R. v. Thomas Equipment Ltd., [1979] 2 SCR 529

Supreme Court of Canada

R. v. Thomas Equipment Ltd., [1979] 2 S.C.R. 529

Date: 1979-05-01

Her Majesty The Queen Appellant;

and

Thomas Equipment Ltd. Respondent.

1978: November 29; 1979: May 1.

Present: Laskin C.J. and Martland, Ritchie, Spence, Pigeon, Dickson, Beetz, Estey and Pratte JJ.

ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION

Sale of goods—Farm equipment supplied by New Brunswick manufacturer to Alberta dealer under dealership agreement—Termination of agreement by dealer—Liability of manufacturer for refusal to repurchase unused equipment—Applicability of The Farm Implement Act, R.S.A. 1970, c. 136, s. 22.

The respondent (Thomas), a manufacturer in New Brunswick, was a supplier of farm equipment to an Alberta dealer (Suburban) under a dealer sales agreement. Suburban forwarded a letter by registered mail to Thomas terminating the agreement and requesting Thomas to purchase from Suburban all unused farm implements and attachments thereto and all unused parts obtained by Suburban from Thomas. This request was founded upon the provisions of s. 22(2) of The Farm Implement Act, R.S.A. 1970, c. 136. Thomas refused to comply with the request. An information was laid charging Thomas with a breach of s. 22(3) of the Act. Thomas was convicted and a fine of $200 was imposed.

On appeal by way of stated case, the judge hearing the appeal was of the opinion that Thomas, because of the absence of its registration under The Companies Act, R.S.A. 1970, c. 60, at the time the offence occurred, was not a person or an entity within Alberta, and therefore could not have committed the offence.

The Crown appealed to the Appellate Division of the Supreme Court of Alberta. The appeal was dismissed by a majority of two to one. All of the judges of the Appellate Division were of the view that the failure of Thomas to register under The Companies Act could not, of itself, afford a defence to the charge.

The majority held the view that no offence had been committed in Alberta. The failure of Thomas to purchase the goods occurred, not in Alberta, but in New Brunswick, and, therefore, The Farm Implement Act was not applicable. Sinclair J.A., dissenting, was of the view that The Farm Implement Act did apply. As

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decided in Citizens Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96, provincial authority over property and civil rights includes the power to regulate the contracts of a particular business or trade. The Farm Implement Act was an example of provincial regulation of the contracts of such a business or trade. In Sinclair J.A.’s opinion, the manufacturer was in breach of a responsibility imposed, by a law which involved a matter of property and civil rights in the Province of Alberta, and hence it was open to the province to enforce that law.

Held (Laskin C.J., Ritchie and Spence JJ. dissenting): The appeal should be allowed and the conviction restored.

Per Martland, Pigeon, Dickson, Beetz, Estey and Pratte JJ.: The terms of the agreement between Thomas and Suburban brought it within the provisions of The Farm Implement Act and it was, therefore, subject to regulation by that statute. This was a provincial regulation of a business or trade. The Act contains a code regulating, in Alberta, the sale of farm implements. One of the provisions of that code is s. 22(2) which gives to the dealer, on termination of the agreement, the right to require the vendor to purchase all unused farm implements obtained from the vendor. All of the farm implements which Thomas was called upon to purchase were situated in Alberta. This was a right which could be conferred upon the dealer as a part of the regulation of the sale of farm implements in Alberta. The Act imposes a penalty upon a vendor who fails to comply with its provisions.

The liability of Thomas arose out of its conduct in Alberta. It had, in Alberta, rendered itself subject to the regulatory provisions of The Farm Implement Act. It had failed to comply with those regulations and the penalty imposed upon it was because of that failure. Thomas was not being penalized under the Act for its conduct in New Brunswick, but because of what it failed to do in Alberta.

The respondent’s submission that it was necessary to determine the proper law of the contract because, it was argued, the Legislature of Alberta could not affect the rights and obligations of contracting parties upon the discharge of the contract unless the proper law of the contract was the law of Alberta failed. The present case was not concerned with the contractual rights and obligations of the parties inter se. This case arose as a result of the imposition of statutory obligations upon vendors of farm implements who sell such machinery in Alberta. The agreement here involved the delivery of farm implements by a vendor to a dealer in Alberta for resale there and, in consequence, Thomas became subject to the

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duties imposed by the statute irrespective of what might be the proper law of the contract which, apart from the statute, would govern the rights of the parties inter se.

