People's Holding Co. v. Attorney-General of Quebec, [1931] SCR 452

Supreme Court of Canada

People's Holding Co. v. Attorney-General of Quebec, [1931] S.C.R. 452

Date: 1931-06-12

People's Holding Company, Limited (Respondent) Appellant;

and

The Attorney-General of Quebec (Petitioner) Respondent;

and

The Attorney-General of Canada (Intervenant).

1930: October 24; 1931: February 23; 1931: June 12.

Present: Anglin C.J.C. and Duff, Newcombe, Rinfret and Cannon JJ.

Present: Duff, Newcombe, Rinfret, Lamont and Cannon JJ.

ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Company—Incorporated under federal authority—Petition by the Attorney-General of a province for its dissolution—Allegations that the company was violating the law and defrauding the public—Right to take proceedings—Exception to the form—Arts. 978 and foll. C.C.P.

The Attorney-General for Quebec instituted proceedings under articles-978 and following C.C.P., invoking irregularities and illegalities in the management of the appellant company, incorporated under the Companies Act of the Dominion, also alleging violations of the law or of the Acts by which the appellant was governed with the object of defrauding the public and of endangering the public welfare and further asserting that the proceedings were taken to abate these alleged violations and were instituted and carried out in the general public interest of the people of the province of Quebec in particular. Consequently, the Attorney-General for Quebec asked that the letters patent of the appellant company be forfeited and that the company itself be dissolved. The appellant, by way of an exception to the form, moved for the dismissal of the action on the ground, inter alia, that the Attorney-General of Quebec had neither the quality nor the capacity to institute these proceedings against a company holding its powers from the federal authority.

Held that the Attorney-General for Quebec was qualified to institute the proceedings and that the exception to the form has been rightly dismissed by the court appealed from. The Crown, as parens patriae, represents the interests of His Majesty's subjects, and the Attorney-General for a province, acting as the officer of the Crown, is. empowered to go before the courts to prevent the violation of the rights of the public of that province, even if the perpetrator of the deeds complained of be a creature of the federal authority. In other words, the Attorney-General of a province has not only the right, but the duty, to suppress the civil offences committed within the limits Of the province.—No opinion is expressed as to the question whether the courts may, at the instance of the Attorney-General of a province, direct the dissolution or winding up of a company incorporated.

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by Act of the Parliament of Canada or by letters patent issued under its authority. Such a question can arise only on the merits of the case and exception to the form is not the proper procedure for that purpose nor is it the appropriate way of raising it.

Held, also, that, by enacting art. 978 C.C.P., the legislature of Quebec intended to confer the power of prosecuting violations of the law therein stated on the Attorney-General of the province. Wherever the words "Attorney-General" are used without qualification in a code or in a statute of Quebec, they have reference to the Attorney-General for Quebec. But the Attorney-General for Canada may also avail himself of the benefit of the enactment provided by art. 978 C.C.P. (Dominion Salvage & Wrecking Co. v. The Attorney-General of Canada (21 Can. S.C.R. 720 ref.).

To the extent above indicated, the following judgments are approved: The Attorney-General v. The Niagara Falls International Bridge Company (20 Grant's Ch. R. 34); The Attorney-General v. The International Bridge Company (27 Grant 37); Loranger v. Montreal Telegraph Company (5 L.N. 429); Turcotte v. Compagnie de chemin de fer Atlantique (17 R.L. 398); Casgrain v. Dominion Burglary Guarantee Company (Q.R. 6 S.C. 382); Guimond v. National Real Estate (16 Q.P.R. 328).

Judgment of the Court of King's Bench (Q.R. 48 K.B. 133) aff.

APPEAL, by special leave of appeal, from the decision of the Court of King's Bench, appeal side, province of Quebec[1], affirming the judgment of the Superior Court, Surveyer J., and dismissing the exception to the form filed by the appellant as a preliminary answer to the proceedings instituted by the respondent for the dissolution or winding-up of the appellant company.

