f common law. II est peu probable que le legislateur ait eu !'intention de faire dependre les droits d'un conjoint du fait que Ia fiducie par interpretation a ete reconnue ou non avant ou a pres Ia separation.

g d) L'article 14

Varticle 14 est Ia seule disposition de Ia Loi de 1986 sur le droit de Ia famille qui mentionne explicitement Ia theorie de Ia fiducie. II prevoit

h que:

14. La regie de droit appliquant une presomption de fiducie au profit eventuel de son auteur s'applique aux questions relatives a Ia propriete d'un bien entre les deux conjoints comme s'ils n'etaient pas maries, sous reserve des exceptions suivantes:

(a) the fact that property is held in the name of spouses as joint tenants is prima facie proof that the spouses are intended to own the property as joint tenants; and j

a) I!! fait qu'un bien soit detenu au nom des conjoints en copropriete avec gain de survie constitue une preuve prima facie que les conjoints ont !'intention d'avoir un tel droit de propriete sur ce bien;

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(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).

The appellant argues that the provisions of s. 14 expressly preserve the doctrine of resulting trust and by implication abolish all other non-express trusts. I cannot accept that contention. Section 14 is, I believe, intended not to specifically preserve but rather to modify the resulting trust doctrine as it applies in the context of the Family Law Act, 1986. If anything, the combination of these modi­fying provisions and the legislature's silence on the subject of remedial constructive trust supports the view that the constructive trust is maintained in an unmodified form.

(e) Section 64(2)

Section 64 of the Family Law Act, 1986 pro­vides that:

a

b) pour !'application de l'alinea a), Jes depots au nom des deux conjoints sont reputes des depots de coproprietaires avec gain de survie.

L 'appelant soutient que les dispositions de I 'art. 14 preservent expressement la theorie de Ia fiducie par deduction et abrogent implicitement toutes les autres fiducies non expresses. Je ne peux accepter

b cette pretention. J'estime que l'art. 14 a pour but non pas de preserver specifiquement mais plut6t de modifier Ia theorie de Ia fiducie par deduction dans son application sous le regime de Ia Loi de 1986 sur le droit de la famille. Au contraire, l'effet

c combine de ces dispositions modificatives et du silence du legislateur sur le recours a Ia fiducie par interpretation confirmerait plut6t !'opinion que Ia fiducie par interpretation est maintenue sans

d modification.

e) Le paragraphe 64(2)

L'article 64 de Ia Loi de 1986 sur le droit de la famille prevoit que:

64.-( I) For all purposes of the law of Ontario, a e married person has a legal personality that is independ­ent, separate and distinct from that of his or her spouse.

64.-(1) Pour !'application de Ia loi de !'Ontario, il est reconnu a chaque personne mariee une personnalite juridique independante, separee et distincte de celle de son conjoint.

(2) A married person has and shall be accorded legal capacity for all purposes and in all respects as i( he or she were an unmarried person and, in particular, has the same right of action in tort against his or her spouse as if they were not married.

(3) The purpose of subsections (1) and (2) is to make the same Jaw apply, and apply equally, to married men and married women and to remove any difference in it resulting from any common law rule or doctrine.

(2) II est reconnu a Ia personne mariee Ja meme f capacite juridique a toute fin et en toute matiere que si

elle n'etait pas mariee. Elle possede notamment le meme droit d'action delictuelle contre son conjoint que s'ils n'etaient pas maries.

(3) Les paragraphes (1) et (2) visent a soumettre aux g memes n!gles juridiques, en toute egalite, les hommes

maries et les femmes mariees, en ecartant toute diffe­rence consacree par les regles ou Ia doctrine de Ia common law.

Although the necessary purpose of this section, h

as stated in subs. (3), is to equalize the legal rights Bien que !'objet evident de cet article, comme

l'indique le paragraphe (3), est d'affirmer l'egalite des droits des hommes maries et des femmes mariees, le par. 64(2) reconnait expressement aux personnes mariees Ia meme capacite juridique qu'aux personnes non mariees. Depuis !'arret Pett­kus v. Becker, precite, de notre Cour, il est clair que le recours a Ia fiducie par interpretation peut etre utilise par des personnes qui cohabitent sans

of married men and married women, subs. (2) expressly declares that married persons shall have the same legal capacities as unmarried persons. Ever since this Court's decision was rendered in Pettkus v. Becker, supra, it has been clear that the constructive trust remedy can be utilized by unmarried cohabitants. It would not only be ine­quitable, but would also contravene the provisions of s. 64(2) if married persons were precluded by the Family Law Act, 1986 from utilizing the doc-

j etre mariees. II serait non seulement. inequitable mais egalement contraire aux dispositions du par. 64(2) de priver, en vertu de la Loi de 1986 sur le

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trine of remedial constructive trust which is avail­able to unmarried persons.

Conclusion

The review of the cases decided by this Court from Murdoch v. Murdoch, supra, to Sorochan v. Sorochan, supra, demonstrates the importance that has been attached to the use of the remedy of constructive trust to achieve a division of property that is as just and equitable as possible. A marital relationship is founded on love and trust. It brings together two people who strive and sacrifice to attain common goals for the benefit of both part­ners. When it is terminated and acquired assets are to be divided, then in this of all relationships the concept .of fairness should predominate in making decisions as to ownership. This was the fundamental equitable principle underlying the application of the constructive trust remedy to matrimonial cases. Where the application of the principle would achieve the goal of fairness it should not be discarded unless the pertinent legis­lation makes it clear that the principle is to be disregarded.

The Family Law Act, 1986 does not constitute an exclusive code for determining the ownership of matrimonial property. The legislators must have been aware of the existence and effect of the constructive trust remedy in matrimonial cases when the Act was proposed. Yet neither by direct reference nor by necessary implication does the Act prohibit the use of the constructive trust remedy. Indeed, the foregoing review of the provi­sions of the Act supports the view that the con­structive trust remedy is to be maintained. The Act's two-step structure and its individual provi­sions indicate that the constructive trust remedy still has an important role to play in the determi­nation of matrimonial property disputes in Ontario. The application of the remedy in the context of the Family Law Act, 1986 can achieve a fair and just result. It enables the courts to bring that treasured and essential measure of individual­ized justice and fairness to the more generalized process of equalization provided by the Act. That

a

droit de Ia famille, les personnes mariees du recours a Ia th6orie de Ia fiducie par interpretation qui est offert aux personnes non mariees.

Conclusion

L'examen de Ia jurisprudence de notre Cour de !'arret Murdoch c. Murdoch, precite, jusqu'a !'ar­ret Sorochan c. Sorochan, precite, demontre l'im-

b portance accordee a !'utilisation de Ia fiducie par interpretation pour effectuer un partage des biens qui soit le plus juste et le plus equitable possible. Le mariage est fonde sur !'amour et Ia confiance. II unit deux personnes pretes a des efforts et a des

c sacrifices pour realiser des projets communs qui profiteront aux deux. Lorsqu'il prend fin et que les biens acquis doivent etre partages, c'est alors dans cette relation plus que dans toute autre que Ia notion d'equite doit prevaloir dans les decisions

d relatives au droit de propriete. C'est Ia le principe fondamental d'equity qui sous-tend !'application de Ia fiducie par interpretation dans les affaires matrimoniales. Lorsque !'application du principe permet d'atteindre l'equite recherch6e, il ne doit

e pas etre ecarte a moins qu'une loi pertinente ne dise clairement qu'il doit l'etre.

La Loi de 1986 sur le droit de Ia famille ne constitue pas un code exclusif pour determiner le

f droit de propriete dans les biens familiaux du mariage. Le legislateur devait etre au courant de !'existence et de l'effet de Ia fiducie par interpreta­tion dans les affaires matrimoniales lorsque Ia Loi

g a ete deposee. La Loi n'interdit cependant pas, ni par mention expresse ni par deduction necessaire, le recours a Ia fiducie par interpretation. En fait, l'examen qui precede des dispositions de Ia Loi confirme !'opinion que le recours a Ia fiducie par

h interpretation doit etre conserve. Le processus en deux temps etabli par Ia Loi et ses dispositions individuelles indiquent que Ia fiducie par interpre­tation a encore un role important a jouer dans les litiges concernant le partage des biens familiaux en Ontario. L'utilisation de ce recours dans le con­texte de Ia Loi de 1986 sur le droit de Ia famille permet d'atteindre un resultat juste et equitable. Il permet aux tribunaux d'incorporer cette mesure

j precieuse et essentielle de justice et d'equite indivi­duelles dans le processus plus general d'egalisation prevu par Ia Loi. Cette equite vitale s'obtient par

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vital fairness is achieved by means of a construc­tive trust remedy and recognition of ownership.

le recours a Ia fiducie par interpretation et par la reconnaissance de la propriete.

In this case fairness requires that the dedication and hard work of Jacqueline Rawluk in acquiring

a and maintaining the properties in issue be recog-

En l'espece, l'equite exige que le devouement et le dur labeur de Jacqueline Rawluk dans !'acquisi­tion et l'entretien des biens en question soient reconnus. La fiducie par interpretation comme reparation en equity a ete correctement appliquee.

nized. The equitable remedy of constructive trust was properly applied.

I would therefore dismiss the appeal with costs.

The reasons of La Forest, McLachlin JJ. were delivered by

McLACHLIN J. (dissenting)­

!. Introduction

Sopinka and

Je suis done d'avis de rejeter le pourvoi avec b depens.

c

Version fran<;aise des motifs des juges La Forest, Sopinka et McLachlin rendus par

LE JUGE MCLACHLIN (dissidente)-

I. Introduction

This case raises the issue of the balance between constructive trust as a remedy for unjust enrich­ment and statutory schemes for the division of d

matrimonial property.

Ce pourvoi souleve la question de l'equilibre entre Ia fiducie par interpretation comme recours contre l'enrichissement sans cause et les disposi­tions legislatives applicables au partage des biens

The facts may be briefly stated. Mr. and Mrs. Rawluk were married in 1955 and lived and worked together for twenty-nine years. They had a farm and a farm equipment sales and service business. In the early years, the wife cared for the three children and looked after farm chores. By the early 1960s, she was also assisting with cus­tomers in the shop of the farm implement business. In 1969, when this business moved to the home farm, the wife assumed a major role in its opera­tion. In addition to operating the parts depart­ment, she did all the bookkeeping and most of the invoicing and banking. With all this, she main­tained her involvement in all aspects of the farm­ing operation. There can be no doubt as to Mrs. Rawluk's contribution to the assets the parties acquired during the marriage.

Those assets consisted mainly of real estate. At the time of separation in 1984, the Rawluks held a number of properties, all but one of which were registered in the name of the husband. In the years between separation and the trial of the action, the value of these properties increased dramatically.

familiaux.

Les faits peuvent etre resumes brievement. M. et e Mm• Rawluk se sont maries en 1955 et ont travaille

et vecu ensemble pendant 29 ans. Ils possedaient une exploitation agricole ainsi qu'une entreprise de service de ventes et d'apres-vente de materiel agri­cole. Au cours des premieres annees du mariage,

f l'epouse a pris soin des trois enfants et s'est char­gee des travaux de la ferme. Au debut des annees 60, elle s'occupait egalement des clients de !'entre­prise de materiel agricole. En 1969, lorsqu'ils ont demenage cette entreprise sur Ia ferme familiale,

g l'epouse a joue un role dominant dans son exploita­tion. En plus du service des pieces, elle s'occupait de la tenue des livres, de la plupart des operations de facturation et des operations bancaires, tout en

h continuant de participer a tous les aspects de ['exploitation agricole. La contribution de Mm• Rawluk a !'acquisition des biens des parties durant le mariage ne fait aucun doute.