Interprovincial Co-operatives Ltd. and Dryden Chemicals Ltd. v. The Queen, [1976] 1 S.C.R. 477, distinguished.

Per Laskin C.J. and Ritchie and Spence JJ., dissenting: Citizens Insurance Co. v. Parsons, supra, related to a fire insurance contract made in the province in respect of property of the insured in the province. That was quite a different thing from the contract in question here. So far as the record showed, the contract between Thomas and Suburban was a New Brunswick contract, and its locus there was emphasized by the provision therein that the contract and the rights, duties and obligations of the parties were to be determined according to the laws of New Brunswick.

For a non-resident of New Brunswick to invoke the operation of the law of his province of residence, here Alberta, against his New Brunswick co-contractor simply because of the presence in Alberta of goods which had been purchased from the New Brunswick manufacturer was an attempt to give Alberta law an extra-provincial application. The termination in New Brunswick of a contract which, by its terms was governed by New Brunswick law, could not give Suburban any claim to apply unilaterally against Thomas a statutory advantage to Suburban based on Alberta law. Thomas was not bound by a law of Alberta which seeks to modify to its disadvantage its contractual arrangement with Suburban. Moreover, under the terms of the contract, the power of Suburban to terminate was associated with a requirement that any indebtedness to Thomas had been paid in full.

To say that Thomas in having his goods sold in Alberta must accept “the rules of the game” established by the Alberta Legislature was a one-sided view because it was an equally if not a more tenable proposition that if Suburban wishes to buy from Thomas it must accept New Brunswick law, and there is no such provision there similar to s. 22 of The Farm Implement Act. Nor was it correct to say that the failure of Thomas to comply with the request to repurchase the goods because the request could have been effected in Alberta, constitutes the offence. The fact was that Thomas received the notice of termination in New Brunswick, and the refusal to purchase was within its rights under New Brunswick law.

Royal Bank of Canada v. The King, [1913] A.C. 283; Ottawa Valley Power Co. v. Hydro Electric Power

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Commission of Ontario, [1937] O.R. 265; Gray v. Kerslake, [1958] S.C.R. 3, referred to.

APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], dismissing an appeal from a judgment of Bowen J. whereby the respondent’s appeal by way of stated case from its conviction on a charge under s. 22 of The Farm Implement Act, R.S.A. 1970, c. 136, was allowed. Appeal allowed and conviction restored, Laskin C.J. and Ritchie and Spence JJ. dissenting.

Jack Watson and D.C. Abbott, Q.C., for the appellant.

A.D. Macleod, for the respondent.

The judgment of Laskin C.J. and Ritchie and Spence JJ. was delivered by

THE CHIEF JUSTICE (dissenting)—I have had the advantage of reading the reasons of my brother Martland who has set out fully the facts and the issues in this appeal. I have difficulty in agreeing that Alberta legislation may be enforced against a manufacturer in New Brunswick who does not carry on business in Alberta simply because that manufacturer’s goods are sold to an Alberta retail dealer who resells them in the ordinary course of its own business.

Suburban, the dealer in Alberta, did not purchase from Thomas, the manufacturer, on consignment but outright on its own account, and, by the contract between them, he was not an agent of Thomas so as to give Thomas a presence in Alberta. The fact that the purchases by Suburban were under a conditional sale arrangement does not affect the issue in appeal any more than it would be affected if the contract had provided, say, thirty or more days for payment of goods shipped to Suburban.

I regard as relevant the place where the contract between them was made. It is all very well to say, as did Sinclair J.A., whose dissent in the Alberta Appellate Division is approved by my brother Martland, that a province has legislative jurisdiction in relation to contracts of a particular

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trade carried on in the province, but this proposition from the case of Citizens Insurance Co. v. Parsons[2] related to a fire insurance contract made in the province in respect of property of the insured in the province. That is quite a different thing from the contract in question here. So far as the record shows, the contract between Thomas and Suburban was a New Brunswick contract, and its locus there is emphasized by the provision therein that the contract and the rights, duties and obligations of the parties were to be determined according to the laws of New Brunswick.

