Canada (Director of Soldier Settlement) v. Snider Estate, [1991] 2 S.C.R. 481

Director of Soldier Settlement Appellant

v.

Fred King, Executor of the Last Will and Testament of Charlie Snider, Deceased

and

Albert Snider and Fred Snider, Executors of the Last Will and Testament of Tillie Snider, Deceased Respondents

and

The Attorney General for Alberta Respondent

and

The Attorney General of Manitoba and the Attorney General for Saskatchewan Interveners

Indexed as: Canada (Director of Soldier Settlement) v. Snider Estate

File No.: 21186.

1991: February 27; 1991: June 27.

Present: La Forest, Sopinka, Gonthier, Cory, McLachlin, Stevenson and Iacobucci JJ.

on appeal from the court of appeal for alberta

Mines and minerals -- Ownership -- Soldier Settlement Act reserving mines and minerals from sales of land by Settlement Board -- Settlement Board selling land and taking mortgage back -- Transfer and mortgage, not reserving mines and minerals, registered under provincial Land Titles Act -- Whether Land Titles Act operates to deprive federal Crown of its proprietary interest -- Whether mineral estate in land was transferred to province under Natural Resources Transfer Agreement of 1930 -- Soldier Settlement Act, 1919, S.C. 1919, c. 71, s. 57 -- Natural Resources Transfer Agreement, 1930, paras. 13, 18(a) -- Land Titles Act, R.S.A. 1980, c. L-5, s. 66(1).

Land titles -- Mines and minerals -- Ownership -- Soldier Settlement Act reserving mines and minerals from sales of land by Settlement Board -- Settlement Board selling land and taking mortgage back -- Transfer and mortgage, not reserving mines and minerals, registered under provincial Land Titles Act -- Whether Land Titles Act operates to deprive federal Crown of its proprietary interest -- Soldier Settlement Act, 1919, S.C. 1919, c. 71, s. 57 -- Land Titles Act, R.S.A. 1980, c. L-5, s. 66(1).

In 1928 the Soldier Settlement Board, as agent for the federal Crown, sold a parcel of land, coal only excepted, and took a mortgage back. Under s. 57 of the Soldier Settlement Act, 1919 any sale of land by the Board was deemed to include a reservation to the federal Crown of all mines and minerals. The transfer and mortgage, which did not reserve mines and minerals, were registered under the provincial Land Titles Act. In 1979 appellant Director sought an order that a title showing him as owner of the mines and minerals (other than coal) be issued. The trial judge considered the fact that the Board had used the provincial Land Titles system to register the mortgage to be irrelevant. She found that the mineral estate in the land had not been transferred to the province of Alberta by the 1930 Natural Resources Transfer Agreement because it was within the exception specified by para. 18(a). Appellant was therefore entitled to be registered as owner of the mines and minerals. The Court of Appeal reversed the judgment. The Court found that the federal Crown was bound by the Alberta Land Titles Act and was thus required to register its reservation of mines and minerals in the land. Since it had not done so, respondent executors were entitled to be registered as owners of the mines and minerals. This appeal is to determine whether the provisions of the Alberta Land Titles Act apply to the mineral estate in the land in question so as to deprive the federal Crown of the proprietary interest reserved to it by The Soldier Settlement Act, 1919, and whether the Natural Resources Transfer Agreement transferred the mineral estate (less coal) in the land from Canada to Alberta. The parties agreed that Alberta is bound by the Land Titles Act.

Held (La Forest and Cory JJ. dissenting): The appeal should be dismissed.

Per Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci JJ.: The Soldier Settlement Act, 1919 reserved to the federal Crown the rights to the mines and minerals it held in the land. A sale by the Board as agent for the Crown was a sale "by the Board" for purposes of s. 57 and the section thus applies to the 1928 sale. Even if it did not apply directly, the transaction would still have left the mines and minerals (except coal) in the federal Crown, since the Board had no authority under the Act to convey them as an agent.

The mines and minerals were transferred to the province by the Natural Resources Transfer Agreement. Since the Agreement is constitutional, its purposive interpretation should lead to a restrictive interpretation of the exceptions. Paragraph 13, which provides an exception for all interests in Crown lands in the province upon the security of which any advance has been made under the Soldier Settlement Act, does not apply. As of the date of the Agreement, neither the surface nor the mines and minerals in question were Crown lands subject to security. Further, there was no "advance" within the meaning of the Soldier Settlement Act since the only amount owing was the unpaid purchase price at the time of sale. Paragraph 18 of the Agreement does not apply either. Since para. 13 deals specifically with soldier settlement lands, there is no reason to resort to para. 18. Moreover, para. 18 deals with "lands", to be distinguished from mines and minerals. Since the mines and minerals were transferred to the province, it is not necessary to consider whether the federal Crown is bound by the Land Titles Act.

Per Cory J. (dissenting): When the Board transferred the land in 1928, it was acting as agent for the federal Crown rather than as principal, but this did not bring the sale outside the ambit of the Soldier Settlement Act, 1919. The reservation of mines and minerals to the federal Crown provided for in s. 57 therefore applied.

The Board was under no obligation to register the reservation under the provincial Land Titles Act since s. 13(6) of the Soldier Settlement Act, 1919 specifically exempts transactions by the Board from the requirements of provincial land registry systems. The federal provision is in direct conflict with the Land Titles Act and must prevail. To the extent that the Land Titles Act requires the Board to register its interest in mines and minerals in the land, it is inoperative. While the Board did register the purchase and later the sale of the land, it did so to benefit the soldier settlers, who were not entitled to rely on the statutory exclusion from registration.

The federal Crown retained ownership and administration of the land after the Natural Resources Transfer Agreement came into force in 1930. Paragraph 13 of the Agreement preserved the federal government's interests in land upon which security was held under the Soldier Settlement scheme. Since the 1917 Act was silent on the question of mines and minerals, these were transferred to the grantee unless specifically reserved to the federal government in the deed of sale. Any security interest held by the Board under the 1917 Act would therefore extend to mines and minerals. Since para. 13 of the Agreement was designed to preserve such security interests, the word "lands" must include mines and minerals. In 1930 the federal Crown held a mortgage back on the land, which secured the "advance" outstanding on the purchase price, and thus had a valid security interest in the land when the Agreement came into force.

Per La Forest J. (dissenting): Cory J.'s reasons were agreed with, except that the differences between The Soldier Settlement Act of 1917 and the later versions of that statute were not relied on. It follows from the terms of the Natural Resources Transfer Agreement itself that the mines and minerals were not transferred to the province. Paragraph 13 of the Agreement preserves all federal interests in soldier settlement lands, and this includes the ordinary mines and minerals in such lands. The preserved government interests are not confined to the security interests which serve to identify the lands in which those interests lie. The fact that para. 1 speaks of "all Crown lands, mines, minerals" is of no significance in the interpretation of para. 13, since this surplusage resulted from the fact that para. 1 was generally modelled on s. 109 of the Constitution Act, 1867. This construction is consistent with the basic purpose of the resources agreements, which is to place the provinces in question in the same position as the original provinces of Canada. The rule under the Soldier Settlement Act was that the mines and minerals in lands transferred under the Act continued to vest in the Government of Canada, and this regime should apply in the western provinces as well as the others.