Ces biens etaient essentiellement constitues de biens immobiliers. Au moment de la separation en 1984, les Rawluk etaient proprietaires d'un certain nombre de biens, qui etaient tous au nom de l'epoux sauf un. Au cours des annees ecoulees

j entre Ia separation et !'audition en premiere ins­tance, la valeur de ces biens a augmente considera blemen t.

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II. The Issues

The Ontario Family Law Act, 1986, S.O. 1986, c. 4, sets up a scheme providing for the division of family property as of the valuation date (in this case, the date of separation).

The husband contends that the amount he must pay to the wife to equalize their positions must be based on the value of the property in his name at the valuation date. Any increment in values there­after would be solely to his credit.

The wife submits that she has a constructive trust over the properties giving her a beneficial half-interest in them at the time of separation, and entitling her to participate as owner in the increase in value of the property after separation.

The trial judge and the Court of Appeal held that the property in question was impressed with a constructive trust which gave the wife a beneficial half interest in the property at the time of separation.

II. Les questions en Iitige

La Lai de "1986 sur le droit de Ia famille de !'Ontario, L.O. 1986, ch. 4, etablit un regime de

a partage des biens familiaux a Ia date d'evaluation (en l'espece, Ia date de separation).

Le mari pretend que le montant qu'il doit verser a son epouse pour egaliser leurs biens doit etre

b etabli selon Ia valeur des biens a son nom a Ia date d'evaluation. Toute augmentation de valeur poste­rieure a cette date lui reviendrait exclusivement.

L'epouse pretend ben6ficier d'une fiducie par c interpretation sur les biens lui donnant un interet

l:)en6ficiaire de moitie au moment de Ia separation et lui permettant de participer comme proprietaire a !'augmentation de valeur des biens apres Ia

d separation.

Le juge de premiere instance et Ia Cour d'appel ont conclu que les biens en question etaient vises par une fiducie par interpretation conferant a

e l'epouse un interet ben6ficiaire de moitie dans les biens a l'epoque de Ia separation.

It is not disputed that apart from the statute, this would be an appropriate case for the court to declare a constructive trust entitling the wife to a 1 half-interest in the property. This leaves the ques­tion of whether the Family Law Act, 1986 changes the situation.

On ne conteste pas que, abstraction faite de Ia Ioi, il s'agirait d'un cas approprie justifiant le tribunal de declarer !'existence d'une fiducie par interpretation donnant a l'epouse un interet de moitie dans les biens. Il reste cependant a determi­ner si Ia Loi de 1986 sur le droit de Ia famille modifie Ia situation.

g

The answer to this question depends on the answer to two sub-issues. The first concerns the nature of the doctrine of constructive trust. Is it a concept of substantive property law, automatically vesting in the wife a half-interest in the property at h

the time of separation? Or is it a remedial device, to be applied only where other remedies for unjust enrichment are unavailable or inadequate?

Pour repondre, il faut d'abord repondre a deux sous-questions. La premiere concerne Ia nature de Ia theorie de Ia fiducie par interpretation. S'agit-il d'une notion qui releve des regles de fond en droit des biens, conferant automatiquement a l'epouse un interet de moitie dans les biens au moment de Ia separation? Ou s'agit-il plut6t d'un moyen de reparer qui ne s'applique que lorsque les autres recours contre l'enrichissement sans cause ne peu­vent etre exerces ou sont inadequats?

If the doctrine of constructive trust is a remedial device, the further question arises of whether the doctrine should be applied where a sta,tute already provides a remedy for the alleged unjust enrichment.

Si Ia theorie de Ia fiducie par interpretation est un moyen de reparer, il faut se demander ensuite si

j Ia theorie devrait etre appliquee lorsqu'une loi prevoit deja un recours contre l'enrichissement sans cause vise.

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Seton mon analyse du litige, Ia question en l'espece n 'est pas de sa voir si Ia Loi de 1986 sur le droit de la famille ecarte le recours a Ia fiducie par interpretation. Je partage !'opinion du juge

As I see the problem, the issue in this case is not whether the Family Law Act, 1986 ousts the remedy of constructive trust. I agree with Cory J. that it does not. In my view, the real question which must be answered is whether the doctrine of constructive trust, as it has been developed by this Court, finds application where a statute already provides a remedy for the unjust enrichment com­plained of.

a Cory que Ia loi ne l'ecarte pas. A mon avis, Ia veritable question a laquelle il faut repondre est de savoir si Ia theorie de Ia fiducie par interpretation, compte tenu de Ia portee que lui a donnee notre Cour, s'applique lorsqu'une loi prevoit deja un

h recours contre l'enrichissement sans cause repro­che.

III. Decision on the Issues

I would answer the questions posed above as c follows.

1. The doctrine of constructive trust, as it has developed in Canada, is not a property right but a proprietary remedy for unjust enrichment; as d

such, the availability of other remedies for the unjust enrichment must be considered before declaring a constructive trust.

e

2. The doctrine of constructive trust should not be applied in this case because the Family Law Act, 1986 provides a remedy for the unjust enrichment of the husband to the detriment of f the wife.

IV. Discussion

III. Les reponses aux questions

Je suis d'avis de repondre aux questions preci­tees de Ia fac;on suivante.

1. La theorie de Ia fiducie par interpretation, telle qu'elle s'est developpee au Canada, ne confere pas un droit de propriete mais constitue un recours sur Ia propriete contre l'enrichissement sans cause; pour cette raison, il faut determiner s'il existe d'autres recours contre l'enrichisse­ment sans cause avant de declarer !'existence d'une fiducie par interpretation.

2. La theorie de Ia fiducie par interpretation ne devrait pas etre appliquee en l'espece parce que Ia Loi de 1986 sur le droit de la famille prevoit un recours dans le cas de l'enrichissement sans cause du mari au detriment de l'epouse.

IV. Analyse

1. The Nature of the Constructive Trust in I. La nature de Ia fiducie par interpretation au Canada: Substantive or Remedial? g Canada: une iegle de fond ou un recours?

An express trust is one which arises from the intention of the settlor or trustee. A constructive trust is one imposed apart from the wishes of the settlor, by operation of law. h

In England, the traditional doctrine of construc­tive trust recognizes a series of categories in which the law imposes on one person the obligation to hold property in trust for another, usually in cases of fraud, mistake and fiduciary relationships. Lord Denning has gone further, stating a constructive trust may be imposed "whenever justice and good conscience require it": Hussey v. Palmer, [1972] 1 j

W.L.R. 1286, at p. 1290. Thus there are two schools of thought in England. The first school of

La fiducie expresse resulte de !'intention du constituant ou du fiduciaire. La fiducie par inter­pretation est imposee sans egard a !'intention du constituant, par !'application de regles de droit. ·

En Angleterre, Ia theorie traditionnelle de Ia fiducie par interpretation reconnait une serie de domaines dans lesquels une personne a, en droit, !'obligation de detenir des biens en fiducie au nom d'une autre, habituellement en matiere de fraude, d'erreur et de rapports fiduciaires. Lord Denning est aile plus loin, affirmant qu'une fiducie par interpretation peut etre imposee [TRADUCTION]

«Chaque fois que Ia justice et Ia conscience !'exi­gent»: Hussey v. Palmer, [1972] I W.L.R. 1286, a

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thought, the "traditional" view, would limit the scope of the trust to existing, recognized construc­tive trust situations and would not extend the application of the trust to the equitable division of property between contesting parties. It rejects the a notion of a trust based on justice and good con­science. The second school of thought is expressed

Ia p. 1290. II y a done deux ecoles de pensee en Angleterre. Les tenants de Ia premiere ecole, dite «traditionnelle», limiteraient Ia portee de Ia fiducie par interpretation a des situations reelles et recon­nues et n'en etendraient pas !'application au par­tage des biens en equity entre parties opposees. lis rejettent Ia notion d'une fiducie fondee sur Ia justice et Ia conscience. La seconde ecole de pensee se manifeste dans le «nouveau modele)) etabli par

in the "new model" set forth by Lord Denning in Hussey v. Palmer.

The traditional English view, which does not recognize the constructive trust as a general remedy for unjust enrichment, but sees it as an obligation attaching to property in certain speci­fied circumstances, holds that a constructive trust is a property right, just like any other trust. Thus Pettit, in Equity and the Law of Trusts (4th ed. 1979), states at p. 46:

... the constructive trust is a substantive institution. It is in principle like any other trust, the difference lying in the mode of creation. Express trusts and constructive trusts are two species of the same genus.

In Canada, we have not followed the traditional English view of the constructive trust as a limited doctrine applying in limited, clearly defined cases. Rather, we have moved toward the American view of the constructive trust as a general equitable remedy for unjust enrichment. This development is of relatively recent standing. In Murdoch v. Mur­doch, [ 197 5] I S.C.R. 423, the majority of this Court agreed with the House of Lords' decisions in Pettitt v. Pettitt, [ 1970] A.C. 777, and Gissing v. Gissing, [1971] A.C. 886. Laskin J. (as he then was) dissented, one of his grounds of dissent being that the constructive trust could be interpreted as an equitable remedy based on the principle of preventing unjust enrichment. Similarly, in Rath­well v. Rathwell, [ 1978] 2 S.C.R. 436, support for the remedial constructive trust remained a minori­ty viewpoint (espoused by Dickson J. (as he then was), Laskin C.J. and Spence J. agreeing). Finally, in Pettkus v. Becker, [1980] 2 S.C.R. 834, the minority opinion of Rathwell v. Rathwell became the majority opinion, and the concept of construe-

b lord Denning dans !'arret Hussey v. Palmer.

Les tenants de !'opinion traditionnelle anglaise, qui ne reconnaissent pas Ia fiducie par interpreta­tion comme recours general contre l'enrichisse-

c ment sans cause mais Ia considerent comme une obligation rattachee aux biens dans certaines cir­constances precises, affirment que Ia fiducie par interpretation est un droit de propriete, au meme

d titre que toutes les autres fiducies. Ainsi, dans son ouvrage Equity and the Law of Trusts ( 4c ed. 1979), Pettit affirme a Ia p. 46: [TRADUCTION] ... Ia fiducie par interpretation est une institution de fond. En principe, elle est semblabte a

e toute autre fiducie, Ia difference etant son mode de creation. Les fiducies expresses et les fiducies par inter­pretation sont deux exemples du meme genre.

