Supreme Court of Canada

Schavernoch v. Foreign Claims Commission et al., [1982] 1 S.C.R. 1092

Date: 1982-06-23

Jolana Schavernoch (née Kostrinsky) Appellant;

and

Foreign Claims Commission, the Attorney General of Canada, the Secretary of State for External Affairs and the Minister of Finance of Canada Respondents.

File No.: 16240.

1982: May 5; 1982: June 23.

Present: Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard and Lamer JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Statutes—Interpretation—Regulations entitling Canadian citizens to claim from Foreign Claims Commission—Definition of “Canadian citizen”—Whether Regulations may be interpreted by reference to extraneous materials—Foreign Claims (Czechoslovakia) Settlement Regulations, SOR/73-681, ss. 2, 4, 7—Appropriation Act No. 9, 1966, 1966-67 (Can.), c. 55, vote 22a.

Regulations, promulgated pursuant to the Appropriation Act No. 9, 1966, implemented a plan to compensate successful Canadian claimants from a fund established under an agreement between Canada and Czechoslovakia for their assets nationalized by Czechoslovakia. The Foreign Claims Commission held appellant to be ineligible because her dominant nationality was Czechoslovakian, not Canadian, when her assets were nationalized. The Federal Court of Appeal confirmed that decision. Both the Court and the Commission interpreted the Regulations by reference to the Agreement and to extraneous material such as the negotiators’ report.

Held: The appeal should be allowed.

The Regulations made no reference to dominant or primary citizenship and defined “Canadian citizen” in the terms of the Citizenship Act. No authority entitled a court to adopt a meaning other than the plain meaning of the words used in the Regulations or to make reference to extraneous material in the absence of any ambiguity in the terms of the Regulations.

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Anisminic Ltd. v. Foreign Compensation Commission, [1969] 2 A.C. 147; Post Office v. Estuary Radio Ltd., [1968] 2 Q.B. 740 (C.A.), referred to.

APPEAL from a judgment of the Federal Court of Appeal, 1980 CanLII 4143 (FCA), [1982] 1 F.C. 233, confirming a decision of the Foreign Claims Commission. Appeal allowed.

Julius Grey, for the appellant.

Paul M. Ollivier, Q.C., for the respondents.

The judgment of the Court was delivered by

ESTEY J.—The appellant made application to the respondent Commission for payment of a claim arising out of the alleged expropriation or confiscation of certain assets of the appellant by Czechoslovakia some time after World War II. The respondent Commission denied the claim on the grounds that the appellant was ineligible to receive an award from the Foreign Claims Fund because her dominant nationality was that of Czechoslovakia and not Canada at the times in question. The Federal Court of Appeal confirmed the decision of the Commission finding no error in law on a review of the Commission’s decision under s. 28 of the Federal Court Act.

Because of the disposition which I propose to make of this appeal it is neither necessary nor desirable to deal at any length with the factual history underlying the appellant’s original application. I assume, as did the Commission and the court below, for the purpose of disposing of this appeal at this stage of the proceedings, that the appellant at all material times continued to be a citizen of Canada within the meaning of that term under the Citizenship Act of Canada, 1974-75-76 (Can.), c. 108. I also assume that at the time of the seizure of the property by the state of Czechoslovakia, apparently in the year 1948, the applicant had become a permanent resident of that country and continued to reside there until 1950.

By an Agreement entered into between the Government of Canada and the Government of Czechoslovakia in April 1973 Canada, on receipt of $3,250,000, released any and all claims by

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Canadians against Czechoslovakia by reason of any action taken prior to the date of the Agreement. For the purposes of that Agreement Article II thereof describes Canadian claims as being:

claims of natural persons who were Canadian citizens on the date of the coming into force of this Agreement and who were or whose legal predecessors were Canadian citizens on the date of the coming into force of the measures referred to in Article I or on the date on which the relevant measures were first applied to their property, rights or interests.

The Agreement itself does not otherwise describe or define Canadian citizens. Article IV of the Agreement provides for the discharge of the Government of Czechoslovakia in respect of all such Canadian claims upon the payment of the funds mentioned, and the Government of Canada agrees in the same Article not to present any claim on behalf of Canadian citizens in respect of any matter which has been settled by the Agreement.

