Supreme Court of Canada
Canadian Pioneer Management Ltd. et al. v. Labour Relations Board of Saskatchewan et al., [1980] 1 S.C.R. 433
Date: 1979-12-21
Canadian Pioneer Management Ltd., Pioneer Life Assurance Company and Pioneer Trust Company Appellants;
and
Labour Relations Board of Saskatchewan and the Saskatchewan Joint Board Retail, Wholesale and Department Store Union Respondents;
and
The Attorney General of Canada, The Attorney General of Ontario, The Attorney General of Quebec, The Attorney General of Nova Scotia, The Attorney General of New Brunswick, The Attorney General of Saskatchewan, The Attorney General of Alberta, The Attorney General of Newfoundland Intervenors.
1979: June 20; 1979: December 21.
Present: Laskin C.J. and Martland, Ritchie, Pigeon, Dickson, Beetz, Estey, Pratte and McIntyre JJ.
Constitutional law—Labour management relations—Federally incorporated life insurance company—Federally incorporated trust company—Jurisdiction of Labour Relations Board of Saskatchewan to certify bargaining unit and hear charges of unfair labour practices—Canada Labour Code, R.S.C. 1970, c. L-1, s. 2, and s. 108 as enacted by 1972 (Can.), c. 18—The Trade Union Act, 1972 (Sask.), c. 137.
The two points in issue in this appeal were whether, under The Trade Union Act, 1972 (Sask.), c. 137, the Labour Relations Board of Saskatchewan has jurisdiction to certify the respondent union to represent the employees of (1) the appellant insurance company (Pioneer Life) and (2) the appellant trust company (Pioneer Trust), and to hear charges of unfair labour practices against these two companies. Both Pioneer Life and Pioneer Trust are wholly-owned subsidiaries of the appellant management company and all three are federally incorporated companies.
The jurisdiction of the Board was challenged on the ground that the labour relations of Pioneer Life and
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Pioneer Trust were regulated by the Canada Labour Code, R.S.C. 1970, c. L-1, or otherwise came within the exclusive competence of Parliament. The Board held that it had jurisdiction and certified the respondent union to represent employees of the appellants in the City of Regina.
The appellants applied to the Court of Queen’s Bench of Saskatchewan for an order of certiorari to quash the Board’s certification order and for an order of prohibition to prevent the Board from proceeding to hear nine complaints of unfair labour practices. The Chambers judge dismissed both applications and his judgment was affirmed by a unanimous judgment of the Saskatchewan Court of Appeal. Hence the present appeal, by leave of this Court.
In this Court, all the intervenors except the Attorney General of Canada supported the judgments of the Courts below. The Attorney General of Canada took the position that the Courts below were right with respect to the jurisdiction of the Board over Pioneer Life but wrong with respect to the jurisdiction of the Board over Pioneer Trust.
After having heard counsel for the appellants, the Court did not call on counsel for the respondents or the intervenors to respond to the argument challenging provincial legislative jurisdiction in relation to the labour relations of insurance companies. All counsel were heard on the question of Pioneer Trust’s subjection to provincial labour relations legislation.
Held: The appeal should be dismissed.
Per Laskin C.J. and Dickson J.: The central issue in this case affecting Pioneer Trust is not whether it is in fact a bank within s. 2(g) of the Canada Labour Code, R.S.C. 1970, c. L-1 and s. 28 of the Interpretation Act, R.S.C. 1970, c. I-23—it clearly is not—but whether it falls within the opening words of s. 2 of the Canada Labour Code and within s. 108 of Part V of that Code, as enacted by 1972 (Can.), c. 18, as being “a federal work, undertaking or business” that is within the legislative authority of the Parliament of Canada or within s. 2(i) of the Canada Labour Code as being “a work, undertaking or business outside the exclusive legislative authority of provincial legislatures”. Although Pioneer Trust is not a “bank” under federal legislation, it was contended that it is nonetheless engaged in “banking”, within s. 91(15) of the British North America Act, and that this activity, although not institutionalized through incorporation as a “bank”, is as fully within exclusive
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federal legislative authority as an actual incorporation would be.
Even if Parliament could have brought trust companies within its regulatory authority in relation to banking, it has chosen not to do so, and this Court should respect that position. The result is to leave provincial labour-management relations legislation as the operative code to govern Pioneer Trust and its employees. It would be strange for this Court to hold, in the circumstances of this case, that, although Pioneer Trust is not a “bank” within the meaning of express federal legislation relating to such institutions and has not been brought into the federal regulatory regime governing banking, it can enter by a back door as a “federal business” when that can only be the business of banking.
Per Martland, Ritchie, Pigeon, Beetz, Estey and McIntyre JJ.: It was submitted on behalf of Pioneer Trust that, while, prima facie, the provinces have jurisdiction to legislate with respect to labour relations, Parliament has exclusive jurisdiction over the labour relations of federal works, undertakings and businesses. It was further submitted that in order to determine whether the business of Pioneer Trust was a federal business, it was necessary to consider its normal operations without regard to exceptional or casual factors. Ninety-nine per cent of the business of Pioneer Trust was identical to that carried by a chartered bank and was therefore in the nature of a banking business although the company was not chartered as a bank under the Bank Act. “Banking” within the meaning of s. 91(15) of the British North America Act, 1867, includes not only the business carried on by chartered banks but also banking carried on by other financial institutions. The Trust Companies Act, R.S.C. 1970, c. T‑16, went beyond mere incorporation. The day-to-day operations of Pioneer Trust were regulated pursuant to the provisions of this Act, under the power of Parliament to make laws in relation to banking. It was because of such regulation and because of the banking nature of its operation that Pioneer Trust ought to be considered as a federal business for the purposes of the Canada Labour Code. Provincially incorporated trusts doing the same type of business were not federally regulated as was Pioneer Trust and the provinces could continue to incorporate and regulate them as long as federal law permitted. But Pioneer Trust, being in the business of banking and being subject to federal regulation, was a federal business within the meaning of s. 2(i) of the Canada
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Labour Code.
Counsel for the Attorney General of Canada agreed with counsel for Pioneer Trust that, although Pioneer Trust is not a bank, banking is its business. The test was not what Pioneer Trust could do under its corporate powers, but what it actually did. At this point however the two counsel parted company. Counsel for the Attorney General of Canada dismissed any suggestion that there was room for shared or concurrent jurisdiction in the field of banking. Banking came under exclusive federal authority. Once it was held, as it should be, that Pioneer Trust was a banking undertaking, the regulation of its labour relations came under the exclusive authority of Parliament, whether or not the Canada Labour Code applied to it. It was contended that Pioneer Trust was a federal work, undertaking or business within the meaning of s. 2(i) of the Canada Labour Code, but even if it was not, the Trade Union Act was inapplicable and the Board was without jurisdiction. The entire scope of Parliament’s jurisdiction over banking and the incorporation of banks was not encompassed in the Bank Act. The fact that the banking undertaking of Pioneer Trust was not regulated by federal legislation under all its aspects did not render provincial legislation applicable to this exclusively federal undertaking.
Should the submissions made on behalf of Pioneer Trust be accepted, a trust company with the same type of business as Pioneer Trust would be subject either to provincial or federal legislation with respect to its labour relations, depending on whether it is provincially incorporated or incorporated under the Trust Companies Act. This goes against settled authority according to which the origin of incorporation has no bearing on jurisdiction over labour relations. Furthermore, trust companies incorporated pursuant to the Trust Companies Act, and, for that matter, provincially incorporated trust companies, would come under either federal or provincial jurisdiction with respect to their labour relations, depending on how little they elect to do fiduciary work and how much they render other types of services resembling those rendered by Pioneer Trust.