Cases Cited

By Stevenson J.

Referred to: Farm Credit Corp. v. Dunwoody Ltd. (1988), 1988 ABCA 216, 59 Alta. L.R. (2d) 279; Reese v. The Queen, 1957 CanLII 72 (SCC), [1957] S.C.R. 794, aff'g 1955 CanLII 772 (CA EXC), [1956] Ex. C.R. 94.

By Cory J. (dissenting)

Multiple Access Ltd. v. McCutcheon, 1982 CanLII 55 (SCC), [1982] 2 S.C.R. 161.

By La Forest J. (dissenting)

Attorney-General of British Columbia v. Attorney-General of Canada (1889), 14 App. Cas. 295.

Statutes and Regulations Cited

Act respecting the Revised Statutes of Canada, S.C. 1924, c. 65, ss. 6, 7.

Alberta Act, S.C. 1905, c. 3 [reprinted in R.S.C., 1985, App. II, No. 20], s. 21.

Alberta Natural Resources Act, S.A. 1930, c. 21, Schedule.

Constitution Act, 1867, s. 91(7).

Constitution Act, 1930 (U.K.), 20-21 Geo. 5, c. 26 [reprinted in R.S.C., 1985, App. II, No. 26], s. 1, Schedule 2.

Dominion Lands Act, S.C. 1908, c. 20, s. 37.

Land Titles Act, R.S.A. 1922, c. 133, ss. 2(i), 57, 58.

Land Titles Act, R.S.A. 1970, c. 198.

Land Titles Act, R.S.A. 1980, c. L-5, ss. 1(k), 65(1), 66(1).

Natural Resources Transfer Agreement, 1930, paras. 1, 13, 18.

Order in Council P.C. 299, February 11, 1919.

Soldier Settlement Act, 1917, S.C. 1917, c. 21, ss. 4(3), 5(1), 6(4), (8).

Soldier Settlement Act, 1919, S.C. 1919, c. 71, ss. 2(q), 4(1), 13(6), 19, 25, 34(4), 51(1), (2), 57.

Soldier Settlement Act, R.S.C. 1927, c. 188.

APPEAL from a judgment of the Alberta Court of Appeal (1988), 1988 ABCA 266, 61 Alta. L.R. (2d) 246, 88 A.R. 385, [1988] 6 W.W.R. 360, 1 R.P.R. 209, reversing a judgment of the Court of Queen's Bench (1984), 1984 CanLII 1229 (AB QB), 34 Alta. L.R. (2d) 314, [1985] 2 W.W.R. 149, 35 R.P.R. 192, granting appellant's petition to have a new title issued. Appeal dismissed, La Forest and Cory JJ. dissenting.

Terrence Joyce, Q.C., and Kirk N. Lambrecht, for the appellant.

Robert B. White, Q.C., and Elizabeth A. Johnson, for the respondents Fred King, Albert Snider and Fred Snider.

David William Kinloch, for the respondent the Attorney General for Alberta.

Dirk D. Blevins, for the intervener the Attorney General of Manitoba.

Tom Irvine, for the intervener the Attorney General for Saskatchewan.

//La Forest J.//

The following are the reasons delivered by

La Forest J. (dissenting) -- I have had the advantage of reading the reasons of my colleagues, Justices Cory and Stevenson. With respect, I agree with the disposition of the case proposed by Cory J. and, subject to the following comment, with his reasons as well.

In arriving at the conclusion that the mines and minerals retained by the Board under the Soldier Settlement Act were not transferred to Alberta under the Alberta Natural Resources Transfer Agreement of 1930, I do not rely on the differences between the Soldier Settlement Act of 1917 and the later versions of that statute. It seems to me the same result follows from the terms of the Natural Resources Transfer Agreement itself.

The resources agreement, as its pivotal provision, para. 1, makes clear, was entered into "[i]n order that the Province may be in the same position as the original Provinces of Confederation are in virtue of section one hundred and nine of the Constitution Act, 1867 . . ." and its various provisions are largely aimed at fulfilling this purpose. That purpose ought, therefore, to be kept steadily in mind in interpreting these provisions and, barring clear terms or special circumstances, should be respected.

It is in light of that overarching purpose that I turn to para. 13, the provision of the agreement dealing with soldier settlement lands. That provision reads:

Soldier Settlement Lands

13. All interests in Crown lands in the Province upon the security of which any advance has been made under the provisions of the Soldier Settlement Act, being chapter 188 of the Revised Statutes of Canada, 1927, and amending Acts, shall continue to be vested in and administered by the Government of Canada for the purposes of Canada.

Like Cory J., I have no difficulty in holding that, as in other cases, "lands" includes all ordinary incidents of land, including mines and minerals other than royalties, which include precious metals; see Attorney-General of British Columbia v. Attorney-General of Canada (1889), 14 App. Cas. 295 (P.C.). The fact that the expression "all Crown lands, mines, minerals (precious and base) and royalties derived therefrom" is used in para. 1 is of no significance in the interpretation of para. 13 This exercise in surplusage obviously resulted from the fact that para. 1 was generally modelled on s. 109 of the Constitution Act, 1867 of which para. 1 was the counterpart for Alberta. This surplusage can be traced all the way back to the pre-Confederation Civil Lists Acts. There was no reason to engage in surplusage in other provisions of the agreement.

Paragraph 13 deals with lands upon which the Crown has made advances under the Soldier Settlement Act. It retains for the Government of Canada "[a]ll interests" it has in these lands despite the general transfer of Crown lands to Alberta. I see no reason why that should not include the ordinary mines and minerals in such lands. The preserved government interests are not confined to the security interests which serve to identify the lands in which those interests lie. In a word, para. 13 preserves all federal interests in soldier settlement lands.

Though the provision can scarcely be described as a model of lucidity, it seems to me the above construction reasonably flows from its terms. It becomes all the clearer when one considers it in light of the basic purpose of the resources agreements I have explained above. The rule under the Soldier Settlement Act was that the mines and minerals in lands transferred under the Act continued to vest in the Government of Canada. Why should a different régime be contemplated by the resources agreements given the stated purpose of these agreements of placing those provinces in the same position as the original provinces of Canada? There is no special reason under the Soldier Settlement Act for making a distinction between those provinces and the others. The underlying reason for restricting these lands to agricultural uses described by Cory J. is as valid in Alberta and the other western provinces as it is in the other provinces.

//Stevenson J.//

The judgment of Sopinka, Gonthier, McLachlin, Stevenson and Iacobucci JJ. was delivered by

Stevenson J. -- The appellant Director appeals a decision of the Court of Appeal of Alberta reversing a judgment of the Court of Queen's Bench that ordered the Registrar of Land Titles to cancel the Certificates of Title covering certain mines and minerals rights held by the respondent executors and to issue a Certificate of Title in favour of the Director of Soldier Settlement. The Attorneys General of Alberta, Saskatchewan and Manitoba intervene in support of the respondents.

The issue, as I analyze the matter, is whether the mines and minerals passed to the Province of Alberta under the 1930 Natural Resources Transfer Agreement.

The Facts

The facts in this case are simple and were agreed.

