National Trust Company v. The Christian Community of Universal Brotherhood Ltd.

National Trust Company v. The Christian Community of Universal Brotherhood Ltd.
Collection
Supreme Court Judgments
Date
1941-06-24
Report
[1941] SCR 601
Judges
Duff, Lyman Poore; Rinfret, Thibaudeau; Crocket, Oswald Smith; Davis, Henry Hague; Hudson, Albert Blellock
On appeal from
British Columbia
Subjects
Contract
Decision Content
Supreme Court of Canada
National Trust Company v. The Christian Community of Universal Brotherhood Ltd., [1941] S.C.R. 601
Date: 1941-06-24
National Trust Company Limited (Plaintiff) Appellant;
and
The Christian Community of Universal Brotherhood Limited and The Board of Review For The Province of British Columbia (Defendants) Respondents.
1941: April 22, 23, 24; 1941: June 24.
Present: Duff C.J. and Rinfret, Crocket, Davis and Hudson JJ
ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA
Debtor and creditor—Farmers' Creditors Arrangement Act, 1934 (Dom.)—Structure and operation of the Act—Whether respondent Community is a "farmer"—Board of Review—Jurisdiction—Whether county or district courts have exclusive jurisdiction under the Act—Jurisdiction of Supreme Courts of the provinces in the matter—Action by creditor against debtor before Supreme Court and appointment by the latter of a Receiver, prior to proceedings by the debtor under the Act—Farmers' Creditors Arrangement Act,1934 (Dom.), s. 2 (2), s. 5 (1), s. 6 (1) (2) (7), s. 11 (1) (2), s. 12 (4) (5) (6).
On May 18th, 1938, the appellant instituted in the Supreme Court of British Columbia a debenture holder's action against the respondent Community, praying foreclosure, or sale, of certain properties and assets mortgaged to the appellant by the respondent Community to secure the payment of certain debentures of the Community. In May and July, 1938, by orders of the Supreme Court of British Columbia, a Receiver (an authorized trustee in bankruptcy) was appointed and immediately entered upon his duties. This action is still pending and the Receiver is still executing his duties In June, 1929, the Community purported to file a proposal under the Farmers Creditors Arrangement Act. In the same month, by County Court orders, "upon the application of" the Official Receiver, under said Act, " for directions," " and upon reading the statement of affairs herein and the proposal and the resolution of the Directors" of the Community, the latter was "hereby permitted to make appli- cation under and (was) entitled to take advantage of the provisions of " said Act, and the Official Receiver was " hereby permitted to accept the said proposal" of the Community under said Act. On September 14, 1939, the respondent Board of Review gave notice to the Receiver that a written request by a creditor of the Community had been made to the Board of Review to formulate an acceptable proposal for a composition, extension of time or scheme of arrangements of the affairs of the Community and gave notice of hearing. The appellant immediately on the 16th of September, 1939, brought the present action, claiming, inter alia, a declaration that the respondent Community was not a farmer within the meaning of the Farmers' Creditors Arrangement Act and was not entitled to the benefit of that Act, that the respondent Board of Review was without jurisdiction and that it had no jurisdiction over the appellant and the other creditors of the Community. The trial judge held that he was invested with jurisdiction to render a decision in the action, and his decision was that the respondent Community was not a farmer within the meaning of the above Act. The appellate court, reversing that judgment, held that the Supreme Court of British Columbia had no jurisdiction in the matter and that, by force of the provisions of the Act, such jurisdiction resided exclusively in the County Court, and it further held that the respondent Community was a farmer.
Held, that the respondent Community was not a farmer within the meaning of the Farmers' Creditors Arrangement Act, and, as such, entitled to a proposal for a composition of its liabilities under the provisions of that Act; and, also, that, under the circumstances of this case, the Supreme Court of British Columbia had jurisdiction to determine the questions raised by the appellant's action. Barickman Hutterian Mutual Corporation v. Nault ( [1939] S.C.R. 223) disc, and dist.
