SUPREME COURT OF CANADA

[2008] 3 S.C.R. 166, 2008 SCC 58

Date: 20081024

Docket: 31622

Between:

Benoit Joseph Saulnier and

Bingo Queen Fisheries Limited

Appellants

and

Royal Bank of Canada, WBLI Inc., in its

capacity as receiver of Benoit Joseph Saulnier

and Bingo Queen Fisheries Limited, and

Goodman Rosen Inc., in its capacity as Trustee in

bankruptcy of Benoit Joseph Saulnier

Respondents

‑ and ‑

Attorney General of Canada, Seafood

Producers Association of Nova Scotia, Groundfish

Enterprise Allocation Council, BC Seafood Alliance,

Canadian Association of Prawn Producers

and Fisheries Council of Canada

Interveners

Coram: McLachlin C.J. and Bastarache,* Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.

Reasons for Judgment:

(paras. 1 to 53)

Binnie J. (McLachlin C.J. and LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ. concurring)

• Bastarache J. took no part in the judgment.

Saulnier v. Royal Bank of Canada, [2008] 3 S.C.R. 166, 2008 SCC 58

Benoit Joseph Saulnier and

Bingo Queen Fisheries Limited Appellants

v.

Royal Bank of Canada, WBLI Inc., in its

capacity as Receiver of Benoit Joseph Saulnier

and Bingo Queen Fisheries Limited, and

Goodman Rosen Inc., in its capacity as Trustee in

bankruptcy of Benoit Joseph Saulnier Respondents

and

Attorney General of Canada, Seafood

Producers Association of Nova Scotia, Groundfish

Enterprise Allocation Council, BC Seafood Alliance,

Canadian Association of Prawn Producers

and Fisheries Council of Canada Interveners

Indexed as: Saulnier v. Royal Bank of Canada

Neutral citation: 2008 SCC 58.

File No.: 31622.

2008: January 23; 2008: October 24.

Present: McLachlin C.J. and Bastarache,^*^ Binnie, LeBel, Deschamps, Fish, Abella, Charron and Rothstein JJ.

on appeal from the court of appeal for nova scotia court of appeal

Bankruptcy and insolvency — Property — Commercial fishing licences — Fisher signing general security agreement with bank — Fisher subsequently making assignment in bankruptcy — Whether fisher’s commercial fishing licences constitute “property” within scope of bankruptcy and insolvency legislation and within scope of personal property security legislation — Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, s. 2 “property” — Personal Property Security Act, S.N.S. 1995‑96, c. 13, s. 2(w), (ad).

S holds four fishing licences. In order to finance his fishing business, he signed a General Security Agreement (“GSA”) with a bank, as well as a guarantee for the debts of his company. The company entered into a parallel GSA. The GSAs gave the bank a security interest in “all . . . present and after acquired personal property including . . . Intangibles . . . and in all proceeds and renewals thereof”. In 2004, the fishing business faltered and S made an assignment in bankruptcy. The following year, the receiver and the trustee in bankruptcy signed an agreement to sell the four licences and other assets to a third party for $630,000, but S refused to sign the necessary documents. The trustee in bankruptcy and the bank brought an application for declaratory relief. S claimed that the commercial fishing licences did not constitute “property” available to a trustee under the federal Bankruptcy and Insolvency Act (“BIA”), or to a creditor who has registered a GSA under the Nova Scotia Personal Property Security Act (“PPSA”). For different reasons, both the trial judge and the Court of Appeal rejected this position.

Held: The appeal should be dismissed.

The task in this case is to interpret the definitions of “property” in s. 2 of the BIA and of “personal property” in s. 2 of the PPSA in a purposeful way having regard to their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. A fishing licence is unquestionably a major commercial asset. The holder of such a licence, issued at the discretion of the Minister of Fisheries and Oceans under s. 7(1) of the Fisheries Act, obtains a good deal more than merely permission to do that which would otherwise be unlawful. A s. 7(1) licence confers to the holder a right to engage in an exclusive fishery under the conditions imposed by the licence, and a proprietary right in the fish harvested and the earnings from their sale. The subject matter of the licence, coupled with a proprietary interest in the fish caught pursuant to its terms, bears a reasonable analogy to a common law profit à prendre which is undeniably a property right. While these elements of the licence do not wholly correspond to the full range of rights necessary to characterize something as “property” at common law, the issue is whether they are sufficient to qualify the “bundle of rights” conferred on S as property for the purposes of the BIA and PPSA. [16] [23] [28] [34] [43]

In an industry where holding one of a very restricted number of licences is a condition precedent to participation, the licence unlocks the value in the fishers’ other marine assets. While “commercial realities” cannot legitimate wishful thinking about the notion of “property” in the BIA and the PPSA, these statutes are largely commercial instruments which should be interpreted in a way best suited to enable them to accomplish their respective commercial purposes. [14] [42]

The BIA is intended to achieve certain objectives in the event of a bankruptcy which require, in general, that non‑exempt assets be made available to creditors. The s. 2 definition of “property” in the BIA should be construed accordingly to include a s. 7(1) licence. Parliament unambiguously signalled an intention to sweep up a variety of assets of the bankrupt not normally considered “property” at common law, and this intention must be respected if the purposes of the BIA are to be achieved. It is important to look at the substance of what is conferred, namely a licence to participate in the fishery coupled with a proprietary interest in the fish caught according to its terms and subject to the Minister’s regulations. While it is true that the proprietary interest in the fish is contingent on the fish first being caught, the existence of that contingency is contemplated in the BIA definition and is no more fatal to the licence’s proprietary status for BIA purposes than is the case with an equivalent contingency arising under a profit à prendre. It follows that the trustee was entitled to require S to execute the appropriate documentation to obtain a transfer of the fishing licences to the third party purchaser. [44] [46‑47] [49]

A holding that a fishing licence is property in the hands of the holder for limited statutory purposes does not fetter the Minister’s discretion under the Fisheries Act to issue, renew or cancel a fishing licence, according to the exigencies of the management of the fisheries. [48]

