Wright v. Attorney-General of Canada, 88 DTC 6041, [1988] 1 CTC 107 (Ont. D. Ct.)

Austin, J.: —This is an appeal by the respondent and a cross-appeal by the applicant from the judgment of the Honourable Judge Killeen dated October 6, 1986. The factual background is very fully and accurately set out in the reasons of the learned judge.

Very briefly, the applicant, Mary Constance Wright, sought a declaration that the sum of $18,002.16 in the hands of the Sheriff of the County of Middlesex and arising from a seizure made pursuant to a writ of execution filed by the federal Crown, should be paid out to her in its entirety on the basis of her prior right to the fund.

Her claim was put on three bases:

1. The charging order granted by Hollingworth J. pursuant to the Judicature Act, s. 146, created a special form of charge on the R.R.S.P’s of her husband, prior in status to the rights of Revenue Canada under its writ of execution.

2. Alternatively, her claim under the charging order and execution issued pursuant to it put her in a prior or preferred position to the extent of $12,000 by virtue of s. 4(a) of the Creditors' Rights Amendment Act proclaimed on July 12, 1985 because her claim is for arrears under a support judgment.

3. Alternatively, the priority asserted under the Crown prerogative power fails because it offends Mrs. Wright's equality rights under s. 15 of the Charter of Rights and Freedoms which puts the competing claims in an equal position and entitles each to a rateable share of the fund in the hands of the Sheriff.

The learned judge dealt with these arguments: he dismissed the first two and gave effect to the third. He found that the claim of the Crown for priority offended section 15 of the Charter and ordered the Sheriff to distribute the seized money in his hands rateably amongst Mrs. Wright, the Crown in right of Canada and any other execution creditors.

The Crown has appealed to this Court from that disposition, taking the position that the learned judge erred in rejecting the Crown claim for priority. Mrs. Wright has cross-appealed, asserting her claim for priority by virtue of the charging order granted by Hollingworth, J. pursuant to section 146 of the Judicature Act and in the alternative claiming priority to the extent of $12,000 by virtue of paragraph 4(a) of the Creditors’ Relief Amendment Act.

Although section 146 of the Judicature Act suggests that it creates a secured right, I am of the view that it does not have that effect. Re Bright (1981), 33 O.R. (2d) 219; 124 D.L.R. (3d) 115. Nor am I persuaded that the effect of the charging order granted under section 146 somehow elevated Mrs. Wright so as to rank above or ahead of any other creditors. Accordingly I am of the view that the learned judge was correct in reaching the conclusion he did on this point.

Turning to the argument with respect to section 15 of the Charter, the learned judge, in reaching the conclusion that the federal Crown is bound by subsection 15(1), found in effect that the Crown is an “individual” within the meaning of that section. In Kurolak et al v. Minister of Highways and Transportation of Saskatchewan, [1986] 4 W.W.R. 323, the Court had to deal with an action for damages in which it was alleged that the defendant Minister failed in his duty to maintain a certain highway. The plaintiffs failed to give notice of their claim as required by the relevant act and in response to an application by the defendant to determine whether this failure was fatal to the action, argued that the relevant limitation period infringed subsection 15(1) of the Charter. In disposing of the application Halvorson, J. said:

As I see it, s. 15(1) has no application because the defendant, in the circumstances before me, is not an "individual" contemplated by the section. Because the defendant is a minister of the government, the Crown, in effect has been sued. The Crown is not equal to others. The Crown could not be sued in tort at common law, and can only be sued in Saskatchewan insofar as permitted by general statutes such as the Proceedings against the Crown Act, R.S.S. 1978 c.P-27, or specific statutes such as the Highways and Transportation Act.

In Regina v. Stoddart (1987), 20 O.A.C. 365, the Court of Appeal for Ontario was dealing with a claim that the difference in jury selection rights between the accused and the Crown constituted an infringement of subsection 15(1). In dismissing the appeal, Tarnopolsky, J.A. for the Court of Appeal said, "The Crown is not an ‘individual’ with whom a comparison can be made to determine a subsection 15(1) violation”. In arriving at that conclusion, he quoted with approval the excerpt from decision of Halvorson, J. in the Kurolak case. In view of that determination by our Court of Appeal, made after the decision below, I conclude, with respect, that the learned judge in the present matter erred in concluding that the Crown was an “individual” for the purposes of section 15 of the Charter.

As this was the basis upon which the application of Mrs. Wright succeeded, it follows that the appeal of the Crown must be allowed, unless her application can be saved, in whole or in part by resorting to paragraph 4(a) of the Creditors’ Relief Amendment Act. That amendment gave priority to arrears of payment under a support or maintenance order over other judgment debts. Subparagraph 4(a)(iii) expressly provides that the operative section “binds the Crown in right of Ontario". The federal and provincial Interpretation Acts provide that the Crown, federal or provincial, cannot be bound by legislation unless such legislation expressly names the Crown as a bound party. In the present situation, the provincial Crown is bound but the federal Crown is not. Accordingly, the priority asserted pursuant to the perogative of the federal Crown must take precedence over the claim of Mrs. Wright.

The order of the Honourable Judge Killeen dated October 6, 1986 will therefore be set aside and in its place an order will go dismissing the application. In accordance with the order of Griffiths, J., dated June 15, 1987, granting leave to the Attorney General of Ontario to intervene, Mrs. Wright will have her costs throughout on a solicitor and client basis, although her application is dismissed.

Smith, J.: —1 have read the reasons of Austin, J. I concur in his disposition of both the appeal and cross-appeal and I agree with him in the matter of costs. I also subscribe to his interpretation of section 146 of the Judicature Act which was in force at the material time and of paragraph 4(a) of the Creditors' Relief Amendment Act.

I feel compelled, however, to make a separate comment in respect of the constitutional issue for I earlier expressly disagreed with Halvorson, J’s decision in Kurolak et al. v. Minister of Highways and Transportation of Saskatchewan, [1986] 4 W.W.R. 323. See Streng et al. v. Township of Winchester (1987), 56 O.R. (2d) 649. In light of Tarnopolsky, J.A.'s reasons in Regina v. Stoddart (1987), 20 O.A.C. 365, it is not likely that our own Court of Appeal would refuse to extend its decision that the Crown was not an individual to civil cases in which the Crown was suing or being sued. But since the Court of Appeal has not specifically spoken in the context of a piece of civil litigation, I register my concurrence in this instance, "dubitante".

I note in passing that the appellant's argument rested also on another basis that circumvented the need to address the definition of “individual”. It certainly does not appear to me to be right that in ordinary litigation where the Crown is a party but not specifically a party qua Crown, as in a negligence suit for example, the Crown should benefit from an advantage not afforded the ordinary individual. Here the Crown is a revenue collector and it would seem that the Crown prerogative ought to prevail. Semble that at least in ordinary civil litigation section 15 could conceivably, although not likely now in the face of Stoddart, be held to apply on the basis of the second branch of the appellant's argument.

Absent resort to section 15 of the Charter, the Crown prerogative could only have its efficacy reduced as a result of legislation similar to paragraph 4(a) (supra). In the matter at hand, the Crown is not an ordinary litigant and Mrs. Wright must therefore regretfully fail.

Crown's appeal allowed.