Words and Phrases - "public authority"

The taxpayer, a subsidiary of the Law Society of Upper Canada (the “Law Society”), was an insurance company providing professional liability insurance to Ontario lawyers and law firms. It was agreed that it qualified for the exemption in s. 149(1)(d.5) provided that its owner (the Law Society) was a “public body performing a function of government in Canada.”

Respecting whether the taxpayer was a “public body,” D’Arcy J adopted (at para. 80) the “three-part English test,” namely, “the entity must have a duty to the public, it must be subject to a significant degree of government control and it must not use any of its profit for the personal benefit of its members.” The third test clearly was satisfied, and the other tests also were satisfied given (respecting the first test) that Trinity Western (2018 SCC 33) found that ss. 4.1 and 4.2 of the Law Society Act imposed a duty to the public on the Law Society and (respecting the second test) that s. 13 of such Act specified a guardianship role for the Ontario Attorney General and the government had appointment or approval rights respecting a minority of the benchers.

However, D’Arcy J found that the Law Society did not perform a function of government in Canada, stating (at paras 91, 95, 99 and 101):

In my view, a public body only performs a function of government in its specific geographical area if it performs the function as part of the governance of the public located in that specific geographical area. …

While the Law Society is required to have the public interest in mind when it carries out its regulating functions, this does not mean that it is performing a function of government. … The Law Society performs its various functions in the course of regulating the legal profession, not in the course of governing people located in Ontario. …

None of the functions of the Law Society constitute a legislative function. … [T]he Law Society … by-laws relate to regulating the legal profession in Ontario, not governing the people of Ontario.

[A] judicial function is only performed by a judge of one of Canada’s courts. …

Accordingly, the taxpayer was not entitled to the exemption under s. 149(1)(d.5).