Held, also, per The Chief Justice and Davis and Hudson JJ., that, under the circumstances of this case, the Supreme Court of British Columbia had jurisdiction to entertain the appellant's action—It is not necessary, for the purpose of this appeal, to determine generally the jurisdiction of the County Court and of the Supreme Court, respectively, in relation to the statutory validity of a proposal filed by a debtor who is invoking the provisions of the statute.—In the present case, property of the respondent Community affected by the debentures was in the hands of a Receiver appointed by the Supreme Court. Whatever may be the effect of the general language of the enactment which purports to give to the County Court exclusive jurisdiction in bankruptcy, such general language cannot be read as giving to the County Court any control over the assets of the respondent Community, in the hands of the Receiver, which could be exercised without the consent of the Supreme Court; and it seems necessarily to follow that it would be within the jurisdiction of the Supreme Court to ascertain by an examination of the facts (if such a claim were made) whether or not the purported proceedings under the statute were competent proceedings,—whether or not, in other words, the County Court had acquired exclusive jurisdiction in relation to the debtors' assets by force of the statute. The Board of Review was about to consider a proposal to be formulated under s. 12 (4) (5) of the Act, and, in the case of a proposal being formulated and confirmed by the Board, questions might very well arise as to the position of the Receiver. S. 11, read literally and giving effect to it according to the full scope of its terms, without any qualification, would appear directly to affect the Receiver in any proceedings by him to realize property within the receivership (e.g., in an action to collect a book debt charged by the debentures in suit). Only the very clearest language would justify the conclusion that Parliament intended in these circumstances to deprive the Supreme Court of the authority to decide for itself whether the filing of the Community's proposal had any statutory warrant. The words employed in the first paragraph of section 5 of the Act ought not to be read as excluding the jurisdiction of the Supreme Court to decide whether, in such circumstances as those in this case, its jurisdiction in respect of property in its possession, and in respect of proceedings in relation to that property pending before it, has been ousted. The trial judge had all the circumstances before him and, having regard to those circumstances, felt it his duty to pronounce upon the issue. The trial judge was right in exercising the jurisdiction he did exercise. He was not deciding upon any abstract question. It was important that the issue should be decided speedily, to avoid conflict of jurisdiction with resulting confusion and expense. As to the County Court orders (The recital shows that they were made on application for directions before the Community's proposal was filed—and quaere whether, until such filing, the Official Receiver has any status, or the Court any jurisdiction, on such an application): The farmer's right to file a proposal arises from provisions of the Act, not from any leave of the Court; the Act does not contemplate an application for such leave. The purpose of the procedure under Rule 42 is to enable the Official Receiver to obtain directions as to his own acts in the course of administration where the application of the Act, which is the foundation of the authority both of the judge and the Official Receiver, is assumed—it is not its purpose to empower the Court to make binding orders affecting the rights of third persons who are not parties to the proceeding. It does not follow that on an application for directions questions of right and jurisdiction may never be determined. The County Court has jurisdiction, speaking generally, to determine such questions in a summary way, and the hearing of an application for directions in a particular case may be a convenient and unobjectionable occasion for dealing with such questions, when proper care is taken to see that everybody concerned is fully represented and has full opportunity of bringing out the facts and presenting his case. The County Court orders in question should be treated as directions to receive and file proposals, and the statement therein that the Community is permitted to make application under, and is entitled to take advantage of, the provisions of the Act, must be regarded simply as introductory, expressing the judge's opinion quantum valeat with regard to matters upon which he had no authority to make a binding pronouncement.
