Executive Summary: Key Legal and Evidentiary Issues

• Four aquaculture-industry plaintiffs sued Canada and two federal Ministers after a series of decisions ended open-net pen salmon farming in the Discovery Islands.
   
• Canada sought to strike the claims for misfeasance in public office, negligence, and negligent misrepresentation, arguing the pleadings lacked sufficient material facts.
   
• Two plaintiffs cross-appealed the lower court's decision to strike their constructive taking claims.
   
• Central to the misfeasance analysis was whether breaches of procedural fairness alone could ground the tort, absent a separate unlawful act.
   
• Establishing a duty of care in negligence turned on whether the pleadings disclosed sufficient proximity between the plaintiffs and the regulator.
   
• Constructive taking required the plaintiffs to show Canada acquired a beneficial interest in their property, which the pleadings did not establish.
   

Facts of the case

Between December 2020 and December 2022, the federal Minister of Fisheries, Oceans and the Canadian Coast Guard made a series of decisions that effectively ended open-net pen salmon aquaculture in the Discovery Islands, located between Vancouver Island and the British Columbia mainland. Cermaq Canada Ltd. and Mowi Canada West Inc. operated aquaculture facilities in the area under licences issued pursuant to the Fisheries Act, while Allpen Diving Ltd. and James Walkus Fishing Co. Ltd. provided related commercial services to the industry. On December 16, 2020, the Minister temporarily renewed aquaculture licences but prohibited the transfer of new smolts into pens until June 30, 2022, a decision that rendered the existing licences largely unworkable for Cermaq and Mowi. Repeated applications for transfer licences were denied on the basis of "social acceptability," and a new, slower application process was later introduced. On April 22, 2022, Justice Heneghan of the Federal Court quashed the 2020 decision for breach of procedural fairness, but shortly after, a new Minister announced that no licences would be reissued pending a final policy decision in 2023. The four companies then sued Canada and the two Ministers, pleading misfeasance in public office; Mowi and Cermaq also pleaded negligence, negligent misrepresentation, and constructive taking. Canada applied to strike all four actions, and the chambers judge allowed the misfeasance, negligence, and negligent misrepresentation claims to proceed while striking the constructive taking and abusive administrative action claims. Canada appealed the refusal to strike the surviving claims, and Mowi and Cermaq cross-appealed the striking of their constructive taking claims.

Policy and legislative provisions at issue

Under section 7(1) of the Fisheries Act, the Minister holds discretion to issue fishing and fisheries licences, considering factors such as sustainability and socio-economic impacts. Section 56 of the Fishery (General) Regulations sets out the criteria governing transfer licences, permitting the Minister to issue one where the transfer aligns with proper fisheries management, poses no disease risk, and does not adversely affect fish stocks. The plaintiffs argued the Minister used her authority over transfer licences for an improper purpose, immediately halting aquaculture rather than following the gradual phase-out contemplated by the aquaculture licences she had issued. They also relied on DFO's 2008 Aquaculture Policy Framework, which committed the department to acting as both an enabler and a regulator of the industry, along with related risk-management frameworks developed with industry input. Canada contended these documents amounted to statements about future policy incapable of grounding a claim for negligent misrepresentation, and that the Minister's broad discretion under section 7 was incompatible with any private law duty of care.

Reasoning and analysis

On misfeasance, the court held it was not plain and obvious that deliberate and egregious breaches of procedural fairness could never ground the tort, since the Supreme Court of Canada in Odhavji Estate v. Woodhouse framed the tort broadly around deliberate unlawful conduct coupled with knowledge that it was likely to cause injury. The court also found the plaintiffs had pleaded more than procedural unfairness alone, alleging Minister Jordan used her transfer-licence authority for an improper purpose inconsistent with the aquaculture licences she had granted. On negligence, the court applied the Anns/Cooper framework and concluded the pleadings disclosed a sufficiently close and ongoing regulatory relationship, including direct industry involvement in policy development and DFO's awareness that the plaintiffs depended on transfer licences to make use of their aquaculture licences, such that proximity could not be ruled out at the pleadings stage. On negligent misrepresentation, the court held it was not clear that Ministerial statements about industry stability and transition planning could never amount to actionable representations, leaving the question of reasonable reliance to be resolved at trial. On constructive taking, the court agreed with the chambers judge that fishing and aquaculture licences are Crown property that confer no proprietary right capable of expropriation, and that Canada had not acquired any beneficial interest or advantage from the plaintiffs' fish, facilities, equipment, or goodwill, since those assets remained the plaintiffs' own even though their usefulness was diminished.

Ruling and overall outcome

The Court of Appeal dismissed Canada's appeals, upholding the lower court's decision to allow the misfeasance, negligence, and negligent misrepresentation claims to proceed to trial. The court also dismissed Mowi and Cermaq's cross-appeals, confirming that the constructive taking claims were properly struck because the pleadings did not disclose either a proprietary interest taken from the plaintiffs or an advantage flowing to the Crown. Costs on the appeal were awarded to the respondents, while costs on the cross-appeals were awarded to Canada, payable by Cermaq and Mowi. No specific monetary amount was ordered or quantified in this decision, as the ruling concerned only whether the claims could proceed, not their ultimate merits or damages.