Pursuant to the Appropriation Act No. 9, 1966, 1966-67 (Can.), c. 55, Regulations SOR/73‑681 were promulgated on November 7, 1973 as P.C. 1973-3495. Under these Regulations reference is made in s. 2 to the aforementioned Agreement dated April 18, 1973, which came into force on June 22, 1973 on an exchange of letters between the two contracting parties.

Section 2 of the Regulations further provides definitions for claims and for Canadian citizens as follows:

“claim” means a claim by a Canadian citizen against the Government of Czechoslovakia or Czechoslovak natural or juridical persons in respect of property, rights and interest in Czechoslovakia affected before April 18, 1973 by Czechoslovak measures of nationalization, expropriation, taking under administration or any other similar legislative or administrative measures;

“Canadian citizen” means

(a) a person who is a Canadian citizen within the meaning of the Canadian Citizenship Act, or

(b) a corporation that is incorporated under the laws of Canada and that

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(i) is controlled or substantially owned by persons described in paragraph (a), or

(ii) is actively carrying on business in Canada.

There are other provisions in the Regulations dealing with the time for filing and other matters of form but it was agreed in the proceedings below that the claim filed by the appellant is complete and regular as to form. Other procedures mentioned in the Regulations relating to the earlier formation of the Foreign Claims Fund are also, for the purposes of these proceedings, deemed to have been properly established; and also the Foreign Claims Commission, the respondent herein, was duly appointed under Part I of the Inquiries Act by Order in Council P.C. 1970-2077 to inquire into and report upon claims for which compensation may be paid out of the Foreign Claims Fund. Section 7(1) of the Regulations goes on to provide:

7. (1) The Chief Commissioner shall report to the Minister and to the Minister of Finance on each claim considered by the Commission, stating

(a) whether the claimant is eligible to receive an award; and

(b) the amount of the award that, in the opinion of the Commission, should be made to the claimant.

Finally, s. 4(1) of the Regulations prescribed the terms for eligibility of the claimant for receipt of the award under the Regulations:

4. (1) In order to be eligible to receive an award in respect of a claim, a claimant must have been a Canadian citizen from the time the claim arose or the time he obtained title to it until June 22, 1973 and, where a claimant obtained title to a claim after the time it arose, each of his predecessors in title must have been a Canadian citizen during the time he held title to it.

Both the Commission and the Federal Court took the view that the Regulations had been adopted and promulgated so as to implement the terms of the Agreement between Canada and Czechoslovakia and that in turn the Agreement was negotiated on the basis that Czechoslovakia was paying

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compensation for property taken by it from citizens of Canada who were not at the time in question citizens of Czechoslovakia. Where dual citizenship existed eligibility for entitlement was in this view to be determined by the “dominant citizenship” so that a claimant having dominant Czechoslovakian citizenship, although concurrently holding Canadian citizenship, would be ineligible. Here the claimant, although allegedly born in Canada in 1901, had resided in Hungary (later to be incorporated into Czechoslovakia after World War I) until her move to Canada in 1950. During her period of residence, or some substantial although perhaps unknown portion thereof, the appellant also held Czechoslovakian citizenship (or Hungarian citizenship prior to the annexation of her region of residence into Czechoslovakia). Accordingly her only alleged attachment to or connection with Canada at the time of the alleged taking of her property, was that of citizenship by reason of birth in Canada. A further complication might be added that the applicant married a citizen of Czechoslovakia in 1920. Her alleged husband was born in Hungary in a region later incorporated into Czechoslovakia and apparently resided there continuously until he came to Canada in 1950. He became a Canadian citizen by naturalization in 1956. As I have said earlier, there is some considerable doubt on the record before the Commission as to whether the applicant was born in what is now Czechoslovakia or in Montreal.