Per Rinfret J.—The principal powers of the Board of Review are enumerated in section 12 of the Farmers' Creditors Arrangement Act and its subsections; but, nowhere is there to be found vested in the Board of Review the power to determine as a question of law the applicability of that Act to a person whose quality and status as a "farmer" is disputed, or where it is objected, by some party having an interest in the matter, that the applicant for a proposal does not come within the definition of the Act: the courts of justice are the proper forum where the matter must be debated and determined.- As to the question whether, in a province other than the province of Quebec, an interested party, who decides of his own initiative to contest the status of an applicant as farmer, must necessarily have to institute his proceedings in the county or district court or whether he is deprived of the right of invoking the general jurisdiction of the Supreme Court of the province, it should be held, as far as the interpretation of the statute is concerned, that, as the Farmers' Creditors Arrangement Act may be regarded as a chapter of the Bankruptcy Act, the status of a farmer and the question whether he is entitled to invoke the benefit of the Farmers' Creditors Arrangement Act are included within the words " jurisdiction in bankruptcy " mentioned in the first paragraph of section 5 of the Act and that, therefore, these matters, under the Act, are within the exclusive jurisdiction of the county and district courts of all the provinces except in the province of Quebec.—It does not necessarily follow that the Supreme Courts of these provinces are divested by the Act of their supervisory authority over an official such as the Official Receiver or a board such as the respondent Board of Review, which jurisdiction is exercised through the writs of prohibition, mandamus or certiorari, or possibly by declaration and injunction as contended by the appellant; but this latter question may be left for wider examination in a case where the point may come up squarely for decision—In the present case, however, there is a special situation. The appellant's Debentures Holders' action was instituted prior to the respondent Community's application to the Official Receiver under the Farmers' Creditors Arrangement Act and before the county court orders were issued. That action is still pending and the Receiver appointed in that action of the Supreme Court of British Columbia is still carrying on his duties. The effect of the Receiver's appointment by the Supreme Court was to put all the property and assets of the Community under the authority of that Court. In such circumstances, its jurisdiction in respect of the assets of the respondent Community and with regard to the proceedings then pending before it could not be interfered with by the mere application of the Official Receiver to the county courts under the Farmers' Creditors Arrangement Act.
Per Crocket J.—Upon a consideration of the record and of the relevant provisions of the Farmers' Creditors Arrangement Act and its regulations the trial judge had full jurisdiction to make the declaration which he did and his judgment was fully warranted by the evidence. If the respondent Community was not a farmer, neither the Official Receiver nor the Board of Review nor any County Court judge had any authority whatsoever to bring the respondent Community within the operation of that Act, and any orders or reports purporting to recognize such respondent as a farmer must be held under the explicit provisions of the Act to have been wholly void and of no effect. If the respondent Community was not a farmer within the meaning of the Act, the fact that a County Court judge had without authority and erroneously found that the respondent Community was a farmer cannot possibly have the effect of ousting the jurisdiction of the Supreme Court to pronounce upon the validity of these proceedings and of removing from the custody and control of a special receiver appointed by the Supreme Court for the administration of the British Columbia assets and business of the respondent Community for the realization of the moneys secured by the respondent's deed of trust and mortgage, and placing them in the exclusive control of the county court. Moreover, the whole tenor of the statute negatives the suggestion that the Parliament of Canada intended to interfere with the inherent jurisdiction of the Supreme Court of the various provinces to declare the nullity of wholly unauthorized proceedings and orders of all inferior statutory functionaries or tribunals at the suit of those whose property and civil rights such proceedings and orders purport to affect.
Judgment of the Court of Appeal (55 B.C. Rep. 516) reversed.
APPEAL from the judgment of the Court of Appeal for British Columbia[1], reversing the judgment of the Supreme Court, Robertson J.[2] which had maintained an action by the appellant in which the latter sought a declaration that the respondent Community was not a farmer within the meaning of the Farmers' Creditors Arrangement Act.
A. E. Hoskin K.C. and D. N. Hossie K.C. for the appellant.
C. L. McAlpine K.C. for the respondent Community.
F. P. Varcoe K.C. for the respondent Board of Review.
The judgment of the Chief Justice and of Davis and Hudson JJ. was delivered by
THE CHIEF JUSTICE—I shall refer to the respondent, The Christian Community of Universal Brotherhood, Limited (which is a company incorporated under the Dominion Companies Act) as the respondent company.
