The Attorney - General for Alberta and G. C. Winstanley
(Defendants) Appellants;
and
Atlas Lumber Company Limited (Plaintiff) Respondent
1940: October 10, 11; 1940: December 20.
Present:—Duff C.J. and Rinfret, Crocket, Davis, Kerwin, Hudson
and Taschereau JJ.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF
ALBERTA
Constitutional law—Debt Adjustment Act, Alberta, 1937, c. 9,
s. 8—Provincial statutory prohibition against commencement of action against
resident debtor for recovery of money recoverable as liquidated demand or debt,
without permit from provincial Board—Enactment invalid in so far as affecting
right of action on promissory note— Bills of Exchange Act, R.S.C., 1927, c. 16,
ss. 74, 134, 186, 136—B.N.A. Act, 1867, ss. 91(18), 92(18) (14)— Conflict
between Dominion and Provincial legislation—Dominion legislation paramount.
[Page 87]
The Debt Adjustment Act, Alberta, 1937, c. 9, by s. 8
enacted that "no action or suit for the recovery of any money which is
recoverable as a liquidated demand or debt in respect of any claim enforcible
by virtue of any rule of law or equity or by virtue of any statute * * * shall
be taken * * * by any person whomsoever against a resident debtor in any
case" unless the Board constituted by the Act and appointed by the
Provincial Government issues a permit consenting thereto.
In an action brought without a permit in the Supreme Court of
Alberta against a resident debtor upon a promissory note, it was held that
a defence pleading said Act could not prevail; that said s. 8 of the Act, in so
far as it affects a right of action on a promissory note, is ultra vires the
Provincial Legislature. (Judgment of the Appellate Division, Alta., [1940] 2
W.W.R. 437, affirming judgment of Ewing J., [1940] 1 W.W.R. 35, affirmed in the
result).
[Page 88]
Per the Chief Justice and Kerwin J.: In so far as said
legislation extends to actions upon bills of exchange and promissory notes, it
is plainly repugnant to the enactments in ss. 74, 134, 135 and 136 of the Bills
of Exchange Act, R.S.C., 1927, c. 16 (which, or substantially the same,
enactments have been in the Act since 1890), which, read together, affirm the
unqualified right of the holder of a note to sue upon it in his own name and to
recover judgment from any party liable on it; and which enactments are
necessarily incidental to the exercise of the powers conferred upon the
Dominion Parliament by s. 91 (18) of the B.N.A. Act. On the passing of
the Bills of Exchange Act the jurisdiction of a province, if it ever
possessed any, to enact such legislation as s. 8 of said Debt
Adjustment Act (in so far as it extended to actions upon bills and notes)
was superseded because it could not be enforced without coming into conflict
with the paramount law of Canada. It would not make any difference if said s. 8
were expressed in the form of limiting the jurisdiction of the courts of Alberta.
In pith and substance such an enactment, if operative, imposes a condition upon
suitors to whom it applies governing them in the exercise of their rights to
enforce causes of action vested in them; and, if it contemplates such an action
as the present one, it purports to qualify rights in respect of which the
Parliament of Canada has legislative jurisdiction in virtue of s. 91 (18) of
the B.N.A. Act, and has exercised that jurisdiction by affirming them
unconditionally. (Attorney-General for Ontario v. Attorney-General
for the Dominion, [1896] A.C. 348, at 359, 365, 366, and Attorney-General
for Ontario v. Attorney-General for the Dominion, [1894]
A.C. 189, at 200-201, cited).
Per Rinfret J.: The prohibition in said s. 8 of the
Provincial Act goes to the right to sue—a substantive right; it is not a matter
of mere procedure. Under said Bills of Exchange Act (ss. 74, 134, 135),
the holder of a note has the right to sue thereon in his own name and to
enforce payment against all parties liable. That right is enforcible by action
in the provincial courts (Board v. Board, [1919] A.C. 956, at
962; also said provisions of the Bills of Exchange Act shew that
Parliament intended the right to be enforcible by an action in court—the only
method open to enforce payment and recover). With respect to matters coming
within the enumerated heads of s. 91 of the B.N.A. Act, the Parliament
of Canada may give jurisdiction to provincial courts and regulate proceedings
in such courts to the fullest extent (Valin v. Langlois, 3 Can.
S.C.R. 1, at 15, 22, 26, 53, 67, 76, 77, 89, and 5 App. Cas. 115, at 117-118; Cushing
v. Dupuy, 5 App. Cas. 409, at 415). Said provisions of the Bills
of Exchange Act relate directly to the matter of head 18 in s. 91 of the B.N.A.
Act; and therefore defendants' contention, that the provincial legislation
was not necessarily incidental to legislation with respect to bills and notes
and therefore the Dominion legislation could not encroach on provincial powers
to make laws in regard to matters under heads 13 and 14 of s. 92 of the B.N.A.
Act, could not prevail (Tennant v. Union Bank of Canada, [1894]
A.C. 31; Cushing v. Dupuy, 5 App. Cas. 409; Proprietary
Articles Trade Assn. v. Attorney-General for Canada, [1931] A.C.
310, at 326-327). The right to sue or to enforce payment or to recover on a
bill or note is of the very essence of bills of exchange; it is one of the
essential characteristics of a bill or note; the matter falls within the strict
limits of s. 91 (18) of the
[Page 89]
B.N.A. Act; it flows from the provisions establishing
negotiability, which has become the primary quality of a bill or note and in
which consist the true character and nature of these instruments; the
provisions relating to the right to sue, to enforce payment and to recover
before the courts are not incidental; they are the very pith and substance of
the statute. The Dominion legislation is valid; the Alberta legislation, in so
far as it applies against the institution of an action on a promisorry note, is
in direct conflict with it, is overridden by it, and is ultra vires on
the ground that it attempts 'to take away from the Alberta courts a
jurisdiction conferred on them by the Parliament of Canada with respect to a
matter within the exclusive legislative authority of that Parliament; and to
that extent it must be held inoperative (John Deere Plow Company v. Wharton,
[1915] A.C. 330; Board of Trustees of the Lethbridge Northern Irrigation
District v. Independent Order of Foresters, [1940] A.C. 513).
