The Fate of DFO's "Last In, First Out" Policy (LIFO): Whether & How to Challenge Fisheries Licensing/Quota Decisions

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The Fate of DFO’s “Last In, First Out” Policy (LIFO): Whether & How to Challenge Fisheries Licensing/Quota Decisions

June 29, 2016

By Daniel Watt, at McInnes Cooper

Note: On July 6, 2016, the Federal Department of Fisheries and Oceans (DFO) accepted the Ministerial Advisory Panel (MAP) recommendation and decided to abolish the “last-in, first-out” policy (LIFO) for the Northern shrimp fishery.

On June 28, 2016, the Ministerial Advisory Panel (MAP) appointed to review the Federal Department of Fisheries and Ocean’s (DFO) “last-in, first-out” policy (LIFO) for the Northern shrimp fishery recommended to the Minister of Fisheries the abolition of LIFO. Whether DFO will accept the recommendation falls to the Minister of Fisheries – whose decision looms. DFO decides who gains entry to the fishery in years of stock abundance, and who must exit if the stock declines. The LIFO policy is intended to guide how DFO makes this determination: those who last entered the fishery are the first to be removed if DFO reduces the total allowable catch (TAC) below a certain threshold. LIFO has been in effect in the Northern shrimp fishery since the late 1990s. DFO has generally followed it since 2010, when reductions in TAC first occurred. Northern shrimp fishery stakeholders – roughly divided between the seasonal, “inshore” fleet and the year-round, “offshore” fleet – hold polarized views on whether LIFO should continue to guide DFO in the Northern shrimp fishery. The MAP’s recommendation is good news for Newfoundland & Labrador’s inshore fleet shore-based processing and Aboriginal groups, but not for the primarily Maritime-based offshore fleet.

MAP’s recommendation on LIFO’s fate is bound to be controversial, as will be any resulting decision by DFO on reduction or re-allocation of quota – and may invite court challenges by dissatisfied stakeholders. But challenging fisheries licensing and quota decisions in court can be complex and difficult. Whether to mount a challenge a licensing/quota decision, choosing the legal process to do so, and successfully navigating it to a desirable outcome all require good legal and strategic advice. Here are some of the key considerations when deciding whether and how to challenge a fisheries licensing/quota decision.

TO CHALLENGE OR NOT TO CHALLENGE

Successfully challenging fisheries licensing and quota decisions is difficult – but not always insurmountable. In particular, there are a couple of strategic factors to consider that, if they exist, will impact on the decision whether to launch a challenge.

Political Pressure. In some cases, legal challenges to DFO decisions can be the continuation of politics by another name; fisheries licensing and quota decisions are frequently politically charged (the LIFO review being a case in point), so challenging such decisions by legal action may have strategic value in itself. Fisheries ministers are politicians and may be susceptible to the pressure litigation can bring to bear.

Aboriginal Groups. Aboriginal groups may have additional grounds not available to non-Aboriginal persons on which to challenge fisheries decisions based on constitutionally-protected Aboriginal or treaty/land claim agreement rights. Some of the most recent successful challenges to quota decisions have been by Aboriginal groups in British Columbia (see, for example, the 2014 decision of the Federal Court in Ahousaht First Nation v. Canada (Fisheries & Oceans)).

CHOOSE THE ROUTE CAREFULLY

There are two main routes to challenge licensing and quota decisions in court – judicial review and a claim for damages – each presenting different obstacles and offering different potential outcomes. But choose carefully: choosing the wrong route can render the claim vulnerable to preliminary challenges. Provincial superior courts and the Federal Court have the discretion to stay a claim for damages if, in its essential character, it’s a claim for judicial review with only a thin pretence of a private wrong. And the causes of action (the legal basis for a claim) that might be available against licensing and quota decisions are very limited; the failure to plead a valid cause of action makes the claim susceptible to a decision to dismiss the claim summarily (summary judgment).

1. Judicial Review. Judicial review in the Federal Court under the Federal Courts Act is the primary route and, if the goal is to set aside or quash the licensing or quota decision, the only route because the Federal Court has exclusive jurisdiction to hear such proceedings.

Limited Remedies. One issue with a judicial review is that the remedies the Court can grant are limited: on judicial review, the Federal Court is limited to granting administrative law remedies, such as sending the decision back to the Minister to reconsider. Most importantly, damages are not available.