The respondent company is not, I am satisfied, on the facts disclosed in the evidence before us, a farmer within the contemplation of the Farmers' Creditors Arrangement Act of 1934, and for this and other reasons the proceedings of the Official Receiver and the respondent, the Board of Review, were without statutory warrant. Had it not been for the decision of this Court in Barickman v. Nault[3], it would never have occurred to anybody, I think, that the respondent company was a farmer within the intendment of that statute. The only point of law decided in that case was that a corporation may be a farmer and entitled as such to avail itself of the provisions of the statute. In the very special circumstances of that case we held that the corporation was a farmer within the definition
a person whose principal occupation consists in farming or the tillage of the soil.
There is little pertinent resemblance between the corporation whose status was there in question and the respondent company, and that decision is really of no assistance in the decision of the question before us. I think it is very clear that, although the members of the Community for the most part are farmers, the incorporated company itself is not a farmer in the ordinary sense of the term, or in the sense of the statute. My brother Rinfret has given conclusive reasons for this.
An important question, however, which was very fully argued, arises. That question is whether it is competent to this Court to give practical effect on this appeal to its conclusion that the respondent company has the right to avail itself of the benefit of the enactments of the Farmers' Creditors Arrangement Act, and that question again depends upon the answer to the question whether or not the Supreme Court of British Columbia was competent to adjudicate upon the respondent company's rights in that respect.
The Farmers' Creditors Arrangement Act provides in section 6 (1) and (2) as follows:—
6.(1) A farmer who is unable to meet his liabilities as they become due may make a proposal for a composition, extension of time or scheme of arrangement either before or after an assignment has been made.
(2) Such proposal shall be filed with the Official Receiver who shall forthwith convene a meeting of the creditors and perform the duties and functions required by the Bankruptcy Act to be performed by a trustee in the case of a proposal for a composition, extension of time or scheme of arrangement.
By section 7:—
7. A proposal may provide for a compromise or an extension of time or scheme of arrangement in relation to a debt owing to a secured creditor, or in relation to a debt owing to a person who has acquired movable or immovable property subject to a right of redemption, but in that event the concurrence of the secured creditor or such person, shall be required, except in the case of a proposal formulated and confirmed by the Board of Review as hereinafter provided.
By section 11 (1) and (2):—
11. (1) On the filing with the Official Receiver of a proposal, no creditor whether secured or unsecured, shall have any remedy against the property or person of the debtor, or shall commence or continue any proceedings under the Bankruptcy Act, or any action, execution or other proceedings for the recovery of a debt provable in bankruptcy, or the realization of any security unless with leave of the court and on such terms as the court may impose; Provided, however, that the stay of proceedings herein provided shall only be effective until the date of the final disposition of the proposal. 1938, Ch. 47 Am.
(2) On a proposal being filed the property of the debtor shall be deemed to be under the authority of the court pending the final disposition of any proceedings in connection with the proposal and the court may make such order as it deems necessary for the preservation of such property.
By section 5, subsection (1):—
5, (1) In the case of an assignment, petition or proposal in the province of Quebec, the Superior Court of the judicial district where the farmer resides, and in other provinces, the county or district court, shall have exclusive jurisdiction in bankruptcy subject to appeal as provided in section one hundred and seventy-four of the Bankruptcy Act.
The statute also provides for a Board of Review consisting of a Chief Commissioner and two Commissioners, and that where the Official Receiver reports that a farmer has made a proposal, but that no proposal has been approved by the creditors, the Board shall, on the written request of a creditor or of the debtor, endeavour to formulate an acceptable proposal, and the Board shall consider representations. If the proposal so formulated is accepted by the debtor and the creditors it is to be filed in Court and then, by force of section 12, subsection (5), it becomes binding on the debtor and all the creditors. Even where a debtor and the creditors refuse to approve a proposal so formulated the Board may, nevertheless, confirm the proposal with or without amendments, and on being filed in Court it becomes binding on all the creditors and the debtor as if it had been accepted by the creditors and approved by the Court.