Whatever jurisdiction there may have been in the province on the subject has
been superseded by the Dominion legislation (Attorney-General for Ontario
v. Attorney-General for the Dominion et al., [1896] A.C. 348, at
369, 370).
Crocket J., while not acceding to the contention that the
rights conferred by ss. 74, 134 and 135 of the Bills of Exchange Act upon
holders of bills and notes to sue, enforce payment and recover thereon in
provincial courts, are not subject to provincial legislation relating to the
jurisdiction of provincial courts and to procedure in civil matters therein,
was not prepared to hold that the prohibitory enactment of said s. 8(1) of the
Alberta statute does not conflict with said Dominion legislation; and he held
that if there is conflict, then the Dominion legislation, strictly relating, as
it does, to bills of exchange and promissory notes as one of the classes of
subjects specially enumerated in s. 91 of the B.N.A. Act, in the sense
of being necessarily incidental thereto, prevails over the provincial
legislation.
Per Davis J.: The Alberta enactment is one of general
application, not aimed at, nor legislation in relation to, bills of exchange or
promissory notes. Sec. 74 of the Bills of Exchange Act deals only with
the rights acquired by negotiation, and the words "the holder of a
bill" "may sue on the bill in his own name" mean only that he is
not liable to be defeated in an action on the bill on the ground that the
action has been brought by the wrong party (reference to Sutters v. Briggs,
[1922] A.C. 1, at 15). The Dominion statute is not in any way dealing with
access to any court. But the Alberta enactment is ultra vires the
province. Where legislative power is divided, as in Canada, between a central
Parliament and local legislative bodies and the administration of justice in
the provinces, including the constitution, maintenance and organization of
provincial courts, is given over to the provinces (with the appointment of the
judges in the Dominion), a province cannot validly pass legislation, at least
in relation to subject-matter within the exclusive competency of the Dominion,
which puts into the hands of a local administrative agency the right to say
whether or not any person can have access to the ordinary courts of the
province. The Debt Adjustment Board of Alberta is an administrative body and is
not validly constituted to receive what is in fact judicial authority (Toronto
v. York, [1938] A.C. 415, at 427).
Per Hudson and Taschereau JJ.: The Alberta enactment
does not purport to amend or limit the jurisdiction of the Supreme Court of
Alberta,
[Page 90]
but to place in the hands of a provincial body the right to
say whether or not certain classes of rights, some of which may arise under the
laws of Canada, may be established or enforced through the courts. In s. 92
(14) of the B.N.A. Act, which gives to the province the exclusive right
to make laws in relation to "the administration of justice in the
Province," etc., the expression "administration of justice,"
read in connection with the whole Act, must be taken to mean the administration
of justice according to the laws of Canada or the laws of the province, as the
case may be. Normally the administration of justice should be carried on
through the established courts, and the Province, though it has been allotted
power to legislate in relation to the administration of justice and the right
to constitute courts, cannot substitute for the established courts any other
tribunal to exercise judicial functions (Toronto v. York, [1938]
A.C. 415). There may be administration of law outside of the courts short of
empowering provincial officers to perform judicial functions, but in respect of
matters falling within the Dominion field a province could not do anything
which would destroy or impair rights arising under the laws of Canada. The
Dominion has power to impose duties upon courts established by the provinces,
in furtherance of the laws of Canada, and a province could not interfere with
nor take away the jurisdiction thus conferred (Valin v. Langlois, 5
App. Cas. 115; Cushing v. Dupuy, 5 App. Cas. 409). Sec. 74 of the
Bills of Exchange Act expressly recognizes a right of action on a
promissory note. That right of action is one governed by the laws of Canada and
therefore excluded from the provincial legislative field. The Alberta enactment
is not properly a law as to procedure in courts; it provides for extra-judicial
procedure. A province cannot impose extrajudicial control over rights of action
under the laws of Canada.
APPEAL by the defendants from the judgment of the Appellate
Division of the Supreme Court of Alberta
affirming the judgment of Ewing J..
The plaintiff sued to recover upon a promissory note made by
the defendant Winstanley. The defendant pleaded the Debt Adjustment Act, c.
9 of the Statutes of Alberta of 1937 and amendments, and said that the plaintiff
had not been granted a permit under the said Act to commence the action. Ewing
J. held that there was direct conflict between the provisions of the Bills
of Exchange Act, R.S.C., 1927, c. 16, and the provisions of the said Debt
Adjustment Act as applied to promissory notes; and that the Dominion
legislation must prevail; and that the plaintiff should be permitted to proceed
with its action without a permit. The formal judgment adjudged and declared
that the said Debt Adjustment Act, "in so far as the same affects
Promissory Notes, is ultra vires the powers of the Provincial
Legislature" and "that the plain-
[Page 91]
tiff has the right to proceed with this
action without a permit of the Debt Adjustment Board". The judgment of
Ewing J. was affirmed by the Appellate Division.
The facts, pleadings and legislation involved are more
particularly set out in the reasons for judgment in this Court now reported.
The plaintiff, upon its reply to the statement of defence, gave
notice to the Attorney-General for Alberta, who was represented on the trial of
the action and on the appeal to the Appellate Division (which court had,
previously to the hearing of the appeal, made an order adding him as a party
defendant).
Special leave to appeal to the Supreme Court of Canada was
granted to the defendants by the Appellate Division of the Supreme Court of
Alberta.
W. S. Gray K.C. and H. J. Wilson K.C. for the
appellants.
W. H. McLaws K.C. for the respondent.
F. P. Varcoe K.C. for the Attorney-General of Canada.
The judgment of the Chief Justice and Kerwin J. was delivered by
THE CHIEF JUSTICE—On the 9th of May, 1939, the respondent
company sued the defendant, Winstanley, upon a promissory note dated the 9th of
October, 1935, payable on demand for One Thousand Dollars ($1,000.00) and
interest at the rate of eight per cent., the payee's name on the note being the
Revelstoke Sawmill Company which, it was alleged, had endorsed the promissory
note to the plaintiff. The defendant, the maker of the note, set up this
defence:—
In answer to the Plaintiff's Statement of Claim herein, the
Defendant pleads the Debt Adjustment Act, being Chapter 9 of the Statutes of
Alberta for 1937 and amendments, and says that the Plaintiff has not been
granted a permit under the said Act to commence this action.