The contentions advanced on behalf of the Attorney General for Canada are even more far-reaching: if acceded to and pushed to their logical consequences, they might mean that provincially incorporated trust
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companies and perhaps even credit unions and “Caisses populaires” with the same type of business as Pioneer Trust were unlawfully incorporated and have been operating invalidly.
The issue turned on the elusive concept of banking.
CONCLUSION
The relationship of Pioneer Trust with its customers is of a fiduciary nature and several of its operations appertain to the business of a trust company. A great many of its other operations are not characteristic of the banking business although they are also carried on by chartered banks. The one operation carried on by Pioneer Trust which may be characteristic of the banking business, the chequing account service, is not exclusive to the business of banking. Finally, Parliament, which is the competent constitutional authority in matters of banks and banking, considers that Pioneer Trust is not a bank and that its business is not the banking business. Hence, Pioneer Trust is not in the business of banking.
Foley v. Hill, [1848] 2 H.L.C. 28; Joachimson v. Swiss Bank Corporation, [1921] 3 K.B. 110; Attorney-General for Canada v. Attorney-General for Quebec, [1946] A.C. 33; Provincial Treasurer for Manitoba v. Minister of Finance for Canada, [1943] S.C.R. 370; Colonial Building and Investment Association v. Attorney-General of Quebec (1883), 9 App. Cas. 157; Reference re Alberta Statutes, [1938] S.C.R. 100; Attorney-General for Alberta v. Attorney‑General for Canada, [1939] A.C. 117; Breckenridge Speedway Ltd. v. The Queen, [1970] S.C.R. 175; In re Bergethaler Waisenamt (No. 2), [1949] 1 W.W.R. 323; United Dominions Trust v. Kirkwood, [1966] 1 All E.R. 968; In re The District Savings Bank Ltd. (1861), 45 E.R. 907; Re The Bottomgate Industrial Co-operative Society (1891), 65 L.T. 712; Bank of Chettinad Ltd., of Colombo v. Commissioner of Income Tax, Colombo, [1948] A.C. 378; Re Dominion Trust Co., [1918] 3 W.W.R. 1023; La Caisse Populaire Notre-Dame Ltée v. Moyen (1967), 61 D.L.R. (2d) 118; In re Shields’ Estate, [1901] 1 Ir. R. 172; Attorney-General for Alberta v. Attorney-General for Canada, [1947] A.C. 503; Bank of New South Wales v. The Commonwealth (1948), 76 C.L.R. 1; Commonwealth of Australia v. Bank of New South Wales, [1950] A.C. 235; Tennant v. Union Bank of Canada, [1894] A.C. 31; Reference as to whether “Indians” in s. 91(24) of the B.N.A. Act includes Eskimo inhabitants of the Province of Quebec, [1939] S.C.R. 104, referred to.
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APPEAL from a judgment of the Court of Appeal for Saskatchewan, affirming a judgment of Halvorson J. who dismissed appellants’ applications for orders in the nature of certiorari and prohibition. Appeal dismissed.
B.A. Crane, Q.C., R.P. Rendek and D.A. Canham, for the appellants.
D.G. McLeod, Q.C., for respondent, Labour Relations Board of Saskatchewan.
T.B. Smith, Q.C., and J. Mabbutt, for the Attorney General of Canada.
D.A. McKillop, for the Attorney General of Saskatchewan.
J. Cavarzan, for the Attorney General of Ontario.
H. Brun and O. Laverdière, for the Attorney General of Quebec.
J.W. Kavanagh, Q.C., and G.D. Gillis, for the Attorney General of Nova Scotia.
A.D. Reid, for the Attorney General of New Brunswick.
W. Henkel, Q.C., and H. Kushner, for the Attorney General of Alberta.
J.A. Nesbitt, Q.C., for the Attorney General of Newfoundland.
The reasons of Laskin C.J. and Dickson J. were delivered by
THE CHIEF JUSTICE—I have had the advantage of seeing the reasons proposed by my brother Beetz and, like him, I have no difficulty in concluding that the employees of Pioneer Life Assurance Company and their employer are subject, in their labour-management relations, to the jurisdiction of the Labour Relations Board of Saskatchewan under The Trade Union Act, 1972 (Sask.), c. 137. The fact that Pioneer Life Assurance Company, originally a Saskatchewan corporation, was, so to speak, reincorporated under the Canadian and British Insurance Companies Act, R.S.C. 1970, c. I-15 and is subject to certain controls under that federal Act, as, for example, in respect
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of solvency and internal corporate matters, does not affect its subjection to provincial regulatory control of its business of life insurance. There is a long line of decisions which affirm provincial legislative authority in relation to the business of insurance carried on within a province, and they support the application of provincial labour-management relations legislation to Pioneer Life Assurance Company and its employees in Saskatchewan.
The position of Pioneer Trust Company and its employees with respect to the application of provincial labour-management relations legislation is not as simple. The company is incorporated under the Trust Companies Act, R.S.C. 1970, c. T-16, but this alone does not bring it within federal legislative authority in respect of its relations with its employees. The argument that it carries on, in the main, what are popularly regarded as banking functions does not ipso facto mean that it is subject only to federal legislative authority, authority extending to its relations with its employees. The Parliament of Canada has been careful not to bring federally incorporated trust companies, companies which are fiduciaries, into the banking system of the country, although endowing them with many powers which are exercised by banks.
The central issue in this case affecting Pioneer Trust Company is not whether it is in fact a bank within s. 2(g) of the Canada Labour Code, R.S.C. 1970, c. L-1 and s. 28 of the Interpretation Act, R.S.C. 1970, c. I-23—it clearly is not—but whether it falls within the opening words of s. 2 of the Canada Labour Code and within s. 108 of Part V of that Code, as enacted by 1972 (Can.), c. 18, as being “a federal work, undertaking or business” that is within the legislative authority of the Parliament of Canada or within s. 2(i) of the Canada Labour Code as being “a work, undertaking or business outside the exclusive legislative authority of provincial legislatures”. Functionally, the issue concerns only the scope of the term “federal business” and the only such business in which Pioneer Trust Company can claim to be engaged is the business of banking. I have already noted that the
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mere fact of federal incorporation does not provide a base for federal jurisdiction; but rather there must be an activity carried on by the corporation which is itself subject to federal regulatory authority. Of course, there is no accretion to provincial legislative authority by the failure or unwillingness of Parliament to legislate to the full limit of its powers under s. 91 of the British North America Act. The Saskatchewan Labour Relations Board and the intervening Provinces which support its claim of jurisdiction do not rely on any such accretion, but rather assert an independent authority to regulate labour-management relations of trust companies, whether provincially or federally incorporated, which carry on business in the particular Province.
Although Pioneer Trust Company is not a “bank” under federal legislation, it is contended that it is nonetheless engaged in “banking”, within s. 91(15) of the British North America Act, and that this activity, although not institutionalized through incorporation as a “bank”, is as fully within exclusive federal legislative authority as an actual incorporation would be. The contention is a cogent one in view of the range of activities in which Pioneer Trust Company is engaged.
One of the difficulties in this case stems from outworn conceptions of the business of banking reflected in a line of cases in the last century, and some in the present century which borrowed from the former, and which were grounded on English practices untouched by federalism and by the rise of new types of credit institutions which exercise powers similar to those long exercised by banks. Although a bank may be a dealer in credit, not every dealer in credit is a bank. So too, it is no longer correct to say, as was said by Lord Porter in Attorney‑General for Canada v. Attorney-General for Quebec, at p. 44 that “the receipt of deposits and the repayment of the sums deposited to the depositors or their successors as defined
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above is an essential part of the business of banking”, if by that he means that any institution which has this relation of debtor and creditor must necessarily be regarded as engaged in “banking” within s. 91(15) of the British North America Act.