In May, 1938, the appellants instituted in the Supreme Court of British Columbia a Debenture Holders action against the respondent company, praying foreclosure or sale of certain properties and assets mortgaged to the appellant to secure the payment of debentures. In May and July, 1938, by orders of the Supreme Court of British Columbia, one G. L. Salter was appointed Receiver and immediately entered upon his duties. This action is still pending and the Receiver is still executing his duties.
In June, 1939, the respondent company purported to file a proposal under the Farmers' Creditors Arrangement Act and on the 14th of September, 1939, the Board of Review sent to the Receiver a notice stating that a written request by a creditor of the respondent company had been addressed to the Board of Review, requesting the Board to formulate an acceptable proposal for a composition, extension of time or scheme of arrangements of the affairs of the said company, and that this request would be dealt with at Nelson, in the county of Kootenay, on the 26th of September, 1939. The appellants immediately commenced an action in the Supreme Court of British Columbia, claiming, among other things, a declaration that the respondent company is not a farmer entitled to take advantage of the Farmers' Creditors Arrangement Act.
The issue of substance which the appellants sought to raise in their action in the Supreme Court of British Columbia was, of course, the question whether the respondent company was entitled to take advantage of the Farmers' Creditors Arrangement Act. The appellants, being the holders of debentures in the amount of three hundred and fifty thousand dollars ($350,000) and having, as already observed, in a Debenture Holders action had a Receiver appointed of property affected by their security in British Columbia, had, of course, an immediate and practical concern in the proceedings taken by the respondent company, purporting it to be under the authority of the Farmers' Creditors Arrangement Act.
The statute, as appears from the enactments already set out, where a proposal, which is a proper proposal within the contemplation of the statute, is filed by a person who is entitled to the benefit of the provisions of the statute, effects (inter alia) a stay of all proceedings taken by the holder of the security to realize his security pending at the time the proposal is filed; and also brings the property of the debtor filing the proposal under the authority of the Court, which is the County Court of the county in which the debtor resides, and gives the County Court authority to make orders for the preservation of the property.
Furthermore (it cannot be too plainly kept in view), authority is given to the Board of Review to formulate a proposal providing for a compromise and extension of time or scheme of arrangement in relation (inter alia) to a debt owing to a secured creditor, and such proposal so formulated by the Board may be confirmed by the Board and filed in the County Court and thereupon (even without the consent of the secured creditor) it becomes binding upon all the creditors and the debtor.
The appellants, I repeat, were naturally and properly concerned with these proceedings, and when they received notice from the Board that the Board intended to consider the framing of a proposal they instituted their action in the Supreme Court of British Columbia, as already mentioned.
On behalf of the respondent company and the Board of Review it was argued that the statute invests the County Court with exclusive jurisdiction in bankruptcy and that this includes any proceeding to determine the question raised by the action; and so precludes the exercise of jurisdiction therein by the Supreme Court. I do not think it is necessary for the purpose of this appeal to determine generally the jurisdiction of the County Court and of the Supreme Court, respectively, in relation to the statutory validity of a proposal filed by a debtor who is invoking the provisions of the statute. Prima facie it would seem that an application made to the County Court judge to set aside such a proposal as incompetent would fall within the "jurisdiction of bankruptcy" within the meaning of the statute, and that the County Court judge would have jurisdiction to pass upon such an application.