The fishing licence is also “personal property” within the meaning of s. 2 of the PPSA. The definition of “intangible” in that section includes an interest created by statute having the characteristics of a licence coupled with an interest at common law. The grant by the Minister of a licence, coupled with a proprietary interest in the fish caught, is thus sufficient to satisfy the PPSA definition. The registration is therefore valid to include the s. 7(1) licence and, in the absence of any other PPSA defence, the bank is entitled to proceed with its PPSA remedies. [51‑52]

Cases Cited

Distinguished: Re National Trust Co. and Bouckhuyt (1987), 1987 CanLII 4098 (ON CA), 61 O.R. (2d) 640; referred to: St. Anthony Seafoods Limited Partnership v. Newfoundland and Labrador (Minister of Fisheries and Aquaculture) (2004), 245 D.L.R. (4th) 597, 2004 NLCA 59; Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12; Jenkins, Re (1997), 1997 CanLII 808 (NS SC), 32 C.B.R. (4th) 262; Townsend, Re (2002), 2002 NSSC 303, 32 C.B.R. (4th) 318; Husky Oil Operations Ltd. v. Minister of National Revenue, 1995 CanLII 69 (SCC), [1995] 3 S.C.R. 453; C.I.B.C. v. Marathon Realty Co., 1987 CanLII 4910 (SK CA), [1987] 5 W.W.R. 236; Credit Suisse Canada v. 1133 Yonge Street Holdings Ltd. (1998), 1998 CanLII 6857 (ON CA), 41 O.R. (3d) 632; Noël (Syndic) (Re), [1994] Q.J. No. 978 (QL); Canadian Imperial Bank of Commerce v. Hallahan (1990), 1990 CanLII 8074 (ON CA), 69 D.L.R. (4th) 449; Bank of Montreal v. Bale (1992), 4 P.P.S.A.C. (2d) 114; The Queen in Right of British Columbia v. Tener, 1985 CanLII 76 (SCC), [1985] 1 S.C.R. 533; Waryk v. Bank of Montreal (1991), 1991 CanLII 945 (BC CA), 85 D.L.R. (4th) 514; British Columbia Packers Ltd. v. Sparrow, 1989 CanLII 2706 (BC CA), [1989] 4 C.N.L.R. 63; Buston v. Canada, 1993 CanLII 17340 (TCC), [1993] 2 C.T.C. 2720; Kelly v. Kelly (1990), 92 A.L.R. 74; Pennington v. McGovern (1987), 45 S.A.S.R. 27; Harper v. Minister for Sea Fisheries (1989), 168 C.L.R. 314; Sugarman (in trust) v. Duca Community Credit Union Ltd. (1999), 1999 CanLII 800 (ON CA), 44 O.R. (3d) 257; Foster (Re) (1992), 1992 CanLII 7428 (ON SC), 89 D.L.R. (4th) 555; Re Rae, [1995] B.C.C. 102; Joliffe v. The Queen, 1985 CanLII 5514 (FC), [1986] 1 F.C. 511; Bennett, Re (1988), 1988 CanLII 3029 (BC SC), 67 C.B.R. (N.S.) 314; Ward (Bankrupt), Re (2000), 229 N.B.R. (2d) 121; Dugas, Re (2004), 50 C.B.R. (4th) 200, 2004 NBQB 200; Saskatoon Auction Mart Ltd. v. Finesse Holsteins (1992), 4 P.P.S.A.C. (2d) 67; G. Slocombe & Associates Inc. v. Gold River Lodges Ltd. (2001), 2 P.P.S.A.C. (3d) 324, 2001 BCSC 840; Re Celtic Extraction Ltd., [2000] 2 W.L.R. 991; Swift v. Dairywise Farms Ltd., [2000] 1 W.L.R. 1177; Veffer v. Canada (Minister of Foreign Affairs), [2008] 1 F.C.R. 641, 2007 FCA 247.

Statutes and Regulations Cited

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, ss. 2 “property”, 67(1).

Fisheries Act, R.S.C. 1985, c. F‑14, ss. 7(1), 9.

Fishery (General) Regulations, SOR/93‑53, ss. 2 “document”, 16.

Personal Property Security Act, S.N.S. 1995‑96, c. 13, ss. 2(w), (ad).

Authors Cited

Canada. Fisheries and Oceans. Commercial Fisheries Licensing Policy for Eastern Canada, 1996. Ottawa: Minister of Supply and Services, 1996.

Honoré, A. M. “Ownership”, in A. G. Guest, ed., Oxford Essays in Jurisprudence: A Collaborative Work. London: Oxford University Press, 1961.

Johnson, Tom. “Security Interests in Discretionary Licences Under the Ontario Personal Property Security Act” (1993), 8 B.F.L.R. 123.

Megarry, Robert, and H. W. R. Wade. The Law of Real Property, 4th ed. London: Sweet & Maxwell, 1975.

Mossman, Mary Jane, and William F. Flanagan, Property Law: Cases and Commentary, 2nd ed. Toronto: Emond Montgomery, 2004.

Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.

Telfer, Thomas G. W. “Statutory Licences and the Search for Property: The End of the Imbroglio?” (2007), 45 Can. Bus. L.J. 224.

Ziegel, Jacob S. “Regulated Licences and the OPPSA: No End in Sight to the Judicial Imbroglio” (1998), 30 Can. Bus. L.J. 284.

Ziegel, Jacob S., and David L. Denomme. The Ontario Personal Property Security Act: Commentary and Analysis. Aurora, Ont.: Canada Law Book, 1994.

Ziegel, Jacob S., Benjamin Geva and R. C. C. Cuming. Commercial and Consumer Transactions: Cases, Text and Materials, 3rd ed., vol. III, Secured Transactions in Personal Property, Suretyships and Insolvency by Jacob S. Ziegel and R. C. C. Cuming. Toronto: Emond Montgomery, 1995.

Ziff, Bruce. Principles of Property Law, 2nd ed. Scarborough, Ont.: Carswell, 1996.

