Great West Saddlery Co. v. Canada, [1921] J PDF

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Great West Saddlery Co. v. Canada, [1921] J...

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Great West Saddlery Co. v. Canada Between Great West Saddlery Company, Limited, appellants, and The King, respondent Attorney General for Canada, intervener [And Consolidated Appeals] [1921] J.C.J. No. 1 [1921] 2 A.C. 91 [1921] 1 W.W.R. 1034 58 D.L.R. 1

Judicial Committee of the Privy Council London, England Viscount Haldane, Viscount Cave, Lord Sumner and Lord Parmoor Heard: November 30, December 2, 3, 6 and 7, 1920. Judgment: February 25, 1921. (51 paras.) FROM THE SUPREME COURT OF CANADA, and FROM THE SUPREME COURT OF ONTARIO, APPELLATE DIVISION Canada -- Legislative Powers -- Dominion Companies -- Provincial Legislative Restrictions -Licence to carry on Business in Province -- Holding of Land -- Companies Act (R.S. Can., 1906, c. 79), ss. 5, 29 -- Extra-Provincial Corporations Act (R.S. Ont., 1914, c. 179) -- Companies Act (R.S. Man., 1913, c. 35), Pt. IV. -- Companies Act (Stat. Sask., 1915, c. 14) -- Mortmain and Charitable Uses Act (R.S. Ont., 1914, c. 103) -- British North America Act, 1867 (30 & 31 Vict. c. 3), ss. 91, 92.

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A company incorporated by the Dominion under the Companies Act of Canada (R. S. Can., 1906, c. 79), with power to trade in any Province may, consistently with ss. 91 and 92 of the British North America Act, 1867, be subject to Provincial laws of general application, such as laws imposing taxes, or relating to mortmain or requiring licences for certain purposes, or as to the form of contracts; but a Provincial Legislature cannot validly enact for the enforcements of such laws sanctions which if applied would sterilize or destroy the capacities and powers which the Dominion has validly conferred. Accordingly, the Extra-Provincial Corporations Act (R.S. Ont. 1914, c. 179), the Companies Act (R. S. Man., 1913, c. 35), and the Ont. Act. (Stat. Sask., 1915, c. 14), so far as they purport to preclude Dominion trading companies from carrying on their business in the Province unless registered or licensed thereunder, or subject such companies to penalties for so carrying on business, are ultra vires. Sect. 29 of the Companies Act of Canada (R. S. Can., 1906, c. 79), which purports to enable a Dominion company to acquire and hold real estate requisite for the carrying on of its undertaking, does not prevail against a severable provision of a Provincial Legislature restricting the power of corporations generally to acquire and hold land in the Province. Accordingly, the Mortmain and Charitable Uses Act (R. S. Ont., 1914, c. 103) is valid; but the provisions of R. S. Man., 1913, c. 35, and R. S. Sask., 1915, c. 14, as to the holding of land by Dominion companies, are invalid, since the provisions are not severable from the invalid provisions referred to above. John Deere Plow Co. v. Wharton [1915] A. C. 330 discussed and applied. Judgments of the Supreme Court of Canada and of the Supreme Court of Ontario (Appellate Division) reversed. CONSOLIDATED APPEALS by special leave from two judgments of the Supreme Court of Canada (May 6, 1919) and a judgment of the Appellate Division of the Supreme Court of Ontario (December 26, 1917). The consolidated appeals related to the validity of certain Provincial enactments so far as they purported to apply to companies incorporated under the Companies Act of Canada (R.S. Can., 1906, c. 79). The provincial Acts in question were the Extra-Provincial Corporations Act (R.S. Ont., 1914, c. 179), the Companies Act (R.S. Man., 1913, c. 35), Pt. IV., the Companies Act (Stat. Sask., 1915, c. 14), and the Mortmain and Charitable Uses Act (R.S. Ont., 1914, c. 103). Each of the first three named Acts purported in effect to preclude Dominion companies from carrying on business in the Province unless registered or licensed thereunder, and to impose penalties upon companies so doing. The last-named Act prohibited all corporations from holding real estate in Ontario unless authorized by licence or statute. The Manitoba and Saskatchewan Acts above referred to, requiring Dominion companies to be licensed thereunder, purported to make the obtaining of a licence a

