Supreme Court of Canada
Northern Pipeline Agency v. Perehinec, [1983] 2 S.C.R. 513
Date: 1983-12-15
Northern Pipeline Agency as represented by the Attorney General of Canada (Defendant) Appellant;
and
John Perehinec (Plaintiff) Respondent.
File No.: 16463.
1982: May 5; 1983: December 15.
Present: Ritchie, Dickson, Beetz, Estey, McIntyre, Chouinard and Wilson JJ.
ON APPEAL FROM THE COURT OF APPEAL OF ALBERTA
Courts—Jurisdiction—Federal Court—Provincial superior court—Action for wrongful dismissal against federal agency—Whether action within exclusive jurisdiction of Federal Court—Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 17—Northern Pipeline Act, 1977-78 (Can.), c. 20.
Crown—Agent of the Crown—Northern Pipeline Agency—Whether Agency can enter into a contract of employment in its own name and be sued in its own right—Northern Pipeline Act, 1977-78 (Can.), c. 20.
The respondent brought an action in the Supreme Court of Alberta against the appellant, a federal agency established under the Northern Pipeline Act, for damages for wrongful dismissal. The appellant, represented by the Attorney General of Canada, sought to strike out the respondent’s action on the ground that it was an action against the Crown and therefore within the exclusive jurisdiction of the Federal Court. The first judge, sitting in chambers, found that the provincial court had jurisdiction and dismissed appellant’s application. The Court of Appeal upheld the decision. Hence this appeal to determine whether an action for breach of a contract of employment can be brought against the appellant in its own name, and if so, whether s. 17(2) of the Federal Court Act applies so that the Federal Court has exclusive jurisdiction.
Held: The appeal should be dismissed.
Per Ritchie, Beetz, Estey, McIntyre, Chouinard and Wilson JJ.: Section 17 of the Federal Court Act does not apply as this case is not the subject of an action against the Crown. Where a fair construction of the enabling statute permits an agency to enter into a contract on its own behalf, even if it may be on behalf of
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the Crown as well, the agency having entered the contract in its own name, may be sued in its own right in an action for breach of contract. Here, the language used by Parliament, particularly in s. 11 of the Northern Pipeline Act, revealed that the Agency is an entity which can enter a contract of employment on its own behalf, and sue or be sued on that contract in its own name. Therefore, the respondent was entitled to claim relief against the Agency alone without any obligation to include the Crown as a defendant in such action.
Per Dickson J.: The appeal should be dismissed.
McLean v. Vancouver Harbour Commissioners, [1936] 3 W.W.R. 657; Washer v. British Columbia Toll Highways and Bridges Authority (1965), 53 W.W.R. 225; Yeats v. Central Mortgage and Housing Corp., [1950] S.C.R. 513; Westlake v. The Queen in right of the Province of Ontario (1971), 21 D.L.R. (3d) 129; Metropolitan Meat Industry Board v. Sheedy, [1927] A.C. 899; City of Halifax v. Halifax Harbour Commissioners, [1935] S.C.R. 215; British Columbia Power Corp. v. Attorney-General of British Columbia (1962), 38 W.W.R. 657; Quebec Liquor Commission v. Moore, [1924] S.C.R. 540; Westeel-Rosco Ltd. v. Board of Governors of South Saskatchewan Hospital Centre, [1977] 2 S.C.R. 238; Attorney General of Canada v. Law Society of British Columbia; Jabour v. Law Society of British Columbia, [1982] 2 S.C.R. 307, applied; International Railway Co. v. Niagara Parks Commission, [1941] 2 All E.R. 456; Hollinger Bus Lines Ltd. v. Ontario Labour Relations Board, [1952] O.R. 366; Bank of Montreal v. Bole, [1931] 1 W.W.R. 203; Taff Vale Railway Co. v. Amalgamated Society of Railway Servants, [1901] A.C. 426; International Longshoremen’s Association, Local 273 v. Maritime Employers’ Association, [1979] 1 S.C.R. 120; Langlois v. Canadian Commercial Corporation, [1956] S.C.R. 954; Conseil des Ports Nationaux v. Langelier, [1969] S.C.R. 60; Metallic Roofing Co. v. Local Union No. 30 (1903), 5 O.L.R. 424 aff’d 9 O.L.R. 171, considered; Graham & Sons v. Works and Public Buildings Commissioners, [1901] 2 K.B. 781, referred to.