For a non-resident of New Brunswick to invoke the operation of the law of his province of residence, here Alberta, against his New Brunswick co-contractor simply because of the presence in Alberta of goods which had been purchased from the New Brunswick manufacturer is to me an attempt to give Alberta law an extra-provincial application. The goods belonged to Suburban, but it purports to say to the New Brunswick manufacturer that “you must repurchase them from me because Alberta law so provides when I have terminated my agreement with you”. The stated case, quoted by my brother Martland, shows that the letter of termination, a unilateral act of Suburban, was sent to Thomas in New Brunswick and, certainly, it could not have any effect until it was received by Thomas there. How then does the termination in New Brunswick of a contract made in New Brunswick which, by its terms is governed by New Brunswick law, give Suburban any claim to apply unilaterally against Thomas a statutory advantage to Suburban based on Alberta law?

Thomas, in my opinion, is entitled to say that it is not bound by a law of Alberta which seeks to modify to its disadvantage its contractual arrangement with Suburban. Moreover, under the terms of the contract, the power of Suburban to terminate is associated with a requirement that any indebtedness to Thomas has been paid in full.

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Two other points are put against Thomas, points which, in my opinion, cut both ways. It is said by Sinclair J.A. in his dissent which Martland J. approves that Thomas in having his goods sold in Alberta must accept “the rules of the game” established by the Alberta Legislature. This is a one-sided view because it is an equally if not a more tenable proposition that if Suburban wishes to buy from Thomas it must accept New Brunswick law, and there is no such provision there similar to s. 22 of The Farm Implement Act, R.S.A. 1970, c. 136. Second, it is said that the failure of Thomas to comply with the request to repurchase the goods, a request that could have been effected in Alberta, constitutes the offence. The fact is, however, that Thomas received the notice of termination in New Brunswick, and the refusal to repurchase was within its rights under New Brunswick law.

I do not think it necessary to parade in any number the authorities which limit the reach of provincial legislation to contracts and rights in the province. The seminal case for the statement of principle (although I may say, for myself, that I have some doubts about the actual results) is Royal Bank of Canada v. The King[3]. Much closer to the facts of the present case is Ottawa Valley Power Co. v. Hydro-Electric Power Commission of Ontario[4], where, as here, the contract sought to be destroyed by Ontario legislation was made in Quebec and called for payment in Quebec. Even so, in a later related case Beauharnois Light, Heat and Power Co. Ltd. v. Hydro-Electric Power Commission of Ontario[5], again involving a contract between the Ontario Commission and a Quebec company, the Ontario Court of Appeal did not think that the place of the contract or the place of payment were the dominating considerations when other rights existed between the parties, of which some belonged to the Quebec company in Quebec and hence could not be destroyed by Ontario legislation. I am content here to rely on

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the Ottawa Valley case, and I would add for fortification the opinion expressed by Locke J. in this Court in Gray v. Kerslake[6], which involved an allegation that Ontario statute law could control an annuity pension contract made in New York (and stated to be governed by New York law) between a New York insurer and an Ontario resident. Locke J. said, at p. 17 that the situs of the cause of action which would arise on the death of the annuitant was clearly New York State and that Ontario could not change the terms of the contract because it would be purporting to deal with civil rights outside the province.

For these reasons, I would dismiss the appeal with costs to the respondent in this Court as provided in the order granting leave.

The judgment of Martland, Pigeon, Dickson, Beetz, Estey and Pratte JJ. was delivered by

MARTLAND J.—The facts which give rise to the present appeal are set out in the case stated by the judge who tried it and they, as well as the questions of law arising therefrom, are as follows:

(a) Suburban Equipment & Supply Ltd. of Edmonton is a retailer of farm implements having a retail sale price of over $1,000.00. Its business was divided approximately evenly between sales to industrial users and to agricultural users insofar as equipment of this type was concerned.

(b) One of its suppliers of equipment was Thomas Equipment Ltd. of Centreville, in the Province of New Brunswick, and the equipment supplied by it could be used for both industrial and agricultural purposes.

(c) On or about the 11th day of June, 1975, Suburban Equipment & Supply Ltd. forwarded by registered mail to Thomas Equipment Ltd. a letter terminating the existing agreement between it and Thomas Equipment Ltd. with respect to the sale of the equipment in question, and requesting that Thomas purchase from Suburban all unused farm implements and attachments thereto, and all unused parts obtained by Suburban from Thomas.

(d) At all times material to this charge, Thomas Equipment Ltd. was a manufacturer of the equipment

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referred to, with its head office located in Centreville, in the Province of New Brunswick.

(e) Thomas Equipment Ltd. was neither registered pursuant to the requirements of part 8 of The Companies Act, R.S.A. 1970, as an extra-provincial company, nor was it registered as a vendor under the regulations made pursuant to The Farm Implement Act, until after the events leading to this charge.