APPEAL from a judgment of the Nova Scotia Court of Appeal (Bateman, Hamilton and Fichaud JJ.A.) (2006), 246 N.S.R. (2d) 239, 780 A.P.R. 239, 271 D.L.R. (4th) 34, 21 B.L.R. (4th) 1, 22 C.B.R. (5th) 38, 10 P.P.S.A.C. (3d) 221, [2006] N.S.J. No. 307 (QL), 2006 CarswellNS 323, 2006 NSCA 91, affirming in part a decision of Kennedy C.J.S.C. (2006), 241 N.S.R. (2d) 96, 767 A.P.R. 96, 17 C.B.R. (5th) 182, [2006] N.S.J. No. 38 (QL), 2006 CarswellNS 41, 2006 NSSC 34. Appeal dismissed.

Andrew S. Nickerson, Q.C., for the appellants.

Carl A. Holm, Q.C., and Christian Weisenburger, for the respondents.

Peter M. Southey and Christine Mohr, for the intervener the Attorney General of Canada.

Richard F. Southcott and Andrea F. Baldwin, for the interveners the Seafood Producers Association of Nova Scotia, the Groundfish Enterprise Allocation Council, the BC Seafood Alliance, the Canadian Association of Prawn Producers and the Fisheries Council of Canada.

The judgment of the Court was delivered by

1Binnie J. — The question raised by this appeal is whether a commercial fishing licence, which enables a fisher to engage in a regulated industry where participation is otherwise prohibited, constitutes “property” available to a trustee under the federal Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”), or a creditor who has registered a General Security Agreement (“GSA”) under the Nova Scotia Personal Property Security Act, S.N.S. 1995-96, c. 13 (“PPSA”).

2The appellant, a bankrupt commercial fisherman, and his wholly owned company, the appellant Bingo Queen Fisheries Limited, say that a fishing licence is merely a “privilege” to do that which would otherwise be illegal. As such, it does not pass to the respondent Royal Bank under the GSA which the appellants signed, nor to the respondent trustee in bankruptcy. In the result, they say, the appellant Saulnier, who holds the four fishing licences in question, is entitled to carry on fishing despite the bankruptcy, leaving the creditors to fight over the remaining assets. Without the licences the assets do not come close to covering the liabilities.

3The appellants were unsuccessful in the courts of Nova Scotia. The trial judge based his decision on “commercial reality”. The Nova Scotia Court of Appeal agreed in the result but declined to base its decision on “commercial reality”. Instead it looked to the rights acquired by the holder of a fishing licence to the earnings from the catch, and to the administrative law principles which the court felt would govern the exercise of the Minister’s discretion in any application for renewal or transfer of the licence under the federal Fishery (General) Regulations, SOR/93-53 (“Regulations”). Collectively, in its opinion, the components of this “bundle of rights” invested the licence holder with property-like rights sufficient to bring the licences within the bankruptcy regime and the PPSA.

4For different reasons, and on a more limited basis, I also agree that the appeal must be dismissed.

I. Facts

5The appellant Saulnier holds four fishing licences (lobster, herring, swordfish and mackerel). Like most fishers, he required loans to finance his business. Accordingly, in April 1999, he signed a GSA with the Royal Bank. In January 2003, he signed a guarantee (limited to $215,000) to the Royal Bank for the debts of the appellant Bingo Queen, a company of which he was the sole owner. At that time, Bingo Queen also entered into a GSA. The standard form GSA gave the Bank a security interest in: “all . . . present and after acquired personal property including . . . Intangibles . . . and in all proceeds and renewals thereof”. The GSA also specified that the term “intangible” would be interpreted according to its definition in the PPSA. The GSA contemplated a listing of specific property in Schedule C but in the case of both GSAs in question Schedule C was left blank.

6In 2004, the appellants’ fishing business faltered. As of July 6, Mr. Saulnier owed the Bank $120,449, and Bingo Queen owed $177,282. On July 8, Saulnier made an assignment in bankruptcy. His Statement of Affairs under the BIA showed liabilities of $400,330, of which about $250,000 was owed to the Royal Bank. The trial judge found that according to the evidence, Saulnier’s four fishing licences had a market value in excess of $600,000. This amount, if available to creditors, would be sufficient to discharge all debts and provide a surplus.

7On November 18, 2004, four months after the bankruptcy, Saulnier purported to lease his lobster licence to Horizon Fisheries Limited, whose principal owner was his common law spouse. In March 2005, the receiver and the trustee in bankruptcy signed an agreement to sell Saulnier’s fishing licences and other assets to a third party for $630,000 (the sale was conditional on the trustee being able to effect a transfer of the licences). Saulnier refused to sign the necessary documents. The trustee in bankruptcy and the Royal Bank brought the present application for declaratory relief.

II. Relevant Statutory Provisions

8Fisheries Act, R.S.C. 1985, c. F-14

7. (1) Subject to subsection (2), the Minister may, in his absolute discretion, wherever the exclusive right of fishing does not already exist by law, issue or authorize to be issued leases and licences for fisheries or fishing, wherever situated or carried on.

8. The Minister may suspend or cancel any lease or licence issued under the authority of this Act, if

(a) the Minister has ascertained that the operations under the lease or licence were not conducted in conformity with its provisions; and

(b) no proceedings under this Act have been commenced with respect to the operations under the lease or licence.

Fishery (General) Regulations, SOR/93‑53

2. . . .

“document” means a licence, fisher’s registration card or vessel registration card that grants a legal privilege to engage in fishing or any other activity related to fishing and fisheries;

16. (1) A document is the property of the Crown and is not transferable.

(2) The issuance of a document of any type to any person does not imply or confer any future right or privilege for that person to be issued a document of the same type or any other type.

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3

2. . . .

“property” means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property;

67. (1) The property of a bankrupt divisible among his creditors shall not comprise

(a) property held by the bankrupt in trust for any other person,

(b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides, or

(b.1) such goods and services tax credit payments and prescribed payments relating to the essential needs of an individual as are made in prescribed circumstances and are not property referred to in paragraph (a) or (b),

but it shall comprise

(c) all property wherever situated of the bankrupt at the date of his bankruptcy or that may be acquired by or devolve on him before his discharge, and

(d) such powers in or over or in respect of the property as might have been exercised by the bankrupt for his own benefit.