Even if Parliament could have brought trust companies within its regulatory authority in relation to banking, it has chosen not to do so, and I think that this Court should respect that position. The result is to leave provincial labour-management relations legislation as the operative code to govern Pioneer Trust Company and its employees. It would, I think, be strange for this Court to hold, in the circumstances of this case, that, although Pioneer Trust Company is not a “bank” within the meaning of express federal legislation relating to such institutions and has not been brought into the federal regulatory regime governing banking, it can enter by a back door as a “federal business” when that can only be the business of banking.
I would dismiss the appeals with costs. There will be no costs to or against any of the intervenors.
The judgment of Martland, Ritchie, Pigeon, Beetz, Estey and McIntyre JJ. was delivered by
BEETZ J.—The two points in issue are whether, under The Trade Union Act, 1972 (Sask.), c. 137, the Labour Relations Board of Saskatchewan, (the Board), has jurisdiction to certify the respondent union to represent the employees of (1) Pioneer Life Assurance Company (Pioneer Life) and (2) Pioneer Trust Company (Pioneer Trust), and to hear charges of unfair labour practices against Pioneer Life and Pioneer Trust.
The jurisdiction of the Board was challenged from the start on the ground that the labour relations of Pioneer Life and Pioneer Trust were
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regulated by the Canada Labour Code, R.S.C. 1970, c. L-1, or otherwise came within the exclusive competence of Parliament. The Board held that it had jurisdiction and certified the respondent union to represent employees of the appellants in the City of Regina.
The appellants applied to the Court of Queen’s Bench of Saskatchewan for an order of certiorari to quash the Board’s certification order and for an order of prohibition to prevent the Board from proceeding to hear nine complaints of unfair labour practices. Halvorson J. dismissed both applications and his judgment was affirmed by the unanimous judgment of Culliton C.J.S., Woods and Brownridge JJ.A. of the Saskatchewan Court of Appeal. Hence the present appeal, by leave of this Court.
In this Court, all the Intervenors except the Attorney General of Canada supported the judgments of the Courts below. The Attorney General of Canada took the position that the Courts below were right with respect to the jurisdiction of the Board over Pioneer Life but wrong with respect to the jurisdiction of the Board over Pioneer Trust.
I—Pioneer Life
Pioneer Life was incorporated under the laws of the Province of Saskatchewan but later registered under the Canadian and British Insurance Companies Act, R.S.C. 1970, c. I-15, and is thus deemed to have been incorporated thereunder. Together with Pioneer Trust, it is a wholly-owned subsidiary of Canadian Pioneer Management Ltd., which was incorporated pursuant to Part I of the Canada Corporations Act, R.S.C. 1970, c. C-32 , and continued under s. 181 of the Canada Business Corporations Act, S.C. 1974-75-76, c. 33. Canadian Pioneer Management Ltd., provides certain management services to its two subsidiaries.
The appellants have approximately 90 employees in the City of Regina including 8 whose employment was terminated before the application
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for certification was filed. Approximately 35 persons are employed by Canadian Pioneer Management Ltd., but some of these have responsibilities in the two subsidiary companies. The Board found that “the industrial relations of the three corporate entities are inseparable” but the whole case was argued quite apart from the possible impact of this finding on the two points in issue.
Pioneer Life carries on the business of life insurance and has offices in Alberta, Saskatchewan and Manitoba. Under the Canadian and British Insurance Companies Act, it is subject to federal controls with respect to licensing, statements and returns, contracts, operations, investments, reserves for unmatured obligations under policies, distribution of profits, securities to be held in Canada, etc. Pursuant to the Department of Insurance Act, R.S.C. 1970, c. I-17, the Superintendent of Insurance administers the Canadian and British Insurance Companies Act.
It was submitted on behalf of the appellants that while each Province has jurisdiction over the business of insurance within the Province, Parliament does have jurisdiction to regulate federally incorporated insurance companies which carry on business in several provinces. Thus, it could not be said that the business of life insurance carried on in more than one province by a federally incorporated company was a matter of exclusive provincial concern and this shared jurisdiction brought the business of Pioneer Life within the statutory definition of a federal work, undertaking or business in s. 2(i) of the Canada Labour Code:
(i) a work, undertaking or business outside the exclusive legislative authority of provincial legislatures.
After having heard counsel for the appellants, the Court did not call on counsel for the respondents or the intervenors to respond on this point. Given the long list of judicial decisions starting
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with Citizens Ins. Co. of Canada v. Parsons and culminating in Canadian Indemnity Co. et al. v. Attorney-General of British Columbia, the Court could not be persuaded, despite Mr. Rendeck’s able and indeed valiant argument, that the business of insurance does not come within exclusive provincial control.
II—Pioneer Trust
1. The facts
As was noted above, Pioneer Trust is a wholly-owned subsidiary of Canadian Pioneer Management Ltd. It was incorporated pursuant to the Trust Companies Act, R.S.C. 1970, c. T-16, and carries on its business and has offices in Alberta, Saskatchewan and Manitoba.
According to the statement of facts contained in appellants’ factum, which has been accepted by the Attorney General for Saskatchewan and which corresponds substantially to the findings of the Board, and according also to a brochure outlining the services provided by Pioneer Trust, which has been produced as an exhibit and the accuracy of which does not appear to have been challenged, the business or operations of Pioneer Trust can be described in terms of the services which it provides to its customers. These include the following: (1) “chequing” accounts; (while cheques drawn on Pioneer Trust are not cheques within the meaning of s. 165(1) of the Bills of Exchange Act, R.S.C. 1970, c. B-5, since they are not drawn on a bank, they appear to play the same role as true cheques, they do pass through the clearing system of the banks: Pioneer Trust utilizes the clearing facilities of the Bank of Montreal); (2) savings accounts; (3) loans on the security of mortgages; (4) personal loans against the collateral and lending by way of over-draft; (5) loans under federal government guarantees pursuant to such statutes as the Canada Students Loans Act, R.S.C. 1970, c. S-17, the Farm Improvement Loans Act, R.S.C. 1970, c. F-3, the Fisheries Improvement Loans Act, R.S.C.
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1970, F-22, and the National Housing Act, R.S.C. 1970, N-10; (6) commercial loans with securities, other than accounts receivable and inventory, and commercial lending without security; (7) exchange services; (8) money orders; (9) travellers cheques; (10) strong boxes renting; (11) securities safekeeping; (12) term deposits, Guaranteed Investment Certificates in amounts of $1,000.00 or more for terms of from one to five years, Guaranteed Income Averaging Certificates and Guaranteed Deposit receipts; (13) Registered Retirement Savings Plans, Retirement Accumulation Savings Plans, Registered Home Ownership Savings Plans and Deferred Profit Sharing Plans; (14) estate administration services.
Of the services outlined above, two are not carried on by chartered banks: the issuance of Income Averaging Certificates and estate administration services. But it was contended that Pioneer Trust does very little fiduciary work. On the other hand, and according to the testimony of Mr. Price, vice-president and general manager of Pioneer Trust, the only banking function not open to Pioneer Trust is the provision of commercial loans on the security of accounts receivable and inventory, although Pioneer Trust is involved in commercial lending with other securities and on an unsecured basis. Mr. Price testified that 99 per cent of the actual business conducted by the company is identical to the business carried on by chartered banks. The brochure outlining the services offered by Pioneer Trust carries the slogan: “You Can Bank on Pioneer”.
Just as banks, and like all federally incorporated trusts, Pioneer Trust is a member of the Canada Deposit Insurance Corporation, pursuant to s. 9(b) of the Canada Deposit Insurance Corporation Act, R.S.C. 1970, c.C-3. It is inspected by the Superintendent of Insurance. It must file with the Government of Canada annual statements, quarterly liquidity statements and semi-annual statements of changes in investments and loans. Pioneer Trust is subject to minimal provincial regulation: it submits an annual summary of capital and shares to the
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Registrar of Companies in Regina and annual statements to the provincial jurisdictions in which it operates but is not subject to inspection by any of the provincial jurisdictions.