Au Canada, nous n'avons pas retenu !'opinion

1 traditionnelle anglaise de Ia fiducie par interpreta­tion comme une theorie de portee limitee qui ne s'applique que dans des cas clairement definis. Au contraire, nous sommes alles vers le point de vue americain qui considere Ia fiducie par interpreta-

g tion comme un recours en equity centre l'enrichis­sement sans cause. Cette evolution est relativement recente. Dans !'arret Murdoch c. Murdoch, [1975] 1 R.C.S. 423, notre Cour a Ia majorite s'est dite d'accord avec les decisions de Ia Chambre des

h lords dans les arrets Pettitt v. Pettitt, [ 1970] A.C. 777, et Gissing v. Gissing, [ 1971] A.C. 886. Le juge Laskin (plus tard Juge en chef) etait dissi­dent, une des raisons de sa dissidence etant que Ia fiducie par interpretation pouvait etre consideree comme un recours en equity fonde sur le principe qu'il faut empecher l'enrichissement sans cause. De meme, dans !'arret Rathwell c. Rathwell, [1978] 2' R.C.S. 436, Ia fiducie par interpretation

j comme voie de recours n'a ete reconnue que par une minorite de juges (le juge Dickson, alors juge

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tive trust as a general remedy for unjust enrich­ment was adopted in Canada.

The new concept of constructive trust now pre­vailing in Canada differs from the traditional Eng­lish concept in two respects. The first is its founda­tion in the concept of unjust enrichment. As Professor Waters, in Law of Trusts in Canada (2nd ed. 1984), at p. 385 puts it:

... though the constructive trust remains in common law Canada a collection of liability situations, it now has a theme. The constructive trust in the area of spousal or quasi-spousal property "arises . . . out of ine~uitable withholding resulting in an unjust enrichment," [quoting from Dickson J. in Rathwell v. Rathwell], and this is the theme, the basis of the defendant's liability.

pulne, 1e juge en chef Laskin et le juge Spence). Enfin, dans !'arret Pettkus c. Becker, [1980] 2 R.C.S. 834, !'opinion minoritaire de !'arret Rath­well c. Rathwell s'est transformee en opinion

a majoritaire, et le Canada a adopte la notion de fiducie par interpretation comme recours general contre l'enrichissement sans cause.

La nouvelle conception de la fiducie par inter-b pretation qui prevaut maintenant au Canada dif­

fere de la conception traditionnelle anglaise a deux egards. D'abord elle trouve sort fondement dans la notion d'enrichissement sans cause. Comme le pro­fesseur Waters l'explique dans son ouvrage Law of

c Trusts in Canada (2< ed. 1984), ala p. 385:

[TRADUCTION) ... bien que Ia fiducie par interpretation corresponde toujours dans les provinces de common law au Canada a un ensemble de cas de responsabilite, elle a

d maintenant un theme. La fiducie par interpretation dans le domaine des biens des epoux ou des conjoints de fait «trouve son origine [ ... ) dans Ia possession arbitraire d'un bien resultant en un enrichissement sans cause», (citant le juge Dickson dans !'arret Rathwell c. Rath­well), et tel est le theme, le fondement de Ia responsabi-

e lite du defendeur.

The new concept eliminates the need to find recog­nizable categories in which the constructive trust can be applied, relying instead on the more general concept of unjust enrichment arising from a con- f tribution by one to property held in the name of the other to the detriment of the contributing party.

Cette nouvelle conception ecarte la necessite de definir des categories identifiables dans lesquelles Ia fiducie par interpretation peut s'appliquer; elle s'appuie plutot sur Ia conception plus generale de l'enrichissement sans cause decoulant de la contri­bution d'un epoux aux biens dont !'autre est le titulaire a son detriment.

The second main difference between the tradi- g tiona! English concept of trust and the doctrine now accepted in Canada is the remedial nature of the Canadian doctrine. The trust is not viewed as

La deuxieme difference principale entre Ia con-

an institution but as a remedy, as a means of compelling a person to surrender an unjust enrich­ment: see Scott, Law of Trusts, vol. 5 (3rd ed. 1967), at p. 3416, § 462.1, Waters, op. cit., at p. 388.

ception traditionnelle anglaise de Ia fiducie et Ia tbeorie maintenant acceptee au Canada tient a ce qu'elle est consideree comme une voie de recours dans Ia tbeorie canadienne. La fiducie n'est pas

h consideree comme une institution mais comme un recours, le moyen d'obliger une personne a se departir ·d'un enrichissement sans cause: voir Scott, Law of Trusts, vol. 5 (3< ed. 1967), a Ia p. 3416, § 462.1, Waters, op. cit., a Ia p. 388.

While some writers suggest that the develop­ment of a remedial constructive trust in Canada has, for all purposes, eliminated the presence of "institutional" constructive trusts (see for example j

McClean, "Constructive and Resulting Trusts -Unjust Enrichment in a Common Law Relation-

Quoique certains auteurs laissent entendre que !'elaboration au Canada d'un recours fonde sur la fiducie par interpretation a elimine, a toutes fins pratiques, Ia presence des fiducies par interpreta­tion «institutionnelles» (voir par exemple McClean, ((Constructive and Resulting Trusts - Unjust

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ship- Pettkus v. Becker" (1982), 16 U.B.C. Law Rev. 155) other authors argue that the construc­tive trust that is used to remedy unjust enrichment is not the only type of constructive trust (see, for example, Paciocco, "The Remedial Constructive Trust: A Principled Basis for Priorities over Credi­tors" (1989), 68 Can. Bar Rev. 315). Because the facts in the present case involve allegations of unjust enrichment (and thus the type of construc­tive trust used to remedy unjust enrichment), it is not necessary for the purpose of this appeal to decide if other types of constructive trusts have been abolished. The discussion which follows focusses on an analysis of constructive trusts as developed in response to unjust enrichment.

Although the constructive trust is remedial, that is not to say that the remedial concept of co~struc­tive trust does not give rise to property interests. When the court declares a constructive trust, at that point the beneficiary obtains an interest in the property subject to the trust. That property inter­est, it appears, may be taken as extending back to the date when the trust was "earned" or perfected. In Hussey v. Palmer, in a passage referred to by Dickson J. in Rathwell v. Rathwell and relied on by the Court of Appeal in this case, Lord Denning postulated that the interest may arise at the time of declaration or from the outset, as the case may require. Scott views the trust as being in force from the outset, with a discretion in the court as to whether it should be enforced: Scott, op. cit., § 462.2. Another American scholar regards it as coming into existence only on an order being made, but having retrospective operation: Bogert, The Law of Trusts and Trustees (2nd ed. 1979), § 472.

Enrichment in a Common Law Relationship -Pettkus v. Becker» (1982), 16 U.B.C. Law Rev. 155), d'autres auteurs soutiennent que Ia fiducie par interpretation utilisee pour remectier a l'enri-

a chissement sans cause n'est pas le seul type de fiducie par interpretation (voir, par exemple, Paciocco, «The Remedial Constructive Trust: A Principled Basis for Priorities Over Creditors» (1989), 68 R. duB. can. 315). Puisque les faits en

b l'espece ont donne lieu a des allegations d'enrichis­sement sans cause (et done de ce type particulier de fiducie par interpretation qui est utilise pour les cas d'enrichissement sans cause), il n'est pas neces-

c saire, aux fins du pourvoi, de decider si d'autres types de fiducies par interpretation ont ete abolis. Le developpement qui suit est centre sur une ana­lyse des fiducies par interpretation telles qu'elles ont ete elaborees en reponse a l'enrichissement

d sans cause.

Meme si Ia fiducie par interpretation a un caractere reparateur, cela ne signifie pas que Ia notion de fiducie par interpretation comme recours

e ne donne pas naissance a des droits de propriete. Lorsque le tribunal impose une fiducie par inter­pretation, le beneficiaire obtient alors un droit sur les biens assujettis a Ia fiducie. II semble que ce droit puisse remonter a Ia date a laquelle Ia fiducie

f etait «acquise» ou devenue opposable. Dans !'arret Hussey v. Palmer, dans un passage mentionne par le juge Dickson dans !'arret Rathwell c. Rathwell et invoque par la Cour d'appel en l'espece, lord

g Denning a affirme que Ia fiducie peut naltre au moment de la declaration ou des Je debut, selon les circonstances. Scott estime que Ia fiducie est en vigueur des le debut, le tribunal ayant le pouvoir discretionnaire de decider si elle devrait etre appli-

h quee: Scott, op. cit., § 462.2. Un autre auteur americain estime qu'elle ne prend naissance que lorsqu'une ordonnance est rendue, mais qu'elle a un effet retroactif: Bogert, The Law of Trusts and Trustees (2• ed. 1979), § 472.

The significance of the remedial nature of the constructive trust is not that it cannot confer· a property interest, but that the conferring of such an interest is discretionary and dependent on the j

inadequacy of other remedies for the unjust enrichment in question. The doctrine of construe-

L'importance de Ia nature reparatrice de Ia fidu­cie par interpretation ne tient pas a ce qu'elle ne peut conferer un droit de propriete, mais a ce que le fait de conferer ce droit decoule de l'exercice d'un pouvoir discretionnaire et depend du carac­tere inadequat des autres recours contre l'enrichis-

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sement sans cause en question. La theorie de Ia fiducie par interpretation peut etre utilisee comme recours en matiere de propriete, mais ne presup­pose pas automatiquement un droit de possession.

tive trust may be used to confer a proprietary remedy, but does not automatically presuppose a possessory property right. Thus, even where the tests for constructive trust are met - unjust enrichment, corresponding deprivation, and no juridical justification for the enrichment and jus­tification - the property interest does not automatically arise. Rather, the court must consid­er whether other remedies to remedy the injustice exist which make the declaration of a constructive trust unnecessary or inappropriate.

a Par consequent, meme lorsque les criteres de !'existence d'une fiducie par interpretation sont etablis - enrichissement sans cause, appauvrisse­ment correspondant, absence de motifs juridiques a l'enrichissement - le droit de propriete n'existe

b pas automatiquement. Le tribunal doit plutot se demander si, pour corriger !'injustice, il existe d'autres recours qui rendent inutile ou inopportune la declaration de fiducie par interpretation.

The foundation of constructive trust in unjust c

enrichment and its essentially remedial nature have been emphasized and re-emphasized by this Court. Dickson J. stated in Pettkus v. Becker, at pp. 850-51, and repeated in Sorochan v. Sorochan, d

[1986] 2 S.C.R. 38:

Notre Cour a souligne et repete que la fiducie par interpretation trouve son origine dans l'enri-chissement sans cause et qu 'elle tient essentielle­ment du recours. Le juge Dickson a affirme dans !'arret Pettkus c. Becker, aux pp. 850 et 851, et repete dans !'arret Sorochan c. Sorochan, [1986] 2 R.C.S. 38, que: Le principe d'equity sur lequel repose le recours a Ia fiducie par interpretation estlarge et general; son but est

The equitable principle on which the remedy of con­structive trust rests is broad and general; its purpose is to prevent unjust enrichment in whatever circumstances it occurs. [Emphasis added.]

e d'empecher l'enrichissement sans cause dans toutes les circonstances ou il se presente. [Je souligne.]

The remedial nature of the notion of construc­tive trust was repeatedly emphasized by Dickson C.J. In Rathwell v. Rathwell, at p. 444, h~ said:

Le juge en chef Dickson a souligne a plusieurs reprises que Ia fiducie par interpretation est, de

f par sa nature, un recours. Dans !'arret Rathwell c. Rathwell, il a dit, a Ia p. 444:

On the legal front, acceptance of the notion of restitu­tion and unjust enrichment in Canadian jurisprudence ... has opened the way to recognition of the constructive trust as an available and useful remedial tool in resolv- g

ing matrimonial property disputes. [Emphasis added.]