In the present case property of the respondent company affected by the debentures is in the hands of a Receiver appointed by the Supreme Court of British Columbia. On general principles any attempt to interfere with the possession of the Receiver would constitute contempt of court. In the absence of some statute to the contrary effect, the Supreme Court would not permit even an action to be brought against the Receiver in respect of his receivership, unless leave of the Court were first obtained. Blair v. Maidstone [4]; Russell v. East Anglia Rly. Co.[5]; Coleman v. Grenville [6], per Strong, V.C. This, of course, is well-known law. Whatever may be the effect of the general language of the enactment which purports to give to the County Court exclusive jurisdiction in bankruptcy, such general language cannot, in my opinion, be read as giving to the County Court any control over the assets of the respondent company, in the hands of the Receiver, which could be exercised without the consent of the Supreme Court. Only the most precise language would justify one in ascribing such an intention to the legislature; and it seems necessarily to follow that it would be within the jurisdiction of the Supreme Court to ascertain by an examination of the facts (if such a claim were made) whether or not the purported proceedings under the statute were competent proceedings,—whether or not, in other words, the County Court had acquired exclusive jurisdiction in relation to the debtors' assets by force of the statute.
In the present case the Board of Review was about to proceed to consider a proposal to be formulated under section 12, subsections (4) and (5) and, in the case of a proposal being formulated and confirmed by the Board of Review, questions might very well arise as to the position of the Receiver. It is to be noticed that section 11 read literally, when effect is given to it according to the full scope of its terms, without any qualification, would appear directly to affect the Receiver in any proceedings by him to realize property within the receivership—in an action, for example, to collect a book debt charged by the debentures in suit. Only the very clearest language would, I repeat, justify the conclusion that the legislature intended in these circumstances to deprive the Supreme Court of the authority to decide for itself whether the filing of the proposal had any statutory warrant.
The principle of Stradling v. Morgan [7] must, I think, be applied. The words employed ought not, I think, to be read as excluding the jurisdiction of the Supreme Court to decide whether, in such circumstances as those before us, its jurisdiction in respect of property in its possession, and in respect of proceedings in relation to that property pending before it, has been ousted. The learned trial judge had all the circumstances before him and, having regard to those circumstances, felt it his duty to pronounce upon the issue. He held that the respondent company is not a farmer within the contemplation of the statute, a conclusion with which, as I have mentioned, we are in entire agreement.
As already observed, the only point remaining to be considered is whether or not the trial judge was also right in exercising the jurisdiction he did exercise, or whether, on the contrary, the County Court was solely competent to pass upon the issue presented to him. If the learned trial judge was wrong in holding that he was invested with jurisdiction, the only course open to us would be to dismiss the appeal, with the result that the question must go back to the County Court for determination, and the time and energy spent in trying the issue before the Supreme Court judge and in arguing it before the Court of Appeal and before this Court thrown away. Happily, in my opinion, this course is not forced upon us because I think the trial judge's decision on the question of jurisdiction, as well as his decision on the question of substance, is right. He was not deciding upon any abstract question. It was important that the issue should be decided speedily in order to avoid conflict of jurisdiction, with resulting confusion and expense.
With the deepest respect for the learning and the judgment of the able and experienced Chief Justice of British Columbia, I am, for the reasons I have indicated, unable to accept his conclusion. I may add, also, that I have read the valuable judgment of Mr. Justice O'Halloran with care, but, with respect, it does not meet the point upon which I think the appeal must be decided.
I think perhaps some observations ought to be made upon certain orders by the judges of the County Court of Yale and the County Court of West Kootenay, respectively.
On the 26th of June an order was made by Judge Kelly, of the County Court of Yale, and on the 28th of the same month an order in the same terms was made by Judge Nisbet, of the County Court of West Kootenay. These orders are in the following terms:— June 1939.
In the County Court of
holden at
In the matter of "The Farmers' Creditors Arrangement Act, 1934," and Amendments thereto, and
In the matter of a proposal for composition, extension or scheme of arrangement of The Christian Community of Universal Brotherhood,
Limited, Farmer.
Before His Honour Judge in Court
, the
day of June, 1939.
Upon the application of Walter Gordon Wilkins, an Official Receiver under the said Farmers' Creditors Arrangements Act, 1934, and amendments thereto for directions.
And upon reading the statement of affairs herein and the proposal and the resolution of the Directors of the said Christian Community of Universal Brotherhood Limited and the affidavit of Nicholas M. Plotnikoff attached thereto.