Personal Property Security Act, S.N.S. 1995‑96, c. 13

2. In this Act,

(w) “intangible” means personal property that is not goods, a document of title, chattel paper, a security, an instrument or money;

(ad) “personal property” means goods, a document of title, chattel paper, a security, an instrument, money or an intangible;

III. Judicial History

A. Supreme Court of Nova Scotia (2006), 241 N.S.R. (2d) 96, 2006 NSSC 34

9Kennedy C.J.S.C. found that “the fair and correct approach is to characterize the federal fishing licences based on the reality of the commercial arena” (para. 49). He added that “[t]o accept the argument . . . that there can be no property in these licences in the hands of the holder, because of ministerial control would . . . foster an unrealistic legal condition based on an historic definition of property that ignores what is actually happening in the commercial world that the law must serve” (para. 53). In his view, the bundle of rights conferred by the licences “constitute marketable property capable of providing security” (para. 54) and also “property for purposes of the BIA” (para. 57).

B. Nova Scotia Court of Appeal (Bateman, Hamilton and Fichaud JJ.A.) (2006), 246 N.S.R. (2d) 239, 2006 NSCA 91

10Fichaud J.A., writing for the court, found that while commercial reality and the market value attached to licences “may be a determinant in the accounting or appraisal contexts” (para. 17), the legal issue should be determined with reference to the definitions of “property” and “personal property” in the BIA and the PPSA.

11Based on his consideration of ss. 2 and 16(1) of the Regulations, he concluded that the licence itself is the property of the Crown, and not of the holder. However, “during the term of a license, a licensee has a beneficial interest in the earnings from use of the license. That interest, and the right to those earnings, pass to the trustee in bankruptcy of the license holder” (para. 38). An important issue, in his view, was whether Mr. Saulnier had any rights relating to the renewal or reissuance of his licences, and whether these rights pass to the trustee. He considered it important that the holder of a fishing licence not only had the right to request a renewal but a right not to be arbitrarily denied it. In these circumstances

[t]he license holder has a legally recognized right — limited though it may be — that constitutes intangible personal property. . . . The security holder or trustee in bankruptcy takes the license holder’s limited legal right or beneficial interest. The security holder or trustee takes [it] subject to all the risks of non-renewal that applied to the license holder — i.e. non-renewal on grounds that are not arbitrary. This ensures that the interest of the security holder or trustee in bankruptcy does not degrade the regulatory scheme of the [fisheries] legislation . . . . [para. 49]

12Fichaud J.A. cited cases in which bad-faith ministerial decisions had given rise to damages or had been judicially reviewed by the courts including St. Anthony Seafoods Limited Partnership v. Newfoundland and Labrador (Minister of Fisheries and Aquaculture) (2004), 245 D.L.R. (4th) 597, 2004 NLCA 59. On the strength of these decisions, he found that “[a] legal right to damages or to set aside a ministerial decision is, in my view, intangible personal property under the broad definition in s. 2 of the BIA” (para. 52). Moreover, while “[t]he PPSA’s framework to define ‘intangible’ is less substantial than in the BIA”, the result concerning the fishing licences is the same (para. 61). The holder’s rights in the fishing licences are also personal property (“intangibles”) for the purposes of the PPSA, in his view.

IV. Analysis

13A commercial fisher with a ramshackle boat and a licence to fish is much better off financially than a fisher with a great boat tied up at the wharf with no licence. Financial institutions looking for readily marketable loan collateral want to snap up licences issued under the federal Regulations, which in the case of the lobster fishery can have a dockside value that fluctuates up to a half a million dollars or more. Fishers want to offer as much collateral as they can to obtain the loans needed to acquire the equipment to enable them to put to sea.

14The Minister’s claim to more or less unfettered discretion to renew or not to renew fishing licences each year is based on the legislation as interpreted in Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12. In that case, Major J. wrote for the Court:

Canada’s fisheries are a “common property resource”, belonging to all the people of Canada. Under the Fisheries Act, it is the Minister’s duty to manage, conserve and develop the fishery on behalf of Canadians in the public interest (s. 43). Licensing is a tool in the arsenal of powers available to the Minister under the Fisheries Act to manage fisheries. [para. 37]

Nevertheless, the fact is that the stability of the fishing industry depends on the Minister’s predictable renewal of such licences year after year. Few fishers expect to see their loans paid off with the proceeds of a single year’s catch. In an industry where holding one of a very restricted number of licences is a condition precedent to participation, the licence unlocks the value in the fishers’ other marine assets.

15Yet the appellants are correct to say that just because a “right” or “power” to fish has commercial value, it does not follow that licences also constitute property within the scope of the BIA or PPSA. Earlier trial level decisions in Nova Scotia had held that fishing licences were not property and were not claimable by the trustee in bankruptcy. See e.g. Jenkins, Re (1997), 1997 CanLII 808 (NS SC), 32 C.B.R. (4th) 262 (N.S.S.C.), and Townsend, Re (2002), 2002 NSSC 303, 32 C.B.R. (4th) 318 (N.S.S.C.). We cannot wish away the statutory language, however, much practical sense is reflected in the result reached by the courts below.

A. A Question of Statutory Interpretation

16The questions before the Court essentially raise a dispute about statutory interpretation. We are not concerned with the concept of “property” in the abstract. The notion of “property” is, in any event, a term of some elasticity that takes its meaning from the context. The task is to interpret the definitions in the BIA and PPSA in a purposeful way having regard to “their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” (R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at p. 1). Because a fishing licence may not qualify as “property” for the general purposes of the common law does not mean that it is also excluded from the reach of the statutes. For particular purposes Parliament can and does create its own lexicon.