(f) The Appellant Thomas Equipment Ltd. refused to purchase from Suburban Equipment & Supply Ltd. any of the said unused farm implements and attachments thereto and any unused parts obtained by Suburban from Thomas Equipment Ltd.

(g) There is no legislation in the Province of New Brunswick similar to Section 22 of The Farm Implement Act, R.S.A. 1970, and amendments thereto.

…

I submit the following questions for the consideration of this Honourable Court:

(a) Did I err in holding that Section 22 of The Farm Implement Act was applicable despite the presence of clause 23 of the written agreement between the parties?

(b) Did I err in concluding that Section 22 of The Farm Implement Act applied to Thomas Equipment Ltd., which was neither registered in Alberta as an extra‑provincial company nor as a vendor under the regulations made pursuant to The Farm Implement Act?

The respondent (“Thomas”) was charged with a breach of subs. 22(3) of The Farm Implement Act, R.S.A. 1970, c. 136. This statute provides a series of rules governing the sale of farm implements in Alberta, some of which override provisions contained in agreements for their sale. It renders void any statement in such an agreement limiting or modifying the liability of the vendor as provided in the Act.

The relevant provisions of this Act are as follows:

2. In this Act,

(a) “dealer” means a person operating in the ordinary course of business a retail establishment for the sale or resale of farm implements and includes a person who leases farm implements to farmers.

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(e) “vendor” means a manufacturer or supplier of farm implements who sells, consigns or delivers farm implements to a dealer for sale or resale in the ordinary course of business.

22. (2) A dealer may, within 90 days after the day an agreement expires or is terminated by the dealer or the vendor for any reason,

(a) personally serve on the vendor, or

(b) send by prepaid registered mail to the vendor,

a written or printed notice to purchase containing a request by the dealer that the vendor purchase all the unused farm implements and all unused parts obtained from the vendor.

(3) Where a notice to purchase is given to the vendor in compliance with subsection (2), the vendor shall, subject to this Act and the regulations, purchase from the dealer all the unused farm implements and attachments thereto, and all unused parts, obtained by that dealer from the vendor.

Provision was made for a fine of not more than $500 for a contravention of the Act.

Thomas and Suburban Equipment & Supply Ltd. (“Suburban”) made an agreement dated March 21, 1973, called “Dealer Sales Agreement”, in which Suburban is referred to as “Dealer”.

One of the purposes of the agreement was defined as follows:

This Contract is entered into for the purpose of setting forth the points of understanding between Thomas and the Dealer, with a view to promoting in the Dealer’s territory, the sale of products marketed by Thomas as listed in the current Industrial Equipment Price Lists.

The following provisions of the agreement are relevant:

1. Subject to the provisions of this contract, Thomas appoints Dealer to promote the sale of Thomas goods in the counties specified as follows: NORTHERN ALBERTA, SOUTH TO & INCLUDING RED DEER, in the province/state of: ALBERTA, known as an exclusive territory.

Thomas reserves the right to appoint additional dealers if in its opinion the above territory is not being properly serviced by the present dealer. Should additional dealers be required, the present dealer will be notified in writing prior to the appointment of a new Dealer.

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3. Thomas agrees to sell to the Dealer and the Dealer agrees to pay to Thomas for machines, allied equipment, attachments, repair parts and supplies at the prices set forth in Thomas’ Suggested Retail Price List, subject to the terms and discounts set forth in Thomas’ current Dealer’s Discounts and Terms Schedule in effect on date of shipment and subject to the terms and conditions of this contract.

4. Discount: All machines and attachments are subject to a trade discount of 20% from the current Suggested Industrial Equipment Division’s Retail Price List, F.O.B. Centreville, N.B., Canada.

Terms: 5%—10 days cash—Net 30 days from date of invoice.

All accounts, past due, are subject to an interest charge of 1% per month.

7. The Dealer agrees to accept delivery of all goods ordered by the Dealer under this contract; Thomas, however, does not guarantee delivery of any equipment to the Dealer on any specific or particular date.

9. The Dealer agrees to properly store and care for all goods and repair parts received under this agreement.

The Dealer further agrees that on his behalf and at his cost, he will ensure against loss or damage by fire and other miscellaneous hazards, all New equipment, and repair parts received in pursuance of this contract. Dealer agrees to supply Thomas with copy of Insurance Policy.