APPEAL from a judgment of the Alberta Court of Appeal, [1981] 2 W.W.R. 566, 119 D.L.R. (3d) 92, 25 A.R. 605, dismissing appellant’s appeal from a judgment of Forsyth J., [1980] 4 W.W.R. 193, 110 D.L.R. (3d) 356, 25 A.R. 617, dismissing appellant’s application to strike out the statement
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of claim against the Agency for want of jurisdiction. Appeal dismissed.
I.G. Whitehall, Q.C., and B.J. Saunders, for the appellant.
G. Neil McDermid, for the respondent.
The judgment of Ritchie, Beetz, Estey, McIntyre, Chouinard and Wilson JJ. was delivered by
ESTEY J.—The appellant, by interlocutory proceedings in the Supreme Court of Alberta, seeks to strike out the respondent’s action on the grounds that the Alberta Court “has no jurisdiction to entertain the Plaintiffs [respondent’s] action against the said Defendant [appellant]”. The issues raised are whether an action for breach of contract can be brought against the appellant agency in its own name, and if so, whether s. 17(2) of the Federal Court Act applies so that the Federal Court of Canada has exclusive jurisdiction. Because of the nature of the proceeding, the record consists entirely of the statement of claim filed by the respondent-plaintiff in the Alberta Court, which, on the hearing of such an application as this, must, as regards the facts pleaded, be presumed to be true. The issue arises because of the nature of the appellant’s status in law and the nature of the claim made by the respondent against the appellant.
The appellant-defendant is an agency established under the Northern Pipeline Act, 1977-78 (Can.), c. 20, with offices in the City of Calgary. In the statement of claim the co-defendant, Harold S. Millican, who did not appear before this Court on the hearing of this appeal, is said to be:
…the Administrator of the Agency and resides in the City of Calgary, in the Province of Alberta and at all times material hereto was responsible for hiring employees on behalf of the Defendant Agency in the City of Calgary.
The respondent (plaintiff) is a former employee of the appellant agency, and the action brought by the respondent is for termination of his employment by the appellant. All that is known in this
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proceeding of the hiring arrangement between the parties is found in paragraph 4 of the statement of claim:
On or about July 26, 1978, the Plaintiff [respondent] was employed by the Defendant Agency [appellant] as Manager, Public Affairs where he earned an annual salary of $44,310 with a 10% deferred annual bonus which was to be paid on a cumulative basis at the termination of the Plaintiffs [respondent’s] employment.
While the action seems to be fundamentally rooted in contract, the statement of claim refers to “misrepresentations [which] induced the Plaintiff to accept the said employment”. In the prayer for relief, the respondent claims general damages, specific damages for relocation expenses, and exemplary and punitive damages. As was pointed out by Laycraft J. writing for the unanimous Court of Appeal:
It is left open for speculation whether the claim alleged is in tort as well as contract and what is the nature of the claim, if any, against Millican.
The learned justice of first instance, sitting in chambers at Calgary, found that the respondent was an employee of the appellant, Northern Pipeline Agency, and that the appellant was:
…a body capable of entering into a contract of employment and therefore capable of being sued in the case of an alleged breach of that contract of employment.
Consequently, the application was dismissed.
The Court of Appeal of Alberta also concluded that the respondent was an employee of the appellant not an employee of the Crown, and that in the absence of parliamentary intention to the contrary, the appellant is liable to suit in the provincial courts at the instance of parties to such employment contracts.