Similarly, in Pettkus v. Becker, at pp. 847-48, Dickson J., after positing unjust enrichment as the h

basis of the remedy, confirmed its remedial nature:

The principle of unjust enrichment lies at the heart of the constructive trust. "Unjust enrichment" has played a role in Anglo-American legal writing for centuries. Lord Mansfield, in the case of Moses v. Macferlan ( 1760), 2 Burr. 1005, put the matter in these words: " ... the gist of this kind of action is. that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money". It j would be undesirable, and indeed impossible, to attempt to define all the circumstances in which an unjust

Sur le terrain du droit, !'acceptation de Ia notion de restitution et d'enrichissement sans cause en jurispru­dence canadienne [ ... ] a ouvert Ia voie a Ia reconnais­sance de Ia fiducic par interpretation comme un recours possible et utile dans les litiges portant sur les biens matrimoniaux. [Je souligne.]

De meme, dans !'arret Pettkus c. Becker, aux pp. 847 et 848, Je juge Dickson, confirme qu'il s'agit d'un recours trouvant son origine dans l'enrichisse­ment sans cause:

Le principe de l'enrichissement sans cause est au creur de Ia fiducie par interpretation. «L'enrichissement sans cause» a joue un role dans Ia doctrine juridique anglo­americaine pendant des siecles. Dans !'arret Moses v. Mac fer! an ( 1760), 2 Burr. 1005, lord Mansfield s'est exprimc comme suit: [TRADUCTION] •· .. le motif prin­cipal de cette action est que le dCfendcur est oblige en vertu des regles de justice naturelle et d'equity de rembourser /"argent>>. ll ne conviendrait pas, et en fait il serait impossible, d'essayer de dHinir toutes les circons-

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enrichment might arise . . . . The great advantage of ancient principles of equity is their flexibility: the judici­ary is thus able to shape these malleable principles so as to accommodate the changing needs and mores of socie­ty, in order to achieve justice. The constructive trust has proven to be a useful tool in the judicial armoury.

tances qui peuvent donner lieu a un enrichissement sans cause [ ... ] Le grand avantage des principes anciens d'equity est leur souplesse: les tribunaux peuvent done modeler ces principes malleables pour repondre aux

a necessites et aux mreurs changeantes de Ia societe, afin que justice soit rendue. La fiducie par interpretation s'est revelee utile dans !'arsenal judiciaire.

In Sorochan v. Sorochan, Dickson C.J., after quoting both these passages, suggested that the h remedy of constructive trust does not follow automatically from establishment of the three cri­teria set out in Pettkus v. Becker. A further inqui-

Dans !'arret Sorochan c. Sorochan, le juge en chef Dickson, apres avoir cite ces deux extraits, laisse entendre que le recours a la fiducie par interpretation ne decoule pas automatiquement de l'etablissement des trois criteres etablis dans !'arret Pettkus c. Becker. Il faut se demander en outre si ry is required to determine if other remedies are

available, and if so, whether the remedy of con­structive trust remains appropriate. The Chief Jus­tice wrote, at p. 47:

The constructive trust constitutes one important judi­cial means of remedying unjust enrichment. Other reme­dies, such as monetary damages, may also be available to rectify situations of unjust enrichment. We must, therefore, ask when and under what circumstances it is appropriate for a court to impose a constructive trust. [Emphasis added.] ·

c d'autres recours existent et, le cas echeant, si la fiducie par interpretation comme recours demeure approprik Le Juge en chef a ecrit, ala p. 47:

La fiducie par interpretation constitue un moyen reparateur important dont disposent les tribunaux pour

d remedier a l'enrichissement Sans cause. II est possible aussi d'avoir recours a d'autres reparations, telles que des dommages-interets, pour corriger des cas d'enrichis­sement sans cause. Nous devons en consequence nous demander quand et dans guelles circonstances il con-

e vient qu'un tribunal impose une fiducie par interpreta­tion. [Je souligne.]

These passages . establish the fundamentals of the Canadian approach to constructive trust in relation to unjust enrichment. First, the doctrine f has as its purpose the remedying of unjust enrich­ment. Second, it is remedial rather than substan­tive. Finally, the remedy of constructive trust is but one of many remedies that may be available to correct unjust enrichment. Before applying it, the g court must consider whether, given other available remedies, the remedy of constructive trust remains necessary and appropriate in the case before it

Ces extraits etablissent les fondements de !'ap­plication de la fiducie par interpretation au Canada en matiere d'enrichissement sans cause. Premierement, la theorie a pour objet de remedier a l'enrichissement sans cause. Deuxiemement, elle est un recours plut6t qu'une regie de fond. Enfin, Ia fiducie par interpretation comme recours n'est qu'un parmi d'autres recours possibles pour corri­ger l'enrichissement sans cause. Avant de l'appli-quer, le tribunal doit determiner si, compte tenu des autres recours possibles, Ia fiducie par inter­pretation comme recours demeure necessaire et

This brings us to the issue raised in this case. Given that the doctrine of constructive trust, as it has developed in Canada, is remedial, what is the relationship of the remedy of constructive trust to other remedies for unjust enrichment? While Dickson C.J. alludes to this issue in Sorochan v. Sorochan, little Canadian jurisprudence exists on the question. In these circumstances, it may be useful to have regard to the American experience. (This approach is advocated by Waters, op cit.,

h appropriee dans le cas dont il est saisi.

Cela nous amene a la question que souleve ce pourvoi. Etant donne que, selon Ia theorie de Ia fiducie par interpretation, telle qu'elle s'est deve­loppee au Canada, il s'agit d'un recours, que! est le rapport entre la fiducie par interpretation et les autres recours contre l'enrichissement sans cause? Bien que le juge en chef Dickson y fasse allusion

j dans !'arret Sorochan c. Sorochan, il existe peu d'arrets sur la question au Canada. Dans ces cir­constances, il peut etre utile de se rapporter a

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who writes, at p. 392, "if this analysis is not early developed, and Canadian eyes remained trained on English precedents rather than the law of restitu­tion in the United States, so that the constructive trust is conceived solely in its generic sense, there is a danger that this trust could indeed become the 'wild card in the pack'.")

!'experience americaine. (Cette demarche est pro­posee par Waters, op. cit., qui ecrit, a Ia p. 392, [TRADUCTION] «si cette analyse n'est pas bient6t adoptee, et si !'attitude canadienne demeure accra-

a chee a Ia jurisprudence anglaise plutot qu'aux regles americaines sur Ia restitution, de sorte que Ia fiducie par interpretation est consideree unique­ment dans son sens generique, on court le risque que cette fiducie devienne effectivement Ia carte

b «passe-partout».>>)

Le droit americain sur les fiducies par interpre­tation, selon le Restatement of Restitution, recon­nait l'eventail des recours applicables a l'enrichis­

c sement sans cause et Ia necessite que le tribunal, dans l'examen d'une demande de reconnaissance

The American law on constructive trusts, as set out in the Restatement of Restitution, recognizes the panoply of remedies for unjust enrichment and the need for the court, in considering a claim for constructive trust, to select among them. As a general rule, the remedies which operate in perso­nam must be brought first - for example, actions for money had and received, quantum meruit and d

account. As Waters, op. cit., states at p. 391:

d'une fiducie par interpretation, en choisisse un. En regie generale, les redressements in personam doivent etre utilises les premiers - par exemple, Ies actions pour enrichissement sans cause, quan-

Only when these actions are inadequate, ... are Ameri­can courts willing to entertain the equitable proprietary remedies, the constructive trust and the equitable lien. [Emphasis added.)

tum meruit et en reddition de compte. Comme I'affirme Waters, op. cit., a Ia p. 391: [TRADUCTION) Ce n'est que lorsque ces actions sont

e inadeguates, [ ... 1 que les tribunaux americains sont prets a envisager les recours en equity sur Ia propriete, Ia fiducie par interpretation et un privilege reconnu en equity. [Je souligne.]

And, at p. 393, Waters counsels caution in apply- f ing the remedy of constructive trust where other personal remedies lie:

Et, a Ia p. 393, Waters conseille Ia prudence dans le recours a Ia fiducie par interpretation lorsque d'autres actions personnelles existent:

It is already clear from the English experience with the "new model" constructive trust that, if this remedy is employed where personal remedies would suffice, it threatens to upset the operation of other doctrines.

[TRADUCTION) II ressort deja clairement de !'expe­rience anglaise du «nouveau modele» de Ia fiducie par

g interpretation que si ce recours est utilise lorsque d'au­tres recours de nature personnelle suffiraient, il risque de modifier l'effet d'autres theories.

Waters goes on to point out the dangers associated Waters poursuit en soulignant les dangers qu'il y a with conferring possessory rights on a plaintiff and h de conferer des droits possessoires a un demandeur concludes: et conclut: ... let us reflect on the consequences of declaring a proprietary right to remedy the situation. It can produce unregistered and unregistrable interests capable of bind­ing the land in the hands of immediate title holders, and successors taking with notice.

Thus I arrive at this point. Without denying the importance of the remedy of constructive trust, it j

must be remembered that it may be only one of several remedies for unjust enrichment. It must

[TRADUCTION) ... reflechissons aux consequences que comporte le fait d'accorder un droit de propriete pour corriger Ia situation. II peut donner lieu a des interets non enregistres ni enregistrables qui peuvent affecter Ie bien-fonds des titulaires actuels et des successeurs a vises.

J'en arrive done a ceci. Sans nier !'importance du recours a Ia fiducie par interpretation, il faut se rappeler qu'il peut s'agir seulement d'un recours parmi d'autres applicables a l'enrichissement sans

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also be remembered that as a proprietary remedy, its imposition may interfere with the operation of other doctrines and the exercise by others, includ­ing third parties, of the rights attendant on their interests in the property made subject to the trust. For these reasons, it may be wise to insist that a plaintiff have exhausted his or her personal reme­dies before imposing the remedy of constructive trust.

Against this background, I return to the first of the two questions I posed at the outset. Is the doctrine of constructive trust as it has developed in Canada a substantive doctrine of trust, automati­cally conferring a property interest where the basic criteria for the trust are made out? Or is it a remedy, to be applied where necessary to remedy unjust enrichment?

The answer must be that in Canada constructive trust, at least in the context of unju,st enrichment, is not a doctrine of substantive property law, but a remedy. It follows that a constructive trust cannot be regarded as arising automatically when the three conditions set out in Pettkus v. Becker are established. Rather, the court must go on to con­sider what other remedies are available to remedy the unjust enrichment in question and whether the proprietary remedy of constructive trust is appropriate.

Neither of the courts below approached the matter in this way. Both the trial judge and the Court of Appeal assumed that the doctrine of constructive trust gave the wife a beneficial half-~ interest in the property, the only question then being whether the statute took that right away. My colleague, Cory J., takes a similar approach, stating that the Family Law Act, 1986 incorpo­rates the constructive trust remedy "as an integral part of the process of ownership determination" at pp. 89-90.

cause. II convient egalement de se rappeler qu'a titre de recours en matiere de propriete, son impo­sition peut porter atteinte a !'application d'autres principes eta l'exercice par d'autres, y compris des

a tiers, de droits correspondant a leurs interets dans 1e bien assujetti a Ia fiducie. Pour ces raisons, il serait prudent d'exiger que le demandeur ait epuise les recours de nature personnelle avant d'imposer une fiducie par interpretation.

b

Dans ce contexte, je reviens a Ia premiere des deux questions que j'ai posees au debut. La theorie de Ia fiducie par interpretation, telle qu'elle s'est developpee au Canada, est-elle une regie de fond

c de Ia theorie de Ia fiducie, conferant automatique­ment un droit de propriete lorsque les criteres fondamentaux de Ia fiducie sont etablis? Ou s'agit-il d'un recours a exercer lorsque cela est

d necessaire pour remedier a l'enrichissement sans cause?