The Soldier Settlement Board was created as a federal agency in order to facilitate the settlement of soldiers coming back from the First World War. The Board sold surface rights on agricultural land to returning soldiers and provided advantageous financing. The Board granted surface rights either on previously ungranted Dominion land or on land bought by the Board for this purpose.

This appeal arises from a dispute over the ownership of mines and mineral rights in a parcel of land located in Alberta. In 1901, the subject property was transferred by the Crown in right of Canada to the Canadian Pacific Railway ("CPR"). That grant carried the mines and minerals which were then vested in CPR. In 1912 CPR sold the land to Herman Diercks, reserving the coal rights. In September 1919, the land was sold by Herman Diercks to His Majesty the King in right of Canada as represented by the Soldier Settlement Board (the "Board"), with the reservation of coal rights to CPR. The transfer was registered by His Majesty the King as represented by the Board in January 1920.

In 1928, the Board transferred the land to Russell James Lynn, coal only excepted, and at the same time His Majesty the King in right of Canada as represented by the Board took a mortgage back from Lynn (which was ultimately discharged in 1935). Both the transfer and the mortgage were duly registered. The same day, Lynn transferred the property to Charlie Snider, reserving only coal. In 1943, Charlie Snider transferred the south half of the land to Tillie Snider, reserving only coal. In 1947 and 1953 respectively, Charlie and Tillie Snider each transferred the surface rights to their property and retained the mines and minerals rights (less coal).

The Sniders and their successor executors, the respondents, are bona fide purchasers for value. They have paid the mineral taxes as these fell due.

In 1979, the appellant Director commenced proceedings against the respondent executors, seeking an order that the title of the property showing Charlie and Tillie Snider to be the owners of the mines and minerals be cancelled and that a new title showing the appellant as owner of the mines and minerals (other than coal) be issued. The Attorney General for Alberta intervened at the trial. The relief sought was granted: (1984), 1984 CanLII 1229 (AB QB), 34 Alta. L.R. (2d) 314.

The Attorney General appealed the order to the Court of Appeal of Alberta. The respondent executors did not appear. The Court of Appeal reversed the decision of the trial judge: (1988), 1988 ABCA 266, 61 Alta. L.R. (2d) 246.

All parties appeared before us and the Attorneys General of Manitoba and Saskatchewan intervened.

The Legislation

The Soldier Settlement Act, 1919, S.C. 1919, c. 71 (later R.S.C. 1927, c. 188):

2. In this Act, and in any regulations made under it, unless the context otherwise requires, the expression, ‑‑

(q) "Registry of deeds" or other words descriptive of the office of a registrar of deeds, includes the land titles office, or other office in which, according to the law of a province, title to land is registered;

4. (1) For the purposes of acquiring, holding, conveying, and transferring, and of agreeing to convey, acquire or transfer any of the property which it is by this Act authorized to acquire, hold, convey, transfer, agree to convey or agree to transfer, but for such purposes only, the Board shall be and be deemed a body corporate, and as such the agent of the Crown in the right of the Dominion of Canada. . . .

5. . . .

(6) No surrender, conveyance, mortgage, charge, agreement or award under this Act shall require registration or enrolment to preserve the right of the Board under it, but the same may be registered in the Registry of Deeds for the place where the land lies, if the Board deems it advisable.

51. (1) All conveyances from the Board shall constitute new titles to the land conveyed and shall have the same and as full effect as grants from the Crown of previously ungranted Crown lands.

(2) All land and other property which, before the coming into force of this Act, was, under authority of any Order of the Governor in Council, purchased by the Board and title thereto taken to His Majesty the King in the right of Canada represented by the Board, and all or any interest or interests of His Majesty in any agreements of sale, mortgages or other instruments and in the land or other property to which such instruments relate, which interest or interests were, before the coming into force of this Act, acquired by His Majesty through the instrumentality of the Board under the former Act or of any Order of the Governor in Council, are, by force of this Act, vested in the Board as constituted under this Act.

57. From all sales and grants of land made by the Board all mines and minerals shall be and shall be deemed to have been reserved, whether or not the instrument of sale or grant so specifies, and as respects any contract or agreement made by it with respect to land it shall not be deemed to have thereby impliedly covenanted or agreed to grant, sell or convey any mines or minerals whatever.

Constitution Act, 1930 (U.K.), 20‑21 Geo. 5, c. 26 (reprinted in R.S.C., 1985, App. II, No. 26, the French version of which is still not official):

1. The agreements set out in the Schedule to this Act are hereby confirmed and shall have the force of law notwithstanding anything in the Constitution Act, 1867, or any Act amending the same, or any Act of the Parliament of Canada, or in any Order in Council or terms or conditions of union made or approved under any such Act as aforesaid.

SCHEDULE

(2) Alberta

Memorandum of Agreement

Transfer of Public Lands Generally

1. In order that the Province may be in the same position as the original Provinces of Confederation are in virtue of section one hundred and nine of the Constitution Act, 1867, the interest of the Crown in all Crown lands, mines, minerals (precious and base) and royalties derived therefrom within the Province, and all sums due or payable for such lands, mines, minerals or royalties, shall, from and after the coming into force of this agreement and subject as therein otherwise provided, belong to the Province, subject to any trusts existing in respect thereof, and to any interest other than that of the Crown in the same . . . .

Soldier Settlement Lands

13. All interests in Crown lands in the Province upon the security of which any advance has been made under the provisions of the Soldier Settlement Act, being chapter 188 of the Revised Statutes of Canada, 1927, and amending Acts, shall continue to be vested in and administered by the Government of Canada for the purposes of Canada.

General Reservation to Canada

18. Except as herein otherwise expressly provided, nothing in this agreement shall be interpreted as applying so as to affect or transfer to the administration of the Province (a) any lands for which Crown grants have been made and registered under the Land Titles Act of the Province and of which His Majesty the King in the right of His Dominion of Canada is, or is entitled to become the registered owner at the date upon which the agreement comes into force, or (b) any ungranted lands of the Crown upon which public money of Canada has been expended or which are, at the date upon which this agreement comes into force, in use or reserved by Canada for the purpose of the federal administration.

This Agreement is also a Schedule to The Alberta Natural Resources Act, S.A. 1930, c. 21. The Agreement is sometimes referred to as the Natural Resources Transfer Agreement and sometimes simply as the Agreement.

Land Titles Act, R.S.A. 1980, c. L‑5.

1 In this Act,

(k) "grant" means a grant of Crown land, whether in fee or for years, and whether direct from Her Majesty or pursuant to any statute;

65(1) The land mentioned in any certificate of title granted under this Act is, by implication and without any special mention therein, subject to

(a) any subsisting reservations or exceptions, including royalties, contained in the original grant of the land from the Crown,

(g) any right of way or other easement granted or acquired under any Act or law in force in Alberta.

66(1) Every certificate of title granted under this Act (except in case of fraud wherein the owner has participated or colluded), so long as it remains in force and uncancelled under this Act, is conclusive proof in all courts as against Her Majesty and all persons whomsoever that the person named therein is entitled to the land included in the certificate for the estate or interest therein specified, subject to the exceptions and reservations mentioned in section 65. . . .

Slightly different versions of these provisions were in force at the time of the grant from the Board to Lynn as ss. 2(i), 57, and 58 of The Land Titles Act, R.S.A. 1922, c. 133.