It is ordered that the said Christian Community of Universal Brotherhood Limited is hereby permitted to make application under and is entitled to take advantage of the Provisions of the said Farmers' Creditors Arrangement Act, 1934, and amendments thereto.
And it is further ordered that the said Official Receiver, Walter Gordon Wilkins, is hereby permitted to accept the said proposal of the Christian Community of Universal Brotherhood Limited under the said Farmers' Creditors Arrangement Act, 1934, and amendments thereto.
Judge, County Court of
(SEAL)
C. C. of
Entered this
1939
day of June,
Registrar,
County Court.
The recital shows that the order was made on an application by the Official Receiver to the County Court for directions before the proposal was filed. It may be open to question whether until the proposal is filed the Official Receiver has any status, or the Court any jurisdiction, under Rule 42. It is not necessary, however, to decide that point.
Section 6 of the Farmers' Creditors Arrangement Act does not contemplate a proposal filed by leave of the County Court; it does not contemplate an application for such leave by a person seeking to avail himself of the provisions of the statute. The right of the farmer is a statutory right arising from the provisions of the statute and not from any leave of the Court. Rule 42 does not empower the County Court to give any direction contrary to the Act, or, on an ex parte application in the absence of the parties known to be principally concerned, to adjudicate upon any controversy touching the right of any person to file a proposal as an insolvent farmer under the authority of section 6 of the Farmers' Creditors Arrangement Act. The purpose of the procedure under rule 42 is to enable the Official Receiver to obtain the advice of the Court in matters of administration where the application of the Act, which is the foundation of the authority of the judge as well as the Official Receiver, is assumed. The purpose of the procedure is to enable the Official Receiver to obtain directions as to his own acts in the course of administration for his own protection and for the orderly conduct of the administration; it is not its purpose to empower the Court to make binding orders affecting the rights of third persons who are not parties to the proceeding.
It does not follow, of course, that on an application for directions, when all parties are present, questions of right and jurisdiction may never be determined. The County Court has jurisdiction, speaking generally, to determine such questions in a summary way and the hearing of an application for directions in a particular case may be a convenient occasion for dealing with such questions, and there can be no objection to such a course when proper care is taken to see that everybody concerned is fully represented and has a full opportunity of bringing out the facts and presenting his case.
The proper way to read the orders is to treat them as directions to the Official Receiver to receive and file proposals and the earlier paragraph must be regarded simply as introductory, expressing the judge's opinion quantum valeat with regard to matters upon which he had no authority to make a binding pronouncement.
I think the appeal should be allowed and the judgment of the learned trial judge restored with costs throughout.
RINFRET J.—Prior to the commencement of the action in respect of which the present appeal is asserted, the appellant had, on May 18th, 1938, commenced in the Supreme Court of British Columbia a Debentures Holders' action against the respondent Community, asking for the foreclosure, or sale, of certain properties and assets of the Community mortgaged to the appellant by the Community to secure the payment of certain bonds of the Community which are still outstanding and unpaid. In that first action, one Mr. G. L. Salter, a chartered accountant and authorized trustee in bankruptcy, was appointed Receiver by Orders of the said Supreme Court of British Columbia, dated May 18th and July 15th, 1938.
The Receiver immediately entered upon his duties as such and he has ever since and still is carrying on the same; and the Debentures Holders' action is still pending in the Supreme Court.
The Receiver is and at all material times was an Officer of the Supreme Court of British Columbia.
About the end of the month of June, 1939, the Community purported to file a proposal under the Farmers' Creditors Arrangement Act, 1934; and, on or about August 1st, 1939, it purported to make a request under that Act to the respondent Board of Review.
On September 14th, 1939, the Board sent out a notice of hearing, whereupon the appellant brought the present action on September 16th, 1939.
At all material times, the Debentures Holders' action was proceeding in the Supreme Court of British Columbia and the Receiver appointed by that Court was in charge and acting.
