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FISHING - Moratoriums and closures - Compensation schemes

Thursday, June 29, 2017 @ 8:33 AM  


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Appeal by the Fish, Food and Allied Workers Union from a judgment directing compensation to licensed scallop fishers in a representative action. In 2010, the federal Department of Fisheries and Oceans permitted Nalcor to install three subsea cables with protective rock berms in a scallop fishing zone. The project resulted in the permanent termination of scallop fishing activity within the zone. The closure affected 86 licensed scallop fishers, of which approximately nine to 12 were actively harvesting scallops in the area during the ten years predating the closure. Nalcor held consultation meetings with Union staff members and some fishers to discuss the implications of the closure. The Union undertook to represent the interests of affected license holders in determining monetary compensation for the permanent loss of access to the zone. The process resulted in an agreed compensation sum of approximately $3 million, payable over 30 years. Controversy and litigation ensued. The trial judge found that the Union breached a fiduciary duty owed to the respondent and other affected licensed scallop fishers by failing to consult and inform them of the true nature and status of the negotiations. The trial judge ordered the Union to pay the compensation fund immediately, less the administration fee, in equal pro rata shares to license holders. The Union appealed. The respondents cross-appealed the aspect of the trial judgment that permitted the Union to retain an administration fee of $388,000 offered by Nalcor as part of the compensation package.

HELD: Appeal dismissed and cross-appeal allowed in part. The trial judge did not err in holding that the Union owed a fiduciary duty to the fishers, notwithstanding its primary role as a trade union in representing fishers in collective bargaining with commercial fish harvesters and processors. Nor did the trial judge err in finding that the Union breached its fiduciary duty by inducing execution of consent forms prior to the conduct of negotiations, and in exercising sole authority to reach an agreement with Nalcor. The trial judge did not err in finding the fishers were entitled to an immediate equal payout of compensation, regardless of whether they were active or inactive as of the date of the Nalcor agreement. The trial judge erred in failing to find that the Union's retention of the administration fee constituted unjust enrichment given the breach of its fiduciary duty. The Union was ordered to transfer half of the fee to eligible fishers on an equal basis, and was entitled to retain the remainder as remuneration for its negotiation efforts.

Moores v. Fish, Food and Allied Workers Union, [2017] N.J. No. 224, Newfoundland and Labrador Supreme Court - Court of Appeal, C.W. White, M.F. Harrington and L.R. Hoegg JJ.A., June 16, 2017. Digest No. TLD-June262017008