The Judgments

Court of Queen's Bench

The trial judge held that s. 57 of The Soldier Settlement Act, 1919 applied to reserve mines and minerals. The fact that the Board used the Alberta Land Titles system to register the mortgage it obtained from Lynn was held to be irrelevant.

The trial judge found that the lands in question were not transferred to the province of Alberta by the Natural Resources Transfer Agreement of 1930 because they were within the exception specified by para. 18(a). The Director of Soldier Settlement was therefore entitled to be registered as owner of the mines and minerals. The judge granted the appellant the relief he sought.

Court of Appeal (Laycraft C.J.A. for the court)

The court reviewed the history and purpose of The Soldier Settlement Act, 1919. Section 57 of that statute provides that in any grant, all mines and mineral rights shall be deemed to be reserved, whether or not the transfer so indicates. The court found that this section applied to the transfer made in 1928.

The court found that the real problem arose as a result of the Crown's decision to register the transfers of the land with the Alberta Land Titles office. The court held that the Sniders were bona fide purchasers for value of the mines and minerals because the transfer to them did not show otherwise.

The court then considered whether the federal Crown was bound by s. 66(1) of the Land Titles Act which protects the Sniders against any challenge to their Certificates of Title. In other words, the court asked whether the federal Crown in this case was bound by the Torrens system established by the Alberta Legislature.

Laycraft C.J.A. noted that, in considering whether inter‑jurisdictional immunity between the federal and a provincial government exists, two questions are raised; firstly, whether the statute is intended to bind the other Crown, and secondly, whether the statute can bind the other Crown. The judge found that the Alberta Land Titles Act expressly binds the Crown. The case of Farm Credit Corp. v. Dunwoody Ltd. (1988), 1988 ABCA 216, 59 Alta. L.R. (2d) 279 (C.A.) is applicable to this case. Going on to the second question, Laycraft C.J.A. stated (at p. 259) that, in his view,

. . . when the federal Crown chooses to shelter itself under provincial land legislation, and a prerogative right is not directly affected, it must accept the burdens of that legislation.

Section 13(6) of the 1919 Soldier Settlement Act, quoted above, did not require the board to register its transfer when it purchased the land. . . . It could have decided not to seek the benefits of registration under the Torrens Statute in effect in Alberta. . . .

Having chosen to shelter under the umbrella of a Torrens system of land registration, the board was, in my opinion, bound by the normal incidents of that legislation.

Accordingly, the court held that the respondent executors were entitled to be registered as the owners of the mines and minerals in the lands in question.

Having decided that the federal Crown was bound in this case by the Land Titles Act, it did not matter whether the mines and minerals were transferred to the province by the Natural Resources Transfer Agreement ‑‑ both the provincial and federal Crown being bound by the Torrens system, it did not matter which had the rights to the mines and minerals. That is why the Court of Appeal did not, as the Court of Queen's Bench did, consider the effect of the Natural Resources Transfer Agreement.

The Issues

The issues in this case were stated as constitutional questions by Dickson C.J. on March 23, 1989 and are as follows:

1.Whether the provisions of the Land Titles Act of Alberta, R.S.A. 1970, c. 198 as amended, apply to or operate in respect of the mineral estate (less coal) in the lands in question so as to deprive the federal Crown of the proprietary interest reserved to it by the Soldier Settlement Act, R.S.C. 1927, c. 188, s. 57.

2.Whether the Natural Resources Transfer Agreement made between Canada and Alberta, as confirmed by the Constitution Act, 1930, transferred the mineral estate (less coal) in the lands in question from Canada to Alberta thereby making inapplicable s. 57 of the Soldier Settlement Act, R.S.C. 1927, c. 188 as amended.

A preliminary issue was raised before us:

Was the sale of land to Lynn a sale of land by the Board within the meaning of s. 57 of The Soldier Settlement Act, 1919?

Analysis

I will consider the preliminary issue first.

I. Does s. 57 of The Soldier Settlement Act, 1919 Apply to the Case at Bar?

Section 57 of The Soldier Settlement Act, 1919 reads as follows:

57. From all sales and grants of land made by the Board all mines and minerals shall be and shall be deemed to have been reserved, whether or not the instrument of sale or grant so specifies, and as respects any contract or agreement made by it with respect to land it shall not be deemed to have thereby impliedly covenanted or agreed to grant, sell or convey any mines or minerals whatever. [Emphasis added.]

The respondents and the Attorney General for Saskatchewan argued that s. 57 does not apply to the case at bar because the sale or grant was not made by the Board. They argued that when Lynn bought the land in 1928, the Board was not the owner of the land, the King was. Therefore the sale of land was not made by the Board but by the King, the Board acting as mere agent. Since s. 57 applies only to sales "by the Board" it would not apply to the case at bar. The mines and minerals would not have been reserved.

The Court of Appeal did note the confusion created by the fact that in 1919 the Board did not acquire the land in its own name as the new 1919 Act allowed it to do but instead in the name of the King (as was the practice under the old 1917 Act). Section 51(2) of the Act vesting in the Board all property acquired and held by the King for soldier settlement does not apply to the case at bar since that subsection applies only to lands acquired prior to the coming into force of the Act on July 7, 1919. In the case at bar the King acquired the land on September 1, 1919.

The Court of Appeal noted that in the 1928 sale the Board was named on the title as agent of the Crown. It also noted that the Board had that status by virtue of The Soldier Settlement Act, 1919 (see s. 4(1)). The Court of Appeal held that a sale by the Board as agent for the Crown was a sale "by the Board" for the purposes of s. 57.

The Court of Appeal's interpretation of s. 57 is sound. The intention of Parliament was that sales made for the purpose of settling soldiers do not include mines and minerals. In that context a sale "by the Board" should be read to include a sale by the Board as agent for the Crown. I would agree that s. 57 applies to the sale of land made to Lynn in 1928.

Moreover, if it did not apply directly, the effect of the transaction would still be to leave the mines and minerals (except coal) in the federal Crown. Under s. 4 the Board's agency is limited to actions authorized by the Act. It does not, under the Act, have authority to dispose of the mines and minerals and thus it lacked the authority to convey them as an agent. Reserving the issue of whether or not the federal Crown is bound by the Land Titles Act, I conclude that The Soldier Settlement Act, 1919 did (either directly by s. 57 or indirectly with the operation s. 4) reserve to the federal Crown the rights to the mines and minerals which had been conveyed to it by the transfer from Diercks.

I pause to note that the federal Crown's reacquisition of the mines and minerals appears to have been purely fortuitous. It had disposed of the mines and minerals in the grant to CPR. One suspects that Diercks simply conveyed his title, with neither side giving thought to the mines and minerals. Moreover, the Board had no mandate to acquire or otherwise deal with mines and minerals; its concern was with lands suitable for agricultural use. The suggestion was made before us that the Board acquired mines and minerals in order to protect surface use. In my view that is speculation, to say the least. There is no evidence of any policy to that effect, or of any need for it, and the absence of any power to manage mines and minerals militates against the suggestion.