In reply the respondent company alleged, inter alia, as
follows:—
(1) The promissory note referred to in the Statement of
Claim was made and taken pursuant to and in accordance with the provisions of
"The Bills of Exchange Act", being Chapter 16 of the Revised Statutes
of Canada, 1927, and amendments thereto, and the Parliament of the Dominion of
Canada has the exclusive power of legislating with respect
[Page 92]
to promissory notes and bills of
exchange, and the rights of the Plaintiff are determined by the
provisions of the said "The Bills of Exchange Act" and not otherwise.
(2) The said "The Bills of Exchange Act" gives to
the Plaintiff an immediate cause of action on the said promissory note against
the Defendant, upon default being made in paying the said promissory note when
it became due and payable, and the immediate right to sue thereon.
* * *
(5) The said Debt Adjustment Act and amendments thereto are ultra
vires the Legislature of the Province of Alberta in so far as the
provisions of the said Act are applicable to the promissory note referred to in
the Statement of Claim and a permit under the said Act is not necessary before
commencing this action.
The pertinent enactment of the Debt Adjustment Act set up
in the statement of defence is section 8,
which is in these words:—
8.(1) Unless the Board or any person designated by the Board
under the provisions of this Act, issues a permit in writing giving consent
thereto,—
(a) no action or suit for the recovery of any
money which is recoverable as a liquidated demand or debt in respect of any
claim enforcible by virtue of any rule of law or equity or by virtue of any
statute, except money payable in respect of rates and taxes payable pursuant to
any statute, and debts owing to a hospital for hospital services;
* * *
shall be taken, made or continued by any person whomsoever
against a resident debtor in any case.
* * *
The trial Judge and the Court of Appeal for Alberta unanimously
held that the defence set up in the pleadings by the appellant, Winstanley, is
without legal validity.
By The Alberta Act, under which the Province of Alberta
came into existence (4 and 5 Edward VII, Chap. 3, sec. 3) it was provided:—
The provisions of The British North America Acts, 1867
to 1886, shall apply to the province of Alberta in the same way and to the like
extent as they apply to the provinces heretofore comprised in the Dominion, as
of the said province of Alberta had been one of the provinces originally
united, except in so far as varied by this Act and except such provisions as
are in terms made, or by reasonable intendment may be held to be, specially
applicable to or only to affect one or more and not the whole of the said
provinces.
By section 91 of the British North America Act,—
* * * * it is * * * declared that (notwithstanding anything
in this Act) the exclusive Legislative Authority of the Parliament of Canada
extends to all Matters coming within the Classes of Subjects next hereinafter
enumerated; that is to say,— * * * 18. Bills of Exchange and Promissory Notes.
* * * * And any Matter coming within any
[Page 93]
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.
By Chap. 33, 53 Victoria, the Parliament of Canada, enacted the Bills
of Exchange Act, 1890. Sections 38 and 57 were reproduced in the Bills
of Exchange Act, Chap. 119, R.S.C., 1906, as section 74, which corresponds
textually to section 38 of the parent Act, and as sections 134, 135 and 136
which correspond to section 57, slightly altered in form without change in
substance or effect. These enactments of R.S.C. 1906, appear in the revision of
1927 (Chap. 16) without change as to the numbers of the sections or otherwise,
and still retain that form.
The substantive question in controversy, as I view it, does not
lend itself to extended discussion. Sections 74, 134, 135 and 136 of the Bills
of Exchange Act, read together, affirm the unqualified right of the holder
of a promissory note to sue upon the note in his own name and to recover
judgment from any party liable on it damages according to the measure defined
by sections 134 and 136. These enactments were in force when the Debt
Adjustment Act was passed in 1937. The appellants contend that by section 8
of that Statute a condition is imposed upon this unqualified right of the
holder of a promissory note to sue upon it, a condition that he shall first
obtain the consent of a Board appointed by the Government of the Province.
I think it is convenient at this place to reproduce textually the
well-known passage in the judgment of Lord Watson in Attorney-General for
Ontario v. Attorney-General for the Dominion;
Lord Watson is here, of course, speaking for the Judicial Committee:—
It was apparently contemplated by the framers of the
Imperial Act of 1867 that the due exercise of the enumerated powers conferred
upon the Parliament of Canada by s. 91, might, occasionally and incidentally,
involve legislation upon matters which are prima facie committed
exclusively to the provincial legislatures by s. 92. In order to provide
against that contingency, the concluding part of s. 91 enacts that "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." It was
observed by this Board in Citizens' Insurance Co. of Canada v.
[Page 94]
Parsons
that the paragraph just quoted "applies in its grammatical construction
only to No. 16 of s. 92." The observation was not material to the question
arising in that case, and it does not appear to their Lordships to be strictly
accurate. It appears to them that the language of the exception in s. 91 was
meant to include and correctly describes all the matters enumerated in the
sixteen heads of s. 92, as being, from a provincial point of view, of a local
or private nature. It also appears to their Lordships that the exception was
not meant to derogate from the legislative authority given to provincial
legislatures by these sixteen subsections, save to the extent of enabling the
Parliament of Canada to deal with matters local or private in those cases where
such legislation is necessarily incidental to the exercise of the powers
conferred upon it by the enumerative heads of clause 91. That view was stated
and illustrated by Sir Montague Smith in Citizens' Insurance Co. of Canada v.
Parsons and in Cushing
v. Dupuy; and it
has been recognized by this Board in Tennant v. Union Bank of Canada
and in Attorney-General of Ontario v. Attorney-General for the
Dominion.