10. The Title, ownership and right to possession of goods purchased by the Dealer hereunder shall remain, at the Dealer’s risk, in Thomas until the purchase price thereof and interest are wholly paid.

11. This contract may be terminated by either party at any time by giving the other party notice in writing by registered mail of such termination, provided, in the case of the Dealer terminating, his indebtedness to Thomas is paid in full.

12. Thomas will advertise its products and will furnish the Dealer, free of charge, suitable advertising literature for local advertising in such quantities as Thomas deems advisable, and will extend to the Dealer its co-operation and advice in sales promotion.

14. The Dealer agrees to keep an accurate record of the names and addresses of all owners of machines merchandised by Thomas in the Dealer’s territory, and the date sold and delivered.

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15. The Dealer agrees to maintain a well equipped repair shop and a repair parts stock sufficient to give prompt and accurate service to owners of goods merchandised by Thomas in the Dealer’s territory. The Dealer further agrees to assemble, service and inspect all goods sold before delivery to retail purchasers, to instruct the retail purchasers in the use and operation thereof, and to give purchasers such service as may be required to fulfill the warranties described in the Warranty Clause.

16. The Dealer is not Thomas’ agent in any respect, and is not authorized to incur any obligation or to make any promises or representations in its behalf.

23. This agreement and the rights, duties and obligations of the parties as set forth herein shall be settled and determined according to the laws of the Province of New Brunswick, Dominion of Canada.

The stated case states that on or about June 11, 1975, Suburban forwarded a letter to Thomas by registered mail terminating the agreement and requesting Thomas to purchase from Suburban all unused farm implements and attachments thereto and all unused parts obtained by Suburban from Thomas. This request is obviously founded upon the provisions of subs. 22(2) of the Act. Thomas refused to comply with the request. An information was laid charging Thomas with a breach of subs. 22(3) of the Act. Thomas was convicted and a fine of $200 was imposed.

The trial judge held that Suburban was a “dealer” within the meaning of the Act. He did not accept the submission of Thomas that clause 23 of the agreement, making New Brunswick law applicable to the contract, precluded a prosecution, pointing out that this clause applied to rights and duties arising under the contract itself. He also referred to subs. 22(12) of the Act which provides that this section applies notwithstanding anything in an agreement or any contract or arrangement between the vendor and dealer, except that where a provision of the agreement is more advantageous to the dealer than the provision of this section pertaining to the same subject matter, the provision of the agreement applies.

I agree with his conclusion.

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He mentioned the fact that Thomas had not complied with the registration requirements of Part 8 of The Companies Act, R.S.A. 1970, c. 60, until after the information was laid. Part 8 of The Companies Act requires an extra-provincial company (not incorporated under the laws of Alberta or the Northwest Territories) which carries on business in Alberta to register in Alberta.

He also pointed out that Thomas had not registered as a “vendor” pursuant to the regulations made under The Farm Implement Act and that there was no evidence that Suburban was registered as a “dealer” under those regulations. He was of the opinion that the absence of these registrations did not prevent the prosecution and found that Thomas had contravened the Act.

On the appeal pursuant to the stated case, the judge hearing the appeal was of the opinion that Thomas, because of the absence of its registration under The Companies Act at the time the offence occurred, was not a person or an entity within Alberta, and therefore could not have committed the offence.

The Crown appealed to the Appellate Division of the Supreme Court of Alberta. The appeal was dismissed by a majority of two to one. All of the judges of the Appellate Division were of the view that the failure of Thomas to register under The Companies Act could not, of itself, afford a defence to the charge. I agree with this conclusion.

The judgment of the majority, delivered by McGillivray C.J.A., expressed the view that no offence had been committed in Alberta. After reviewing the provisions of the agreement, the following statement is made:

In my opinion, this contract does no more than provide that Thomas will sell goods at determinable prices to Suburban, and will not sell to others in Northern Alberta, and it is my view that it cannot be said that Thomas is carrying on business in the Province of Alberta so that its failure to respond to the demand made by Suburban constituted an offence within the Province.

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The question as I see it is whether the province of Alberta can effectively legislate so as to make it an offence for a resident of New Brunswick to fail to comply with a demand to re-purchase machinery sold to an Albertan. The offence would surely be committed in New Brunswick when Thomas refused to make payment.

He went on to say that the failure of Thomas to purchase the goods occurred, not in Alberta, but in New Brunswick.