2. Submissions made on behalf of appellants and the Attorney General for Canada
It was submitted on behalf of Pioneer Trust that, while, prima facie, the provinces have jurisdiction to legislate with respect to labour relations, Parliament has exclusive jurisdiction over the labour relations of federal works, undertakings and businesses. It was further submitted that in order to determine whether the business of Pioneer Trust was a federal business, it was necessary to consider its normal operations without regard to exceptional or casual factors: Letter Carriers’ Union of Canada v. Canadian Union of Postal Workers and M & B Enterprises Ltd. Ninety-nine per cent of the business of Pioneer Trust was identical to that carried by a chartered bank and was therefore in the nature of a banking business although the company was not chartered as a bank under the Bank Act, R.S.C. 1970, c. B-1. “Banking” within the meaning of s. 91.15 of the British North America Act, 1867, includes not only the business carried on by chartered banks but also banking carried on by other financial institutions. The Trust Companies Act went beyond mere incorporation. The day-to-day operations of Pioneer Trust were regulated pursuant to the provisions of this Act, under the power of Parliament to make laws in relation to banking. It was because of such regulation and because of the banking nature of its operation that Pioneer Trust ought to be considered as a federal business for the purposes of the Canada Labour Code. Provincially incorporated trusts doing the same type of business were not federally regulated as was Pioneer Trust and the provinces could continue to incorporate and regulate them as long as federal law permitted. But Pioneer Trust, being in the business of banking and being subject to federal regulation, was a federal business within the meaning of s. 2 of the
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Canada Labour Code:
2. In this Act
“federal work, undertaking or business” means any work, undertaking or business that is within the legislative authority of the Parliament of Canada, including without restricting the generality of the foregoing:
(g) a bank;
(i) a work, undertaking or business outside the exclusive legislative authority of provincial legislatures;
It was conceded that Pioneer Trust is not a “bank”: s. 28 of the Interpretation Act, R.S.C. 1970, c. I-23, provides:
In every enactment “bank” or “chartered bank” means a bank to which the Bank Act applies;
and s. 4 of the Bank Act provides:
4. This Act applies to each bank named in Schedule A and does not apply to any other bank.
Pioneer Trust is not named in Schedule A of the Bank Act and therefore, by virtue of the Interpretation Act, is not a bank within the meaning of s. 2(g) of the Canada Labour Code.
But it was contended that Pioneer Trust is a federal business within the meaning of s. 2(i) of the Canada Labour Code quoted above.
Counsel for the Attorney General of Canada agreed with counsel for Pioneer Trust that, although Pioneer Trust is not a bank, banking is its business. The test was not what Pioneer Trust could do under its corporate powers, but what it actually did. At this point however the two counsel parted company. Counsel for the Attorney General of Canada dismissed any suggestion that there was room for shared or concurrent jurisdiction in the field of banking. Banking came under exclusive federal authority. Once it was held, as it should be, that Pioneer Trust was a banking undertaking, the regulation of its labour relations came under the exclusive authority of Parliament, whether or not the Canada Labour Code applied to it; Reference re Industrial Relations and Disputes Investigation
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Act, (the Stevedoring case). It was contended that Pioneer Trust was a federal work, undertaking or business within the meaning of s. 2(i) of the Canada Labour Code, but even if it was not, the Trade Union Act was inapplicable and the Board was without jurisdiction. The entire scope of Parliament’s jurisdiction over banking and the incorporation of banks was not encompassed in the Bank Act. The fact that the banking undertaking of Pioneer Trust was not regulated by federal legislation under all its aspects did not render provincial legislation applicable to this exclusively federal undertaking: Union Colliery Co. v. Bryden; Commission du Salaire Minimum v. Bell Telephone Company of Canada, at pp. 772 and 774.
If those submissions express the law, the consequences are quite far reaching.
Thus, should the submissions made on behalf of Pioneer Trust be accepted, a trust company with the same type of business as Pioneer Trust would be subject either to provincial or federal legislation with respect to its labour relations, depending on whether it is provincially incorporated or incorporated under the Trust Companies Act. This goes against settled authority according to which the origin of incorporation has no bearing on jurisdiction over labour relations: Canadian Pacific Railway Co. v. Attorney-General for British Columbia (the Empress Hotel case); Canada Labour Relations Board v. C.N.R. (the Jasper Park Lodge case); Morgan and Jacob son v. Attorney General for Prince Edward Island, per Laskin C.J. at p. 364; The Canadian Indemnity case, supra, per Martland J. at p. 519. Furthermore, trust companies incorporated pursuant to the Trust Companies Act, and, for that matter, provincially incorporated trust companies, would come under either federal or provincial jurisdiction
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with respect to their labour relations, depending on how little they elect to do fiduciary work and how much they render other types of services resembling those rendered by Pioneer Trust.
The contentions advanced on behalf of the Attorney General for Canada are even more far‑reaching: if acceded to and pushed to their logical consequences, they might mean that provincially incorporated trust companies and perhaps even credit unions and “Caisses populaires” with the same type of business as Pioneer Trust were unlawfully incorporated and have been operating invalidly.
The issue turns on the elusive concept of banking.
3. Difficulty of defining banking
In The Law of Banking and the Canadian Bank Act, 2nd ed., 1968, Toronto, the author, Ian F.G. Baxter wrote, at p. 5:
… it would be a bold man who would undertake to state categorically which business activities legally appertain and which do not appertain to the business of banking.
Chorley, in his book on the Law of Banking, 4th ed., p. 23, has even gone as far as to say that “to construct a definition which would embrace the whole of it is manifestly impossible”.
The reasons why banking is so difficult to define are manifold. First,
Banking is not a technical or legal term but a loose popular one, comprehending activities carried on by those who, likewise popularly, are called bankers. Coyne J.A. in In re Bergethaler Waisenamt (No. 2) [1949] 1 W.W.R. 323 at p. 334.
“Banking” on the other hand, while not a legal term, evokes economic notions which are notoriously not amenable to the discipline of the law. Furthermore, the meaning of the word has evolved
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considerably over the centuries. Finally, because of the expansion of credit and the development of competition between banks and other types of institutions sometimes called near banks, such as trust companies, the latter have entered certain fields of activities previously carried on by banks while banks have begun operations which were not traditionally considered to appertain to the business of banking, leading to considerable overlapping of functions.
Still, many attempts have been made in judicial decisions as well as in doctrinal works, to define the notion of banking or at least to reduce the uncertainties. In some of the attempts, the problem was approached from the point of view of the substance of the matter and, in others, from the point of view of form.
