Licences of bankrupt fishermen can be sold, Supreme Court says
Decision praised by fisheries groups, criticized by lawyer as harmful to fishing families

The Canadian Press, October 25, 2008. Click here for link to original story.

HALIFAX — A Supreme Court of Canada decision permitting banks to seize the quotas of bankrupt fishermen is being praised by fishery groups, but criticized by a fisheries lawyer as a potential blow to family-owned enterprises.

In an 8-0 decision yesterday, the court upheld a ruling that commercial fishing licences are property that can be sold to settle a bankruptcy. A Nova Scotia fisherman had argued that his four licences didn’t meet the legal definition of property and were not subject to sale to cover his debts.

Benoit Saulnier and his company Bingo Queen Fisheries Ltd. went bankrupt in 2004. His creditors tried to sell the licences – worth $630,000 – to cover their debts.

Mr. Saulnier refused to sign the necessary documents, saying the licences were merely a "privilege" allowing him to fish, not property.

Christian Brun, a spokesman for the Maritime Fishermen’s Union, which represents fishermen who operate their own vessels, said he is hopeful the decision will increase the willingness of banks to lend to his members.

"It’s an advantage in terms of financing to fishermen because not everyone out there is willing to make loans to fishing enterprises," he said in an interview.

Christina Burridge, director of the B.C. Seafood Alliance, which represents both large and small fishing operations on the West Coast, also supported the decision.

The collapse of the Glitnir and Landsbanki banks in Iceland has removed a major source of lending for the industry, while the U.S. credit crisis is causing lenders across the globe to tighten credit, she said.

"We see this as a positive step because it will make access to capital easier for fishermen large and small," she said.

However, Eli Baker, a St. John’s lawyer who has several hundred fishermen as clients, called the decision "terrible." He said it will have far-reaching consequences for fishing communities where licences have been passed down from generation to generation.

"This will serve to aid the banks in recovering money through the sale of licences," he said.

"There are other and better ways to help people who feed us from the ocean. …Why would you allow fishermen to risk the very thing they need to make a living in order to borrow money? That’s obscene."

In cases where there’s a divorce in a fishing family, Mr. Baker said, the court ruling could give the spouse the right to demand the licence be sold off as part of the settlement.

"Under the Saulnier decision, I think the licence now becomes part of marital property," he argued.

He also disagreed with the argument by fishing groups that the decision is good news because it improves the chances of fishermen getting credit from banks.

Instead, he argued, governments should encourage fishermen to use fisheries loan boards.

Mr. Saulnier lost at both the trial and appeal court levels and the Supreme Court agreed with the lower rulings.

Mr. Saulnier and his lawyer, Andrew Nickerson, were unavailable for comment.

Mr. Justice Ian Binnie, writing for the Supreme Court, said the licences fit the definition of property for the purposes of bankruptcy.

Even if they don’t fit the technical common-law definition of property, the bankruptcy law clearly intends "to sweep up a variety of assets of the bankrupt not normally considered ‘property’ at common law," he wrote. "This intention should be respected."

Judge Binnie said the licences – Mr. Saulnier’s covered lobster, herring, swordfish and mackerel – have value.

"A 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 a wharf with no licence," he wrote.

"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-million dollars or more."

Mr. Brun said he is relieved the court made it clear the decision applies narrowly to bankruptcy situations, rather than weakening the notion that licences are ultimately the property of the Crown.

"The decision goes out of its way to indicate that it doesn’t consider the licence to be an asset in the normal sense of the word," he said.

"It avoids the possibility of diluting the Fisheries Department’s control of the licences."

Judge Binnie wrote in the decision that the bank isn’t gaining any greater ownership rights than the fisherman, and simply "steps into the shoes of the appellant Saulnier and takes the licence warts and all."