Their Lordships observed further at page 365:—
In the able and elaborate argument addressed to their
Lordships on behalf of the respondents it was practically conceded that a
provincial legislature must have power to deal with the restriction of the
liquor traffic from a local and provincial point of view, unless it be held
that the whole subject of restriction or abolition is exclusively committed to
the Parliament of Canada as being within the regulation of trade and commerce.
In that case the subject, in so far at least as it had been regulated by
Canadian legislation, would, by virtue of the concluding enactment of s. 91, be
excepted from the matters committed to provincial legislatures by s. 92.
And again at page 366:—
It has been frequently recognized by this Board, and it may
now be regarded as settled law, that according to the scheme of the British
North America Act the enactments of the Parliament of Canada, in so far as
these are within its competency, must override provincial legislation.
Section 8 of the Debt Adjustment Act, if (as the
appellants contend and I agree) it extends to actions upon bills of exchange
and promissory notes, is plainly repugnant to the enactments of the Bills of
Exchange Act in the sections mentioned above. Nor can I think it
susceptible of dispute that the enactments are "necessarily incidental to
the exercise of the powers conferred upon the Dominion Parliament" by
section 91 of the British North America Act in relation to bills
of exchange and promissory notes. On the passing of the Bills of Exchange
Act of 1890, therefore, the jurisdiction of any province of Canada, if it
ever possessed any, to enact such legislation was, to borrow the
[Page 95]
language of the same judgment (at p.
369), "superseded" because it could not be enforced "without
coming into conflict with the paramount law of Canada."
I do not think it would make any difference if section 8 were
expressed in the form of limiting the jurisdiction of the courts of Alberta. In
pith and substance such an enactment, if operative, imposes, I repeat, a
condition upon suitors to whom it applies governing them in the exercise of
their rights to enforce causes of actions vested in them; and, if it
contemplates such an action as this, it purports to qualify rights in respect
of which the Parliament of Canada has legislative jurisdiction in virtue of
section 91 (18), and has exercised that jurisdiction by affirming; them
unconditionally.
Once again, the Dominion Parliament has seen fit "to deal
with" those rights (to adapt the language of Lord Herschell, L.C.,
speaking for the Judicial Committee in Attorney-General for Ontario v. Attorney-General
for the Dominion
"as part of a * * * law" concerning bills of exchange and promissory
notes; and the provincial legislatures are consequently "precluded from
interfering with this legislation inasmuch as such interference would affect
the * * * law of the Dominion Parliament" touching that subject.
This is the ground upon which, as it appears to me, the defence
to the action and (consequently) this appeal, demonstrably fail.
RINFRET J.—In this case, action was brought by the
respondent, Atlas Lumber Company Limited, to recover from the appellant
Winstanley the amount due on a promissory note for $1,000 payable on demand,
with interest at 8% per annum, said note being dated the 9th of October, 1935.
In answer to the respondent's statement of claim, the appellant
Winstanley pleaded the Debt Adjustment Act, being chapter 9 of the
Statutes of Alberta for 1937 and amendments, and said that the respondent had
not been granted a permit under the said Act to commence its action and that,
therefore, it could not proceed to judgment thereon.
[Page 96]
In reply, the respondent invoked the Bills of Exchange Act, being
chapter 16 of the Revised Statutes of Canada (1927) and amendments thereto. It
alleged that the Parliament of the Dominion of Canada had the exclusive power
to legislate with respect to promissory notes and that the rights of the
respondent were determined by the provisions of the said Bills of Exchange
Act, and not otherwise. That Act gave the plaintiff an immediate cause of
action on the promissory note held against the appellant Winstanley, upon
default being made in paying the said promissory note when it became due and
payable, and the immediate right to sue thereon. The respondent contended that
it was not subject to the provisions of the Debt Adjustment Act with
respect to the said promissory note and that the right of recourse against
Winstanley was not subject to, or conditional upon, the granting of a permit
under the said statute.
The reply further stated that the respondent had made application
under the provisions of the Debt Adjustment Act for a permit to commence
proceedings in the trial division of the Supreme Court of Alberta against the
appellant Winstanley on the promissory note in question, that he had complied
with the provisions of the said Act, but that the officers authorized under the
Act in that behalf refused a permit.
The respondent further replied that, if it should be contended
that the Debt Adjustment Act and amendments was meant to cover a case
such as this one, then it was ultra vires the Legislature of Alberta, in
so far as the provisions of the said Act were intended to be applicable to the
promissory note referred to in the respondent's statement of claim, and a
permit under the Debt Adjustment Act was not necessary before commencing
the action.
Simultaneously with the filing of the respondent's reply, notice
was served upon the Attorney-General for Alberta that the respondent had, by
its reply, pleaded that the Adjustment Act and amendments thereto were ultra
vires the Legislature of the Province of Alberta, in so far as it may be
contended that the Act applied to an action under a promissory note made and
taken in accordance with the provisions of the Bills of Exchange Act. Counsel
for the Attorney-General appeared and took part in the trial.
[Page 97]
In the Appellate Division, the Court
ordered that he be added as a party in the case and that the style of cause be
amended accordingly.
In this Court, the Attorney-General of Alberta appeared as
appellant, together with Winstanley, the debtor on the promissory note.
Both the trial court and the Appellate Division came to the
conclusion that, to the extent that the Debt Adjustment Act purported to
include within its operation the debt sued upon here, it was ultra vires of
the provincial legislature.
In the result, the respondent was permitted to proceed with his
action without a permit from the Adjustment Board, and the question is whether
the concurrent judgments below ought to be confirmed.
The material provisions of the Debt Adjustment Act (c. 9
of the Statutes of Alberta, 1937) read in part as follows:
8.(1) Unless the Board or any person designated by the Board
under the provisions of this Act, issues a permit in writing giving consent
thereto,—
(a) no action or suit for the recovery of any money
which is recoverable as a liquidated demand or debt in respect of any claim
enforcible by virtue of any rule of law or equity or by virtue of any statute,
except money payable in respect of rates and taxes payable pursuant to any
statute, and debts owing to a hospital for hospital services;
* * *
shall be taken, made or continued by
any person whomsoever against a resident debtor in any case.