La reponse doit etre qu'au Canada Ia fiducie par interpretation, du moins dans le contexte de l'enri-

e chissement sans cause, n'est pas une regie de fond en droit des biens mais un recours. 11 s'ensuit qu'une fiducie par interpretation ne peut etre con­sideree comme existant automatiquement lorsque les trois conditions requises dans !'arret Pettkus c.

f Becker sont etablies. Le tribunal doit plut6t exami­ner alors quels autres recours existent pour reme­dier a l'enrichissement sans cause en question et si Ia fiducie par interpretation comme recours sur Ia propriete est appropriee.

g

Aucun tribunal d'instance inferieure n'a aborde !'affaire sous cet angle. Le juge de premiere ins­tance et Ia Cour d'appel ont presume que Ia theo­rie de Ia fiducie par interpretation conferait a

h J'epouse un interet beneficiaire de moitie dans les biens, Ia seule question etant de savoir si Ia loi avait supprime ce droit. Mon collegue le juge Cory adopte un point de vue semblable, affirmant que Ia Loi de I 986 sur le droit de Ia famille fait de Ia fiducie par interpretation comme moyen de redres­sement ((une partie integrante du processus de determination du droit de propriete», aux pp. 89 et 90.

j I cannot share this approach. In my opinion, the Je ne peux partager ce point de vue. A mon avis,

Ia theorie de Ia fiducie par interpretation ne doctrine of constructive trust does not permit the

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court to retrospectively confer a property interest solely on the basis of contribution of one spouse and enrichment of the other. A further inquiry must be made, namely: whether, given the pres­ence of another remedy, the remedy of construc­tive trust is necessary or appropriate. I now turn to that question.

2. Whether The Doctrine of Constructive Trust Should be Applied in the Case at Bar

This case poses the question of whether the doctrine of constructive trust should be applied where there exists a comprehensive statutory scheme providing a remedy for the situation where one spouse holds exclusive title to property to which the other spouse has contributed.

The Family Law Act, 1986 sets up a compre­hensive statutory scheme which recognizes the contributions of both spouses to the acquisition, preservation, maintenance or improvement of property during the marriage. It addresses the question of unjust enrichment between spouses by providing for a monetary equalization payment based on the value of the "net family property" at the valuation date, i.e., the time of separation: s. 5(1).

permet pas au tribunal de conferer retroactivement un droit de propriete en se fondant uniquement sur Ia contribution d'un conjoint et l'enrichissement de !'autre. 11 faut se demander en outre si, compte

a tenu de !'existence d'un autre recours, le recours a Ia fiducie par interpretation est necessaire ou approprie. J'examine maintenant cette question.

2. La theorie de Ia fiducie par interpretation b devrait-elle etre appliquee en l'espece?

Cette affaire souteve Ia question de savoir si Ia theorie de Ia fiducie par interpretation devrait etre appliquee lorsqu'il existe un regime legislatif com­

e plet qui prevoit un recours lorsqu'un conjoint detient exclusivement le titre de propriete dans Je bien auquell'autre conjoint a contribue.

La Loi de 1986 sur le droit de Ia famille etablit d un regime legislatif complet qui reconnait les con­

tributions des deux conjoints a !'acquisition, a Ia conservation, a l'entretien ou a !'amelioration des biens au cours du mariage. Elle traite de Ia ques­tion de l'enrichissement sans cause entre les con-

e joints en prevoyant l'egalisation par Je paiement d'un montant fixe selon Ia valeur des ((biens fami­liaux nets» a Ia date d'evaluation, c.-a-d. au moment de Ia separation (par. 5(1)).

The Act defines property broadly as including f "any interest, present or future, vested or contin­gent, in real or personal property ... ": s. 4. "Net family property" is defined as meaning "the value

La Loi definit Je mot ((bien» comme comprenant un «droit, actuel ou futur, acquis ou eventuel, sur un bien meuble ou immeuble ... •• (art. 4). L'ex­pression «biens familiaux nets" est definie comme «Ia valeur de tous Jes biens [ ... ] dont Je conjoint est le proprietaire a Ia date d'evaluation ... •• apres deduction des dettes et de Ia valeur des biens a J'epoque du mariage (art. 4). La Loi oblige expres­sement Ie juge a appliquer Ia theorie de Ia fiducie par deduction (art. 14), mais ne mentionne pas Ia fiducie par interpretation. La Loi permet au juge de s'ecarter du principe du partage ega! et d'ajus­ter le montant dans diverses circonstances, y com­pris dans «n'importe quelle autre circonstance con­cernant !'acquisition, !'alienation, Ia conservation, l'entretien ou !'amelioration des biens•• (a!. 5(6)h)).

of all the property ... that a spouse owns on the valuation date ... " after deducting debts and the g

value of the property at the time of marriage: s. 4. The Act specifically requires the judge to apply the doctrine of resulting trust (s. 14), but makes no mention of constructive trust. The Act permits the

h judge to depart from the principle of equal distri-bution and adjust the award in a variety of circum­stances, including "any other circumstance relat­ing to the acquisition, disposition, preservation, maintenance or improvement of property": s. 5(6)(h).

The question may be put thus: given that there was an unjust enrichment arising from the fact j

that the property to which the wife contributed was in the husband's name, does the Family Law

La question peut done etre formulee ainsi: etant donne que l'enrichissement sans cause provient du fait que les biens auxquels l'epouse a contribue etaient au nom de l'epoux, Ia Loi de 1986 sur le

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Act, 1986 provide a remedy, which makes it un­necessary to resort to the doctrine of constructive trust? In my opinion, the answer to this question must be affirmative.

Both the statutory remedy and the remedy of constructive trust are, on the facts of this case, directed to the same end. The purpose of a con­structive trust, as already discussed, is to permit a party without title to receive compensation for his or her contribution to the acquisition and mainte­nance of property standing in the other's name. The purpose of the Family Law Act, 1986 is the same: it sets up a scheme to equalize the property holdings of each party to a marriage, regardless of who holds legal title. The only difference for the purposes of this case is that the Family Law Act, 1986 provides for the equalization to be accom­plished by a payment of money based on the value of the property at the time of separation (a remedy in personam), while the doctrine of constructive trust would give a beneficial interest in the land which persists to the date of trial (a proprietary remedy).

a

droit de Ia famille prevoit-elle un recours qui rend inutile !'utilisation de Ia theorie de la fiducie par interpretation? A mon avis, Ia question doit rece­voir une reponse affirmative.

Le recours prevu par la loi et celui qu'offre la fiducie par interpretation visent en l'espece le meme but. L'objet d'une fiducie par interpretation, comme nous l'avons deja souligne, est de permettre

b a une partie non titulaire d'un droit de propriete d'etre dedommagee pour sa contribution a ['acqui­sition et a l'entretien de biens qui sont inscrits au nom de !'autre. L'objet de Ia Loi de 1986 sur le droit de Ia famille est le meme: elle etablit un

c regime d'egalisation des biens de chaque partie au mariage, sans egard a celle qui detient le titre de propriete. Pour les fins du present pourvoi, la seule difference est que Ia Loi de 1986 sur le droit de Ia

d jamille prevoit que l'egalisation s'effectue par le paiement d'une somme calculee selon la valeur des biens au moment de la separation (un recours in personam), alors que Ia th6orie de Ia fiducie par interpretation confererait un interet b6n6ficiaire

e dans Je bien-fonds qui subsiste jusqu'a la date de !'audience (un recours sur Ia propriete).

If the doctrine· of unjust enrichment is to be applied in this case, it is not for the purpose of rewarding the wife for her contribution to the J property held in the husband's name, but for the purpose of permitting her to share in the increase

Si Ia th6orie de l'enrichissement sans cause doit etre appliquee en l'espece, ce n'est pas pour recom­penser l'epouse de sa contribution aux biens dont l'epoux est titulaire mais pour lui permettre d'avoir une part dans !'augmentation de valeur des biens a pres la s-eparation. Mais cela ne peut justifier une demande de fiducie par interpretation pour deux

in value of the property after separation. But this cannot support a claim for a constructive trust for two reasons.

First, the Act contemplates the problem that assets may increase or diminish in value between the date of separation and trial; s. 5( 6)(h)permits the trial judge to vary the equal division of prop­erty as at separation, on the basis of circumstances relating to the disposition or improvement of the property. I agree with Cory J. that this step of the process is distinct from the preliminary determina­tions of ownership.

Second, it would appear that the elements neces­sary to establish a constructive trust are not present where the enrichment occurs as a result of appreciation of the market value of the land after

g raisons.

Premierement, Ia Loi prevoit que Ia valeur des biens peut augmenter ou diminuer entre la date de Ia separation et !'audience; J'al. 5(6)h) permet au

h juge de premiere instance de modifier le partage egal des biens au moment de Ia separation compte tenu de circonstances concernant !'alienation ou !'amelioration des biens. Je partage ]'avis du juge Cory que cette etape du processus est distincte de J'etape preliminaire de determination de Ia pro­priete des biens.

Deuxiemement, il semblerait que les elements j necessaires a l'etablissement d'une fiducie par

interpretation n'existent pas lorsque l'enrichisse­ment resulte de !'augmentation de Ia valeur mar-

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separation. Under the statute, the wife already receives a payment sufficient to give her fifty percent of the family property, valued at the date of separation. There is no unjust enrichment there. What then of the fact that because of delays in obtaining judgment, the value of the property held in the hands of the husband increases pending trial? True, this is an enrichment of the husband. But there is no corresponding deprivation to the wife giving rise to an injustice. The husband is not being enriched at her expense or because of her efforts. In these circumstances, the first two requirements of a constructive trust posited in Pettkus v. Becker - unjust enrichment of one party and corresponding deprivation of the other -are absent.

In the final analysis, the Family Law Act, 1986 provides complete compensation for the wife's con­tribution to the date of separation. Any dispropor­tionate enrichment must occur because of the increase in value due to changing market condi­tions after that date. But that does not constitute an unjust enrichment under the principles set forth in Pettkus v. Becker, given that the wife made no contribution after that date. As a matter of legal principle, the Legislature having provided a remedy for the unjust enrichment which would otherwise have occurred in this case, it is not for this Court to impose an additional equitable remedy aimed at correcting the same wrong.

I add that application of the remedy of construc-

chande du bien-fonds apres la separation. En vertu de la loi, l'epouse re9oit deja un paiement corres­pondant a 50 p. 100 des biens familiaux, evalues a Ia date de Ia separation. II n'y a la aucun enrichis-

a sement sans cause. Qu'arrive-t-il done lorsqu'en raison des delais pour obtenir jugement Ia valeur des biens dont l'epoux est proprietaire augmente avant le proces? II est vrai que l'epoux s'enrichit. Mais il n'y a pas d'appauvrissement correspondant

b de l'epouse donnant lieu a une injustice. L'epoux ne s'enrichit pas a ses depens ou grace a ses efforts. Dans ces circonstances, les deux premieres exigen­ces de la fiducie par interpretation, etablies dans

c !'arret Pettkus c. Becker - enrichissement sans cause d'une partie et appauvrissement correspon­dant de !'autre- n'existent pas.