17In determining the scope of the definition of “property” in a statutory context, it is necessary to have regard to the overall purpose of the BIA, which is to regulate the orderly administration of the bankrupt’s affairs, keeping a balance between the rights of creditors and the desirability of giving the bankrupt a clean break: Husky Oil Operations Ltd. v. Minister of National Revenue, 1995 CanLII 69 (SCC), [1995] 3 S.C.R. 453, at para. 7. The exemption of designated property from distribution among creditors under s. 67(1) is to allow the bankrupt to continue a living pending discharge and, when discharged, to make a fresh start. Those exemptions do not, it seems to me, bear much similarity to the proposed “exempting” of a valuable asset such as a commercial fishing licence. If Saulnier had “sold” his licences prior to discharge the cash proceeds would, it seems, be after-acquired property that would be divided amongst his creditors under s. 67(1)(c) of the BIA.

18Within this overall purpose an appropriate interpretation must be given to the following definition of “property” in s. 2 of the BIA:

“property” means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property;

19The PPSA, on the other hand, is designed to facilitate the creation of a security interest to enable holders of personal property to use it as collateral, and to enable lenders to predict accurately the priority of their claims against the assets in question.

Proceeding from the premise that all security agreements are designed to accomplish the same end and that borrowers usually have little bargaining power, the PPSA prescribes a detailed system for the regulation of default rights and remedies which is designed to provide consistency and fairness in the enforcement of security interests.

(J. S. Ziegel, B. Geva and R. C. C. Cuming, Commercial and Consumer Transactions: Cases, Text and Materials (3rd ed. 1995), vol. III, at p. 18)

To the same effect see C.I.B.C. v. Marathon Realty Co., 1987 CanLII 4910 (SK CA), [1987] 5 W.W.R. 236 (Sask. C.A.), at p. 247, and Credit Suisse Canada v. 1133 Yonge Street Holdings Ltd. (1998), 1998 CanLII 6857 (ON CA), 41 O.R. (3d) 632 (C.A.).

20Within that overall purpose, an interpretation must be given to the somewhat circular definitions given in s. 2 of the PPSA:

(w) “intangible” means personal property that is not goods, a document of title, chattel paper, a security, an instrument or money;

(ad) “personal property” means goods, a document of title, chattel paper, a security, an instrument, money or an intangible;

21Of course a creditor/lender who enters into a security agreement that is not registerable under the PPSA may still have contractual rights against the borrower. However, the objective of lenders is to achieve priority (or to know in advance what priority they can achieve) over other claimants. Otherwise a miscreant could enter into a series of unregistered financing agreements purporting to use and re-use the same boat and licence as collateral.

B. The Interest Conferred by a Fishing Licence

22The fishery is a public resource. The fishing licence permits the holder to participate for a limited time in its exploitation. The fish, once caught, become the property of the holder. Accordingly, the fishing licence is more than a “mere licence” to do that which is otherwise illegal. It is a licence coupled with a proprietary interest in the harvest from the fishing effort contingent, of course, on first catching it.

23It is extremely doubtful that a simple licence could itself be considered property at common law. See generally A. M. Honoré, “Ownership”, in A. G. Guest, ed., Oxford Essays in Jurisprudence (1961). On the other hand, if not property in the common law sense, a fishing licence is unquestionably a major commercial asset.

24Successive Ministers of Fisheries have issued policies underscoring their support for stability in the fishing industry, which necessitates continuity in the ranks of licence holders. Despite a policy favouring stability and continuity, the Minister’s Commercial Fisheries Licensing Policy for Eastern Canada, 1996 seeks to guard against any notion that such licences should be read as conferring a property interest on licence holders, which could possibly impose a fetter on the exercise of the Minister’s “absolute discretion” in their issuance. Thus s. 5(a) of the Licensing Policy states:

A “licence” grants permission to do something which, without such permission, would be prohibited. As such, a licence confers no property or other rights which can be legally sold, bartered or bequeathed. Essentially, it is a privilege to do something, subject to the terms and conditions of the licence.

The Minister’s statement of policy expresses a departmental position that has no regulatory status and which, in the eye of the law, does not add to or subtract from his “absolute discretion” under s. 7(1) of the Fisheries Act to issue licences. Nor does this informal policy determine whether the licence can be construed as “property” for the purposes of the BIA and PPSA. The reality, as found by the courts below, is that the commercial market operates justifiably on the assumption that licences can be transferred on application to the Minister with the consent of the existing licence holder, that licences will be renewed from year to year, and that the Minister’s policy will not be changed to the detriment of the existing licence holders. Thus, despite the Minister’s protestations, the market attributes a high market value to what might otherwise be seen, as some of the cases put it, as a “transitory and ephemeral” right.

25The jurisprudence indicates a number of different approaches.

(i) The Traditional “Property” Approach

26The appellants rely on the decision of the Ontario Court of Appeal in Re National Trust Co. and Bouckhuyt (1987), 1987 CanLII 4098 (ON CA), 61 O.R. (2d) 640. In that case, the court dismissed the trust company’s claim that a valuable tobacco quota listed in a chattel mortgage could properly be made the subject of Ontario PPSA registration. Cory J.A., as he then was, referred to some traditional indicia of rights of property and concluded that renewal of the tobacco quota year to year was subject to the “unfettered discretion of the [Tobacco B]oard” and that the quota itself was “transitory and ephemeral” (pp. 647-48). Accordingly, the quota did “not constitute intangible personal property as that term is utilized” in the Ontario PPSA (p. 649). The Quebec Court of Appeal reached a similar conclusion under the BIA in relation to a fishing licence in Noël (Syndic) (Re), [1994] Q.J. No. 978 (QL).

27The Bouckhuyt approach has been followed in some of the Ontario PPSA cases; see e.g. Canadian Imperial Bank of Commerce v. Hallahan (1990), 1990 CanLII 8074 (ON CA), 69 D.L.R. (4th) 449 (Ont. C.A.), and Bank of Montreal v. Bale (1992), 4 P.P.S.A.C. (2d) 114 (Ont. C.A.), but it has been criticized as insufficiently sensitive to the particular context of personal property security legislation, which (so the critics say) commands a broader concept of intangible property if the purposes of that legislation are to be achieved. See e.g. J. S. Ziegel and D. L. Denomme, The Ontario Personal Property Security Act: Commentary and Analysis (1994), at pp. 41-42. As discussed below, more recent cases have tended to restrict Bouckhuyt to its facts. Even in the “regulatory cases” the courts now adopt a more purposeful approach to the definitions in the BIA and in personal property security legislation, and consider traditional common law notions of property as less of a stumbling block to recognition of licences and quotas as “property” for statutory purposes. I agree with this evolution.