4. Nature of the relationship between the institution and its customers
One approach related to substance has focused on the nature of the relationship between the institution and its customers. The relation between a banker and a customer who pays money into the bank is not a fiduciary one. It is the ordinary relation of debtor and creditor, with a superadded obligation arising out of the custom of bankers to honour the customer’s cheques. Possession of or property in the deposit remains with the bank the obligation of which is a debt under a contract of mutuum, not commodatum: Foley v. Hill; Joachimson v. Swiss Bank Corporation, at p. 127; Attorney-General for Canada v. Attorney-General for the Province of Quebec (the Bank Deposits case), at p. 44. By contrast, s. 63 of the Trust Companies Act which relates to the powers of a trust company emphasizes their fiduciary nature by the use of the words “in trust”, “entrusted”, “trustee” or some other similar expression in practically each of its subsections; and it would appear that a trust company has no power to receive money on deposit in such a way that it is the
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simple debtor of the depositor: Daniel J. Baum, The Near-Banks: Trust Companies of Canada, (1970-71) XLV Tulane Law Review 546 at pp. 558 and 568. It has been contended that this legal distinction is of little or no practical effect and that in fact the relationship between a trust company and a depositor “is indistinguishable from the debtor-creditor relationship between a bank and its customer”: Peter W. Hogg, Constitutional Law of Canada, 1977, p. 367, note 97. I cannot subscribe to the view that the distinction entails no practical differences. It was on this very basis that in the Bank Deposits case at pp. 44 to 46, the Judicial Committee distinguished a judgment of this Court relating to unclaimed trust property which vested in the Province under provincial legislation: Provincial Treasurer for the Province of Manitoba v. Minister of Finance for Canada. Furthermore, s. 66 of the Trust Companies Act prescribes that trust funds are to be kept distinct from those of the company and ss. 64 and 68 provide that trust money is not to be invested in a manner which is identical to the investment of its own funds by the company, whereas money deposited with a bank becomes the property of the bank which may invest it as it pleases, as long as it does so in accordance with the provisions of the Bank Act.
In connection with the fiduciary character of Pioneer Trust, I find rather misleading the assertion that, on the one hand, it does very little fiduciary work but, on the other, that it is in the banking business because, like banks, it is involved in activities which include the operation of certain plans such as Registered Home Ownership Savings Plans and Registered Retirement Plans. Under s. 146.2(1)(d) of the Income Tax Act, 1970-71-72 (Can.), c. 63 and amendments, only a Canadian trust company is empowered to issue a Registered Home Ownership Savings Plan. If it authorizes a bank, credit union or mutual fund to act as its agent in the sale of shares in the plan, it continues to be the issuer and trustee of the plan and, as
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such, it remains responsible for the application, the registration of the plan, the issue of receipts for contributions to the plan and the filing of tax and information returns. So this is not at all an instance of a trust company doing any banking business but, on the contrary, of a bank acting as the agent of a trustee. Similarly, under s. 146(1)(j) of the Income Tax Act, Registered Retirement Savings Plans cannot be issued by banks but only by certain insurance companies, by Canadian trust companies and certain other approved companies. This type of operation has nothing to do with banking and is not connected with banks unless banks act as mere agents of trust companies, insurance companies and other approved companies.
In the same vein, I do not think that Pioneer Trust can accurately argue that it is doing a banking operation when, like banks, it provides its customers with travellers cheques. The evidence reveals that Pioneer Trust sells to its customers travellers cheques of the American Express Company. While the case does not disclose what type of agreement governs the legal relationship between Pioneer Trust and the American Express Company, the usual or normal practice would appear to be that the issuer of the cheques delivers blank cheques to its selling agent, whether a bank, a trust company or a travel agency, who agrees to hold them as trustee of the issuer and to sell them on his behalf. “The trust receipt invariably stipulates that the proceeds of such sales are to be held by the agent as a specific trust fund in favour of the issuing banker”. E.P. Ellinger, Travellers’ cheques and the Law, (1969) 19 University of Toronto Law Journal 132 at p. 150. Since the operation of selling travellers cheques on behalf of and in trust for the issuer involves a trust agreement, it cannot appertain more to the business of a bank than to that of a trust company.
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Furthermore, I find it somewhat strange that the safe-keeping of securities and the renting of safety deposit boxes be represented, at the present day, as banking operations. Of course in earlier days, as to-day, banks provided the means for the safe-keeping of valuables, because, dealing in coins, bullion, money and other valuables they had to be provided with vaults and strong-boxes which could also be of service to customers of the banks for purposes other than banking. But the renting of safety deposit boxes merely puts the bank in the position of a bailee in accordance with the terms of an ordinary civil contract which can be concluded by anyone, including a bank or a trust company, who happens to be provided with the secured facilities. And the safe-keeping of securities appertains much more in my view to the business of a trust company than to that of a bank. It is a power which is specifically bestowed upon trust companies by s. 63(h) of the Trust Companies Act. Indeed, it is by nature a fiduciary service even when it happens to be rendered by a bank. I fail to see how it is transformed into a banking service when it is rendered by a trust company. (See the opinion of Adamson J.A., as he then was, in the Bergethaler Waisenamt case, p. 337.)
As for the submission, made on behalf of Pioneer Trust, that the Trust Companies Act goes beyond incorporation and rises to the level of regulation, I do not think it should be entertained. This aspect of the matter has been alluded to but not argued in any detail by any of the parties or the intervenors. The Trust Companies Act does not apply to trust institutions in general but only to federally incorporated trust companies. It is most doubtful that Parliament could regulate the fiduciary activities of trust institutions, whether federally or provincially incorporated. That is why the provisions of the Trust Companies Act must not be construed as going beyond what they can constitutionally do and what, on their face, they purport to do: to allow for the incorporation of trust companies and impose limitations on their corporate capacity as conditions of their incorporation. The authority so to legislate is not derived from the power of Parliament over banking but from its
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power to make laws for the incorporation of companies with objects other than provincial, this being taken to include objects within provincial authority in more than one province: Colonial Building and Investment Association v. Attorney-General of Quebec.
In short, under the Trust Companies Act, all the transactions of Pioneer Trust, or most of them, appear to be fiduciary by operation of law, whether or not they are so by nature. Furthermore, several of them, described by Pioneer Trust as banking operations, are fiduciary by nature as well as by operation of law and are not banking transactions although some of them, not all, may lawfully be carried on by chartered banks. These factors may not by themselves be determinative of the issue. But they are relevant and indicative that the business of Pioneer Trust is not that of banking.
5. The functional test
Another approach to the problem of defining banking, also related to the substance of the matter, consists in the consideration of the functions of banking, from an economic or legal point of view.
a) The economic point of view
According to a view widely held in the nineteenth century, banks were considered as the main channel for the transfer of savings; the function of banking was one of financial intermediation in which the public had an interest with respect to solvency and allocation of financial resources. But under this particular economic view, the list of financial intermediaries would include, as well as chartered banks, some other very different types of institutions such as life insurance companies, finance companies, mortgage companies, trust companies, etc. (See Patrick N. McDonald, The B.N.A. Act and the Near Banks: A case study in federalism, (1972) 10 Alberta Law Review 155 at
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pp. 158 and ff. This article is, to the best of my knowledge, the most exhaustive study published on the question).
Judges however have not always shrunk from the functional economic approach. They had little choice in the Reference re Alberta Statutes (Alberta Statutes Reference) since they had to deal with the legislative implementation of a specific economic doctrine; the Court found ultra vires a provincial legislative scheme the essence of which was to set up a new form of credit and currency within Alberta. Three bills had been referred to the Court: Bill No. 1 “An Act Respecting the Taxation of banks”; Bill No. 8 “An Act to Amend and Consolidate the Credit of Alberta Regulations Act” and Bill No. 9 “An Act to ensure the Publication of Accurate News and Information”. The three bills were found unconstitutional together with a statute which had not been explicitly referred to the Court but which contained, expressed in legislative terms, the core of the social credit system, The Alberta Social Credit Act. Bill No. 9 does not concern us here. Bill No. 1 attempted to tax the banks out of existence and was found ultra vires as directed to the frustration of the banking system established by the Bank Act. (This part of the judgment was upheld by the Judicial Committee in Attorney‑General for Alberta v. Attorney-General for Canada (the Alberta Bank Taxation case). The Judicial Committee did not pronounce on the other issues which had become academic). The main thrust of The Alberta Social Credit Act was described as follows by Duff C.J. at p. 113:
it is clear … that the substitution generally in internal commerce of Alberta credit for bank credit and legal tender as the circulating medium is of the very essence of the plan.