The note sued on in this action is not among the exceptions
stated in subsec. 1 (a) or any of the other subsections of section 8. In
terms, section 8 prohibits an action of the nature of the one brought here by the
respondent, except where a permit is issued by a Board appointed and controlled
by the Provincial Government under the provisions of the Act. The prohibition
goes to the right to sue. It has nothing to do with mere procedure. The right
to bring an action is not procedure; it is a substantive right.
The Debt Adjustment Board has the power to grant or to refuse
permits. It can do so wholly within its discretion. It may refuse a permit
indefinitely and is not called upon to give reasons for its decision.
[Page 98]
In effect, in view of the unlimited powers of the Board, the
holder of a promissory note, and more particularly the respondent, may be
entirely denied access to His Majesty's courts.
It does not diminish the impropriety of the situation that, in the
present case, the respondent is a federally incorporated company.
It could not be seriously disputed by the appellants herein that
the Debt Adjustment Act applied in the premises and was meant to prevent
the institution of actions, even in the case of promissory notes. The appellant
Winstanley took that ground from the very start and pleaded the Act in his
statement of defence. As for the Attorney-General, he intervened in the case at
the trial and later was made a party for the very purpose, of which he took
full opportunity, of arguing both that the Act applied and that it was well
within the powers of the Alberta Legislature.
The only point remaining for decision, therefore, is the
constitutionality of the legislation now before us.
Of course, it need only be stated that the Bills of Exchange
Act, which gives to the holder of the note its rights and powers, is within
the legislative competence of the Parliament of Canada. The subject of
"bills of exchange" and "promissory notes" is specifically
mentioned in sub-head 18 of sec. 91 of the B.N.A. Act.
Among the rights and powers given to the holder of a promissory
note under the Bills of Exchange Act, is the right to "enforce
payment" of the note and to "recover" from persons liable
thereon by an action, inter alia, in the Supreme Court of Alberta:
Rights and Powers of
Holder
74. The rights and powers of the holder of a bill are as
follows:
(a) He may sue on the bill in his own name;
(b) Where he is a holder in due course he * * * may
enforce payment against all parties liable on the bill;
* * *
134. Where a bill is dishonoured, the measure of damages
which shall be deemed to be liquidated damages shall be,
(a) the amount of the bill;
(b) interest thereon * * *;
(c) the expenses of noting and protest.
135. In the case of the dishonour of a bill the holder may
recover from any party liable on the bill * * * the damages aforesaid.
[Page 99]
The effect of the above sections is that the holder of a bill or
note has the right to sue on the bill or note in his own name, to enforce
payment against all parties liable; and, in case of a dishonour of the bill or
note, he may recover from any party liable under the bill both the amount of
the bill with interest and the expense of noting the protest, of which it is
stated that they "shall be deemed to be liquidated damages."
These rights and powers are enforceable by action in the
provincial courts (Board v. Board):
If the right exists, the presumption is that there is a
court which can enforce it, for if no other mode of enforcing it is prescribed,
that alone is sufficient to give jurisdiction to the King's Courts of Justice.
In order to oust jurisdiction, it is necessary, in the absence of a special law
excluding it altogether, to plead that jurisdiction exists in some other Court.
In this case, the right is conferred, the Act does not exclude
the jurisdiction of the provincial court and there is no other court in which
that right could be enforced.
Further, the provisions of the Act show that Parliament intended
the rights and powers conferred by it to be enforceable by an action in court.
The statute expressly provides that the holder of a bill or note may enforce
payment, may sue on the bill or note, and may recover from any party liable
thereon. Action in the courts is the only method open to enforce payment and
recover.
The appellants contend that such provisions of the Bills of
Exchange Act exceed the powers of the Dominion Parliament, in so far as
they provide for procedure in such an action, on the ground that the provincial
legislature had the exclusive right to legislate with respect to the
administration of civil justice in the province, the constitution of courts and
the proceedings in civil matters in those courts.
They further contend that the legislation in question is not
necessarily incidental to legislation with respect to bills and notes and that,
therefore, in legislating on the subject, Parliament could not encroach on the
powers of the provincial legislature to make laws in regard to property and
civil rights in the province (sub-head 13 of sec. 92 B.N.A. Act) and
the administration of justice in the province, including the constitution,
maintenance and organization
[Page 100]
of provincial courts, both of civil and
criminal jurisdiction and including procedure in civil matters in those courts
(sub-head 14 of sec. 92).
But it has long since been decided that, with respect to matters
coming within the enumerated heads of sec. 91, the Parliament of Canada may
give jurisdiction to provincial courts and regulate proceedings in such courts
to the fullest extent.
That question was decided by this Court in Valin v. Langlois.
An application was made to the Judicial Committee of the Privy Council for
leave to appeal, and Lord Selborne said:
On the other hand, the same considerations make it unfit and
inexpedient to throw doubt upon a great question of constitutional law in Canada,
and upon a decision in the Court of Appeal there, unless their Lordships are
satisfied that there is, prima facie, a serious and a substantial
question requiring to be determined. Their Lordships are not satisfied in this
case that there is any such question, inasmuch as they entertain no doubt that
the decisions of the lower Courts were correct.
See also Cushing v. Dupuy.
As for the further contention of the appellants, it ought to be
said that, so long as Dominion legislation directly relates to matters
enumerated in the heads of sec. 91, no question of the legislation being
incidental can be raised (Tennant v. Union Bank of Canada;
Cushing v. Dupuy).
I would like to quote the following passage from Lord Atkin,
delivering the judgment of the Privy Council in Proprietary Articles Trade
Association v. Attorney-General for Canada:
If then the legislation in question is authorized under one
or other of the heads specifically enumerated in s. 91, it is not to the
purpose to say that it affects property and civil rights in the Provinces. Most
of the specific subjects in s. 91 do affect property and civil rights, but so
far as the legislation of Parliament in pith and substance is operating within
the enumerated powers, there is constitutional authority to interfere with
property and civil rights. The same principle would apply to s. 92, head 14,
"the administration of justice in the Province," even if the
legislation did, as in the present case it does not, in any way interfere with
the administration of justice. Nor is there any ground for suggesting that the
Dominion may not employ its own executive
[Page 101]
officers for the purpose of carrying
out legislation which is within its constitutional authority, as it does
regularly in the case of revenue officials and other matters which need not be
enumerated.