He placed reliance on the judgment of Pigeon J. in this Court in Interprovincial Co-operatives Limited and Dryden Chemicals Limited v. Her Majesty The Queen[7], and cited, inter alia, the following passage from his reasons for judgment at p. 507:

With respect, I fail to see how the Assistance Act can be said in the present case to be directed against acts done within Manitoba. The essential provision on which Manitoba relies to claim against the appellants is the discharge of a contaminant from premises outside Manitoba into waters whereby it is carried into waters in the province. While it can be said that the legislation is aimed at damage caused in Manitoba, it is not directed against acts done in that province: the basic provision on which the claim is founded is an act done outside the province namely, the discharge of the contaminant.

Sinclair J.A. dissented. He stated his reasons as follows:

In my opinion, the proper resolution of the issue turns around the B.N.A. Act, 1867. Section 92 provides that in each province the Legislature may exclusively make laws in relation to:

“13. Property and civil rights in the province.

15. The imposition of punishment by fine, penalty or imprisonment for enforcing any law of the province made in relation to any matter coming within any of the classes of subjects enumerated in this section;”

(See R. v. Buzunis (1972) 26 D.L.R. (3d) 502, 507.)

As pointed out in the judgment of Pigeon, J. in Interprovincial Co-operatives Limited and Dryden Chemicals Limited v. The Queen (Manitoba), [1976] 1 S.C.R. 477, 512, provincial authority is restricted to

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provincial territory. So far as concerns head 13, of s. 92, that is made plain by the very words “in the province”.

It was, however, decided long ago, in Citizens Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96, that provincial authority over property and civil rights includes the power to regulate the contracts of a particular business or trade. In my opinion, The Farm Implements Act is an example of provincial regulation of the contracts of such a business or trade.

As I see it, the Act provides a code for the very important business of buying and selling farm machinery in Alberta. If a manufacturer wants to have his farm implements sold here he must comply with the rules of the game, as it were, established by the legislature of Alberta. One of these rules clearly covers the manufacturer’s responsibility when his agreement with a dealer is terminated.

If, as in the present case, the manufacturer is in breach of that responsibility, a responsibility imposed by a law which I believe to involve a matter of property and civil rights in the province of Alberta, then it is open to the province to enforce that law.

With due respect for the view expressed by the majority of the Appellate Division, I prefer the conclusion of Sinclair J.A. The basis for the decision of the majority is to be found in the passage from the reasons of McGillivray C.J.A. first quoted above, i.e., that the contract did no more than provide that Thomas would sell goods at determinable prices to Suburban, and would not sell to others in Northern Alberta, and that it could not be said that Thomas was carrying on business in Alberta so that its failure to respond to the demand of Suburban constituted an offence in Alberta.

In my opinion, the agreement between Thomas and Suburban cannot be regarded as simple contract for the sale of goods made by a vendor in New Brunswick to a purchaser in Alberta. A review of the contents of that agreement establishes that it goes much further than that.

The recital clause states that the agreement is entered into with a view to promoting in the Dealer’s territory the sale of products marketed by Thomas. In clause 1, Thomas appoints Suburban to promote the sale of Thomas’ goods. Thomas

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may appoint additional dealers in Suburban’s territory if the territory is not being sufficiently serviced. In clause 12, Thomas agrees to advertise its products, to provide advertising literature for local advertising and to extend co-operation and advice to Suburban in sales promotions. Clause 15 requires Suburban to maintain a well equipped repair shop and a repair parts stock sufficient to give prompt and adequate service to owners of goods merchandised by Thomas in Suburban’s territory.

Accordingly, the agreement must be viewed as relating, not only to the sale of farm equipment by Thomas to Suburban, but also to promoting the resale of Thomas’ products in Alberta and to the establishment in that province of good will in relation to Thomas’ products. The method used was not sales on behalf of Thomas by Suburban as an agent, but sales by Thomas to Suburban for the purpose of resale by Suburban. Performance of this contract would, in that respect, be effected in Alberta.

The terms of the contract brought it within the provisions of The Farm Implement Act. Thomas is a vendor within the definition of the Act, being “a manufacturer or supplier of farm implements who sells, consigns or delivers farm implements to a dealer for sale or resale in the ordinary course of business”. Suburban is a dealer within the meaning of the Act. The goods which it purchased from Thomas were sold and consigned to it by Thomas for resale in the ordinary course of business.