In the present action, the appellant alleged, among other things, that the Community was not a farmer within the meaning of the Farmers' Creditors Arrangement Act and was not entitled to the benefit of that Act; that the Community had not made a proposal for a composition, extension of time or scheme of arrangement pursuant to the Act; and that accordingly the Act had no application to the Community, and the Board of Review for the province of British Columbia was without jurisdiction, that it had no jurisdiction over the appellant and the other creditors of the Community.
The appellant asked and claimed:
(a) A declaration that the Farmers' Creditors Arrangement Act of 1934 does not apply to the respondent Community;
(b) A declaration that the Community is not entitled to make a proposal for a composition of its liabilities under the provisions of the Act; (c) A declaration that the respondent Board is not authorized or empowered and has no jurisdiction to hold a hearing, or formulate a proposal for such a composition;
(d) A declaration that all proceedings of the Board pursuant to the application of the Community are null and void;
(e) An injunction restraining the respondents, and each of them, from taking any further steps under the Act with respect to the application of the Community, or with respect to its liabilities;
(f) The costs of this action;
(g) Such further or other relief as to this Honourable Court may seem meet.
The formal judgment of the Supreme Court of British Columbia, at the trial before Robertson J. [8], was a declaration that the Community was not a farmer within the meaning of the Act; and it gave liberty to apply for an injunction as against the Board, in the event of its deciding to proceed with the "Request for Review." The judgment gave costs to the appellant against the Community.
Having decided that the Community was not a farmer within the meaning of the Act, the learned judge stated that, under the circumstances, it was not necessary to consider the appellant's alternative submissions.
Both the Community and the Board appealed from this judgment to the Court of Appeal of British Columbia, where the appeal was allowed and the judgment was set aside with costs against the present appellant [9].
The Court of Appeal decided that the Supreme Court of British Columbia had no jurisdiction in the matter and that, by force of the provisions of the Act, such jurisdiction resided exclusively in the County Court. It decided further that, on the authority of Barickman Hutterian Mutual Corporation v. Nault [10], the Community was a farmer.
The other questions raised in the action have not been dealt with by the appeal court.
The substantial question that stands to be decided in the present appeal is whether the Community is a farmer within the meaning of the Farmers' Creditors Arrangement Act and, as such, entitled to a proposal for a composition of its liabilities under the provisions of that Act.
When once this point is settled, there will have to be examined the further question whether the respondent Board established under the Act is authorized and empowered and has jurisdiction to hold a hearing, or to formulate a proposal for a composition of the liabilities of the respondent Community.
If these two questions be disposed of in accordance with the contentions of the appellant, there will remain to be decided whether the County Court is vested with the exclusive jurisdiction to pass upon these questions, subject to appeal as provided in sec. 174 of the Bankruptcy Act, or if the appellant's action was competently brought before the Supreme Court of British Columbia; and, in such a case, whether the jurisdiction of that Court should have been exercised in a declaratory action such as was instituted here, or whether the intervention of the Supreme Court could be asked for only by petition for a writ of certiorari.
I will deal first with the question whether, on the evidence before the Court, the respondent Community can be held to be a farmer within the meaning of the Farmers' Creditors Arrangement Act.
The Christian Community of Universal Brotherhood is a limited company incorporated by letters patent under the Dominion Companies Act on April 25th, 1917, with a capital stock of $1,000,000 divided into 10,000 shares of $100 each.
Its powers and objects are those usually granted to an ordinary commercial corporation. The Charter contains no reference to any religious beliefs, practices, or observances.
Some of the objects and powers of the Company are as follows:
(a) To carry on agricultural pursuits, and to manufacture the products of the farm, the mine, the soil and the forest; to manufacture, purchase or otherwise acquire, to hold, own, sell, assign and transfer or otherwise dispose of, to invest, trade, deal in and deal with, either at retail or wholesale, goods, wares and merchandise, and real and personal property, corporeal and incorporeal, of every class and description whatsoever and whatsoever required; to grow, produce, manufacture, buy, sell, trade, deal in and deal with raw materials, live stock, grains, fruits, agricultural products and all othe