28In any event, there is a significant difference between a quota (as in Bouckhuyt) and a fishing licence, which bears some analogy to a common law profit à prendre which is undeniably a property right. A profit à prendre enables the holder to enter onto the land of another to extract some part of the natural produce, such as crops or game birds (B. Ziff, Principles of Property Law (2nd ed. 1996), at pp. 333-34; The Queen in Right of British Columbia v. Tener, 1985 CanLII 76 (SCC), [1985] 1 S.C.R. 533; M. J. Mossman and W. F. Flanagan, Property Law: Cases and Commentary (2nd ed. 2004), at p. 545). Equally, a “profit of piscary” (being a type of profit à prendre) is recognized as a property right to fish in the privately owned waters of another.

29Fichaud J.A. in the court below noted numerous cases where it was held that “during the term of a license the license holder has a beneficial interest to the earnings from his license” (para. 37). See also: Waryk v. Bank of Montreal (1991), 1991 CanLII 945 (BC CA), 85 D.L.R. (4th) 514 (B.C.C.A.), at pp. 521-24; British Columbia Packers Ltd. v. Sparrow, 1989 CanLII 2706 (BC CA), [1989] 4 C.N.L.R. 63 (B.C.C.A.), at p. 68; Buston v. Canada, 1993 CanLII 17340 (TCC), [1993] 2 C.T.C. 2720 (T.C.C.), at pp. 2733-34. This is another way of expressing substantially the same idea. The earnings flow from the catch which is lawfully reduced to possession at the time of the catch, as is the case with a profit à prendre.

30Some analytical comfort may be drawn in this connection from the observations of R. Megarry and H. W. R. Wade on The Law of Real Property (4th ed. 1975), at p. 779:

A licence may be coupled with some proprietary interest in other property. Thus the right to enter another man’s land to hunt and take away the deer killed, or to enter and cut down a tree and take it away, involves two things, namely, a licence to enter the land and the grant of an interest (a profit à prendre) in the deer or tree.

And at p. 822:

A right to “hawk, hunt, fish and fowl” may thus exist as a profit, for this gives the right to take creatures living on the soil which, when killed, are capable of being owned.

(See also Kelly v. Kelly (1990), 92 A.L.R. 74 (H.C.); Pennington v. McGovern (1987), 45 S.A.S.R. 27 (S.C.).)

31The analogy of a commercial fishing licence to the profit à prendre has already been noted by the High Court of Australia in Harper v. Minister for Sea Fisheries (1989), 168 C.L.R. 314. In that case a challenge was made to the authority of the Tasmanian government to issue a licence to fish for abalone, inter alia, in the Australian fishing zone beyond the coastal waters of the state of Tasmania. The facts are far removed from our case, as is the relevant statutory regime, yet of interest are the observations of Brennan J. with whom Dawson, Toohey and McHugh JJ. concurred:

A fee paid to obtain such a privilege is analogous to the price of a profit à prendre; it is a charge for the acquisition of a right akin to property. Such a fee may be distinguished from a fee exacted for a licence merely to do some act which is otherwise prohibited (for example, a fee for a licence to sell liquor) where there is no resource to which a right of access is obtained by payment of the fee. [p. 335]

32The concurring judgment of Mason C.J., Deane and Gaudron JJ. pointed out that notwithstanding its resemblance in some respects to a profit à prendre, the fishing licence is nevertheless a statutory creation:

What was formerly in the public domain is converted into the exclusive but controlled preserve of those who hold licences. The right of commercial exploitation of a public resource for personal profit has become a privilege confined to those who hold commercial licences. This privilege can be compared to a profit à prendre. In truth, however, it is an entitlement of a new kind created as part of a system for preserving a limited public natural resource . . . . [p. 325]

33In my view these observations are helpful. A fishing licence is, no doubt, a creature of the Fisheries Act and its Regulations. Our Court has already emphasized the broad scope and discretion of the Minister in relation to such licences in Comeau’s Sea Foods. Nevertheless, there are important points of analogy between the fishing licences issued to the appellant Saulnier and the form of common law property called a profit à prendre, which may include a profit of piscary. If the question were whether a fishing licence is a profit à prendre, the answer would almost certainly be no. But that is not the question. The question before us is whether the fishing licences thus conceived can satisfy the statutory definition of the BIA and PPSA, purposefully interpreted.

34My point is simply that the subject matter of the licence (i.e. the right to participate in a fishery that is exclusive to licence holders) coupled with a proprietary interest in the fish caught pursuant to its terms, bears a reasonable analogy to rights traditionally considered at common law to be proprietary in nature. It is thus reasonably within the contemplation of the definition of “property” in s. 2 of the BIA, where reference is made to a “profit, present or future, vested or contingent, in, arising out of or incident to property”. In this connection the property in question is the fish harvest.

35Of course, the holder’s rights under a fishing licence are limited in time, place and the manner of their exercise by the Fisheries Act and Regulations. To say that the fishing licence is coupled with a proprietary interest does not encumber the Minister’s discretion with proprietary fetters. The analogy used for present purposes does not prevail over the legislation. The licence is no more and no less than is described in the relevant legislation. Nevertheless, during its lifetime, however fragile, the fishing licence clearly confers something more than a “mere” permission to do something which is otherwise illegal.