And in this case it should be pointed out that the right to sue,
or to enforce payment, or to recover on a bill or note is of the very essence
of bills of exchange; it is one of the essential characteristics of a bill or
of a promissory note. The matter falls within the strict limits of subhead 18
of sec. 91. It flows from the provisions establishing negotiability, which has
become the primary quality of a bill or note and in which consist the true
character and nature of these instruments.
The provisions relating to the right to sue, to enforce payment
and to recover before the courts are not incidental provisions; they are, in
truth, the very pith and substance of the statute.
If that be so, there is no question but that the Alberta Debt
Adjustment Act providing, as it does, that no action or suit "shall be
taken, made or continued" to enforce payment of a debt—including debts
evidenced by bills of exchange or promissory notes—is in direct conflict with
valid Dominion legislation.
The Boara created under the Provincial Act, as we have seen, has
an absolute discretion to say whether or not the particular holder of a bill of
exchange or of a promissory note will have the right and power to enforce
payment by action or suit. The effect is to destroy the value of the
negotiability of the bill or note and to deprive the holder of a bill or note
of the right and power to sue and enforce payment and recover, which are
conferred upon him by the Bills of Exchange Act.
The consequence is that the Alberta Act, being in direct conflict
with the above two provisions of the Bills of Exchange Act, are overridden
by the latter; and that, in so far as the Alberta Act may be interpreted as
applying to this action, it is ultra vires of the Alberta Legislature,
on the ground that it attempts to take away from the Alberta courts a
jurisdiction conferred upon such courts by the Parliament of Canada with
respect to a matter within the exclusive legislative authority of that
Parliament. To that extent, the provisions of the Alberta Adjustment Act must
be held inoperative (John Deere
[Page 102]
Plow Company v. Wharton;
Board of Trustees of the Lethbridge Northern Irrigation
District v. Independent Order of Foresters).
Whatever jurisdiction there may have been in the province on the subject has
been superseded by the Dominion legislation (Attorney-General for Ontario
v. Attorney-General for the Dominion and The Distillers and Brewers'
Association of Ontario).
For these reasons, it must be held that the judgment a quo is
right and the appeal ought to be dismissed with costs.
CROCKET J.—While I cannot at all accede to the respondent's
contention that the rights conferred by ss. 74, 134 and 135 of the Bills of
Exchange Act upon holders of bills of exchange and promissory notes to sue,
enforce payment and recover thereon in provincial courts, are not subject to
provincial legislation relating to the jurisdiction of provincial courts and to
procedure in civil matters therein, I am not prepared to hold that s. 8(1) of
the Alberta Debt Adjustment Act does not conflict with the Dominion
enactment in prohibiting all actions "for the recovery of any money which
is recoverable as a liquidated demand or debt," etc., without the consent
of a Board constituted by the Provincial Government.
If the two enactments do conflict, as both courts below have
adjudged, then the Dominion legislation, strictly relating, as it does, to
Bills of Exchange and Promissory Notes as one of the classes of subjects
specially enumerated in s. 91 of the B.N.A. Act, in the sense of being
necessarily incidental thereto, unquestionably prevails over the provincial.
I agree that the appeal should be dismissed with costs.
DAVIS J.—The provincial legislation in question, The
Debt Adjustment Act, 1987, of Alberta, is not aimed at bills of exchange or
promissory notes; nor is it legislation in relation to bills of exchange or
promissory notes. It is a statute of general application whereby no action or
suit for the recovery of any money which is recoverable as a liquidated demand
or debt in respect of any claim enforceable by virtue of any rule of law or
equity or by
[Page 103]
virtue of any statute (except money
payable in respect of rates and taxes payable pursuant to any statute, and
debts owing to a hospital for hospital services); and no proceedings by way of
execution, attachment or garnishment; and no action or proceeding for the sale
under or foreclosure of a mortgage on land, or for cancellation, rescission or
specific performance of an agreement for sale of land or for recovery of
possession of land, whether in court or otherwise; and other specified
proceedings for seizure or distress; and "no action respecting such other
class of legal or other proceedings as may be brought within the
provisions" of the statute "by order of the Lieutenant-Governor in
Council" shall be taken, made or continued in the courts of the province
by any person whomsoever against a resident debtor (a person who is a debtor
and who is an actual resident of and personally living in Alberta) without a
permit in writing giving consent thereto issued by the Debt Adjustment Board
constituted by the province pursuant to the statute. The statute further
provides that such consent whenever given shall relate back to anything done in
the action or other proceedings in respect of which the permit is given. The
statute does not apply to any contract made or entered into by a debtor where
the whole of the original consideration for the contract arose on or after the
1st day of July, 1936, but does apply to any agreement, contract, stipulation,
covenant or arrangement made since that date which purports to substitute a new
indebtedness in the place of any indebtedness created or arising before the 1st
day of July, 1936, or to any guarantee whensoever made for the payment of any
debt payable in respect of any contract, the whole of the original consideration
for which arose before the 1st of July, 1936.
The principal submission of the Attorney-General of Canada and of
the respondent (plaintiff) was that the statute is in conflict with the
Dominion legislation under the Bills of Exchange Act, R.S.C.; 1927, ch.
16. Particular emphasis was put upon sec. 74 of that statute, which provides
that the holder of a bill may sue on the bill in his own name. It is contended
that the provincial legislation is in conflict and therefore invalid or
inoperative in so far as it affects bills of exchange or promissory notes. A
holder means a payee or endorsee
[Page 104]
of a bill or note who is in possession of
it, or the bearer thereof. But the words "the holder of a bill may sue on
the bill in his own name" mean only "not liable to be defeated in an
action on the bill on the ground that the action has been brought by the wrong
party" (see the judgment of Lord Birkenhead in Sutters v. Briggs).