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condition also for the holding of real estate in the Province. The sections of the Acts in question and their provisions appear more particularly from the judgment of their Lordships, as also does the manner in which their validity came in question in the six cases giving rise to the present appeals. The Supreme Court of Canada, affirming the judgment of the Supreme Court of Saskatchewan en banc (which by an equal division of opinion affirmed the judgment of the Chief Justice), and affirming by a majority a majority judgment of the Court of Appeal of Manitoba, held that the provisions above referred to of the Acts of Saskatchewan and Manitoba were intra vires. The appeals to the Supreme Court of Canada are reported at 59 Can. S. C. R., pp. 19 and 35. In the cases relating to the Ontario legislation there was no appeal to the Supreme Court of Canada. The Appellate Division of the Supreme Court of Ontario held that the provisions in question were intra vires save so far as they precluded an unregistered Dominion company from suing in the Province; that decision reversed the judgment of Masten J. with regard to the provisions of the Extra-Provincial Corporations Act requiring a Dominion company to be licensed before carrying on its business in the Province, and affirmed his judgment with regard to the provisions of the Mortmain and Charitable Uses Act as to the holding of real estate in the Province. The appeal to the Appellate Division is reported at 41 Ont. L. R. 475. The effect of the judgment of the various learned judges in Canada before whom the cases were argued is more fully stated in the judgment of the Judicial Committee. 1920. Nov. 30; Dec. 2, 3, 6, 7. F. W. Wegenast and T. Moss for the appellants; Sir John Simon K.C. and Cyril Asquith for the Attorney General for Canada, intervener. Each of the appellant companies was incorporated under s. 5 of the Companies Act of Canada (R.S. Can., 1906, c. 79) for trading purposes as shown by their letters patent. Under ss. 5 and 29 of that Act and s. 30 of the Interpretation Act (R.S. Can., 1906, c. 1) they had the fullest corporate powers, including power to hold land for the purpose of their undertakings. The provincial legislation now in question is invalid, since, as held in John Deere Plow Co. v. Wharton, [1915] A.C. 330, 341, the status and powers of a Dominion company as such cannot be destroyed by Provincial legislation; the provisions of the Provincial Acts are not distinguishable from those of the Act of British Columbia held invalid in that appeal. The legislation cannot be justified under s. 92, head 2, of the British North America Act, 1867, as direct taxation for Provincial purposes. The decision in Bank of Toronto v. Lambe, (1887), 12 App. Cas. 575, does not apply. Neither its "pith and substance" (see Union Colliery Co. v. Bryden, [1899] A.C. 580, 587), nor its "true nature and character" (see Russell v. The Queen, (1882) 7 App. Cas. 829, 839, 840) was Provincial taxation. Its "pith and substance" was that it controlled the exercise of trading and commercial rights which the Dominion had conferred upon Dominion companies. The Acts were, as their titles describe them, Companies Acts. It is a well-established principle that where Dominion legislation rests on one of the heads enumerated in s. 91 it overbears Provincial legislation in the same field, although it is of the kind mentioned in a head of s. 92. The legislative power of the Provinces in the matter was limited to passing Acts which were genuinely regulative in character, and which applied equally to all