En derniere analyse, Ia Loi de 1986 sur le droit d de Ia famille prevoit une compensation complete

de Ia contribution de l'epouse jusqu'a Ia date de la separation. Apres cela, tout enrichissement dispro­portionne resulte de !'augmentation de valeur due aux conditions changeantes du marche. Mais ce

e n'est pas un enrichissement sans cause selon les principes etablis dans !'arret Pettkus c. Becker puisque l'epouse n'a fait aucune contribution apres cette date. Selon les principes juridiques, lorsque le

f legislateur a prevu un moyen de remedier a l'enri­chissement sans cause qui se serait produit en l'espece, il n'appartient pas a cette Cour d'imposer une reparation additionnelle en equity pour corri­ger le meme tort.

g

tive trust to the statutory scheme may pose practi­cal problems. The scheme under the Act is rela­tively clear and simple; the basic rule is equality between the spouses, an equality effected by an h

equalization payment from one spouse to the other, based on the value of the property at the valuation date, usually the date of separation. In most cases the parties can ascertain without dif­ficulty what payment must be made, thereby set­tling their affairs without lengthy litigation. Graft­ing the remedy of constructive trust on to this scheme would add uncertainty and promote litiga­tion featuring detailed inquiries into how much j

each party contributed to the acquisition, preserva­tion, maintenance and improvement of the prop-

J'ajoute que !'application de Ia fiducie par inter­pretation au regime legislatif peut soulever des problemes d'ordre pratique. Le regime que prevoit !a Loi est relativement clair et simple; Ia regie fondamentale est l'egalite entre les conjoints, une egalite obtenue par un paiement d'egalisation verse par un conjoint a l'autre dont le montant est fixe en fonction de Ia valeur des biens a Ia date d'eva­luation, habituellement Ia date de separation. Dans Ia plupart des cas, les parties peuvent determiner sans difficulte le paiement qui doit etre fait, reglant ainsi leurs affaires sans long proces. Gref­fer le mecanisme de Ia fiducie par interpretation a ce regime creerait de !'incertitude et susciterait des litiges comportant l'examen detaille de Ia contribu­tion de chaque partie a !'acquisition, a Ia conserva-

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erty to the end of having the court declare a constructive trust in one of the parties. Moreover, property rights which third parties have acquired in the interval may be adversely affected. One returns to Professor Water's warning that to employ constructive trust where personal remedies suffice threatens to upset the operation of other doctrines.

One must also consider the converse situation to that of this case - the situation where instead of increasing in value after separation, the property loses value. Is the amount recoverable by the spouse lacking title to be diminished accordingly? One judge has said yes, imposing a beneficial constructive interest in the property on the wife as at separation, against her wishes and at the behest of the husband: McDonald v. McDonald (1988), 11 R.F.L. (3d) 321 (Ont. H.C.) So we arrive at the anomaly of the equitable remedy of construc­tive trust's being applied against the wishes of the party found to have been unfairly treated, at the behest of the party who has been unjustly enriched. What does this leave of the maxim that he who seeks the aid of equity must come with clean hands? The fallacy at the root of such an approach is that of treating the remedy of con­structive trust as though it were a property inter­est, which for the sake of consistency must be imposed regardless of the circumstances or of other remedies.

It is suggested that the position of the wife should not be worse than it would have been had the parties not married. The answer to thissubmis­sion is that the Legislature, acting within the proper scope of its authority, has chosen to confine the Act to married persons. Some Acts governing distribution of marital property apply to unmar­ried couples. While it may be a ground for criti­cism of the legislation, the fact that a person covered by legislation may be treated less gener­ously than someone not under the statute cannot give rise to a claim for unjust enrichment; the doctrine of unjust enrichment does not go as far as that. ·

tion, a l'entretien et a !'amelioration des biens en vue de faire declarer par le tribunal !'existence d'une fiducie par interpretation en faveur d'une des parties. En outre, les tiers qui auraient acquis

a des droits de propriete dans l'intervalle pourraient subir un prejudice. On revient ainsi a l'avertisse­ment du professeur Waters que l'emploi de Ia fiducie par interpretation lorsque des recours per­sonnels suffisent menace l'effet des autres theories.

b

c

II faut egalement examiner Ia situation inverse de celle en l'espece- Ia situation ou Ia valeur des biens diminue au lieu d'augmenter apres Ia separa­tion. Le montant que peut recouvrer le conjoint non titulaire devrait-il etre diminue en conse-quence? Un juge a repondu oui, imposant un interet beneficiaire par interpretation dans les biens en faveur de l'epouse au moment de Ia

d separation, contre sa volonte et a Ia demande de l'epoux: McDonald v. McDonald (1988), II R.F.L. (3d) 321 (H.C. Ont.) On arrive done au resultat anormal ou Ia fiducie par interpretation comme recours en equity est appliquee contre Ia

e volonte de Ia partie qui a ete traitee injustement, a Ia demande d'une autre partie qui s'est enrichie injustement. Qu'advient-il alors de Ia maxime que celui qui invoque !'equity ne doit rien avoir a se

f reprocher? L'erreur a l'origine de cette interpreta­tion est de considerer le recours fonde sur Ia fiducie par interpretation comme s'il s'agissait d'un droit de propriete, lequel, pour des fins d'uni­formite, doit etre impose sans egard aux circons-

g tances ou aux autres recours.

On soutient aussi que Ia situation de l'epouse ne devrait pas etre pire que celle dans laquelle elle se trouverait si les parties n'avaient pas ete mariees.

h La reponse a cet argument est que le legislateur, agissant dans le cadre approprie de ses pouvoirs, a decide que Ia Loi ne s'appliquerait qu'aux person­nes mariees. Certaines lois regissant le partage des biens familiaux s'appliquent aux personnes non mariees. Bien que !'on puisse critiquer Ia Loi pour cela, le fait qu'une personne visee par une loi puisse etre traitee moins genereusement qu'une autre qui n'est pas visee par Ia loi ne peut donner lieu a une demande fondee sur l'enrichissement j sans cause; Ia theorie de l'enrichissement sans cause ne va pas si loin.

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My colleague, Cory 1 ., suggests that s. 10 of the Family Law Act, 1986 shows that the legislators did not intend to oust the remedy of constructive trust. In this regard, I reiterate that it is not my view that the doctrine of constructive trust is entirely ousted by the Act. The equalization provi­sions of the Act, providing as they do a remedy for unjust enrichment in the equalization process, may preclude establishment of the conditions necessary to found a constructive trust after separation. But in other circumstances, for example before separa­tion, the requirements for a constructive trust may be made out. It may be noted that s. 10 does not recognize automatic entitlement to property by way of trust or otherwise. It is necessary to apply to the court for a declaration of the property interest sought. At the time of that application, a court considering a request for a declaration of constructive trust would be required to consider whether, in view of the circumstances and the availability of other remedies, a constructive trust might appropriately be declared.

It may seem anomalous that a married person might be able to obtain a declaration of construc­tive trust before but not after separation. It must be remembered, however, that the equalization provisions of the Act provide an alternative remedy to which the spouse becomes entitled upon separation. The fact that that remedy may not be as advantageous in some cases as the remedy of constructive trust does not justify the court in altering the doctrine of constructive trust.

I cannot leave this question without alluding to the quite different provisions found in Acts regu­lating the division of marital property in provinces other than Ontario. As Cory 1. points out, the relationship between the constructive trust doc­trine and its "statutory equivalents" has been vari­ously treated in different jurisdictions. While it is interesting to consider dispositions in other juris­dictions, it should be noted that the legislative provisions from province to province are not truly equivalent. In particular, none of the provincial statutes governing the division of marital property, save that of Ontario, appears to have a statutorily

Mon collegue le juge Cory dit que l'art. 10 de Ia Loi de 1986 sur le droit de Ia jamille indique que le legislateur n'avait pas !'intention d'ecarter le recours a Ia fiducie par interpretation. A cet egard,

a je repete que je ne crois pas que Ia th6orie de Ia fiducie par interpretation soit entierement ecartee par Ia Loi. Les dispositions de Ia Loi sur I'egalisa­tion, parce qu'elles prevoient un recours centre l'enrichissement sans cause dans le processus

h d'egalisation, peuvent empecher l'etablissement des conditions necessaires a !'existence d'une fidu­cie par interpretation apres Ia separation. Mais en d'autres circonstances, par exemple avant Ia sepa-

c ration, les conditions d'existence d'une fiducie par interpretation peuvent etre etablies. On peut souli­gner que I' art. 10 ne reconnait pas un droit auto­matique aux biens au moyen de Ia fiducie ou autrement. II faut demander au tribunal de decla-

d rer !'existence des droits de propriete recherches. Lorsqu'il est saisi d'une demande de declaration de fiducie par interpretation le tribunal serait tenu d'examiner si, compte tenu des circonstances et des autres recours disponibles, il peut conclure a bon

e droit a !'existence d'une fiducie par interpretation.

II peut sembler anormal qu'une personne mariee puisse obtenir une declaration de fiducie par inter­pretation avant mais pas apres Ia separation. II

f faut cependant rappeler que les dispositions de Ia Loi sur l'egalisation offrent au conjoint un autre recours au moment de Ia separation. Le fait que ce recours puisse ne pas etre aussi avantageux dans

g certains cas que Ia fiducie par interpretation ne justifie pas Ia cour de modifier Ia theorie de Ia fiducie par interpretation.

1e ne peux terminer sans faire etat des disposi-h tions tres differentes des lois regissant le partage

des biens familiaux dans les provinces autres que !'Ontario. Comme le juge Cory le souligne, le rapport entre Ia th6orie de Ia fiducie par interpre­tation et ses «equivalents legislatifs» a ete traite de fa<;ons diverses dans les differents ressorts. Bien

· qu'il soit interessant d'examiner les dispositions des autres ressorts, il convient de souligner que les dispositions legislatives ne sont pas veritablement

j equivalentes d'une province a !'autre. En particu­lier, il semble qu'aucune des lois provinciales regis­sant le partage des biens familiaux, en dehors de

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fixed and inflexible valuation date, the feature of the Act which gives rise to the wife's grievance in this case. There can be no simple or universally applicable answer to the question of whether the doctrine of constructive trust will apply in a statu­tory context: in each case, the circumstances of the case and the efficacy of alternative remedies con­ferred by the applicable legislation must be exam­ined to ascertain whether, in that situation, a declaration of constructive trust should be declared.

In this case, I conclude that the remedy of constructive trust is neither necessary nor appro­priate, given the remedies available under the Family Law Act, 1986.

V. Conclusion

I would set aside the judgments of the Court of Appeal and the trial judge, and refer the matter back to the trial judge to determine whether an adjustment should be made under s. 5(6)(h) of the Family Law Act, 1986 to reflect the increase in value of the land held in the husband's name since separation, and to adjust the amount of the equali­zation payment due to the wife, on the basis that she is not entitled to a constructive trust vesting her with a beneficial half-interest in the property as at the date of separation.