Section 74 deals only with the rights acquired by negotiation (sec. 60), that
is, by transfer according to the form required by the law merchant.
Falconbridge on Banking, 5th ed., 1935, pp. 698-99.
I do not think that the Dominion statute is in any way dealing
with access to any court, general or particular, provincial or Dominion. The
original statute, the Bills of Exchange Act, 1890, was a re-enactment
(with only some slight modifications with which we are not concerned) of the Bills
of Exchange Act, 1882, as enacted by the Imperial Parliament. Our present
section 74 is the original sec. 38 of the Imperial statute. The argument before
us was directed to the contention that the Dominion statute expressly gave
access to the courts and that the provincial legislation closed the door of the
particular court in which this action was instituted, that is, the Supreme
Court of Alberta, and that was a conflict, and the Dominion legislation
prevailed. But, as I have said, I do not think the Dominion statute was in any
way dealing with courts as such, either general or particular.
Section 92 (14) of the British North America Act gave the
legislatures of the provinces exclusive jurisdiction in relation to "the
administration of justice in the province, including the constitution,
maintenance and organization of provincial courts, both of civil and of criminal
jurisdiction, and including procedure in civil matters in those courts."
It is of vital importance to the integrity of our system of constitutional
government that full recognition be given to the rights of the provinces in the
exercise of their powers by their elected legislative bodies. If they have
legislative competency in relation to the matters dealt with, then that any
particular enactment may appear to us to be inadvisable or unjust has nothing
whatever to do with its validity.
If the constitution of the civil courts by a province and the
provincial legislation governing the administration of
[Page 105]
justice in a province is not adequate at
any time in the view of the Parliament of Canada for the purposes of those
specific matters which are within the exclusive legislative competency of the
Dominion, the Parliament of Canada may itself establish additional courts, as
it did in the Exchequer Court of Canada which has original as well as appellate
jurisdiction, or designate any existing provincial courts, as was done in sec.
63 of the Dominion Bankruptcy Act, 1919, ch. 36, now sec. 152 of R.S.C.,
1927, ch. 11 (pursuant to the power vested in the Dominion by sec. 101 of the British
North America Act) "for the better administration of the laws
of Canada," i.e., laws passed by the Dominion Parliament (Consolidated
Distilleries Ld. v. The King).
But I am prepared to hold for the purposes of this action (both
the Attorney-General of Canada and the Attorney-General of the province having
been represented before us) that the provincial legislation relied upon as a
defence to the action is ultra vires the province. Where legislative
power is divided, as in Canada, between a central Parliament and local
legislative bodies and the administration of justice in the provinces,
including the constitution, maintenance and organization of provincial courts,
is given over to the provinces (with the appointment of the Judges in the
Dominion), a province cannot, in my opinion, validly pass legislation, at least
in relation to subject-matter within the exclusive competency of the Dominion,
which puts into the hands of a local administrative agency the right to say
whether or not any person can have access to the ordinary courts of the
province. The Debt Adjustment Board of Alberta is an administrative body and is
not validly constituted to receive what is in fact judicial authority. Toronto
v. York.
For the reasons above stated, I would dismiss this appeal with
costs.
The judgment of Hudson and Taschereau JJ. was delivered by
HUDSON J.—In this action the plaintiff, as holder, claims
from the defendant, a resident of Alberta, as maker, the amount of an overdue
promissory note made and payable in Alberta. The only defence set up by the
defendant
[Page 106]
is the Debt Adjustment Act, being
chapter 9 of the Statutes of Alberta of 1937 and amendments, and that the
plaintiff has not been granted a permit under the said Act to commence the
action. In reply it was claimed that this Act was ultra vires of the
Province.
The Attorney-General of Alberta intervened to support the
defence.
The action was tried before Mr. Justice Ewing, who gave judgment:(1)
declaring that the Debt Adjustment Act of Alberta, 1937, in so far as
the same affects promissory notes, is ultra vires the powers of the
Provincial Legislature;(2) that the plaintiff has the right to proceed with
this action without a permit of the Debt Adjustment Board.
On appeal, the Court of Appeal in a unanimous judgment confirmed
the decision of Mr. Justice Ewing.
The Debt Adjustment Act of 1937, as amended, constituted a
Board to be known as the Debt Adjustment Board, the member or members to be
named by the Lieutenant-Governor in Council.
Section 4 empowers the Board to nominate agents who, with the
approval of the Lieutenant-Governor in Council, shall have power to grant or
refuse permits under the Act.
Section 6 empowers the Board to make inquiries with regard to the
property of a resident debtor and the disposition made by him of the property,
and may examine under oath certain persons and others.
Section 7 constitutes the Board a body politic and corporate and
provides that any member of the Board is empowered to act for and on behalf of
the Board.
Section 8, which is the important section, in part is as follows:
8.(1) Unless the Board or any person designated by the Board
under the provisions of this Act, issues a permit in writing giving consent
thereto,—
(a) no action or suit for the recovery, of any money
which is recoverable as a liquidated demand or debt in respect of any claim
enforcible by virtue of any rule of law or equity or by virtue of any statute,
except money payable in respect of rates and taxes payable pursuant to any
statute, and debts owing to a hospital for hospital services;
* * *
(g) no action respecting such other class of
legal or other proceedings as may be brought within the provisions of this
section by order of the Lieutenant-Governor in Council,—
[Page 107]
shall be taken, made or continued by
any person whomsoever against a resident debtor in any case.
Subsection 3 limits the application of the section to debts where
the original consideration arose prior to the 1st of July, 1936.
Subsection 5 provides that the Board may at any time in its
discretion cancel or suspend any permit which has been previously issued under
this section by the Board.
Section 10 provides that where a creditor asks for a permit, the
Board shall proceed to make such inquiries as it may deem proper, and thereupon
may issue a permit or refuse or adjourn the application, and may give
directions to the resident debtor as to the conduct of his affairs.