Before proceeding to the sole issue of the jurisdiction of the Alberta Court to receive this proceeding, it is necessary to examine briefly the constituting statute of the Northern Pipeline Agency (the appellant), the Northern Pipeline Act, supra.
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By section 4 of that statute, it was enacted that:
There shall be an agency of the Government of Canada called the Northern Pipeline Agency over which the Minister [as from time to time designated by the Governor in Council] shall preside.
The statute, by s. 5(1), goes on to provide for the appointment by the Governor in Council of the Commissioner of the Agency who shall be the deputy of the Minister responsible for the Agency, and:
…the Commissioner shall rank as and have all the powers of a deputy head of a department.
By section 11 of the statute, the Agency is given express authorization to:
…employ such professional, scientific, technical and other officers and employees as it considers necessary for the purposes of this Act, fix their tenure of employment and their duties and, with the approval of the Treasury Board, fix and pay their remuneration.
The issue as to the jurisdiction of the Supreme Court of Alberta in this litigation is raised by s. 17 of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10 which provides:
17. (1) The Trial Division has original jurisdiction in all cases where relief is claimed against the Crown and, except where otherwise provided, the Trial Division has exclusive original jurisdiction in all such cases.
(2) Without restricting the generality of subsection (1), the Trial Division has exclusive original jurisdiction, except where otherwise provided, in all cases in which the land, goods or money of any person are in the possession of the Crown or in which the claim arises out of a contract entered into by or on behalf of the Crown, and in all cases in which there is a claim against the Crown for injurious affection.
In argument, the appellant and the respondent placed considerable emphasis on the question as to whether the appellant was an agent of the Crown. Indeed both of the courts below found such to be the case. For reasons which I will later set out, I do not think the answer to that question determines the outcome of this appeal.
Whether a statutory entity is an agent of the Crown, for the purpose of attracting the Crown immunity doctrine, is a question governed by the extent and degree of control exercised over that
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entity by the Crown, through its Ministers, or other elements in the executive branch of government, including the Governor in Council. In Metropolitan Meat Industry Board v. Sheedy, [1927] A.C. 899, Viscount Haldane considered the extent of the control by government, or conversely the uncontrolled discretionary power in the board, in determining whether the acts of the board in question constituted those of an agent of the Crown. In concluding that the board there in question was not an agent of the Crown His Lordship stated, at p. 905:
They are a body with discretionary powers of their own. Even if a Minister of the Crown has power to interfere with them, there is nothing in the statute which makes the acts of administration his as distinguished from theirs. That they were incorporated does not matter. It is also true that the Governor appoints their members and can veto certain of their actions. But these provisions, even when taken together, do not outweigh the fact that the Act of 1915 confers on the appellant Board wide powers which are given to it to be exercised at its own discretion and without consulting the direct representatives of the Crown.
This Court adopted this reasoning of the Privy Council in City of Halifax v. Halifax Harbour Commissioners, [1935] S.C.R. 215 at p. 225. There, however, the Court, speaking through Duff C.J., reached the opposite conclusion, namely that the Harbour Commissioners, when occupying certain lands within the City of Halifax, were, in law, the agents of His Majesty, and thus were beyond the reach of provincial (in fact, municipal) assessment and taxation. Again the test used by this Court was the degree and extent of control by the Governor in Council or by a Minister of the Crown over the agency in question (the Chief Justice making no distinction as to the manner in which the control was exercised). Duff C.J. found the necessary degree of control by reference to the limitations on acquisition of property, borrowing, administrative functioning, governance by by-law of the agency, and construction of works, all of which were subject to the approval of the Governor in Council or, in some instances, by a Minister of the Crown. In total these controls and restrictions upon the operations of the agency were found
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to be “of such a character as to constitute that occupation an occupation ‘for the Crown’…”.