The facts of the case and the questions at issue are stated in the above head-note and in the judgment now reported.

J. de G. Audette K.C. for the appellant.

A. Geoffrion K.C. and A. Garneau for the respondent.

O. M. Biggar K.C. for the Attorney-General for Canada.

F. H. Chrysler K.C. for the Attorneys-General for Manitoba and Saskatchewan.

J. Sedgewick for the Attorney-General for Ontario.

The judgment of the court was delivered by

Rinfret J.—The People's Holding Company Limited is a federal company incorporated under the Companies' Act, now c. 27 of R.S.C., 1927, originally with its head office in

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the province of Ontario. On the record before us, it would appear that the head office was later transferred to Montreal, in the province of Quebec, but it is alleged that the proceedings adopted for that purpose were not according to law and therefore ineffectual.

This case originated by a petition on behalf of the Attorney-General of Quebec, in right of His Majesty the King, under articles 978 and following of the Code of Civil Procedure, alleging irregularities and illegalities in the organization, the activities and the management of the company; asserting that the company made use of its charter to defraud the public who, in the words of the petition,

a déjà perdu des sommes considérables par l'achat d'un certain nombre d'actions de la compagnie intimée.

and that, without the present intervention of the Attorney General,

le public du Canada et de la province de Québec en particulier est en danger de perdre des sommes très considérables.

Under the circumstances, the prayer of the petition is that a writ of scire facias should issue pursuant to the articles of the code already mentioned in order that it might be declared:

(a) Que la compagnie intimée a commencé et a continué ses opérations en violation de l'acte qui la régit;

(b)(Que la dite compagnie intimée a assumé et assume des pouvoirs, privilèges, franchises, qui ne lui appartiennent pas et qu'elle est en conséquence de venue passible de la forfaiture de ses droits.

(c) Que les lettres patentes ou charte de l'intimée, ainsi que tous les droits et privilèges que les dites lettres patentes ou charte comportent, soient déclarés forfaits; et

(d) Que la dite compagnie intimée ayant un capital minimum d'un million de dollars, soit déclarée dissoute et * * * qu'un curateur soit nommé aux biens de la dite compagnie intimée.

The appellant, by way of exception to the form, prayed for the dismissal of the action on several grounds. Some of these grounds raised questions purely of procedure. They have already been disposed of in the Quebec courts and they are not open in this appeal. Another ground was that

proceedings. by way of scire facias are not the proceedings provided by law when seeking the remedy asked for by petitioner in the present case.

Yet another ground—and the one about which we are mainly concerned—was that the provincial Attorney-General had

neither the quality nor the capacity to institute the proceedings

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against a company holding its powers from the federal authority.

The Superior Court, in Montreal, held that the Attorney-General of Quebec was the proper person to present the special information (Art. 980 C.C.P.) and dismissed the exception to the form, but without distinguishing between the various kinds of relief prayed. On appeal, the judgment was unanimously affirmed. Some of the learned judges, in their reasons, made reservations with regard to part of the conclusions of the petition, but these reservations were not expressed in the formal judgment of the court. It was feared, therefore, that the decision might be regarded as res judicata between the parties upon all of the points raised by the appellant. That involved undoubtedly questions of law of great public importance applicable to the whole Dominion, and affecting all joint stock companies incorporated by Act of the Parliament of Canada or by letters patent issued under its authority.

For those reasons, special leave to appeal was granted by this court so that the true effect of the judgments may be determined and that, if necessary, these important questions may be further discussed and decided.

The Attorney-General of Canada and the Attorneys-General of all the other provinces were notified in order that they may take part in the appeal and be given an opportunity to submit their views. Thus, for the decision presently to be stated, we had the benefit of arguments not only on behalf of the parties immediately concerned, but also on behalf of the Attorney-General of Canada and of other provincial Attorneys-General.