Section 23 provides that in case any person makes wilful default
in complying with any order, direction or condition of the Board, or wilfully
takes or continues any action or proceeding, or makes or continues any seizure,
etc., in contravention of the provisions of this Act, or makes default in
complying with any direction of the Board under the provisions of this Act,
then he shall be liable on summary conviction to a fine, and, in default, to
imprisonment.
Section 26 indemnifies the Board and its members from liability
for any act done under the Act.
Section 27 provides that every action, order or decision of the
Board as to any matter or thing in respect of which any power, authority or
discretion is conferred on the Board shall be final and shall not be
questioned, reviewed or restrained by injunction, prohibition or mandamus or
other process or proceeding in any court, or be removed by certiorari or
otherwise in any court.
It is further provided that the provisions of this Act shall not
be so construed as to authorize the doing of any act or thing which is not
within the legislative competence of the Legislative Assembly.
This Act, if valid, effectually bars access to the established
courts of justice in respect of a large class of rights arising under the laws
of Canada as well as the laws of Alberta, unless a nominee of the Provincial
Executive of his or its own free will, ungoverned by any law, chooses to give
consent.
The right of the Province to pass such a law, in so far as it
affects a promissory note made and payable in Alberta, is directly challenged
in this action.
[Page 108]
The British North America Act, sec. 91, subsection 18,
particularly enumerates as a class of subjects falling exclusively within the
legislative authority of the Parliament of Canada: "18. Bills of Exchange
and Promissory Notes," and under the authority of this heading the
Parliament of Canada passed the Bills of Exchange Act. In the court
below, reference was made to section 74, which provides:
The rights and powers of the holder of a bill are as
follows:
(a) He may sue on the bill in his own name;
(b) Where he is a holder in due course, he holds the
bill free from any defect of title of prior parties, as well as from mere
personal defences available to prior parties among themselves, and may enforce
payment against all parties liable on the bill.
This section expressly recognizes a right
of action on a note such as is here in question.
The action was entered in the Supreme Court of Alberta. This
court was constituted by statute of the Province of Alberta and given civil and
criminal jurisdiction similar to that exercised by superior courts in England
and, in addition, was expressly given the jurisdiction up until then exercised
by the former Supreme Court of the North West Territories. This latter court
was a Dominion court created by the statutes of the Parliament of Canada and
maintained and organized under Dominion authority. The express grant of this
jurisdiction merely emphasizes in the case of Alberta what has always been
recognized since Confederation, that a provincial court has jurisdiction to
entertain actions founded on the laws of Canada as well as on the laws of the
Province.
Upon the constitution of this court by the Province, qualified
judges were appointed by the Dominion, as provided for in section 96 of the British
North America Act, and thus the court was enabled to function as
contemplated by the statute.
There can be no doubt that it had jurisdiction and that it was
its duty to entertain this action, unless that right ; had been taken away by
competent authority.
The Debt Adjustment Act, which is set up as a defence,
does not purport to amend or limit the jurisdiction of the Supreme Court. What
it does is to place in the hands of a provincial body the right to say whether
or not certain classes of rights may be established or enforced through the
courts.
[Page 109]
The contention of the Attorney-General and of the defendant in
support of this statute is based primarily on sub-head 14 of section 92 of the British
North America Act, which reads as follows:
92. In each Province the Legislature may exclusively make
laws in relation to * * *
(14) The administration of justice in the Province,
including the constitution, maintenance and organization of provincial courts,
both of civil and of criminal jurisdiction, and including procedure in civil
matters in those courts;.
The expression "administration of
justice" taken by itself is most comprehensive, but it must be read as
part of the British North America Act; otherwise, it would enable the
Legislature to make and enforce laws within the field allotted exclusively to
the Dominion Parliament. The expression must mean, the administration of justice
according to the laws of Canada or the laws of the Province, as the case may
be.
Normally, the administration of justice should be carried on
through the established courts, and the Province, although it has been allotted
power to legislate in relation to the administration of justice and the right
to constitute courts, cannot substitute for the established courts any other
tribunal to exercise judicial functions: see Toronto v. York.
There may be administration of law outside of the courts short of
empowering provincial officers to perform judicial functions, but in respect of
matters falling within the Dominion field a province would certainly not be
justified in doing anything which would destroy or impair rights arising under
the laws of Canada.
The province is given the power to constitute courts, and this
would imply a power to define, limit, or enlarge the jurisdiction of those
courts, at least in so far as the laws of the province may be involved.
The Dominion Parliament has power to impose duties upon courts
established by the provinces in furtherance of the laws of Canada, and a
province could not interfere with, nor take away, the jurisdiction thus
conferred: see Valin v. Langlois; Cushing
v. Dupuy.
[Page 110]
In the present case, as already pointed out, the Province has not
directly altered the jurisdiction of the Supreme Court of Alberta. It has set
up a commission without whose approval all courts are forbidden to act within a
prescribed field.
Under section 92 (14) a Provincial Legislature has power to
legislate in respect of procedure in the courts in respect of matters
exclusively allocated to the provinces under other headings of section 92, and
no doubt to regulate procedure in those courts in respect of enforcement of the
laws of Canada where Parliament has not otherwise provided and where the result
is not in conflict with the laws of Canada.
It is said that a right of action on a promissory note is a
"civil right" within the meaning of section 92 (13), but it is a
civil right governed by the laws of Canada and, for that reason, excluded from
the provincial legislative field.
However, the Debt Adjustment Act is not properly a law as
to procedure in courts. It provides for extrajudicial procedure.
We are not concerned here with the law of executions, exemptions
from seizure or property rights and it is neither necessary nor advisable to
discuss the validity of the Debt Adjustment Act, in so far as it affects
matters not now directly in issue in this action.
The real question here appears to be this: Can a province impose
extra-judicial control over rights of action arising under the laws of Canada?
To answer this in the affirmative would, in my opinion, conflict with the
distribution of legislative power contemplated by the Constitution.
I would dismiss the appeal with costs.
Appeal dismissed with costs.
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