The Act provided for the distribution of Alberta credit by the Provincial Treasurer by means of
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Treasury Credit Certificates. It also provided for the creation of a Credit House with branches that could accept deposits, convert currency and negotiable instruments on demand into Alberta credit, etc. The practicability of the scheme would have depended upon the general acceptance by the people of Alberta, of Alberta credit as a medium of payment. The Act was found ultra vires by five of the six members of the Court, as relating to “Banking and the Incorporation of Banks”, and also, by three of those five, as dealing with “Currency” and the “Regulation of Trade and Commerce”. By comparison to what he said with respect to Bill No. 8, Duff C.J. did not deal at great length with the functions of banking; The Alberta Social Credit Act was in relation to banking because it purported to set up a parallel system of banks for the issuance and circulation of a parallel system of credit. While the reasons of Duff C.J. may not be capable of being interpreted as meaning that The Alberta Social Credit Act would not have been found ultra vires had it not interfered with chartered banks, Duff C.J. did say in the passage quoted above, that the substitution of one system for the other was the very essence of the plan. And if one couples The Alberta Social Credit Act with Bill No. 1, the taxing bill, which would have prevented the continued operation of chartered banks, one can entertain no doubt, looking at the scheme as a whole, that the parallel system was intended to prevail over the established one, and to that extent, to interfere with it.
But it is mostly in relation to Bill No. 8, “An Act to Amend and Consolidate the Credit of Alberta Regulation Act”, that Duff C.J. and Kerwin J., as he then was, dealt in detail with the function of banking, and sought to get hold of its quintessence in terms involving economic concepts. At pp. 124 and 125, after saying: “A banker is a dealer in credit”, Duff C.J. focused upon the monetary function of banks and dwelt upon the particular way in which bankers, as opposed to money lenders, create credit and deal in credit by way of bookkeeping entries. He quoted with
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approval the following passage from M. Walter Leafs volume on Banking:
… when the creation of credit is discussed there is general agreement that by credit is meant banker’s credit, that is to say, the right to draw cheques on a bank. The exercise of this right involves either the withdrawal from the bank of legal tender, in the shape of bank notes or silver and bronze coin, or the transfer of such a right to some other person in the books of the same or another bank.
At pp. 155 and 156, Kerwin J. quoted a paragraph of the Encyclopaedia Britannica containing the following passage:
Banks create credit. It is a mistake to suppose that bank credit is created to any important extent by the payment of money into the banks. Money is always being paid in by tradesmen and others who receive it in the course of business, and drawn out again by employers to pay wages and by depositors in general for use as pocket money. But the change of money into credit money and of credit money back into money does not alter the total amount of the means of payment in the hands of the community. When a bank lends, by granting an advance or discounting a bill, the effect is different. Two debts are created; the trader who borrows becomes indebted to the bank at a future date, and the bank becomes immediately indebted to the trader. The bank’s debt is a means of payment; it is credit money. It is a clear addition to the amount of the means of payment in the community. The bank does not lend money. The borrower can, if he pleases, take out the whole amount of the loan in money. He is in that respect in the same position as any other depositor. But like other depositors he is likely in practice to use credit for all major payments and only to draw out money as and when needed for minor payments.
Kerwin J. then continued at p. 156:
It is not necessary to refer to the various schools of economists with their divergent views as to the extent to which banks create credit or as to the wisdom or otherwise of a state empowering such institutions to do so. It suffices that by current common understanding a business transaction whereby credit is created, issued, lent, provided or dealt in by means of bookkeeping entries is considered to be part of the business of banking as it has
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been practised and developed. It is well known that in addition to creating credit banks also issue, lend, provide and deal in credit by means of bookkeeping entries.
The type of provincial legislation found ultra vires in the Alberta Statutes Reference would still be invalidated to-day, but whether the same reasons would all be relied upon is a matter of doubt for economic theory has evolved. Be that as it may, there were other reasons of a more classical type from a legal point of view why Bill No. 8, “An Act to Amend and Consolidate the Credit of Alberta Regulation Act”, was found ultra vires: it was a licensing statute; it depended upon machinery created by The Alberta Social Credit Act which was found ultra vires, and it was ancillary to the latter. By themselves, these reasons which were also invoked by Duff C.J. at pp. 122 and 123, sufficed to dispose of Bill No. 8 and I do not think that the other reasons are decisive of the case at bar. (It should be noted however that these other reasons commended themselves to Porter J.A. whose partly dissenting opinion to the effect that The Treasury Branches Act, R.S.A. 155, c. 344, was unconstitutional, was adopted by two members of this Court in Breckenridge Speedway Ltd. et al. v. The Queen; the seven other members of the Court refrained from expressing any view on the question, and I do the same).
b) The legal point of view
Attempts to define banking in functional terms but from a strictly legal angle have been studied by C.C. Johnston, in Judicial Comment on the Concept of “Banking Business”, (1962) 2 Osgoode Hall Law Journal 347. Typical of such attempts is the description of banking given by Richards J.A. for the majority of the Manitoba Court of Appeal in the Bergethaler Waisenamt case, at pp. 328 and 329:
Expert opinion was not given in evidence in this case as to what is banking business, but it is common knowl-
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edge that during the period of the corporation’s operations banking did include the following: (1) Receiving money on deposit from its customers; (2) Paying a customer’s cheques or drafts on it to the amount on deposit by such customers and holding Dominion Government and bank notes and coin for such purpose; (3) Paying interest by agreement on deposits; (4) Discounting commercial paper for its customers; (5) Dealing in exchange and in gold and silver coin and bullion; (6) Collecting notes and drafts deposited; (7) Arranging credits for itself with banks in other towns, cities and countries; (8) Selling its drafts or cheques on other banks and banking correspondents; (9) Issuing letters of credit; (10) Lending money to its customers, (a) on the customers’ notes; (b) by way of overdraft; (c) on bonds, shares and other securities.
The business of a Canadian Chartered bank is wider still because of the statutory rights and powers given to a bank under the provisions of the Bank Act, now 1944-45 ch.30.
But Richards J.A. added the following comment at p. 332:
The business carried on by most banks includes the totality of the functions I have enumerated, but, of course, a banking business can be carried on without performing all of them and most corporations and individuals engaged in a financial business of any kind are required to carry on or perform some of them and it does not follow from the fact that banks perform them that every exercise of one or more of the functions is a form of banking.
I agree with this comment.
Take long term borrowing by way of term deposits or otherwise. It was held by the English Court of Appeal in United Dominions Trust v. Kirkwood, that the acceptance of money against deposit receipts, usually in sums ranging between £5,000 and £1,000,000 for definite periods of three, six or nine months was not an aspect of the business of banking. Under this standard, Pioneer Trust’s borrowing by way of Guaranteed Investment Certificates is not a banking activity although it is widely practised by chartered banks and other types of institutions. I should think it is an activity that may be appropriate for savings
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banks but it could not be said that, on that account, they should have a monopoly thereon.
The hard core of banking is usually what lawyers will try to circumscribe. The issuance of banknotes intended for circulation would probably have been considered as part of that core in earlier days when the issuance of bank-notes had not become the monopoly of the central bank: it is significant in this regard that in s. 91.15 of the Constitution, legislative jurisdiction over the issue of paper money is linked with jurisdiction over banking and the incorporation of banks. At the present day in England, the features which, according to most, are characteristic of the business of bankers have been described as follows by Lord Denning M.R. in the United Dominions Trust case, at p. 975:
(i) they accept money from, and collect cheques for, their customers and place them to their credit; (ii) they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly. These two characteristics carry with them also a third, namely, (iii) they keep current accounts, or something of that nature, in their books in which the credits and debits are entered.