I think it clear that the mines and minerals formed part of the public lands of Canada, a view supported by Reese v. The Queen, 1955 CanLII 772 (CA EXC), [1956] Ex. C.R. 94, aff'd 1957 CanLII 72 (SCC), [1957] S.C.R. 794, especially at p. 800. It appears to me that on the reacquisition the mines and minerals would form lands of the Dominion, under the administration of The Dominion Lands Act, S.C. 1908, c. 20 (s. 37 of which deals with disposition of mines and minerals).

II. Which Constitutional Issues Should Be Addressed?

In order to succeed before this Court the appellant had to address both constitutional issues. The appellant has to convince us that the mines and minerals were not transferred to the province by the Natural Resources Transfer Agreement and that the federal Crown is not bound by the Land Titles Act.

On the other hand, if the respondents' arguments on one of the constitutional issues succeed in convincing us, the appeal will be dismissed. Indeed, if the mines and minerals were transferred to the Crown in right of Alberta ‑‑ the provincial Crown being bound by the Land Titles Act ‑‑ the Torrens system would not allow any challenge to the Certificate of Title of the respondent executors (Land Titles Act, s. 66(1)). If that is the case, the Court does not have to decide whether, on the peculiar facts here, the federal Crown is bound by the Land Titles Act.

Since I have come to the conclusion that the mines and minerals were transferred to the province under the Natural Resources Transfer Agreement it will not be necessary to address the issue of whether the federal Crown is here bound by the Land Titles Act.

III. The Natural Resources Transfer Agreement.

Until the creation of the Province of Alberta by the Alberta Act, S.C. 1905, c. 3 (reprinted in R.S.C., 1985, App. II, No. 20), the federal Crown had original title to all land, mines and minerals in the territory of what would become Alberta. The creation of the province did not alter this situation and the federal Crown continued to hold title to all reserved or ungranted natural resources.

An Agreement was passed so that Alberta would "be placed in a position of equality with the other Provinces of Confederation with respect to the administration and control of its natural resources" (preamble of the Agreement). The transfer of natural resources was done by what is now called the Constitution Act, 1930, which gave legal effect to Schedule 2, the Natural Resources Transfer Agreement between Alberta and the federal government.

The first clause of the Agreement transfers all federal public lands, mines, minerals and royalties to Alberta. I note that this fundamental clause distinguishes mines and minerals from lands, consistent with subsequent clauses. This broad general grant is followed by some exceptions, two of which were stressed before us. If the federal Crown's claim to the rights in the mines and minerals cannot fit one of those exceptions, those rights will have been transferred to Alberta. If that is the case, Alberta being bound by the Land Titles Act, the successors of the Sniders would have a fee simple that includes mines and minerals (except for coal).

Before studying those exceptions, I note that the purpose of the Agreement is the transfer of natural resources and the document being constitutional, its purposive interpretation should lead this Court to interpret the exceptions restrictively.

A. Paragraph 13 of the Agreement

13. All interests in Crown lands in the Province upon the security of which any advance has been made under the provisions of the Soldier Settlement Act, being chapter 188 of the Revised Statutes of Canada, 1927, and amending Acts, shall continue to be vested in and administered by the Government of Canada for the purposes of Canada.

The trial judge rejected the application of this clause.

I reject it on two grounds. Firstly, as of the date of the Agreement neither the surface nor the mines and minerals in question were Crown lands subject to security. Secondly, there was no "advance" within the meaning of the Soldier Settlement Act.

Before addressing the appellant's argument I must make clear that the appellant's case is founded on the proposition that the mines and minerals here were not security. His position is that s. 57 of the 1919 Act was a statutory reservation of the mines and they never passed to Lynn, and never provided any security. The appellant's position is, and I quote from the factum, "only surface interests could be held as security". The mines and minerals therefore were Crown lands, but not subject to any security.

The surface, as of 1930, belonged to Snider subject to the Land Titles mortgage given by Lynn. A Land Titles Act mortgage is a charge upon the mortgagor's fee simple interest and that surface fee simple cannot be defined as "Crown lands".

Paragraph 13 is needed to preserve "Crown lands" upon which an advance has been made. Mortgages are not given on "Crown lands", they are given on the mortgagor's lands. Under s. 25 of the 1919 Act "advances" constitute a first charge on unpatented lands. The office of para. 13 is to protect such Crown lands, and, as the appellant concedes, those advances could only be secured against the surface.

The lands involved herein do not come within para. 13 because it has not been shown that they were subject to any advance under the Act. Section 19 allows the Board to make advances not to exceed $1,000 to settlers for permanent improvements. When made, the advances were to constitute a first charge on the land of the settlers. Section 25(1) of the Act allows the Board to make advances to a settler for the discharge of encumbrances on the agricultural land owned and used by the settler. A limitation of $3,500 (but not to exceed 50 percent of the value of the land) is specified for these purposes. However, the subsection goes on to state that a) the advances made for the discharge of encumbrances under the section and b) the amounts due by the settler to the Board "in any connection under authority of this Act" are together not to exceed $5,000. Under b), the reference to other amounts due to the Board would cover the amounts unpaid on the sale of land (ss. 16 and 17) or live stock and equipment (s. 18). Taking these provisions together, one can see that the Act distinguishes quite clearly between advances made under it and unpaid amounts owing by settlers to the Board on, for example, the sale to settlers of the settlers' land or on the sale to settlers of live stock or equipment.

In the case at bar, there was no suggestion of an advance being made of the kind contemplated by s. 19 or s. 25 of the Act and it appears that the only amount owing was the unpaid purchase price at the time of sale. Accordingly, one cannot conclude that there was an advance within the meaning of para. 13 of the Agreement. All that took place was the sale of the land and a mortgage back to the Crown but this cannot be interpreted as being an advance under the Act.

The Crown's interest as a mortgagee is, of course, not affected by the transfer Agreement.

I again note that the mines and minerals were simply kept as part of the public domain owned by the federal Crown. Natural resources kept for no specific purposes are exactly what the Natural Resources Transfer Agreement intended to transfer to the Province.

The federal Crown's interest in these mines and minerals was not covered by para. 13 and that clause did not prevent the transfer of that interest to Alberta.

B. Paragraph 18 of the Agreement

18. Except as herein otherwise expressly provided, nothing in this agreement shall be interpreted as applying so as to affect or transfer to the administration of the Province (a) any lands for which Crown grants have been made and registered under the Land Titles Act of the Province and of which His Majesty the King in the right of His Dominion of Canada is, or is entitled to become the registered owner at the date upon which the agreement comes into force, or (b) any ungranted lands of the Crown upon which public money of Canada has been expended or which are, at the date upon which this agreement comes into force, in use or reserved by Canada for the purpose of the federal administration.

Counsel for the appellant also argued that para. 18 of the Agreement applied to the case at bar. The Court of Queen's Bench agreed with him on the basis that there had been a grant (to the CPR) and the Director of Soldier Settlement was entitled to become registered owner at the time of the Agreement. With respect, I disagree. As we have seen, para. 13 of the Agreement deals specifically with soldier settlement lands. Specialia generalibus derogant. There is no warrant to resort to para. 18.