(ii) The Regulatory Approach

36Bouckhuyt resulted in a line of cases in which licences and quotas were held to be intangible property (or not) according to the degree of renewal discretion vested in the issuing authority. In Sugarman (in trust) v. Duca Community Credit Union Ltd. (1999), 1999 CanLII 800 (ON CA), 44 O.R. (3d) 257 (C.A.), the court distinguished Bouckhuyt on the basis that the authority issuing nursing home licences was bound to grant licences to operators that qualified, with little discretion to refuse, and an administrative appeal procedure in the event issuance or renewal was refused. See also Foster (Re) (1992), 1992 CanLII 7428 (ON SC), 89 D.L.R. (4th) 555 (Ont. Ct. (Gen. Div.)), at pp. 564-65. The Nova Scotia Court of Appeal in the present case adopted a variant of the “regulatory” approach in holding that a licence holder’s ability to request a renewal or reissuance of a licence to its designate, and to resist an arbitrary denial by the Minister, forms part of a “bundle of rights” which collectively constitute a type of property in which a security interest can be taken. A somewhat similar approach was taken in the English case of Re Rae, [1995] B.C.C. 102, where the Court of Chancery held that a Minister’s stated policy of renewing licences (similar to the policy in Canada) created what the Minister herself described as an “entitlement” sufficient to bring the fishing licence into the bankrupt’s estate. It should be noted, however, that under the English legislation, unlike the Canadian legislation, a licence is issued “in respect of a named vessel”, and the court was therefore able to say that the licence was an interest “incidental to property, namely his vessels” (p. 113).

37In my view, the debate about the extent to which licences are “transitory and ephemeral” is of limited value. A lease of land for one day or one hour is undeniably a property interest, as is a lease terminable at pleasure. A third party may be willing to pay “key money” to take over a shop lease that is soon to expire in the expectation (reasonable or not) that a renewal will be forthcoming. Uncertainties of renewal do not detract from the interest presently possessed by the holder, but nor does an expectation of renewal based on a Minister’s policy which could change tomorrow, transform a licence into a property interest.

38A difficulty with the “regulatory approach” is that there are no clear criteria to determine how much “fetter” on the issuing authority’s discretion is enough to transform a “mere licence” into some sort of interest sufficient to satisfy the statutory definitions in the BIA and the PPSA. In Bouckhuyt, the fetters on the authority issuing tobacco quota were considered too weak, the discretion too great, to qualify the tobacco quota as Ontario PPSA “property”. In Sugarman and Foster the “fetters” placed on the issuing authorities of nursing home licences and taxi licences, respectively, were thought to be enough to confer a proprietary interest within the terms of the Ontario PPSA. The regulatory frameworks in all three cases were different to be sure, but at what point does a licence that does not qualify under personal property security legislation become transformed into a qualifying licence? See generally T. Johnson, “Security Interests in Discretionary Licences Under the Ontario Personal Property Security Act” (1993), 8 B.F.L.R. 123, at p. 240; J. S. Ziegel, “Regulated Licences and the OPPSA: No End in Sight to the Judicial Imbroglio” (1998), 30 Can. Bus. L.J. 284, at p. 284. The cases do not suggest an answer. No doubt criteria will emerge more clearly as cases that rely on a “regulatory approach” evolve. In this respect, however, I do not believe the “judicial review” paradigm offered by the Nova Scotia Court of Appeal in this case is helpful. The Regulations permit anyone to apply for a fisheries licence and everyone is entitled to a ministerial decision that complies with procedural fairness. I cannot agree that these elements are capable, as such, of constituting a licence “property” in the hands of a holder.

39In any event, I agree with the observation adopted by Major J. in Comeau’s Sea Foods that he could not find in the fisheries legislation any legal underpinning for the “vesting” of an interest in a licence “beyond the rights which it gives for the year in which it was issued” (para. 33). See also Joliffe v. The Queen, 1985 CanLII 5514 (FC), [1986] 1 F.C. 511 (T.D.), at p. 520; Bennett, Re (1988), 1988 CanLII 3029 (BC SC), 67 C.B.R. (N.S.) 314 (B.C.S.C.); Ward (Bankrupt), Re (2000), 229 N.B.R. (2d) 121 (Q.B.), and Dugas, Re (2004), 50 C.B.R. (4th) 200, 2004 NBQB 200. To the extent the regulatory cases are considered relevant here they do not assist the appellants, in my opinion. Section 7(1) of the Fisheries Act says that the Minister’s discretion is “absolute”.

40However, I do not believe the prospect of renewal, whether or not subject to an “unfettered” discretion, is determinative. For present purposes the appellants do not have to prove a renewal or even the reasonable prospect of it. The question under the PPSA is whether the holder (in this case the appellant Saulnier) had a qualifying interest in the licence either at the time he entered into a GSA with the Royal Bank in April 1999, or at the time the Bank sought to realize on Saulnier’s after-acquired property, and the question under the BIA is whether he had a qualifying interest within the meaning of that Act when he made an assignment in bankruptcy on July 8, 2004.

(iii) The “Commercial Realities” Approach

41This approach is well illustrated by the trial decision of Kennedy C.J.S.C. in this case, who put the argument succinctly:

That evidence confirms my understanding, that on the east coast of Canada fishing licenses, particularly for lobster, are commonly exchanged between fishermen for a great deal of money.

Fishing vessels of questionable value are traded for small fortunes because of the licences that are anticipated to come with them.

To ignore commercial reality would be to deny creditors access to something of significant value in the hands of the bankrupt. That would be both artificial and potentially inequitable. [paras. 51-52 and 58]

Similar views have been expressed in other licensing contexts: see Saskatoon Auction Mart Ltd. v. Finesse Holsteins (1992), 4 P.P.S.A.C. (2d) 67 (Sask. Q.B.); G. Slocombe & Associates Inc. v. Gold River Lodges Ltd. (2001), 2 P.P.S.A.C. (3d) 324, 2001 BCSC 840, at para. 8; and the English cases of Re Celtic Extraction Ltd., [2000] 2 W.L.R. 991 (C.A.), at p. 1000, and Swift v. Dairywise Farms Ltd., [2000] 1 W.L.R. 1177 (Ch.).