For the better understanding of the nature of the litigation, it will be convenient to give here the text of the article of the Code of Civil Procedure under which the information was presented:

978. In all cases of general public interest, the Attorney-General must, and in all other cases, may, but need not unless sufficient security is given to indemnify the Government for the costs to be incurred, prosecute the violations of the law in the following cases:

1. Whenever any association or number of persons acts as a corporation without being legally incorporated or recognized;

2. Whenever any corporation, public body, or board, violates any of the provisions of the acts by which it is governed, or becomes liable to a forfeiture of its rights, or does or omits acts the doing or omission of

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which amounts to a surrender of its corporate rights, privileges and franchises, or exercises any power, franchise or privilege, which does not belong to it or is not conferred upon it by law.

At the outset, it may be stated that we do not find it necessary to decide the point whether, upon the allegations of the information and to secure the object sought for, the writ of scire facias would be a proper remedy. The appellant urged that the writ did not lie to attack, cancel and annul letters patent granted by the Crown or to dissolve a corporation created by or under an Act of parliament. Upon that contention we need not express any opinion. The information of the Attorney-General is substantially within the terms of articles 978 and following of the Code of Civil Procedure. It is expressly stated that the proceedings are taken out in compliance with those articles. It does not matter if the petition calls scire facias a writ which, in truth and strictly speaking, may not be scire facias. It is sufficient that the proceedings taken out are those authorized by the articles of the code the Attorney-General expressly appeals to. Giving the writ an erroneous or improper appellation does not alter its nature, nor does it modify the position of the parties.

We should therefore proceed to a consideration of the true nature of the petition and inquire whether or not the Attorney-General of Quebec has the "capacity" and the "quality" to maintain these proceedings.

The real question in dispute is one of quality and not of capacity. It is unquestionable that the Crown has the capacity to be a party to any suit. It exercises that capacity through its recognized officers and, in Quebec (Art. 81 C.C.P.), as well as in all other provinces, that officer is the Attorney-General (c. 16 of R.S.Q. 1927). It should be evident that the appellant does not wish to dispute that proposition and the issue he intends to raise really is: Whether, for the particular purpose, the Attorney-General of Quebec is qualified to represent the Crown.

That, by enacting article 978 C.C.P., the legislature of Quebec intended to confer the power referred to on the Attorney-General of Quebec does not seem to leave any room for discussion. Although the decision of the court in Dominion Salvage & Wrecking Company and The Attorney-General of Canada[2], is authority for the proposition

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that the Attorney-General of Canada may also avail himself of the benefit of the enactment, it may not be doubted that the words "Attorney-General" wherever used without qualification in a code or in a statute of Quebec have reference to the Attorney-General of the Province of Quebec (See art. 5 of the Code of Civil Procedure, subs. 17 of s. 36 of R.S.Q. 1909 and subs. 14 of s. 61, c. 1 of R.S.Q. 1925). The respondent is therefore the officer of the Crown primarily designated in art. 978 and qualified to institute all proceedings originated under that article.

But the objection of the appellant goes deeper and it says: The People's Holding Company Limited is a federal corporation whose status cannot be impaired by provincial authority. The respondent, as an executive officer of the province, is not empowered to conduct litigation in respect of any subject within the authority or jurisdiction of the Dominion. He cannot, as such, grant a fiat for the issue of a writ to annul federal letters patent, nor can he take out such a writ himself without permission from the proper federal authority. In brief: Article 978 C.C.P., on which the respondent relies, does not apply to federal companies or, if it does apply in such cases, then the proceedings can only be brought by the Attorney-General of Canada or, in the alternative, if the article is meant to apply to federal companies and if it should be interpreted as giving the alleged power to the Attorney-General of Quebec, then it is pro tanto ultra vires.

There are no decisions of the higher courts precisely in point. In two instances (The Colonial Building and Investment Association v. Attorney-General of Quebec[3]; Casgrain v. Atlantic & North West Ry.[4]), similar proceedings in the name of the Attorney-General of Quebec against companies incorporated under Dominion law went to the Privy Council without there being any suggestion, either by the Board or by counsel, that the provincial Attorney-General was not the proper plaintiff.

