Canadian Pioneer Management Ltd. et al. v. Labour Relations Board of Saskatchewan et al.

Canadian Pioneer Management Ltd. et al. v. Labour Relations Board of Saskatchewan et al.
Collection
Supreme Court Judgments
Date
1979-12-21
Report
[1980] 1 SCR 433
Judges
Laskin, Bora; Martland, Ronald; Ritchie, Roland Almon; Pigeon, Louis-Philippe; Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; Pratte, Yves; McIntyre, William Rogers
On appeal from
Saskatchewan
Subjects
Constitutional law
Decision Content
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[1] 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 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 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 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 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. APPEAL from a judgment of the Court of Appeal for Saskatchewan[2], 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 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 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[3], at p. 44 that “the receipt of deposits and the repayment of the sums deposited to the depositors or their successors as defined 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 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 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 with Citizens Ins. Co. of Canada v. Parsons[4] and culminating in Canadian Indemnity Co. et al. v. Attorney-General of British Columbia[5], 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. 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 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.[6] 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 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 Act[7], (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[8]; Commission du Salaire Minimum v. Bell Telephone Company of Canada[9], 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[10] (the Empress Hotel case); Canada Labour Relations Board v. C.N.R.[11] (the Jasper Park Lodge case); Morgan and Jacob son v. Attorney General for Prince Edward Island[12], 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 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 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[13]; Joachimson v. Swiss Bank Corporation[14], at p. 127; Attorney-General for Canada v. Attorney-General for the Province of Quebec[15] (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 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[16]. 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 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 a