42The criticism of this approach is that many things that have commercial value do not constitute property, while the value of some property may be minimal. There is no necessary connection between proprietary status and commercial value. See generally T. G. W. Telfer, “Statutory Licences and the Search for Property: The End of the Imbroglio?” (2007), 45 Can. Bus. L.J. 224, at p. 238. I agree with the Court of Appeal that “commercial realities” cannot legitimate wishful thinking about the notion of “property” in the BIA and the PPSA, although commercial realities provide an appropriate context in which to interpret the statutory provisions. The BIA and the PPSA are, after all, largely commercial statutes which should be interpreted in a way best suited to enable them to accomplish their respective commercial purposes.

(iv) The Preferred Approach

43As described above, the holder of a s. 7(1) licence acquires a good deal more than merely permission to do that which would otherwise be unlawful. The holder acquires the right to engage in an exclusive fishery under the conditions imposed by the licence and, what is of prime importance, a proprietary right in the wild fish harvested thereunder, and the earnings from their sale. While these elements do not wholly correspond to the full range of rights necessary to characterize something as “property” at common law, the question is whether (even leaving aside the debate about the prospects of renewal) they are sufficient to qualify the “bundle of rights” the appellant Saulnier did possess as property for purposes of the statutes.

(a) Fishing Licences Qualify as Property Within the Scope of

Section 2 of the BIA

44For ease of reference I repeat the relevant part of s. 2:

“property” means any type of property, whether situated in Canada or elsewhere, and includes money, goods, things in action, land and every description of property, whether real or personal, legal or equitable, as well as obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, in, arising out of or incident to property;

The terms of the definition are very wide. Parliament unambiguously signalled an intention to sweep up a variety of assets of the bankrupt not normally considered “property” at common law. This intention should be respected if the purposes of the BIA are to be achieved.

45Reliance was placed on s. 16 of the Regulations which provides that a fishing licence is a “document” which is “the property of the Crown and is not transferable”. From this it was inferred that the licence, in its commercial dimension, is declared by the Regulations to be a property right in the hands of the Crown. I think s. 16 merely says that the Regulations contemplate that the documentation of the licence (as opposed to the licence itself) is the property of the Crown, in the same way that a Canadian Passport is declared to be the property of the Crown, not the holder: Veffer v. Canada (Minister of Foreign Affairs), [2008] 1 F.C.R. 641, 2007 FCA 247, at para. 6. A fisher whose licence is suspended or revoked cannot refuse the Minister’s demand for a return of the documentation on the basis the Minister gave it to him and it is now his property.

46I prefer to look at the substance of what was conferred, namely a licence to participate in the fishery coupled with a proprietary interest in the fish caught according to its terms and subject to the Minister’s regulation. As noted earlier, the BIA is intended to fulfill certain objectives in the event of a bankruptcy which require, in general, that non-exempt assets be made available to creditors. The s. 2 definition of property should be construed accordingly to include a s. 7(1) fishing licence.

47It is true that the proprietary interest in the fish is contingent on the fish first being caught, but the existence of that contingency is contemplated in the BIA definition and is no more fatal to the proprietary status for BIA purposes than is the case with the equivalent contingency arising under a profit à prendre, which is undeniably a property interest.

48Counsel for the Attorney General of Canada was greatly concerned that a holding that the fishing licence is property in the hands of the holder even for limited statutory purposes might be raised in future litigation to fetter the Minister’s discretion, but I do not think this concern is well founded. The licence is a creature of the regulatory system. Section 7(1) of the Fisheries Act speaks of the Minister’s “absolute discretion”. The Minister gives and the Minister (when acting properly within his jurisdiction under s. 9 of the Act) can take away, according to the exigencies of his or her management of the fisheries. The statute defines the nature of the holder’s interest, and this interest is not expanded by our decision that a fishing licence qualifies for inclusion as “property” for certain statutory purposes.

49It follows that in my view the trustee was entitled to require the appellant Saulnier to execute the appropriate documentation to obtain a transfer of the fishing licences to the third party purchaser.

50It may well be that in the course of a bankruptcy the fishing licence will expire, or has already expired. If so, the trustee will have the same right as the original holder of an expired licence to go to the Minister to seek its replacement, and has the same recourse (or the lack of it) if the request is rejected. The bankrupt can transfer no greater rights than he possesses. The trustee simply steps into the shoes of the appellant Saulnier and takes the licence “warts and all”.

(b) The Fishing Licence Is Also “Personal Property” Within the Meaning of Section 2 of the PPSA

51I repeat, for convenience, the relevant PPSA definitions:

(w) “intangible” means personal property that is not goods, a document of title, chattel paper, a security, an instrument or money;

(ad) “personal property” means goods, a document of title, chattel paper, a security, an instrument, money or an intangible;

The definition of “intangible” simply describes something that otherwise constitutes “personal property” but is not one of the listed types of tangible personal property. “Intangible” would include an interest created by statute having the characteristics of a licence coupled with an interest at common law as in the case of a profit à prendre. Again, to repeat, I do not suggest that a fishing licence constitutes a profit à prendre at common law, for clearly there would be numerous conceptual objections to such a characterization. Our concern is exclusively with the extended definitions of “personal property” in the context of a statute that seeks to facilitate financing by borrowers and the protection of creditors. In my view the grant by the Fisheries and Oceans Minister of a licence coupled with a proprietary interest as described above is sufficient to satisfy the PPSA definition.

52In this respect, the registration is therefore valid to include the s. 7(1) fishing licence and, in the absence of any other PPSA defence, the respondent bank is entitled to proceed with its PPSA remedies.

V. Disposition

53For these reasons I would uphold the result of the decision of the courts below and dismiss the appeal with costs in this Court to the respondents.

Appeal dismissed with costs.

Solicitors for the appellants: Nickerson Jacquard, Yarmouth.

Solicitors for the respondents: Wickwire Holm, Halifax.

Solicitor for the intervener the Attorney General of Canada: Attorney General of Canada, Toronto.

Solicitors for the interveners the Seafood Producers Association of Nova Scotia, the Groundfish Enterprise Allocation Council, the BC Seafood Alliance, the Canadian Association of Prawn Producers and the Fisheries Council of Canada: Stewart McKelvey, Halifax.

^*^ Bastarache J. took no part in the judgment.