The agreement was, therefore, subject to regulation by the Alberta statute. As Sinclair J.A. points out, this is a provincial regulation of a business or trade. The Act contains a code regulating, in Alberta, the sale of farm implements. One of the provisions of that code is subs. 22(2) which gives to the dealer, on termination of the agreement, the right to require the vendor to purchase all unused farm implements obtained from the vendor. All of the farm implements which Thomas was called upon to purchase are situated in Alberta. This was a right which could be conferred upon the dealer

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as a part of the regulation of the sale of farm implements in Alberta. The Act imposes a penalty upon a vendor who fails to comply with its provisions.

When Thomas entered into the agreement and, in carrying it into effect sold the farm implements to Suburban for resale in Alberta, it rendered itself subject to the provisions of the regulating statute. As Sinclair J.A., put it:

If a manufacturer wants to have his farm implements sold here he must comply with the rules of the game, as it were, established by the legislature of Alberta. One of these rules clearly covers the manufacturer’s responsibility when his agreement with a dealer is terminated.

The majority judgment in the present case is based on the proposition that the offence was not committed in Alberta. In my view, the essence of the offence was a failure to comply with the request of Suburban with which, under the Act, Thomas was obligated to comply. The Act did not compel Thomas to effect a repurchase of the goods in New Brunswick merely because Thomas resided there. Compliance with the request could have been effected in Alberta. It is the failure to comply with the request which constitutes the offence.

As already noted, the majority found support for its reasoning in the judgment of Pigeon J., in the Interprovincial case. That case raised a constitutional issue concerning the validity of The Fishermen’s Assistance and Polluters’ Liability Act, 1970 (Man.) c. 32. The Act purported to impose statutory liability for damage to Manitoba fisheries upon any person who discharged a contaminant “into waters in the province or into any waters whereby it is carried into waters in the province”. The issue was as to whether the province had constitutional power to impose a liability on a person for acts done outside the province.

In the present case, the liability of Thomas arose out of its conduct in Alberta. It had, in Alberta, rendered itself subject to the regulatory provisions of The Farm Implement Act. It had failed to comply with those regulations and the penalty imposed upon it was because of that failure.

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Thomas is not being penalized under the Act for its conduct in New Brunswick, but because of what it failed to do in Alberta. The Manitoba statute was aimed at the conduct outside the province of persons outside the province. The Alberta statute imposes an obligation upon a vendor who sells farm implements to a dealer in Alberta for resale in Alberta to repurchase those implements which are located in Alberta.

Subsections 22(12) and (13) of The Farm Implement Act provide:

(12) This section applies to a vendor and a dealer notwithstanding anything in an agreement or any other contract or arrangement between the vendor and dealer, except that where a provision of the agreement is more advantageous to the dealer than the provision of this section pertaining to the same subject matter, the provision of the agreement applies.

(13) Any waiver or release given by a dealer of his rights under this section is against public policy and void.

From those provisions it is apparent that the basis of the prosecution against Thomas is a statutory obligation entirely independent of contract. No constitutional question has been raised in this case and therefore the only question to be decided on the stated case is as to the proper construction of the statute in respect of the facts of the case.

In addition to supporting the grounds of decision of the majority of the Appellate Division, counsel for Thomas also urged that it was necessary to determine the proper law of the contract because, it was argued, the Legislature of Alberta could not affect the rights and obligations of contracting parties upon the discharge of the contract unless the proper law of the contract was the law of Alberta. This submission was not accepted by any of the judges of the Appellate Division and I agree with them. The present case is not concerned with the contractual rights and obligations of the parties inter se. This case arises as a result of the imposition of statutory obligations upon vendors of farm implements who sell such machinery in Alberta. The agreement in question here involved the delivery of farm implements by a vendor to a dealer in Alberta for resale there and, in consequence, Thomas became subject to the duties

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imposed by the statute irrespective of what might be the proper law of the contract which, apart from the statute, would govern the rights of the parties inter se.

I would allow the appeal, set aside the judgments of the Appellate Division and of the Trial Division and restore the conviction of Thomas by the judge of first instance. Pursuant to the terms of the order granting leave to appeal, it is ordered that the appellant pay the respondent’s costs of the appeal to this Court.

Appeal allowed and conviction restored, LASKIN C.J. and RITCHIE and SPENCE JJ. dissenting.

Solicitor for the appellant: Jack Watson, Edmonton.

Solicitor for the respondent: A.D. Macleod, Calgary.