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persons, individual or corporate: A.-G. for Ontario v. A.-G. for Canada, [1896] A.C. 348, 363; Toronto (City of) v. Virgo, [1896] A.C. 88; John Deere Plow Co. v. Wharton, [1915] A.C. 330; A.-G. for Canada v. A.-G. for Alberta, [1916] 1 A.C. 588, 597. The Dominion by incorporating a company not only creates a juridical person, it also confers rights and powers. Provincial legislation cannot validly require registration or the taking out of a licence as a condition to those rights and powers being operative. Nesbitt K.C. and G. Lawrence for the respondent and intervener the Attorney General for Ontario and Attorney General for Manitoba. The Provincial legislation in question was intra vires. The effect of the incorporation was to give the appellants the right to trade in every Province, but subject to valid Provincial legislation. The Dominion had no power, and has not purported, to give the appellant companies the right to trade in violation of valid Provincial legislation. Licensing for the purpose of registration or taxation is intra vires of a Province; the Dominion could not empower its creature to trade unlicensed, and the Provincial legislation is, therefore, not a violation of any Dominion power. The legislation now in question can be described as either (a) licensing for the purpose of registration and information, or (b) for taxation and statistical purposes. The legislation condemned in John Deere Plow Co. v. Wharton, [1915] A.C. 330, is distinguishable; the defect there was that the Registrar had a discretion to grant or withhold a licence, and had refused a licence unless the name of the company were altered. The licence here required was not discretionary, but was in the nature of a receipt indicating that the company had complied with all legislative requirements. The requirement of a licence was valid under s. 92, head 9, and the penalties were validly imposed as a method of enforcing that requirement. The legislation is valid under the principles laid down in Citizens Insurance Co. v. Parsons, (1881), 7 App. Cas. 96, 104, 106, 117; Colonial Building Association v. A.-G. for Quebec, (1883) 9 App. Cas. 157, 166; Bank of Toronto v. Lambe, 12 App. Cas. 575, 585, 586; Brewers and Maltsters Case, [1897] A.C. 231; Canadian Pacific Ry. Co. v. Notre Dame de Bonsecours, [1899] A.C. 367, 372; A.-G. for Ontario v. A.-G. for Canada, [1896] A.C. 348, 360; A.-G. of Manitoba v. Manitoba Licence Holders' Association, [1902] A.C. 73, 79. It was held in John Deere Plow Co.'s Case, [1915] A.C. 330, 341, that a Provincial Legislature could regulate the conditions upon which the status and powers conferred by the Dominion by incorporation could be exercised in the Province and could require registration. The powers of the Dominion under the head "trade and commerce" should not be extended; the authorities show that the powers under that head are limited, and that the doctrine as to the "pith and substance" of the legislation is one which cannot safely be applied: A.-G. for Canada v. A.-G. for Alberta, [1903] A.C. 151.; Cunningham v. Tomey Homma, [1916] 1 A.C. 588, 595, 596. Henn-Collins, for the respondent the Attorney General for Saskatchewan, adopted the above arguments and further distinguished the provisions of the Saskatchewan Act from those of the other Acts in question. The Act should be construed so as to be valid. C. Bovill Clark for the respondent shareholders. Wegenast replied.

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The judgment of their Lordships was delivered by 1 VISCOUNT HALDANE:-- In this case their Lordships are called on to interpret and apply the implications of a judgment, delivered by the Judicial Committee on November 2, 1914, in John Deere Plow Co. v. Wharton, [1915] A.C. 330. It was then laid down that the British North America Act of 1867 had so enabled the Parliament of the Dominion to prescribe the extent of the powers of companies incorporated under Dominion law with objects which extended to the Dominion generally, that the status and powers so far as there in question of one of the three appellant companies could not as matter of principle be validly interfered with by the Provincial Legislature of British Columbia. It was held that laws which had been passed by the Legislature of that Province, and which sought to compel a Dominion company to obtain a certain kind of Provincial licence or to be registered in the way brought before the Judicial Committee, as a condition of exercising its powers in the Province or of suing in its Courts, were ultra vires. The reason given was that their Lordships interpreted what had been done by the Province in that case as interfering in a manner not consistent with the principles laid down with the status and corporate capacity of a company with Dominion objects to which the Parliament of Canada had given powers to carry on its business in every part of the Dominion. 2 In the consolidated appeals now before their Lordships analogous questions are raised by legislation in varying forms enacted in three other Provinces, Saskatchewan, Manitoba, and Ontario. 3 Since the decision in 1914 the Province of Saskatchewan has passed an Act, in 1915, which supersedes its earlier Companies Acts, and apparently seeks to avoid the features in these which might conflict with the decision of this Committee in John Deere Plow Co. v. Wharton, [1915] A.C. 330, as to the British Columbia legislation. The question raised as regards Manitoba arises out of older legislation of 1913 (subsequently amended and re-enacted in 1916), and as regards Ontario under an older Ontario Companies Act and the Extra-Provincial Corporations Act of 1914. No question is raised from British Columbia, or from any Provinces other than Saskatchewan, Manitoba and Ontario, on this occasion. 4 The proceedings out of which the present appeals arise concern several Dominion companies, and are, as to Saskatchewan, two cases before a magistrate for infraction of the provisions of the Provincial Companies Act, and an action by a shareholder in one of the Dominion companies concerned, to restrain it from attempting to carry on its business without complying with the requirements of the Companies Act of the Province. The main issue in all these proceedings is substantially the same. In Manitoba an analogous question was raised in a shareholder's action, and also in an action by the Attorney General of the Province. The main issue in Ontario was similar to that in Saskatchewan, but there was also raised a question as to whether a Dominion company could hold land in the Province without being authorized to do so by its Government, in accordance with

