Stewart McKelvey

THE ATLANTIC FISHERY AFTER SAULNIER: NOT ALL SECURED CREDITORS ARE ALIKE tainty in the transfer and renewal of licences, and that the market attributes a reasonably high value to these licences. Nevertheless, the Court agreed with its previous statements from Comeau's Sea Foods that there is no indication in the Fisheries Act of any legal basis for the vesting of an interest in a licence beyond the rights which it gives for the year in which it is issued. Ultimately, however, the Court concluded that licence holders not only acquire a right to engage in an exclusive fishery, but also a proprietary interest in the wild fish harvested as well as the earnings from their sale. This was considered sufficient to constitute property under the Bankruptcy and Insolvency Act and personal property under the Personal Property Security Act. A bankrupt can transfer no greater rights than he or she possesses. The trustee simply steps into the shoes of the licence holder and takes the licence, warts and all. As a result, the trustee in Saulnier was held entitled to require the bankrupt licence holder to execute appropriate documentation to ef- fect the transfer of his licences to the trustee. In substance, this decision provided some addi- tional comfort to lenders regarding the taking of security over fishing licences and related rights. However, a degree of uncertainty remains as a re- sult of the ministerial discretion, and there is no guarantee that a request for a transfer of licence to a lender's nominee will be accepted by DFO. Judi- cial decisions subsequent to Saulnier have not fo- cused on the nuances with respect to the property status of fishing licences and have been supportive of trustee and creditor rights. DFO Licensing Policies Post-Saulnier Shortly after the Saulnier decision, DFO recognized in a policy statement that the Supreme Court of Canada had ruled that a fishing licence was con- sidered property for the purposes of the BIA and the PPSA while recognizing the Minister's discre- tion to issue licences. DFO indicated that it will accept requests respecting licences from a secured creditor or receiver with either a court order or written consent of the licence holder. In theory the policy applies to all secured creditors, though in practice RFIs (essentially banks, provincial loan boards and certain loan guarantee programs) are the only secured creditors recognized in the policy. The policy, entitled Preserving the Independence of the In-shore Fleet in Canada's Atlantic Fisheries 4 SUMMER 2011 DOING BUSINESS IN ATLANTIC CANADA (PIIFCAF), requires all licence holders to be free of "Controlling Agreements" by April 12, 2014, failing which they will, among other things, not be eligible to be issued new replacement licences. A "Controlling Agreement" is defined in the policy as an agreement through which a licence holder permits a person, other than the licence holder, to control or influence the licence holder's decision to submit a request to DFO for issuance of a replace- ment licence to another fish harvester. PIIFCAF provides that if a fish harvester has such an agree- ment with an RFI, it can notify DFO of this agree- ment by filing a "Notice to Department of Fisheries and Oceans of an Arrangement with a Recognized Financial Institution". Under PIIFCAF, each licence holder is required to file a declaration stating that he or she is not party to a Controlling Agreement. If the licence holder fails to file a declaration, DFO will not process requests for most licensing transactions from the licence holder. Licence holders who indicate that they have entered into Controlling Agreements are required to divest them by April 12, 2014 in order to be eligible to continue to hold the licences. Implications for RFIs For RFIs, such as chartered banks, the system under PIIFCAF is a marginal improvement in that the no- tice requirements provide a greater degree of com- fort. This, of course, assumes that the notice system functions as it is intended to. If so, the bank should have notice of any attempts to transfer the licences. The Supreme Court of Canada recognized, in the Saulnier decision, that rights which flow from li- cences constitute property which is subject to the BIA and PPSA. This will allow a trustee or receiver to realize upon such security. However, it is import- ant to recognize that some uncertainty remains. The trustee or receiver is subject to the same minister- ial discretion that the licence holder was subject to. The RFIs rely upon there being no change in policy (which is a significant uncertainty) and general pres-

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