Time Limit. Parties considering judicial review must act quickly: the timeline for filing a Judicial Review application is only 30 days after the time the decision was first communicated to that party (section 18.1(2) of the Federal Courts Act). If the deadline passes, the judicial review will normally only proceed if the delay is justified and the claim has a reasonable chance of success.

High Standard of Review. Another consideration is the tough standard of review for licensing and quota decisions. Under Section 7 of the Fisheries Act, the Minister has “absolute discretion” regarding the issuance of licences; this extends to quota decisions, which are made as conditions of licences. This discretion poses significant challenge to claimants: the Supreme Court of Canada has noted, “the Minister gives and the Minister (when acting properly within his jurisdiction under s[ection] 9 of the [Fisheries] Act) can take away …”. But the Minister’s discretion isn’t boundless. There are two grounds on which the Court can overturn a licensing or quota decision – both of which are difficult to establish and which require a detailed review of the facts in the particular case to determine whether there is a basis for the ground.

Substantively Unreasonable. The Court can overturn a licensing or quota decision if it is substantively unreasonable. Proving unreasonableness is a high bar in fisheries cases. A decision is unreasonable if it is: made in bad faith; based on considerations that are irrelevant or extraneous to the legislative purpose; or irrational, incomprehensible or otherwise the result of an abuse of discretion. These grounds give DFO wide latitude, and they can be hard to prove. However, the courts have overturned ministerial decisions on the basis that they were unreasonable.
Breach of Duty of Procedural Unfairness. The Court can also overturn a licensing or quota decision if the Minister owed the party challenging the decision a duty of procedural fairness and breached that duty when making the decision. Whether a duty of procedural fairness is owed to an applicant, and what procedural safeguards that duty entails, depends on a number of factors: the nature of the decision; the nature of the statutory scheme; the importance of the decision – usually financial – to the individual; whether the individual had any legitimate expectations that the Minister would follow any particular procedure though such expectations, if they exist, will not provide any substantive right to a particular decision or outcome; and whether the legislation gives the decision-maker discretion to set procedure. Given the Minister’s wide discretion and the absence of any express procedural rules in the Fisheries Act or regulations, procedural fairness challenges are tough. However, Courts have found applicants to be owed at least some procedural safeguards though generally these will be limited, such as the right to make submissions and to receive reasons for the Minister’s decision.

2. Lawsuit for Damages. If the dissatisfied party is content to let the licensing or quota decision stand without challenge, it may be able to sue DFO for losses suffered as a result of the decision – as long as there’s a valid cause of action.

“Valid Cause of Action”. Legislation and common law rules can limit the exposure of governments, both federal and provincial, to lawsuits. The Crown Liability and Proceedings Act limits claims against the federal Crown – including DFO. Under that Act DFO can be liable, as if it were a person, for torts (civil wrongs) committed by servants of the federal Crown. Other possible causes of action that may be available against DFO include:

Negligence, including negligent misrepresentation.
Breach of contract, although courts have decided that the Minister is not permitted to fetter its discretion regarding licenses and quota by any contractual arrangement.
Abuse of public office, which generally requires that the public officer must have been: engaged in deliberate and unlawful conduct in his or her capacity as a public officer; and aware both that his or her conduct was unlawful and it was likely to harm the claimant.
Unjust enrichment.

Procedural Requirements. The same legislation typically sets out a number of special procedural requirements to which a litigant must adhere if there is a valid claim for damages. The Crown Liability and Proceedings Act requires, among other things, advance notice to the Crown of any claim.

Limitation Period. Also, under the Crown Liability and Proceedings Act, the limitation period applicable to the claim is that imposed under provincial law in the province where the cause of action arose. These will generally be longer than the time for bringing a judicial review under the Federal Courts Act, but they may differ depending on the limitations statute in force in the province where the cause of action arose.

No Prior Judicial Review. Generally, if the claimant has pleaded a valid cause of action for damages, it will be allowed to sue for damages (including in provincial superior court) without the need to first seek judicial review of the decision and have the Federal Court declare it unlawful.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Energy and Natural Resources Team to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2016. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Email us at publications@mcinnescooper.com to request our consent.

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