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Ontario statute law. In the proceedings referred to judgments were delivered in the Courts of first instance and by the Appellate Courts in Saskatchewan and Manitoba, and by the Courts of first instance and the Appellate Court in Ontario. In the cases in the two former Provinces there was an appeal to the Supreme Court of Canada, but in the Ontario litigation the appeal has been brought directly to the King in Council from the judgment of the Appellate Court of the Province. On August 18, 1919, special leave to appeal to the Privy Council was granted, and it was ordered that the appeals, six in number, from judgments which had been adverse to the Dominion companies concerned, should be consolidated and heard together. The Attorneys-General for Canada and for the Provinces have intervened throughout. 5 It will be convenient, having regard to the course taken in the argument, to consider in the first place the appeal from the Court of Appeal in Ontario. 6 In order to ascertain the real points now in controversy, it is important to refer in some detail to what was actually decided in 1914 in John Deere Plow Co. v. Wharton, [1915] A.C. 330. The British Columbia Companies Act had provided that, in the case of an incorporated company which was not one incorporated under the laws of the Province, and was called in the Act an extra-provincial company, certain conditions must be complied with. If such a company had gain for its object it must be licensed or registered under the law of the Province, and no agent was to carry on its business until this had been done. If this condition were complied with, such an extra-provincial company might sue in the Courts of the Province and hold land there. Such a company might also, if it were one duly incorporated under the laws of, among other authorities, the Dominion, and if authorized by its charter to carry out purposes to which the legislative authority of the Province extended, obtain from the Registrar, under the general Companies Act of the Province, a licence to carry on business within the Province on complying with the provisions of the Act and paying a proper licence fee. It was then to have the same powers and privileges in the Province as though incorporated under the Provincial Act. If such a company carried on business without a licence it was made liable to penalties, and its agents were similarly made liable. So long as unlicensed, the company could not sue in the Courts of the Province in respect of contracts in connection with its business made within the Province. The Registrar might refuse a licence where the name of the company was identical with or resembled that by which a company, society or firm in existence was carrying on business or had been incorporated, licensed or registered, or where the Registrar was of opinion that the name was calculated to deceive, or disapproved of it for any other reason. 7 Their Lordships pointed out that, under the Dominion Companies Act, which they held to have been validly passed, the charter of the John Deere Plow Company incorporated it with the powers to which the legislative authority of the Parliament of Canada extended. The Dominion Interpretation Act provided that the meaning of such an incorporation included this, that the corporate body created should have power to sue, to contract in its corporate name, and to acquire and hold personal property for its purposes. There was in the Dominion Companies Act a provision that such a company should not be incorporated with a name likely to be confounded with the name of any

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other known company, incorporated or unincorporated, and it gave the Secretary of State the discretion in this connection. On incorporation the company was to be vested with all the powers, privileges, and immunities, requisite or incidental to the carrying on of its undertaking. It was to have an office in the city or town in which its chief place of business in Canada was situated, which should be its legal domicil in Canada, and could establish other offices and agencies elsewhere. No person acting as its agent was to be subjected, if acting within his authority, to individual penalty. 8 Their Lordships made reference to the circumstance that the concluding words of s. 91 of the British North America Act, "Any matter coming within any of the classes of subjects enumerated in this section shall not be deemed to come within the class of matters of a local or private nature comprised in the enumeration of the classes of subjects by this Act assigned exclusively to the Legislatures of the Provinces," render it necessary to do more than ascertain whether the subject-matter in question apparently falls within any of the heads of s. 92; for if it also falls within any of the enumerated heads of s. 91, then it cannot be treated as covered by any of those in s. 92. As is now well settled the words quoted apply, not only to the merely local or private matters in the Province referred to in head 16 of s. 92, but to the whole of the sixteen heads in that section: A.-G. for Ontario v. A.-G. for Canada., [1896] A.C. 348. The effect, as was pointed out in the decision just cited, is to effect a derogation from what might otherwise have been literally the authority of the Provincial Legislatures, to the extent of enabling the Parliament of Canada to deal with matters local and private where, though only where, such legislation is necessarily incidental to the exercise of the enumerated powers conferred on it by s. 91. 9 If therefore in legislating for the incorporation of companies under Dominion law and in validly endowing them with powers, the Dominion Parliament has by necessary implication given these companies a status which enables them to exercise these powers in the Provinces, they cannot be interfered with by any Provincial law in such a fashion as to derogate from their status and their consequent capac...