The King v. Dominion Building Corporation Ltd.

him in the form of a letter from the claimants, demanding payment of $981,000 damages said to have arisen from breach of an alleged contract for the sale by the Crown to vN their assignor of a certain property occupied by the Canadian National Railways, situate at the northwest corner

I/D. of King and Yonge streets in the city of Toronto.

C.J.C. The motion before the Exchequer Court was based on three grounds:

Minister of Railways and Canals:

A question of the jurisdiction of this Court to entertain the present appeal, raised by a preliminary motion to quash, stood over to the hearing on the merits and must now be dealt with.

Under s. 82 of the Exchequer Court Act, in any judicial proceeding in which the amount in controversy exceeds

$500, there is a right of appeal to this Court from a final judgment of the Exchequer Court or a judgment pronounced by it upon any demurrer or question of law raised by the pleadings. In rejecting the first and second grounds of the Crown's motion, the Exchequer Court has determined that, assuming the facts to be as stated in the claimants' letter preferring the claim referred to the court, two grounds of defence, which might otherwise have been set up by the Crown, are not available to it because not good in law, inasmuch as it has held that the reference was validly made and that the Order in Council directing its withdrawal is without legal force. That is tantamount to allowing a demurrer by the claimant to two prospective defences of the Crown, and effectively excludes them from the issues to come before the court. Moreover, the first ground of the motion challenges the jurisdiction of the

Exchequer Court to entertain the claim, and the judgment affirming that jurisdiction is final. We are of the opinion that this appeal is, therefore, competent. It is within the intendment, if not within the literal terms, of s. 82 of the Exchequer Court Act.

The second ground of the Crown's present motion was, in our opinion, successfully met by the claimants' answer of res judicata.

On a previous motion by the claimants for an order that their claim be taken pro-confesso for default in delivery of a statement of defence thereto by the Crown, the learned President of the Exchequer Court had rejected the Crown's answer that the reference had been withdrawn by Order in Council (1).

In his reasons for judgment he had said: In disposing of the motion now before us the same learned judge, referring to the earlier motion, said (2): The ground that the reference had been withdrawn by Order in Council was, therefore, not open on the present motion.

The objection based on an alleged departure in the statement of claim from the terms of the reference authorized, while, no doubt, important (if a proper subject of appeal to this Court), seems to us rather to present matter for the exercise of discretion as to amendment than to afford a ground for striking the pleading from the records of the court or otherwise summarily determining the claimants' action.

The claim put forward in the statement of claim, we should perhaps assume, was intended to be that set forth in the claimants' letter upon which the reference was directed. Its purview must be gathered from the terms in which it is couched in the letter, since the document by which the reference was made reads as follows:

The " annexed claim " was the claimants' letter of the 4th of September, 1926. In so far as the claim set forth in the statement of claim may substantially depart from or exceed that contained in the claimants' letter, it transcends the jurisdiction of the Exchequer Court, which is restricted to the very claim referred to it by the Minister. For that claim only could judgment be given.

The first ground of the appellant's motion, and that most urgently pressed upon us, requires careful consideration.

By s. 38 of the Exchequer Court Act it is enacted that The important question now presented is whether the claim which forms the subject matter of the present proceeding arises " in connection with the administration of " the Department of Railways and Canals within the meaning of the section just quoted.

In construing that section it is important to note that, while " any claim against the Crown may be prosecuted by petition of right," no doubt for convenience and to avoid the necessity of obtaining the fiat of the Governor General, which is essential to the filing of a petition of right, intra-departmental claims may be summarily referred by the presiding Minister. But such claims must arise " in connection with the administration of " the department and they must exclusively concern such administration.

BLDG. CoRp.

Taking up the claim as presented in the letter of the 4th of September, 1926, we find that, while the formal de- Anglin mand is for a sum of $981,000,

CJ.C.

the amount which the undersigned (the claimants) have lost or are liable for, by reason of the cancellation of the contract

(i.e., the contract for the purchase of the lands in question), the letter in describing the claim and the circumstances in which it is alleged to have arisen, says:

It was well understood from the inception of the negotiations by the Rt. Hon. the Prime Minister, by the Rt. Hon. the Minister of Railways and Canals, the Hon. the Minister of Public Works, and by other members of the Cabinet, * * * that the successful financing of this operation depended upon the leasing by the Canadian National Railways of the ground floor and three additional floors of the building, and also by (sic) the leasing by the Customs and Excise Department of the five other floors referred to in this letter, and it was well known that, until the passage of the necessary Orders in Council making it quite certain that the floors in question would be leased, definite arrangements which would enable the completion of the purchase, could not be made, and it was because of such knowledge by the Government and the members of the Cabinet, that the Government requested that the applications for the extensions of time to complete the said contract, be made.

In an earlier passage the claimants, referring to the Order in Council sanctioning the sale, had said:

It was a term of the Order in Council that, on obtaining possession of the premises on or before the 15th September, 1925, a twenty-six storey modern fireproof office building should be erected on the premises and on lands immediately adjoining the premises and formerly known as the Home Bank of Canada, Head Office site, such building to be ready for occupation for the Canadian National Railways, as tenant, on rentals and for the time mentioned in the Order in Council, the obligation of the Canadian National Railways being to rent, for the time and on the terms mentioned in the Order in Council, the ground floor and three floors of the building.

It was part of the original negotiations that the Customs and Excise Department should also rent five floors of the building on the terms and for a time which was agreed upon, and provision for such renting was to be made by Order in Council, and an Order in Council to give effect to such arrangement was actually prepared on the 3rd of September, 1925, but, not having been passed, at the request of the Government, an extension of time to complete the purchase up to the 28th of September was asked for and was granted, it being expected that before that date the last-mentioned Order in Council would be passed. This Order in Council was not passed during the year 1925, and, from time to time, at the request of the Government, extensions of the time for completing the purchase were applied for and were granted. The last written extension fixed the time for completion at the 30th of December, 1925, because it was intended to It is, therefore, apparent on the face of the claim, as referred to the court, that the leasing of the nine floors of the projected building-four to the Canadian National - Railways and five to the Department of Customs and Exc.c. cise-was an essential feature of the project of the claimants, so essential that its being successfully financed was wholly dependent on these leases being entered into and that without them the contract had no financial value to the claimants. Indeed their failure to obtain such leases is the substantial basis of the present claim, although in form it is a claim for breach of the contract of sale. The erection of the 26 storey modern fireproof office building was a term of the sale of the property to the claimants' issignor. The financing of the entire operation depended upon the claimants being assured of the two leases, one to the Canadian National Railways and the other to the Department of Customs and Excise.

Moreover, the contract, with all its terms, must be considered as a whole. It was negotiated not by the Minister of Railways and Canals alone, but

The claimants' letter in effect says so. The Minister of Customs and Excise must have been a party to the negotiations, inasmuch as they covered the leasing of floor space for his department. If, therefore, the contract for breach of which damages are claimed, was entered into, by His Majesty represented by the Minister of Railways, the latter, in executing that contract, was acting, not in exercise of his administrative powers as Minister of Railways and Canals, but in the execution of a special authority deputed to him by the Government. As Minister of Railways and Canals he could not bind the Departments of Customs and Excise and of Public Works, and it may be doubtful how far he could bind the Canadian National Railways. Yet, admittedly, unless engagements to take leases for the Department of Customs and Excise and for the Canadian National Railways were assured, the contract could not be carried out; it had no financial value to the claimants or