I would make no order as to costs in this Court or below.

Appeal dismissed with costs, LA FOREST,

SOPINKA and MCLACHIN JJ. dis~entin~.

Solicitors for the appellant: McMillan, Binch, Toronto.

Solicitor for the respondent: Melanie A. Man­chee, Toronto.

celle de !'Ontario, ne fixe inflexiblement Ia date d'evaluation, ce qui est precisement Ia caracteristi­que de Ia loi ·ontarienne qui a donne lieu a Ia demande de l'epouse en l'espece. II n'existe aucune

a reponse facile ou universelle a Ia question de savoir si Ia theorie de Ia fiducie par interpretation doit s'appliquer en contexte legislatif: dans chaque cas, les circonstances de l'espece et l'efficacite d'autres recours prevus par les lois applicables doivent etre

b examinees pour evaluer si, dans un cas donne, il y a lieu d'imposer une fiducie par interpretation.

En l'espece, je conclus que le recours a Ia fiducie par interpretation n'est ni necessaire ni approprie,

c etant donne les recours prevus par Ia Loi de 1986 sur le droit de lafamille.

d

V. Conclusion

Je suis d'avis d'annuler les decisions de Ia Cour d'appel et du juge de premiere instance et de renvoyer !'affaire au juge de premiere instance pour qu'il determine si un ajustement doit etre fait en vertu de l'al. 5(6)h) de Ia Loi de 1986 sur le

e droit de Ia famille pour tenir compte de !'augmen­tation, depuis Ia separation, de valeur du bien­fonds dont l'epoux est titulaire et pour modifier la somme due a l'epouse par suite de l'egalisation, etant entendu au depart qu'elle n'a pas droit a une

f fiducie par interpretation lui accordant un interet beneficiaire de moitie dans les biens a Ia date de Ia separation.

Je ne rendrais aucune ordonnance quant aux g depens devant notre Cour et devant les juridictions

inferieures.

Pourvoi rejete avec depens, les juges LA FOREST, SOPINKA et McLACHLIN sont dissi­

h dents.

Procureurs de l'appelant: McMillan, Binch, Toronto.

Procureur de l'intimee: Melanie A. Manchee, Toronto.

TAB 7

TAB 8

TAB 9

THIRD EDITION

Edited by Maurice Waite

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_ prise (US spelling prize) 11>-verb (prises, prising, prised) force something open or apart.

prism 11>- noun 1 a piece of glass or other transparent material with facets, used to separate white light into a spectrum of colours. 2 a solid geometric figure whose two ends are parallel and of the same size and shape, and whose sides are parallelograms. o prismatic adjective.

prison 11>- noun a building where criminals are kept as a punishment.

sYNONYMS jail, penal institution; N. Amer. jailhouse, penitentiary, correctional facility; informal clink, slammer; Brit. informal nick; N. Amer. informal can, pen.

prisoner 11>- noun 1 a person who has been found guilty of a crime and sent to prison. 2 a person who has been captured by someone and kept confined.

sYNONYMS 1 a prisoner serving a life sentence convict, detainee, inmate; informal jailbird, con; Brit. informal lag; N. Amer. informal yardbird. 2 the army took many prisoners prisoner of war, POW, internee, captive, hostage.

11!111 prisoner of war a person captured and imprisoned by the enemy in war.

prissy .,.. adjective too concerned with behaving in a correct and respectable way.

pristine 11>- adjective 1 in its original condition. 2 clean and fresh as if new.

sYNONYMs immaculate, perfect, in mint condition, as new, spotless, unspoilt. ANTONYMS dirty, SpOilt.

privacy 11>- noun a state in which you are not watched or disturbed by other people.

sYNONYMs seclusion, solitude, isolation.

private 11>- adjective 1 intended for or involving a particular person or group. 2 (of thoughts, feelings, etc.) that you do not tell other people about. 3 not sharing thoughts and feelings with other people. 4 where you will not be disturbed; secluded. 5 ('of a service or industry) provided by an individual or commercial company rather than the state. 6 not connected with a person's work or official role.

sYNONYMs 1 his private plane personal, own, special, exclusive. 2 private talks confidential, secret, classified. 3 private thoughts intimate, personal, secret, innermost, undisclosed, unspoken, unvoiced. 4 a very private man reserved, introverted, self-contained, reticent, retiring, unsociable, withdrawn, solitary, reclusive. 5 somewhere private to talk secluded, undisturbed, remote,·

prise I privileged

isolated. 6 private industry independent, non-state, pdvatized, commercial, private-enterprise. 7 in a private capacity unofficial, personaL ANTONYMs public, open, extrovert, busy, crowded, nationalized, official, state.

11>- noun (also private soldier) a soldier of the lowest rank in the army.

SYNONYMS a private in the army private soldier, trooper; Brit. sapper, gunner; US Gl; Brit. informal Tommy, squaddie.

111111 private company Brit. a company whose shares may not be offered to the public for sale. private detective a detective who is not a police officer and who carries out investigations for clients. private enterprise business or industry managed by independent companies rather than the state. private eye informal a private detective.

· ·private member a member of parliament who does not hold a government office. private parts a person's genitals. private practice the work of a doctor, lawyer, etc. who is self-employed. private school Brit. an independent school financed mainly by the fees paid by pupils. private secretary 1 a secretary who deals with the personal matters of their employer. 2 a civil servant acting as an assistant to a senior government officiaL private sector the part of the national economy not under direct state control. o privately adverb.

privateer 11>- noun (in the past) an armed but privately owned ship, authorized by a government for use in war.

privation 11>- noun a state in which you do not have the basic things you need, such as food and warmth.

privatize (or privatise) ~~>verb (privatizes, privatizing, privatized) transfer a business or industry from ownership by the state to private ownership. o privatization noun.

privet 11>- noun a shrub with small white flowers.

privilege 11>- noun 1 a special right or advantage for a particular person or group. 2 an opportunity to do something regarded as a special honour. 3 the advantages available to people who are rich and powerful.

SYNONYMS 1 senior pupils have certain privileges advantage, benefit, prerogative, entitlement, right, concession, freedom, liberty. 2 it was a privilege to meet her honour, pleasure.

v -il-, not -el-, and no d: privilege.

privileged 11> adjective 1 having a privilege or privileges. 2 (of information) protected from being made public.

TAB 10

SULLIVAN

ON THE

CONSTRUCTION OF STATUTES

Sixth Edition

by

Ruth Sullivan

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504 Sullivan on the Construction of Statutes

There is no principle of statutory interpretation that would presume that those adversely affected by a statute regulating their affairs are entitled to com­pensation ... Indeed, such a principle would severely hamper the operation of the modern state where most regulatory legislation, however remedial, adversely af­fects someone. 89

STRICT CONSTRUCTION OF LEGISLATION

THAT DEROGATES FROM ESTABLISHED LAW

§15.50 Presumption against implicit alteration of law. It is presumed that the legislature does not intend to change existing law or to depart from established principles or practices. On its face, this presumption makes little sense. If the legislature does not intend to change the law, why is it enacting legislation? To the extent this presumption reflects mere conservatism, or a preference for common law values over legislative ones, it is difficult to justify. But the pre­sumption also reflects rule of law concerns. The stability of law is enhanced by rejecting vague or inadvertent change while certainty and fair notice are pro­moted py requiring legislatures to be clear and explicit about proposed changes. In addition, the common law has always placed a high value on the harmoniza­tion of sources of law. In any event, for better or worse, the presumption is fre­quently invoked by modem courts.

§15.51 In Parry Sound (District) Social Services Administration Board v. On­tario Public Services Employees Union, 90 one of the issues was whether the rights and obligations created by the Human Rights Code were incorporated into the collective agreement between the parties, in accordance with the rule estab­lished by the Supreme Court of Canada in McLeod v.Egan.91 Iacobucci J. wrote:

89

90 91

92

93

To begin with, I think it useful to stress the presumption that the legislature does not intend to change existing law or to depart from established principles, poli­cies or practices. In Goodyear Tire & Rubber Co. of Canada v. T Eaton Co.,[921 ... for example, Fauteux J. (as he then was) wrote that "a Legislature is not presumed to depart from the general system of the law without expressing its intentions to do so with irresistible clearness, failing which the law remains un­disturbed". In Slaight Communications Inc. v. Davidson, [931 Lamer J. (as he then was) wrote that "in the absence of a clear provision to the contrary, the legislator should not be assumed to have intended to alter the pre-existing ordinary rules of common law".

In my view, s. 48(12)G) does not clearly indicate that it was the legislature's intention to alter the principles described above. Quite the opposite. I believe that the amendments to the legislation affirm that grievance arbitrators have not only

Ibid., at paras. 27 and 29. [2003] S.C.J. No. 42, [2003] 2 S.C.R. 157 (S.C.C.). [1974] S.C.J. No. 62, [1975] 1 S.C.R. 517 (S.C.C.). [1956] S.C.J. No. 37, [1956] S.C.R. 610, at 614 (S.C.C.). [1989] S.C.J. No. 45, [1989] 1 S.C.R. 1038, at 1077 (S.C.C.).

Ch. 15: Presumed Legislative Intent 505

the power but also the responsibility to' implement and enforce the substantive rights and obligations of human rights and other employment-related statutes as if they were part of the collective agreement.94

§15.52 The presumption against legal change was affirmed and applied by the Supreme Court of Canada in R. v. T (V) .95 The Court was asked to rule that un­der the Young Offenders Act a youth court judge may dismiss a charge, even though the accused appears to be guilty, if after hearing all the evidence the judge believes that the charge should not have been laid in the first place. Al­though the Court could see the virtue of this interpretation, in the end it was not prepared to accept so drastic a change in the law. L'Heureux-Dube J. wrote:

... the principle of prosecutorial discretion is an important and useful part of our criminal law .... [T]he interpretation of the Act which is urged upon us by there­spondent and which was accepted by the Court of Appeal would represent a marked departure from the law as it currently exists. This, in tum, heightens the scrutiny with which the argument must be examined. As stated in Maxwell on the Interpretation of Statutes ... :

It is presumed that the legislature does not intend to make any change in the existing law beyond that which is expressly stated in, or follows by neces­sary implication from, the language of the statute in question .... [961

... [W]hile it is open to Parliament ... , subject to over-arching constitutional norms, ... to change the law in whatever way it sees fit, the legislation in which it chooses to make these alterations known must be drafted in such a way that its intention is in no way in doubt.97

§15.53 Exceptions are strictly construed. The courts sometimes suggest that statutory exemptions and exceptions are to be strictly construed, or alternatively, that persons seeking the benefit of a statutory exemption or exception must es­tablish clearly that they come within its terms. 98 In Barrette v. Crabtree Estate,99