In the case of the Dominion Salvage Company already referred to[5], under former articles of the code of which 978 and following are the re-enactment, the charter of a federal company—being an Act of the Parliament of Canada—

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was declared forfeited, but at the instance of the Attorney-General of Canada. The majority of the court, for whom Taschereau J., afterwards Chief Justice, delivered the judgment, declared however that the articles in question "apply by their very terms to all corporations whatsoever," and the court expressly reserved the question

whether, and in what cases, the Attorney-General for the province could also exercise that right.

It has now become our duty to decide whether the present information in the name of the provincial Attorney-General is a proper and competent exercise of the right.

The allegations of the petition all point to violations of the law or of the Acts by which the appellant is governed, with the object of defrauding the public and of endangering the public welfare. The prosecution tends to abate the alleged violations and is declared to be instituted and carried on in the general public interest of the people of the province of Quebec in particular.

Now the Crown, as parens patriae, represents the interests of the whole of His Majesty's subjects, and we can discover no reason why the Attorney-General for the province, acting as the officer of the Crown, should not be empowered to go before the courts to prevent the violation of the rights of the public of that province, even if the perpetrator of the deeds complained of be a creature of the federal authority. In the words of Surveyer J., in the present case: " le procureur-général d'une province a le droit et le devoir de réprimer les délits civils qui se commettent dans les limites de sa province."

This accords with the position taken at bar by the Attorney-General of Canada who stated that he did "not desire to contest the right of an attorney-general of a province to take such proceedings as may be open to him to take, according to the practice of the courts of the province, for the purpose of compelling the observance within the province of any law, federal or provincial, which may be in force therein." To the extent so far indicated and also to the extent to which they have so decided we think that the following judgments, referred to during the course of the argument and on which the courts below relied,

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should be approved; The Attorney-General v. The Niagara Falls International Bridge Company[6]; The Attorney-General v. The International Bridge Company[7]; Loranger v. Montreal Telegraph Company[8]; Turcotte v. Compagnie de chemin de fer Atlantique[9]; Casgrain v. Dominion Burglary Guarantee Company[10]; Guimond v. National Real Estate Company[11]; to which should be added the judgments now appealed from.

What we have said is sufficient to conclude that, for the reasons stated, the exception to the form was rightly dismissed and that the appeal should accordingly be disallowed.

The confirmation of the judgments a quo does not imply that the courts may, at the instance of the Attorney-General of a province, direct the dissolution or winding-up of a company incorporated under the Canadian Companies Act. These questions will arise only on the merits. There is no decision on these points, as it is not the proper procedure on which to make an adjudication of that kind, nor is it the appropriate way of raising these questions.

We were told by the appellant that those were the only remedies prayed for in the information. We do not wish to be understood to mean that they are not open. We only say that if they are not, when the facts are found to have been established, some other order may be made, on the conclusions as drawn or upon proper amendments, which will have the effect of protecting the public and forcing the appellant to obey the laws to which it is subject.

A powerful argument was addressed to us urging that, articles 978 and following of the Code of Civil Procedure being in substance a re-enactment of pre-confederation statutes (Statutes of Canada, 12 Vict., c. 41, s. 8; Consolidated Statutes of Lower Canada, c. 88, s. 9) which, it is claimed, have never been repealed at least so far as concerns the province of Quebec, full effect should be given to their provisions in that province even as regards Dominion bodies or federally incorporated companies, as long as the Parliament of Canada does not intervene to introduce conflicting legislation or to appoint its own executive officers

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for the purpose of prosecuting matters of this nature within its constitutional authority (see Proprietary Articles Trade Association v. Attorney-General for Canada (1).

The point is so much involved with the question of remedies, with which, after all, article 978 C.C.P. is primarily concerned, that, as a consequence of what we have just said, we think it should properly be left for discussion on the merits.

Appeal dismissed with costs.

Solicitors for the appellant: Audette & O'Brien.

Solicitors for the respondent: Bertrand, Guerin, Goudrault & Garneau.