Those three characteristics are much the same as those stated in Paget’s Law of Banking (6th Edn.) (1961), p. 8:
“No-one and nobody, corporate or otherwise, can be a ‘banker’ who does not (i) take current accounts; (ii) pay cheques drawn on himself; (iii) collect cheques for his customers”.
It will be noticed that this statement links up with the banking concept of Duff C.J. and Kerwin J. in the Alberta Statutes Reference stripped from its economic aspect relating to credit. (See also In re The District Savings Bank Limited, at p. 909; Re The Bottomgate Industrial Co-operative Society; Bank of Chettinad Limited, of Colombo, v. Commissioner of Income Tax, Colombo. In the Dominion Trust Company, and La Caisse
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Populaire Notre-Dame Limitée v. Moyen, single judges took the view that a provincial trust company and a provincial credit union could validly provide chequing facilities to their depositors).
Assuming that no corporation can be said to be in the banking business unless it provides its depositors with chequing privileges, it does not follow that these activities are exclusive to the business of banking. I agree, in this respect with what Coyne J.A. said in the Bergethaler Waisenamt case at p. 334 that
chequing privileges accorded depositors … are characteristic of, and perhaps essential to, banking. But even that does not make them exclusive rights of bankers, even in the absence of prohibition by statute against others carrying them on.
On the whole, I do not think that it is possible, at least for the purpose of this case, to define banking in purely functional terms.
6. The formal and institutional tests
In the United Kingdom, the peculiar status of bankers, their importance at the centre of the financial community, the expectation of the public that it can grant them implicit and utmost confidence have led, given the uncertainty of substantive tests, to various methods to identify or recognise banks and banking by way of formal and institutional means.
Two of these means which are closely connected with each other, have been elaborated in the cases. The first is the holding out of oneself as a banker. The second is one’s reputation as a banker. The holding out is evidently aimed at the acquisition of the reputation.
A banker
“must hold himself out as a banker and the public take him as such, “assuming” openly, avowedly and notori-
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ously the character of a banker …”. Stafford v. Henry, (1850) 12 Ir. Eq. 400. Quoted by Coyne J.A. in the Bergethaler Waisenamt case, p. 335.
In re Shields’ Estate, FitzGibbon L.J. wrote at p. 197:
In all his dealings with the public, Shields held his firm out as “Bankers”. He so described himself for the purpose of inducing custom and giving dignity to his operations. It may be conceded that people who are not bankers, cannot make themselves so by adopting the name … But the name was assumed by Shields, and the Bank of Ireland accepted it as a truthful designation … From beginning to end they treated him as a banker. That being so, it is only a question of fact, and one upon which the presumption is in the affirmative, whether there is reasonable evidence to warrant the conclusion that Shields was what he professed to be, and what the Bank of Ireland took him to be, namely a “Banker”.
In the United Dominions Trust case, Lord Denning M.R. held that the United Dominions Trust, although it had not succeeded in proving that its business, as distinct from its reputation, was effectively a banking business, had discharged the onus of proving that it was a banker because it had established that for a long period of years it had been accepted as having the status of a banker by the banking community and government departments. Harman L.J. dissented from that view on the ground that reputation alone was not enough and that there had to be some performance behind it. Diplock L.J. as he then was, agreed in the result with Lord Denning, with some hesitation, because he could not infer that the witnesses who had established the reputation of United Dominions Trust as a banker had been mistaken as to the substantive factors to be taken into consideration.
In Canada, Parliament has recognized the importance of the holding out test and, in order to prevent individuals or institutions which are not banks from acquiring the reputation of being in the banking business, has enacted s. 157(1) of the Bank Act:
157. (1) Every person who, in any language, uses the word “bank”, “banker”, or “banking”, either alone or in
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combination with other words, or any word or words of import equivalent thereto, to indicate or describe his business in Canada or any part of his business in Canada without being authorized so to do by this or any other Act, is guilty of an offence against this Act.
Pioneer Trust is not authorized by the Bank Act nor any other Act to use the forbidden words to describe its business or any part thereof including its chequing account service. If Parliament, which is the competent authority in the matter, wishes to prevent members of the public from mistaking any part of the business of Pioneer Trust and other trust companies for a banking business, it seems to me that it is because Parliament considers that it is not a banking business. I am also of the view that the opinion of Parliament should be considered as decisive in this case.
I am confirmed in this view by the legislative technique used by Parliament in the Bank Act to define a chartered bank, (which consists in a list of specific institutions designated by name), together with the definition of a bank for the purposes of every enactment in s. 28 of the Interpretation Act, quoted above, and s. 20(3) of the same Act which provides:
No corporation shall be deemed to be authorized to carry on the business of banking unless such power is expressly conferred upon it by the enactment establishing the corporation.
This last provision practically suffices by itself to dispose of the issue. Pioneer Trust was established under the Trust Companies Act no provision of which expressly authorizes it to carry on the business of banking. If any part of Pioneer Trust’s business is banking business, then it is unauthorized and ought not to be taken into consideration to remove Pioneer Trust from the jurisdiction of the Board and bring it under the jurisdiction of the Canada Labour Relations Board as a federal business. If on the other hand Pioneer Trust’s business is authorized business, it must be because it is deemed not to be banking business.
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Nobody, let alone Pioneer Trust, has suggested that its business is unauthorized. The only part of its business which, in this respect, appears to raise a problem is the taking of deposits coupled with chequing privileges.
Pioneer Trust is given the following powers by s. 63(a), (e), and (k) of the Trust Companies Act:
63. The company may
(a) receive money in trust for the purposes herein specified, and invest and accumulate it at such lawful rates of interest as may be obtained therefor;
(e) guarantee repayment of the principal or payment of the interest, or both, of any moneys entrusted to the company for investment, on such terms and conditions as are agreed upon;
(k) receive money on deposit in trust and allow interest thereon from the time of deposit at such rate as may be agreed upon and advance moneys to protect any estate, trust or property entrusted to it as aforesaid, and charge lawful interest upon any such advances, but nothing herein shall be held either to restrict or to extend the powers of the company as trustee or agent under the terms of any trust or agency that may be conferred upon it;
The powers given by s. 63(a) are of the traditional fiduciary type whereas those given by s. 63(e) and (k) are not of that type: they contemplate the guarantee of repayment by the company of moneys entrusted to it for investment and the allowing of interest on deposits in trust at such rate as may be agreed upon. The latter type of powers facilitates the development between a trust company and its depositor of a legal relationship which bears some resemblance with that between a bank and its depositor. To that extent, Professor Hogg’s remark, quoted above, is justified. But the point is that these powers, which must be deemed not to be banking powers, are specifically given to Pioneer Trust by Parliament.
I fail to see what is to prevent Pioneer Trust from concluding with the depositor an agreement under which the money so deposited shall be repayable on demand or short notice (see s. 67 of the Trust Companies Act) to the depositor or to some third party if, by way of an appropriate instrument, the trust company is requested so to do
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by the depositor. I also fail to see what is to prevent a trust company from undertaking to collect negotiable instruments on behalf of its depositor and place them to his credit. There is nothing against public policy in such undertakings, and, so far as I know, no statutory prohibition in the Bank Act, the Bills of Exchange Act or any other Act. It would take a provision much more specific than s. 20(3) of the Interpretation Act to render such agreements unlawful.
I accept the submission made on behalf of the Attorney General for New Brunswick that, to resolve the issue, we should adopt an institutional approach. Such an approach, it is true, emphasizes formal tests. But, in the case at bar, these tests are bolstered by the consideration of the substantive factors referred to above. I agree with the contention which I quote from the factum of the Attorney General for New Brunswick that
“Banking” involves a set of interrelated financial activities carried out by an institution that operates under the nomenclature and terms of incorporation which clearly identify it as having the distinctive institutional character of a bank.
There are several reasons for adopting such an approach.