94

95

96

97

98

Parry Sound (District) Social Services Administration Board v. Ontario Public Services Em­ployees Union, [2003] S.C.J. No. 42, [2003] 2 S.C.R. 157, at paras. 39-40 (S.C.C.). This pas­sage was quoted but not applied in Castillo v. Castillo, [2005] S.C.J. No. 68, [2005] 3 S.C.R. 870, at para. 26 (S.C.C.). See also United Taxi Drivers' Fellowship of Southern Alberta v. Cal­gary (City), [2004] S.C.J. No. 19, [2004] 1 S.C.R. 485 (S.C.C.). [1992] S.C.J. No. 29, [1992] 1 S.C.R. 749 (S.C.C.). Maxwell on the Interpretation of Statutes, 12th ed. (1969), p. 116. R. v. T.(V.), [1992] S.C.J. No. 29, [1992] 1 S.C.R. 749 at paras. 22-23 (S.C.C.). See also Cana­dian Pacific Air Lines Ltd. v. Canadian Air Line Pilots Assn., [1993] S.C.J. No. 114, [1993] 3 S.C.R. 724, at 740 (S.C.C.); R. v. R.J.H, [2000] A.J. No. 396, at paras. 23-25 (Alta. C.A.); Rudco Insulation Ltd. v. Toronto Sanitary Inc., [1998] O.J. No. 4105, 42 O.R. (3d) 292, at 298 (Ont. C.A.); Demers v. B.R. Davidson Mining & Development Ltd, [2012] O.J. No. 2570, 2012 ONCA 384, at paras. 29, 31-33, 41 (Ont. C.A.); Bryan's Transfer Ltd. v. Trail (City), [2010] B.C.J. No. 2329, 2010 BCCA 531, at paras. 45-52 (B.C.C.A.); Krzysik v. Manitoba Public In­surance Corp., [2008] M.J. No. 75, 2008 MBCA 29, at para. 56 (Man. C.A.). See, for example, Re F.N., [2000] S.C.J. No. 34, [2000] 1 S.C.R. 880, at para~ 19 (S.C.C.); Poulin v. Serge Morency et Associes Inc., [1999] S.C.J. No. 56, [1999] 3 S.C.R. 351, at para. 35 (S.C.C.); Pfizer Co. Ltd. v. Dept. MNK, [1975] S.C.J. No. 126, [1977] 1 S.C.R. 456, at 459 (S.C.C.); 1231640 Ontario Inc. (Re), [2007] O.J. No. 4561, 2007 ONCA 810, at para. 40

660 Sullivan on the Construction of Statutes

§23.15 Must the legislation be ambiguous? It is sometimes said that the courts should not look to extrinsic materials, even though the materials other­wise would be admissible, unless the legislation to be interpreted is ambiguous.s This constraint is a vestige of the plain meaning rule.

§23.16 To say that a provision is not ambiguous, that its meaning is clear or "plain", is a conclusion reached at the end of interpretation. It is a judgment that can appropriately be made only in light of all the available evidence of legisla­tive meaning and intent. The issue, then, is whether the assistance afforded by extrinsic materials - as legal context, as evidence of external context, as evi­dence of legislative intent, or as authoritative opinion evidence - should be included in the initial work of interpretation. It is hard to see why these materials should be excluded.

§23.17 No doubt, there are occasions when the text is precise, its meaning appears to be clear and concerns about the right of citizens to rely on what the text appears to say are more than purely formal. In such cases, the apparent meaning of the text properly outweighs evidence of a contrary intention derived from extrinsic materials. There are also occasions when ambiguity in a text is convincingly resolved through textual or scheme analysis. Again, in such cases the extrinsic materials would probably be dismissed. But even in cases of this sort there is no reason why those materials should not be consulted and given their appropriate weight having regard to all relevant circumstances and consid­erations.

LEGISLATIVE EVOLUTION

§23.18 Legislative evolution distinguished from legislative history. The evo­lution of a legislative provision consists of the successive enacted versions of the provision from its inception to the version in place when the relevant facts oc­cur. Some provisions are r,ooted in the common law, so that it is necessary to look to pre-enactment case law to establish the initial rule. Other provisions originate as part of a legislative scheme and their initial formulation must be understood in that context. In either case, the evolution of a provision consists of its initial formulation and all subsequent formulations which are enacted either as amendments or as re-enactments, until the moment of application.

4

5 Ibid., at 306 (D.L.R.). See, for example, Professional Institute of the Public Service of Canada v. Canada (Attorney General), [2012] S.C.J. No. 71, 2012 SCC 71, at para. 95 (S.C.C.), where the Court relies on Bell ExpressVu Limited Partnership v. Rex, [2002] S.C.J. No. A3, 2002 SCC 42, [2002] 2 S.C.R. 559 (S.C.C.), to narrow the scope of the "total context" in which all legislation must be read. See also North Pender Island Local Trust Committee v. Conconi, [2010] B.C.J. No. 2152, 2010 BCCA 494, at paras. 15-17 (B.C.C.A.). For criticism of this aspect of the Bell ExpressVu case, see Chapter 2, at §2.33-2.35.

Ch. 23: Extrinsic Aids 661

§23.19 Confusion is apt to occur because the term "legislative history" is widely used to refer both to the legislative evolution of a provision as defined above and to the range of extrinsic materials relating to the conception, prepara­tion and passage of a provision, from the earliest proposals for legislative change to royal assent. Legislative history in the latter sense can include every­thing from white papers and Commission reports to remarks recorded in Han­sard. It is not helpful to use the same expression to refer to these two types of evidence, since they are actually quite different and their use is governed by different considerations. 6

§23.20 Even though legislative evolution is generally dealt with under the heading "extrinsic aids", the legislative evolution of a provision is not really extrinsic. It consists of the legislative text itself- or more precisely, the succes­sion of enacted texts in which the law has been embodied over time. This con­trasts with other forms of legislative history, which express the opinion of participants in or commentators on the legislative process or set out facts from which the intention of the legislature might be inferred. Because the legislative evolution of a provision consists exclusively of enacted text, it raises none of the theoretical problems created by legislative history materials. These differences are unhelpfully obscured by treating legislative evolution as a type of legislative history and an extrinsic aid.

§23.21 Reliance on legislative evolution is permitted. It is well-established that the legislative evolution of provisions may be relied on by courts to assist interpretation. As Pigeon J. wrote in Gravel v. St. Leonard (City): 7

Legislative history may be used to interpret a statute because prior enactments may throw some light on the intention of the legislature in repealing, amending, replacing or adding to it. 8

In R. v. Ulybel Enterprises Ltd., Iacobucci J. wrote:

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9

To understand the scope of [a provision], it is useful to consider its legislative evolution. Prior enactments may throw some light on the intention of Parliament in repealing, amending, replacing or adding to a statute.9

The distinction between legislative evolution and legislative history is recognized by the Su­preme Court of Canada in Canada (Canadian Human Rights Commission) v. Canada (Attorney General), [2011] S.C.J. No. 53, 2011 SCC 53, at para. 43 (S.C.C.). However, in other cases the Court continues to use the term "legislative history" to refer to what is here called "legislative evolution". See, for example, Entertainment Software Association v. Society of Composers, Au­thors and Music Publishers of Canada, [2012] S.C.J. No. 34, 2012 SCC 34, [2012] 2 S.C.R. 231, at paras. 12.ff. (S.C.C.). [1977] S.C.J. No. 71, [1978] 1 S.C.R. 660 (S.C.C.). Ibid., at 667. This provision has been cited with approval in numerous decisions of the Su­preme Court of Canada. [2001] S.C.J. No. 55, [2001] 2 S.C.R. 867, at para. 33 (S.C.C.). See also R. v. A.D.H., [2013] S.C.J. No. 28, 2013 SCC 28, at para. 43 (S.C.C.); Canada (Canadian Human Rights Commis­sion) v. Canada (Attorney General), [2011] S.C.J. No. 53, 2011 SCC 53, [2011] 3 S.C.R. 471,

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I

662 Sullivan on the Construction of Statutes

In Pacific National Investments Ltd. v. Victoria (City), LeBel J. wrote:

As Rand J. once stated, "That we may look at the history of legislation to ascer­tain its present meaning is undoubted"[ IOJ .•.. Looking at the legislation in place preceding and following the events at issue in this appeal provides at least a con­text for comparison and might even shed light on the meaning of the statutory framework as it existed at the relevant time. 11

In Merk v. International Association of Bridge, Structural, Ornamental andRe­inforcing Iron Workers, Binnie J. noted that legislative evolution is part of Driedger's entire context. 12

§23.22 Presumption that change is purposeful. It is presumed that amend­ments to the wording of a legislative provision are made for some intelligible purpose: to clarify the meaning, to correct a mistake, to change the law. 13 A leg­islature would not go to the trouble and expense of amending a provision with­out any reason. As Lord MacMillan wrote in D.R. Fraser and Co. v. Canada (Minister of National Revenue- MNR.):

When an amending Act alters the language of the principal statute, the alteration must be taken to have been made deliberately. 14

Although the presumption of purposeful change is strong, it is not irrebuttable. On occasion a court is forced to conclude that a particular amendment had no intelligible purpose and in fact was a drafting error.

§23.23 It is presumed far less strongly that the purpose of amending legislation is to bring about a substantive change in the law. 15 The presumption of substan­tive change is grounded in historical British practice. Until recently, the re-

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15

para. 43 (S.C.C.); Smith v. Alliance Pipeline Ltd, [2011] S.C.J. No. 7, 2011 SCC 7, [2011] 1 S.C.R. 160, at para. 49 (S.C.C.); Hills v. Canada (Attorney General), [1988] S.C.J. No. 22, [1988] 1 S.C.R. 513, at 528 (S.C.C.); McKibbon v. R., [1984] S.C.J. No. 8, [1984] 1 S.C.R. 131, at 150-52 (S.C.C.); Dawson v. R., [1983] S.C.J. No. 68, [1983] 2 S.C.R. 144, at 154, 155ff. (S.C.C.); R. v. Popovic, [1975] S.C.J. No. 80, [1976] 2 S.C.R. 308, at 310ff. (S.C.C.); Keizer v. Slauenwhite, [2012] N.S.J. No. 89,2012 NSCA 20, at para. 18 (N.S.C.A.). Vancouver (City) v. British Columbia Telephone Co., [1950] S.C.J. No. 30, [1951] S.C.R. 3, at 8 (S.C.C.). [2000] S.C.J. No. 64, [2002] 2 S.C.R. 919, at para. 45 (S.C.C.). Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, [2005] S.C.J. No. 72, [2005] 3 S.C.R. 425, at para. 28 (S.C. C.). This follows from the presumption against tautology, discussed in Chapter 8, at §8.23ff. For discussion of presumption against changing the law, see also Chapter 15, at §15.51ff. [1948] J.C.J. No.3, [1949] A.C. 24, at 33 (P.C.). See also Klippert v. R., [1967] S.C.J. No. 71, [1967] S.C.R. 822, at 834-35 (S.C.C.). See Quebec (Commission des droits de la personne et des droits de la jeunesse) v. Montreal (City), [2000] S.C.J. No. 24, [2000] 1 S.C.R. 665, at para. 60 (S.C.C.); Ottawa (City) v. Hunter, [1900] S.C.J. No. 54, 31 S.C.R. 7, at 10 (S.C.C.); Peralta v. Ontario, [1985] O.J. No. 2304, 49 O.R. (2d) 705, at 716 (Ont. C.A.), affd [1988] S.C.J. No. 92, [1988] 2 S.C.R. 1045 (S.C.C.); Mahone Bay (Town) School Commissioners, [1979] N.S.J. No. 609, 101 D.L.R. (3d) 87, at 90-91 (N.S.C.A.).

TAB 11

TAB 12