Moreover, I would not interpret para. 18 as extending to these mines and minerals. The section deals with "lands" and honours the distinction made in the opening clause. If it were not so restricted it would have the astonishing result, on the appellant's interpretation, of retaining for the federal Crown all the mines and minerals which the federal Crown had reserved from grants prior to 1930. For example, mines and minerals reserved from homestead grants would not pass to the province. During argument, counsel for the Director conceded that those mines and minerals did pass to the province.

The office of para. 18(a) is, in my view, to protect surface grants which the Crown had made to itself and were in the form of titles in the Crown, or in the process of registration. Lands granted for the use of federal Crown agencies would serve as an example, consistent with clause (b) which would similarly protect ungranted lands used for administration (or upon which public monies had been expended). It cannot have been meant to extend to the extensive mineral reservations under the surface of granted lands in respect of which the Crown would be, at the time of the Agreement, "entitled to become the registered owner".

Benefit and Burden

In view of my interpretation of the Agreement and the position taken by the appellant I have not addressed the argument that succeeded in the Court of Appeal.

Conclusion

The respondents or their predecessors have been the registered owners, as bona fide purchasers for value, of these mines and minerals since before 1930 and under the Land Titles Act of Alberta hold them against the provincial Crown. The appellant, I am glad to say, cannot some 50 years later, after the transfer to Alberta, invoke federal Crown ownership.

I answer the questions as follows:

Q. 1.Whether the provisions of the Land Titles Act of Alberta, R.S.A. 1970, c. 198 as amended, apply to or operate in respect of the mineral estate (less coal) in the lands in question so as to deprive the federal Crown of the proprietary interest reserved to it by the Soldier Settlement Act, R.S.C. 1927, c. 188, s. 57.

A.It is not necessary to answer the question because of the answer to question 2. Any proprietary interest passed to Alberta.

Q. 2.Whether the Natural Resources Transfer Agreement made between Canada and Alberta, as confirmed by the Constitution Act, 1930, transferred the mineral estate (less coal) in the lands in question from Canada to Alberta thereby making inapplicable s. 57 of the Soldier Settlement Act, R.S.C. 1927, c. 188 as amended.

A.The Natural Resources Transfer Agreement did transfer the mineral estate to Alberta.

I would dismiss the appeal, declare the respondent executors entitled to the mines and minerals (except coal) and award costs to the respondent executors except for the appeal in the Court of Appeal where they did not appear.

//Cory J.//

The following are the reasons delivered by

Cory J. (dissenting) -- I have read with interest the reasons of my colleague, Justice Stevenson. However, I have come to a different conclusion.

Factual Background

There are some facts in addition to those set out by Stevenson J. to which I must refer for the purposes of these reasons.

Toward the end of the First World War, Parliament enacted The Soldier Settlement Act, 1917, S.C. 1917, c. 21 (the "1917 Act") which was later replaced by The Soldier Settlement Act, 1919, S.C. 1919, c. 71 (the "1919 Act"). The aim of these Acts was to settle returning soldiers on agricultural land. The agricultural objective of the legislation was emphasized by s. 57 of the 1919 Act which provided that all mines and minerals were reserved to the federal Crown whenever the Soldier Settlement Board (the "Board") transferred land to a settling soldier.

The land in question (the "Land") was originally granted by the federal Crown to the Canadian Pacific Railway Company ("CPR") which, in turn, sold the Land to Herman Diercks subject to a reservation for coal. In 1919, Diercks sold the Land to the Board.

On March 10, 1928, three documents were registered under The Land Titles Act, R.S.A. 1922, c. 133 (the "LTA"). First, by a transfer dated February 22, 1928, the Board transferred the Land subject to the reservation of coal for the CPR to Russell James Lynn for the amount of $2,800. Second, by mortgage dated February 7, 1928, Lynn mortgaged the Land back to the Board to secure the sum of $2,000. Third, by transfer dated February 7, 1928, Lynn transferred the Land to Charlie Snider for $6,000. This sum presumably represented the cost of the land, $2,800, together with the improvements made by Lynn amounting to $3,200. The transfer was made subject once again to the reservation of coal for the CPR. The mortgage registered against the Land in 1928 was discharged by discharge of mortgage dated January 28, 1935, and registered May 14, 1935.

By way of caveat dated February 19, 1971, registered February 22, 1971, the Registrar of the North Alberta Land Registration District claimed an interest in the mines and minerals on the Land. The claim was put forward in this way:

. . . it appears that errors may have been made with respect to a transfer from the Soldier Settlement Board registered . . . on March 10th, 1928 and Certificate of Title No. 156-U-67 and subsequent Certificates of Title which fail to reserve mines and minerals to the Soldier Settlement Board as provided in Section 57 of the Soldier Settlement Act, c. 188, R.S.C. 1927. . . .

The Director of Soldier Settlement commenced proceedings in 1979 to cancel the certificates of title showing the executors of Charlie and Tillie Snider (the "Executors") to be the owners of the mines and minerals in the Land. In a judgment released on November 13, 1984, Foster J. of the Court of Queen's Bench of Alberta granted this relief. On August 17, 1988, the Court of Appeal allowed the appeal and upheld the original certificate of title.

Issues

The following constitutional questions were stated:

1.Whether the provisions of the Land Titles Act of Alberta, R.S.A. 1970, c. 198 as amended, apply to or operate in respect of the mineral estate (less coal) in the lands in question so as to deprive the federal Crown of the proprietary interest reserved to it by the Soldier Settlement Act, R.S.C. 1927, c. 188, s. 57.

2.Whether the Natural Resources Transfer Agreement made between Canada and Alberta, as confirmed by the Constitution Act, 1930, transferred the mineral estate (less coal) in the lands in question from Canada to Alberta thereby making inapplicable s. 57 of the Soldier Settlement Act, R.S.C. 1927, c. 188 as amended.

In addition, the Attorney General of Alberta and the Executors raised an issue as to whether s. 57 of the 1919 Act applies since the Board bought and sold the Land in the name of His Majesty the King in right of Canada rather than in its own name.

Relevant Legislation

The Soldier Settlement Act, 1917:

4. . . .

(3) The Minister may grant to any settler recommended by the Board a free entry for not more than one hundred and sixty acres of such reserved lands, subject to such conditions as, in the opinion of the Governor in Council, are necessary to secure the use of the land for the purpose for which it is granted.

5.(1) The Board may loan to a settler an amount not exceeding two thousand five hundred dollars for any of the following purposes: --

(a) the acquiring of land for agricultural purposes;

(b)the payment of incumbrances on lands used for agricultural purposes;

6. . . .

(4) All loans upon Dominion lands shall constitute a first charge against the land, and all loans upon other lands shall be secured by first mortgages, and all loans shall in all cases bear interest at the rate of five per centum per annum.

(8) When a loan has been made upon Dominion lands, no patent shall issue until the loan and all interest thereon have been paid in full.

The Soldier Settlement Act, 1919:

4. (1) For the purposes of acquiring, holding, conveying, and transferring, and of agreeing to convey, acquire or transfer any of the property which it is by this Act authorized to acquire, hold, convey, transfer, agree to convey or agree to transfer, but for such purposes only, the Board shall be and be deemed a body corporate, and as such the agent of the Crown in the right of the Dominion of Canada. . . .

5. . . .