First, it is the approach taken by Parliament, and federal legislation may properly be considered as an aid to constitutional interpretation: Citizens Insurance Company of Canada v. Parsons, at p. 116.
Second, it is an approach which was also taken by the Courts: in most instances where provincial legislation was found ultra vires on the ground that it impinged upon exclusive federal authority over banking, there has also been an attempt to regulate or to interfere with the business of established banks: the Alberta Bank Taxation case; the Bank Deposits case; Attorney General for Alberta v. Attorney-General for Canada, (the Alberta Bill of Rights case).
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Third, it is an approach which is particularly appropriate in a case where what has to be decided is whether a given institution falls within the concept of banking as a business, and not whether a legislative enactment is constitutionally depending on its relationship to banking within the meaning of s. 91.15 of the Constitution. The characterization of legislation and the characterization of a business are not identical processes. Legislation for instance, may be divisible whereas a business as a going concern is indivisible and must stand or fall as a whole on one side of the constitutional line or the other. The concept of banking as a business and the meaning of the word “banking” in s. 91.15 are not necessarily co-extensive; the meaning of “banking” in the section might very well be wider than the concept of banking as a business. Some of the reasons for such distinction have been explained by Latham C.J. in Bank of New South Wales v. The Commonwealth, (the Australian Banking case) at p. 195:
I agree with the argument of the plaintiffs that the acquisition of a share in a bank by any person (whether a bank or not) is not itself a banking operation, and similarly that the purchase by any person, whether a bank or not, of assets from a bank is not itself a banking operation and that the taking over of the business of another bank probably would not be described as a banking “transaction”. But a law which controls such matters is a law dealing with the business of banking, because such matters affect the conduct and control of the business and are things which may be done from time to time in the course of the business of banking, although they are not banking transactions between a banker and a customer. It is easy to give examples of laws which are laws having a most immediate relation to banking and which are therefore laws with respect to banking, though they do not deal with banker-customer relations as such. Among such laws would be a law requiring a bank to have a certain minimum capital or to maintain a percentage of uncalled capital, or a law prescribing the persons who may be allowed to hold bank shares, e.g. excluding bankrupts, or a law preventing banks in certain circumstances from disposing of their assets, or a law prescribing permissible forms of investment by banks. A law dealing with the management and staffing of banks would be a law relating to essential elements in the business of banking though not
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dealing with any transactions between any bank and any customer.
(Judicial opinions on the constitutional meaning of the word “banking” in Australia should carry some weight in Canada because s. 51(xiii) of the Commonwealth of Australia Constitution, 1900, 63-64 Vict., c. 12 (U.K.) is, except for a reference to State Banking, identical to s. 91.15 of the Canadian Constitution and, as was noted by some Australian judges, seems to have been inspired by the latter. It reads:
(xiii) Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money;
Latham C.J. was dissenting in part in the Australian Banking case but, more than his views on the nature of banking, one of the main reasons for his partial dissent would appear to have been his interpretation of another provision of the Australian Constitution, s. 92, relating to the freedom of trade, commerce and intercourse among the States, of which there is no exact counterpart in the Canadian Constitution. The majority view on one of the issues raised in the Australian Banking case was upheld in an opinion of the Judicial Committee: Commonwealth of Australia v. Bank of New South Wales.
One of the earliest pronouncements on the meaning of banking in Canadian constitutional law is to be found in Tennant v. Union Bank of Canada, where Lord Watson wrote, at p. 46, that “banking’, is
an expression which is wide enough to embrace every transaction coming within the legitimate business of a banker.
This statement was again referred to in more recent times: the Bank Deposits case at p. 42 and the Alberta Bill of Rights case at p. 517.
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Appellants have relied upon that expression of opinion but I do not think it helps them. It cannot be read literally for it would then mean for instance that the borrowing of money or the lending of money, with or without security, which come within the legitimate business of a great many other types of institutions as well as of individuals, would, in every respect, fall under the exclusive legislative competence of Parliament. Such a result was never intended. But Lord Watson was then speaking of the federal legislative authority with respect to institutions which had been chartered as banks and his statement makes sense if understood in institutional terms. Take the business of money-lending on the security of mortgages. This operation was not previously open to banks and, because of the problem of liquidity, would have frightened nineteenth-century bankers. That it became open to banks did not mean that it was transformed into a banking operation so that all the institutions such as loan companies, trust companies like Pioneer Trust and individuals who were heavily engaged in this type of transactions found themselves suddenly plunged into the banking business. It could not be contended either that the provincial legislatures had lost their jurisdiction over the law of mortgages, mortgage companies and their employees. It would be more accurate to say that it was the banks which were beginning a non-banking type of activity, but it is a well‑established principle that federal undertakings may be empowered by Parliament to engage in business under provincial jurisdiction: the Empress Hotel case; the Jasper Park Lodge case.
The same comments and qualifications might apply to other loans made by banks.
7. The objection of the exclusiveness rule
Only one serious objection to the institutional approach can be raised and it has been raised by counsel for the Attorney General of Canada. It is based on the exclusiveness of federal legislative powers relating to Banking and the Incorporation of Banks. It was contended that provincial legislative jurisdiction and the extent and applicability of
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provincial legislation cannot depend on the abstinence of Parliament from legislating to the full limit of its exclusive powers. The Union Colliery and Commission du Salaire Minimum cases were relied upon.
I do not think this objection is valid in this case.
Legislative jurisdiction involves certain powers of definition which are not unlimited but which, depending on the particular manner in which they are exercised, may affect other jurisdictional fields.
For instance, Parliament has exclusive legislative jurisdiction over the Establishment, Maintenance, and Management of Penitentiaries under s. 91.28 of the Constitution, and each Province has exclusive legislative jurisdiction over the Establishment, Maintenance and Management of Public and Reformatory Prisons in and for the Province, under s. 92.6. At present, the line of demarcation between the two appears to depend in part upon federal legislation such as s. 659 of the Criminal Code.
Another example is provided by the legal status of the Eskimo inhabitants of Quebec. They are not Indians under the Indian Act, R.S.C. 1970, c. I-6, s. 4(1), but they are Indians within the contemplation of s. 91.24 of the Constitution: Reference as to whether “Indians” in s. 91(24) of the B.N.A. Act includes Eskimo inhabitants of the Province of Quebec. Should Parliament bring them under the Indian Act, provincial laws relating to descent of property and to testamentary matters would cease to apply to them and be replaced by the provisions of the Indian Act relating thereto.
Parliament having chosen to exercise its jurisdiction over Banking and the Incorporation of Banks from an institutional aspect rather than in functional terms, as was perhaps unavoidable, did not necessarily exhaust its exclusive jurisdiction; but it left institutions which it did not characterize as being in the banking business to the operation of provincial labour laws.
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8. Conclusion
To summarize and conclude.
The relationship of Pioneer Trust with its customers is of a fiduciary nature and several of its operations appertain to the business of a trust company. A great many of its other operations are not characteristic of the banking business although they are also carried on by chartered banks. The one operation carried on by Pioneer Trust which may be characteristic of the banking business, the chequing account service, is not exclusive to the business of banking. And finally, Parliament, which is the competent constitutional authority in matters of banks and banking, considers that Pioneer Trust is not a bank and that its business is not the banking business. Hence, Pioneer Trust is not in the business of banking.
The appeal should be dismissed with costs. There should be no order as to cost for or against the intervenors.
Appeal dismissed with costs.
Solicitors for the appellants: Richard P. Rendek & Associates, Regina.
Solicitors for the respondent, Saskatchewan Joint Board Retail, Wholesale and Department Store Union: Goldenberg & Taylor, Saskatoon.
Solicitors for the respondent, Labour Relations Board of Saskatchewan: Pedersen, Norman, McLeod & Todd, Regina.
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