The mechanics for accounting for awards made under the Regulations make reference to the Agreement and the receipt of funds from Czechoslovakia. There are, therefore, several references in the Regulations to the Agreement of 1973 and it is clear that the purpose of the Regulations was to implement a plan for the distribution among successful Canadian claimants of the Fund established upon the receipt of the moneys under the Agreement from Czechoslovakia. In construing and applying these Regulations to the claim made by the appellant, Mr. Justice Le Dain in the Federal Court of Appeal noted that the Commission disqualified the appellant since “Canada does

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not espouse the claim of a dual national of Canada and another country against that other country where the dominant nationality of the dual national is that of the other country and he or she is domiciled there and to all intents and purposes primarily a citizen thereof”. The Court of Appeal then included a reference from the record before the Commission by the Canadian Ambassador involved in the negotiations with Czechoslovakia. The essence of the report by the Ambassador is found in the following sentence: “The Canadian side feels that the doctrine of dominant nationality must govern in this kind of negotiation”. This apparently is an excerpt from a report made in the course of the negotiations leading to the 1973 Agreement. Drawing on this background Mr. Justice Le Dain concluded [at p. 240]:

… the definition of “claim” in the Regulations should in my opinion be construed as necessarily excluding a claim which Canada would not recognize itself as having the right to espouse because the dominant nationality of the claimant at the time the property was taken was that of Czechoslovakia.

There is no doubt that Article V of the Agreement leaves to the Government of Canada the entire right of distribution of the funds paid under the Agreement by Czechoslovakia:

The distribution of the sum paid under Article I of this Agreement shall be at the exclusive discretion and within the exclusive competence of the Government of Canada.

When the Fund was established under vote 22a of the Appropriation Act No. 9, 1966, supra, the Minister of Finance was authorized to provide for payment out of the Fund:

… in accordance with regulations of the Governor in Council which regulations may, inter alia, provide for the determination of the nature of claims for compensation that may be made, the persons to whom compensation may be paid, and the manner and time for the submission of claims, the calculation (including any weighted or pro rata distribution) of the amount of the payments by the Minister of Finance and the Secretary of State for External Affairs,…

There also is no doubt that the Regulations, 73-681, supra, were promulgated pursuant to these

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provisions found in the Appropriation Act No. 9, 1966.

The narrow problem which arises is whether or not the Commission or a court reviewing the decision of the Commission may interpret the provisions of Regulation 73-681 by reference to the Agreement of 1973 or such clearly extraneous matters as the report from negotiators of the Agreement, including the Canadian Ambassador. For example, the reference to dominant or primary citizenship is nowhere to be found in the Regulations under which the appellant makes her claim. The entitlement is defined rather in terms only of a Canadian citizen who is defined as being a person who is a Canadian citizen according to the Canadian Citizenship Act. I emphasize that we here assume the appellant so qualifies.

If one could assert an ambiguity, either patent or latent, in the Regulations it might be that a court could find support for making reference to matters external to the Regulations in order to interpret its terms. Because, however, there is in my view no ambiguity arising from the above-quoted excerpt from these Regulations, there is no authority and none was drawn to our attention in argument entitling a court to take recourse either to an underlying international agreement or to textbooks on international law with reference to the negotiation of agreements or to take recourse to reports made to the Government of Canada by persons engaged in the negotiation referred to in the Regulations.

We are confined entirely to the definition of Canadian citizen drawn from the Citizenship Act and for the purposes of this appeal it has been assumed, as I have said, that the appellant so qualifies.

Even if it were accepted that reference could be made to the Agreement the further difficulty arises: should a tribunal seek support from the negotiators’ report? Nowhere in the Agreement is any reference made to the limitation of Canadian claims to those holding only Canadian citizenship. Duality of citizenship is not mentioned, nor is

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there any reference to primary or dominant citizenship. Indeed the Agreement reveals no reliance by the Government of Czechoslovakia on any entitlement to release of claims by persons holding Canadian citizenship only, or of freedom from claims by persons who hold whatever a dominant Czechoslovakian citizenship may be found to be. Article IV, para. 1 of the Agreement, for example, provides as follows:

1. Payment in full of the sum set out in Article I shall discharge the Government of Czechoslovakia and Czechoslovak natural and juridical persons from obligations in respect of all matters covered by this Agreement; the Government of Canada will then consider as completely settled, all claims covered by this Agreement whether or not they have been brought to the attention of the Government of Czechoslovakia.

The claims referred to in the above passage are defined in Articles I and II where no reference is made to duality of citizenship or primary or dominant citizenship. The Agreement is, as has been observed, then mentioned in the Regulations which adopt the same definition of claim as in the Agreement. The Regulations, however, do not purport to limit the availability of the Fund to the compensation of Canadian citizens who happen to hold other citizenship rights elsewhere.