(4) The Board may require of any settler the execution of a mortgage, in such form as its regulations may prescribe, defining and securing any charge which is by this or by the former Act imposed or declared to exist or is agreed upon by the Board and the settler.

57. From all sales and grants of land made by the Board all mines and minerals shall be and shall be deemed to have been reserved, whether or not the instrument of sale or grant so specifies, and as respects any contract or agreement made by it with respect to land it shall not be deemed to have thereby impliedly covenanted or agreed to grant, sell or convey any mines or minerals whatever.

The Aim and Design of The Soldier Settlement Act

The Soldier Settlement Act, 1917 was designed to provide an opportunity for returning soldiers to establish themselves as farmers. Pursuant to the 1917 Act, the Board would recommend to the Minister of the Interior that certain reserved land be granted to a veteran for agricultural use. The Board was empowered to make loans to veterans for the purchase of agricultural land, for the erection of buildings, for the purchase of stock and equipment and for such other purposes which the Board might approve.

At the conclusion of the First World War, the demand for land under the 1917 Act was so great that the reserved lands were insufficient to meet the needs of returning soldiers. In order to rectify the situation, the Governor in Council enacted Order in Council P.C. 299 on February 11, 1919, which provided that the Board could acquire land and resell it to veterans. With the passage of this Order, the Board began purchasing land in the name of the Crown and selling it to those veterans who qualified under the 1917 Act.

As might be expected, the Order in Council was only a temporary measure. Later, in 1919, Parliament enacted The Soldier Settlement Act, 1919 which greatly expanded upon the 1917 Act. For the purposes of the present appeal, it is important to note that, by the terms of s. 4(1) of the 1919 Act, the Board was deemed to be a body corporate for the purposes of buying and selling land pursuant to the 1919 Act and, further, that the Board was deemed to be a Crown agent in conducting such transactions. In addition, all the land previously reserved by the Crown under the 1917 Act was deemed, as of July 7, 1919, to be transferred to the Board.

The 1919 Act provided several restrictions upon the Board in transferring land to veterans. The most significant of these for our purposes was that contained in s. 57 which provided that any sale of land was deemed to include a reservation to the federal Crown of all mines and minerals.

The Board was provided with two methods of retaining security in the land allotted to veterans. It could either retain title to the land until the purchase price had been paid in full, or it could require a veteran to execute a mortgage to secure any charge imposed or declared under the 1919 Act. Section 34 provided that those charges could include amounts loaned by the Board to enable the veteran to pay off encumbrances, to acquire equipment or livestock, to construct buildings or for any amount "agreed upon by the Board and the settler".

The primary aim and object of the 1917 Act, the Order in Council and the 1919 Act was to assist returning veterans to settle upon land for agricultural purposes. Section 57 of the 1919 Act, which reserved all mines and minerals to the federal Crown, was important in achieving the object of the legislation since it ensured that the allotted lands would be used for agricultural purposes. The legislation was aimed at benefiting the veterans returning from the First World War. It thus came within the federal jurisdiction over the militia, military and naval services and defence as provided by s. 91(7) of the Constitution Act, 1867.

The Purchase and Sale of the Land

By September 1, 1919, when Diercks sold the Land to the Board, the 1919 Act had been enacted and proclaimed. When the Board purchased the Land from Diercks, it was apparently acting under the false impression that the 1917 Act was still in effect since it purchased the Land in the name of His Majesty the King in right of Canada as provided by the 1917 Act, rather than acquiring it in the name of the Board.

When the Board transferred the Land to Lynn in 1928, the transferor was said to be His Majesty the King in right of Canada although the 1919 Act provided that the Board could buy and sell land in its own name. The Board, in carrying out the transaction, was acting as agent for the federal Crown rather than as principal. This, the respondents submit, had the result of bringing the purchase from Diercks and the sale to Lynn outside the ambit of the 1919 Act.

I cannot accept this submission. Nothing in the 1919 Act requires the Board to enter into transactions as a principal rather than as an agent. The changes made in the 1919 Act were designed to both simplify and amplify the administration of the Soldier Settlement scheme. It was not intended to restrict the powers of the Board by requiring it to act in all matters as principal rather than as agent. In purchasing and selling the Land, the Board was clearly pursuing the aim and object of the 1919 Act. It would be bizarre, in circumstances where the legislation is otherwise silent, if the provisions of the 1919 Act did not apply simply because the Land was bought and sold in the name of His Majesty the King in right of Canada rather than in the name of the Board, an agent of the federal Crown. It follows that the provisions of the 1919 Act, particularly the reservation of mines and minerals to the federal Crown, applied to the sale of the Land to Lynn.

Alberta's Land Titles Act

The Court of Appeal found that the Board was bound by the provisions of the LTA which were in effect at the time of the sale to Lynn in 1928. According to this view, the Board became subject to the LTA when it registered its purchase from Diercks and its subsequent transfer to Lynn. It was found that, once the Board chose to register under the LTA, it was bound by all of that Act's provisions including the requirement that the Board register its reservation of mines and minerals in the Land. It was held that because the Board failed to register this reservation, Snider took the Land free from any reservation of mines and minerals except coal, which has been specifically reserved to the CPR.

This line of reasoning is, in my view, based on an unacceptable interpretation of the 1919 Act. Section 13(6) of the 1919 Act provides:

13. . . .

(6) No surrender, conveyance, mortgage, charge, agreement or award under this Act shall require registration or enrolment to preserve the right of the Board under it, but the same may be registered in the Registry of Deeds for the place where the land lies, if the Board deems it advisable.

This provision was designed to specifically exempt transactions undertaken by the Board, either as principal or as agent, under the 1919 Act from the requirements of provincial land registry systems.

In the absence of such a provision, the Board would indeed be bound by the provisions of the provincial LTA. Section 13(6) of the 1919 Act is, however, directed against such a result. The 1919 Act provides that the Board is to retain ownership and priority in the mines and minerals in those situations where it does not register its interests under provincial land law. The federal provision is, therefore, in direct conflict with the LTA and the federal Act of 1919 must prevail.

In Multiple Access Ltd. v. McCutcheon, 1982 CanLII 55 (SCC), [1982] 2 S.C.R. 161, at p. 191, it was held that in situations of direct conflict between valid federal and provincial legislation, the federal statute is paramount. Dickson J. (as he then was) wrote:

In principle, there would seem to be no good reasons to speak of paramountcy and preclusion except where there is actual conflict in operation as where one enactment says "yes" and the other says "no"; "the same citizens are being told to do inconsistent things"; compliance with one is defiance of the other.

In the circumstances of this case, both the federal and provincial statutes were validly enacted for legitimate federal and provincial purposes. Further, there is a direct conflict between the federal and provincial legislation. To the question whether the Board retains its interest in the mines and minerals in the Land despite the lack of registration, the federal statute gives a clear "yes" while the provincial statute answers "no". In these circumstances the federal provision is paramount. It follows that, to the extent that the LTA requires the Board to register its interest in mines and minerals in the Land, the LTA is inoperative.

