British Columbia (Attorney General) v Lafarge Canada Inc:
Public Property, Ports and the Paramountcy Principle

In Attorney General (British Columbia) v Lafarge Canada Inc., the Supreme Court of Canada has analyzed the constitutional framework within which both Federal and Provincial/Municipal interests in the use and development of ports lands are recognized, and conflicts between competing Federal and Provincial/Municipal regulations are to be resolved.

The case involved an application by Lafarge Canada Inc. to construct an integrated ship off loading/concrete batching facility on lands owned by the Vancouver Port Authority. Aggregate from the Sunshine Coast would be transported to the facility by barge, off-loaded, stored temporarily on-site, then mixed with cement (which would be trucked to the site), loaded into concrete trucks and delivered to construction sites in the Vancouver area. Much stress was placed on the fact that the batch plant was "integrated" into the unloading facility.

The Vancouver Port Authority consulted with the City of Vancouver with respect to the proposal but did not insist upon Lafarge seeking a development permit from the City. The City's land use regulations prescribed limits such as a thirty foot height limit for development on the site – those regulations conflicted with the proposal. However, both the Port Authority and the City took the position that the development proposal was not subject to municipal land use regulations, and that a City development permit was not required.

A local residents’ association, the Burrardview Neighbourhood Association, took the Port Authority and the City to court, arguing that the development was subject to the development permit requirements of the City of Vancouver. The Neighbourhood Association was successful at the trial level, but lost on appeal. The British Columbia Court of Appeal held that lands owned by the Port Authority were federal public property and immune from the application of municipal land use regulations.

In a decision released earlier this year, the Supreme Court of Canada upheld the decision of the Court of Appeal, but for different reasons. The majority of the Court held that:

1. The lands were not “federal public property” for constitutional purposes. The Court noted that while certain lands within the Port were owned by the Federal Crown, and certain other lands held by the Port Authority as an agent for the Crown, the subject lands were specifically described under the provisions of the Canada Marine Act as being held by the Port Authority other than as agent for the Crown. The federal government's exclusive jurisdiction over federal public property only applied to lands in which the Federal Crown has a proprietary interest.
   
2. The use and development of port lands is a subject matter over which both federal and provincial/municipal levels of government may have a legitimate interest. The federal government’s interest may arise in relation to its jurisdiction over shipping and navigation. The interest of a municipality or the province arises under the provincial jurisdiction over property and civil rights, and municipal institutions. The "pith and substance" doctrine permits provincial/municipal land use regulations to have incidental effects on matters that would otherwise fall within federal jurisdiction over shipping and navigation, provided that those effects are not precluded by the doctrine of inter-jurisdictional immunity, or by the operation of federal paramountcy.
   
3. The proposed development was closely integrated with port activities and was therefore brought within federal jurisdiction, but was not at the core of the federal power over navigation and shipping. The doctrine of inter-jurisdictional immunity did not apply. In the absence of federal land use planning controls, the principles of federalism should not require or tolerate a regulatory vacuum. In the absence of such controls the City's land use planning regulations would have applied to the proposal.
4. However, the case was resolved by application of the paramountcy principle. The Canada Marine Act required the Port Authority to develop a land use plan, setting out policies and objectives for the development of the port. The proposal had been reviewed and approved pursuant to the Port Authority’s land use plan, Port 2010. The whole project was sufficiently "integrated" into the ship/barge unloading facility to make federal law applicable to all aspects of it. There was an operational conflict between the federal law and the provincial/municipal law - including conflicts relating to height restrictions, and to noise and pollution standards. In the face of the Petitioner's application, a Court could not give effect to both the federal law and the municipal law, and to that extent there was a "conflict". In addition, to give effect to the municipal law would frustrate Parliament's intent by depriving the Port Authority of its final decision making authority on the development of a project that was primarily shipping-related.

The case is significant for local government to the extent that it clarifies the principles under which competing federal and provincial/municipal interests in the use and development of port lands will be resolved. Port land is not an enclave that is exempt from the application of municipal land use regulations. To determine whether those regulations apply, however, requires careful consideration of the nature of the proposed development, and the potential application of federal statutes. Port development that is at the “core” of the federal power over navigation and shipping may be protected from municipal land use regulations by the doctrine of inter-jurisdictional immunity. In the case of development or facilities which merely "support" but are integrated into port activities, municipal land use controls may well apply, subject to the paramountcy principle.

The application of the paramountcy principle in this case may prove to be the most significant aspect of the decision. In the municipal law context, we have become accustomed to thinking of the paramountcy principle in the terms in which it was described and applied in the Supreme Court’s decision in the Spraytech case. There, the Court confirmed that for there to be a conflict between a federal and a provincial law such that federal law was paramount, obedience to one must necessarily involve contravention of the other. Viewed in that light, one could reasonably conclude that no such "conflict" existed in the case of the Lafarge proposal. Both sets of regulations could be complied with if the more restrictive (the City of Vancouver's) were adhered to. However, having referred to its other recent decisions on paramountcy, the Supreme Court cast the "conflict" test in a somewhat different light. The question was not so much whether compliance with one involved disobedience to the other, but whether in the face of the Neighborhood Association’s injunction application, a Court could have given effect to both.

The other aspect of the paramountcy doctrine that has come to the fore in cases such as Lafarge, and its companion case Canadian Western Bank v. Alberta, is the concept of "frustration" of Parliament's intent. The Supreme Court of Canada long ago abandoned the notion that where the federal Parliament had "occupied the field" through the enactment of legislation, any provincial interest in the same subject matter was necessarily excluded. Now, the Court has suggested that where the overall purpose or intent of the federal law would be frustrated by the application of a provincial law, the federal law should prevail. The Court assures us that it is not returning to the old “occupied field” theory. Still, one is left wondering how broadly the concept of "Parliamentary frustration" will be applied by lower courts when considering the overlap of federal and provincial/municipal laws in a multitude of areas, where in a federal system such "conflicts" will inevitably arise.

Peter Johnson

This article was published in Fall 2007 and may be superseded by changes in the law at a later date. It is for general information only. Specific legal advice should be obtained from a qualified lawyer.