The respondent points to Post Office v. Estuary Radio Ltd., [1968] 2 Q.B. 740 (C.A.) as support for the reference to the underlying international Agreement as the basis for the interpretation of the controlling domestic Order in Council. Two comments may be made concerning that reference. Firstly, the international Agreement here is of no assistance in narrowing the definition of a Canadian citizen down to one who does not hold any other citizenship at the critical time. Secondly, the simple fact that the Regulations were an implementation of the Agreement does not entitle a court to take the next step to ascertain what the parties intended to but did not embody in the Agreement.

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Extensive references were laid before the Court concerning the negotiation of rights by countries for compensation of their nationals by reason of expropriations or confiscation by other countries. These conventions or customs may find some validity in proceedings in specified international tribunals or perhaps even in domestic tribunals where specific legislative authority has made them operative. Here the Regulations fall to be interpreted according to the maxims of interpretation applicable to Canadian domestic law generally. The only rule of interpretation which seems to have any bearing in these proceedings is the plain meaning rule because no ambiguity can be found either in the Order in Council or indeed in the Agreement therein referred to if the latter step may be validly taken.

In the course of argument both counsel referred the Court to the judgments in Anisminic Ltd. v. Foreign Compensation Commission, [1969] 2 A.C. 147, where a remarkably similar series of transactions occurred. The trial judge was urged in argument to consider the underlying treaty when construing the operative Order in Council promulgated by the Government of the United Kingdom for the distribution of funds received under a treaty between the United Kingdom and the United Arab Republic. Browne J., the judge of first instance, in setting aside a refusal by the Commission to accept a claim for compensation, stated at p. 227:

Their claim was not expressly excluded from the treaty, but Mr. Bridge asks me to infer that it must have been the belief and intention of the Government of the United Arab Republic that it should be excluded from the inter-governmental negotiations and the compensation agreed to be paid, though General Ghaleb’s letter to Mr. Denham of October 28, 1957, seems to imply the contrary. But even if it is legitimate in considering an international treaty to inquire what the subjective intentions of the parties were, I find it impossible to say that H.M. Government intended to exclude the plaintiffs claim; on balance I think it more probable that they did not.

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The reluctance of the trial judge to be influenced in the interpretation of domestic law by an international treaty is adverted to again at p. 242, but in the final analysis the trial judge construed the operative Order in Council according to the usual canons of interpretation. In the House of Lords Lord Pearce noted that: “Substantially the whole of the Order is concerned with the treaty between the British and Egyptian Governments of 1959 …” (p. 202); and at p. 205 Lord Pearce finds a possible reference in the Order in Council to underlying transactions between the claimant and the ultimate purchaser of the assets in question in Egypt from the Egyptian Government. Nowhere, however, is there any clear principle enunciated that in these circumstances international law somehow overrides or imposes its interpretations on validly enacted domestic law.

Here the Order in Council, although making numerous references to the international Agreement, does not follow the Agreement entirely. However, on the essential points such as the precedential requirement of Canadian citizenship the Order in Council and the Agreement are congruent. The Agreement itself makes no reference to the possible exclusion of those Canadian citizens who happen to hold other citizenship status at the same time. The Order in Council likewise makes no such distinction. It is only by reading texts on the subject of international law or the report of the negotiators of this Agreement that one learns of the practices which have been followed elsewhere in international negotiations on this subject. Had it been the intention of the draftsman of the Order in Council or of the Governor in Council in promulgating this Order to exclude persons in the position of the appellant, such could have been accomplished by the adoption of the simplest of provisions. There is no suggestion anywhere within the four corners of the Order in Council (or indeed in the Agreement itself) of any such intention to exclude. There is, as I have said, no ambiguity, latent or patent, in the terminology of the Order in Council as regards the appellant’s claim. There is therefore no authority for a court to adopt other than the plain meaning of the words used by the Governor in Council in these Regulations.

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I therefore would allow the appeal with costs here and in the Federal Court of Appeal and, as suggested by the respondent in the event that the appeal be allowed, would remit these proceedings to the Commission for determination of the appellant’s claim in accordance with Regulations 73-681 as interpreted.

Appeal allowed with costs.

Solicitors for the appellant: Gareau, Grey & Pohoryles, Montreal.

Solicitors for the respondents: Paul M. Ollivier and Jean-Marc Aubry, Ottawa.