There can, then, be no question of the Board being bound by the LTA's registration requirements. As far as the Board is concerned, these requirements simply do not exist. While it is true that the Board did register the purchase and later the sale of the Land under the LTA, it did so to benefit the soldier settlers who were not entitled to rely on the statutory exclusion from registration found under the 1919 Act. The registration was not to benefit the Board but, rather, to make the operation of the Soldier Settlement scheme feasible. Registration was the basis upon which the returning veterans received the benefits of the settlement legislation. It must be remembered that the Acts of 1917 and 1919 contemplated the settlement of veterans on lands throughout Canada. The registration requirements could well be expected to vary from province to province. The effect of s. 13(6) was to preserve the Board's right to mines and minerals in all lands wherever they might be located. This right was preserved for the Board without the necessity of any registration on title in Alberta or in any other province.

It now must be considered whether the transfer in 1930 of natural resources from the federal to the Alberta government had the effect of transferring the mines and minerals in the Land to the province.

The Natural Resources Transfer Agreement

When Alberta joined Confederation in 1905, the administration of natural resources was reserved to the federal government through s. 21 of the Alberta Act, S.C. 1905, c. 3 (reprinted in R.S.C., 1985, App. II, No. 20):

21. All Crown lands, mines and minerals and royalties incident thereto, and the interest of the Crown in the waters within the province under The North-west Irrigation Act, 1898, shall continue to be vested in the Crown and administered by the Government of Canada for the purposes of Canada, subject to the provisions of any Act of the Parliament of Canada with respect to road allowances and roads or trails in force immediately before the coming into force of this Act, which shall apply to the said province with the substitution therein of the said province for the North-west Territories.

In order to place Alberta in the same position with respect to natural resources as the original provinces of Confederation, the federal and Alberta governments negotiated the Natural Resources Transfer Agreement (the "Agreement"). This Agreement has been incorporated into the Constitution of Canada as Schedule 2 of the Constitution Act, 1930. Paragraph 1 of the Agreement transferred the federal government's interest ". . . in all Crown lands, mines, minerals (precious and base) and royalties derived therefrom . . . " to Alberta. Certain lands were excluded from the transfer. These included Indian reserves, national parks and land held by the federal government as security. Another of the exclusions dealt with land falling within the Soldier Settlement scheme. Paragraph 13 of the Agreement provides:

13. All interests in Crown lands in the Province upon the security of which any advance has been made under the provisions of the Soldier Settlement Act, being chapter 188 of the Revised Statutes of Canada, 1927, and amending Acts, shall continue to be vested in and administered by the Government of Canada for the purposes of Canada.

This provision is obviously directed at preserving the federal government's security interests in land falling within the Soldier Settlement scheme. By retaining federal ownership and administration over land subject to these interests, the Agreement maintains the Board's ability to manage the scheme as contemplated by the Acts of 1917 and 1919. In order to fulfill the purposes of para. 13, federal ownership and administration must extend at least to any federal security interests, outstanding as of 1930, in lands falling within the scheme.

What, then, is the meaning of the word "lands" in para. 13 of the Agreement? My colleague Stevenson J. takes the position that it should be given a narrow interpretation so as to exclude mines and minerals and be limited to surface rights. I am led to a different conclusion as a result of a review of the structure of the 1917 and 1919 Acts.

Section 64 of the 1919 Act provides that grants and loans made under the 1917 Act were to continue upon their original terms and conditions. This continuation was unaffected by the revision of statutes in 1928. (See An Act respecting the Revised Statutes of Canada, S.C. 1924, c. 65, ss. 6-7.) Thus, in 1930 when the Agreement came into force, all outstanding security interests in land subject to the 1917 Act continued in effect upon their original terms and conditions. Since the 1917 Act, in contradistinction to the 1919 Act, was silent on the question of mines and minerals, unless those mines and minerals were specifically reserved to the federal government in the deed of sale, they were transferred to the grantee. It follows that any security interests held by the Board pursuant to the 1917 Act would extend to mines and minerals. These interests would have been continued through the 1919 Act and the revision of statutes. Since para. 13 of the Agreement was designed to preserve such security interests, the use of the word "lands" in that paragraph must extend to mines and minerals. Any other interpretation would have the effect of negating federal security interests in land securing loans made under the 1917 Act. The only definition of "lands" in para. 13 of the Agreement which preserves the federal interests under both the 1917 Act and the 1919 Act is one which includes mines and minerals.

The respondents contend that when the word "lands" is used elsewhere in the Agreement, it refers only to surface rights and not to all interests in real property. I do not believe it is necessary to address this argument. It must be remembered that the purpose of para. 13 of the Agreement was to preserve the federal government's security interests in land falling within the Soldier Settlement scheme. When that purpose is taken into account along with the structure and aim of the 1917 and 1919 Acts, I must conclude that para. 13 of the Agreement refers to both surface and mineral rights.

In 1930, when the Agreement came into force, the federal Crown had a valid security interest in the Land. Pursuant to s. 34(4) of the 1919 Act, this security interest, which was represented by the mortgage back from Lynn, secured the $2,000 outstanding on the purchase price of the Land. The $2,000 was thus an "advance" within the meaning of the 1919 Act. The mortgage was not discharged until 1935. By the operation of para. 13 of the Agreement, therefore, ownership and administration of the Land remained in federal hands.

The respondents contend, however, that para. 13 of the Agreement only preserved federal ownership and administration so long as the federal security interest existed. This position, they argue, is in keeping with the general purpose of the Agreement, namely the transfer of all lands to the provincial government. In my view, this submission cannot be accepted. To do so would require one to stretch the meaning of para. 13 of the Agreement to provide that there was only a temporary vesting in the federal Crown. Yet, para. 13 specifically provides that lands to which it refers "shall continue to be vested in and administered by" the federal government. This language is clear and unequivocal. By its terms, para. 13 provides that the federal Crown is to be the absolute administrator of such lands.

Conclusion

The transfer of the Land to Lynn in 1928 included the reservation of mines and minerals to the federal Crown. The Board was under no obligation to register this reservation under the LTA. To the extent that the LTA required such registration, it was inoperative. The federal Crown retained ownership and administration of the Land after the coming into force of the Agreement in 1930. This follows from the provisions of para. 13 of the Agreement which preserved federal interests in any land upon which security was held under the Soldier Settlement scheme. In 1930, when the Agreement came into force, the federal Crown held a mortgage in the Land pursuant to the 1919 Act. This mortgage was not discharged until 1935. By its terms, para. 13 of the Agreement preserved the entire federal interest in the Land, including the right to mines and minerals. No subsequent action has removed the federal interest in the mines and minerals in the Land. These interests remain vested in the federal Crown, represented by the Board.

Disposition

I would allow the appeal, set aside the order of the Court of Appeal and restore the order of the trial judge.

For the reasons outlined above, both constitutional questions should be answered in the negative.

Appeal dismissed with costs, La Forest and Cory JJ. dissenting.

Solicitor for the appellant: John C. Tait, Ottawa.

Solicitors for the respondents Fred King, Albert Snider and Fred Snider: Lucas, Bishop, Bowker & White, Edmonton.

Solicitor for the respondent the Attorney General for Alberta: The Department of the Attorney General, Edmonton.

Solicitor for the intervener the Attorney General of Manitoba: The Attorney General of Manitoba, Winnipeg.

Solicitor for the intervener the Attorney General for Saskatchewan: The Deputy Attorney General for Saskatchewan, Regina.