The British Columbia Court of Appeal had occasion to consider the application of the same principle in British Columbia Power Corp. v. Attorney-General of British Columbia (1962), 38 W.W.R. 657. One may note in particular the observations of Sheppard J.A. at pp. 665-66 where he concluded that the company in question, the shares of which were all owned by the Crown in the right of the Province, was not, within the meaning of Duff J., as he then was, speaking in Quebec Liquor Commission v. Moore, [1924] S.C.R. 540, at p. 551 “… an instrumentality of government,” nor did the parent statute constitute the company a department of government; and the agency in question had a contractual capacity apart from the Crown. In the end, the Court concluded that the corporate agency in question was not an agent of the Crown.
This Court most recently considered the status of Crown agencies in Westeel-Rosco Ltd. v. Board of Governors of South Saskatchewan Hospital Centre, [1977] 2 S.C.R. 238, where Ritchie J., speaking for a unanimous Court, stated at pp. 249-50:
Whether or not a particular body is an agent of the Crown depends upon the nature and degree of control which the Crown exercises over it. This is made plain in a paragraph in the reasons for judgment of Mr. Justice Laidlaw, speaking on behalf of the Court of Appeal for Ontario in R. v. Ontario Labour Relations Board, Ex p. Ontario Food Terminal Board (1963), 38 D.L.R. (2d) 530, at p. 534, where he said:
It is not possible for me to formulate a comprehensive and accurate test applicable in all cases to determine with certainty whether or not an entity is a Crown agent. The answer to that question depends in part upon the nature of the functions performed and for whose benefit the service is rendered. It depends in part upon the nature and extent of the powers entrusted to it. It depends mainly upon the nature and degree of control exercisable or retained by the Crown.
(Emphasis added by Ritchie J.)
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In the Northern Pipeline Act, supra, the Agency was established to carry out and give effect to an agreement which had been previously entered into by this country and the United States relating to the establishment of gas transmission pipeline facilities in the federal territories and the Province of Alberta. To this end the Agency, pursuant to s. 3, was given a statutory mandate to “facilitate the efficient and expeditious planning and construction of the pipeline”, and in doing so “to carry out… federal responsibilities in relation to the pipeline”, and finally to:
advance national economic and energy interests and to maximize related industrial benefits by ensuring the highest possible degree of Canadian participation in all aspects of the planning and construction of, and procurement for, the pipeline while ensuring that the procurement of goods and services for the pipeline will be on generally competitive terms.
The Agency, by s. 4 of its statute, was described as “an Agency of the Government of Canada called the Northern Pipeline Agency over which the Minister shall preside”. The Agency was made subject to the management and direction of the Minister. The Commissioner of the Agency is appointed by the Governor in Council who shall, in holding such office, be “the deputy of the Minister” and shall have the rank and powers of “a deputy head of a department” (s. 5(1)). Pursuant to s. 24 of the Act the Agency is included as a separate employer in Part II of Schedule I of the Public Service Staff Relations Act. The cost of operation of the Agency is provided for in s. 29 by a requirement that participating companies in the pipeline program “shall pay to the Receiver General an amount… in respect of the costs incurred by the Agency …” with reference to its role in the planning and construction of the pipeline.
Applying the principle of control as enunciated in the decisions of the Privy Council and of this Court, supra, (and as applied in the British Columbia Court of Appeal), to the statutory provisions establishing the appellant, it would appear that the appellant is indeed an agent of the Crown, at least in the discharge of its primary function of
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attending to the design, construction and installation of the pipeline. With this I respectfully concur in the conclusions reached in both courts below. However, as I observed at the outset, the determination of such a status or relationship does not determine the issue arising on this appeal. For that we must, in my view, turn to those provisions in the statute creating the Agency which relate to its power and authority to enter into the arrangements as described in paragraph 4 of the statement of claim, supra.
The ultimate issue in this appeal is whether this action may be maintained in the provincial courts or whether, by virtue of s. 17(2) of the Federal Court Act, the Federal Court of Canada has exclusive jurisdiction to entertain this proceeding. In determining the proper scope of s. 17(2) of the Federal Court Act, supra, it is important to remember that:
The provincial superior courts have always occupied a position of prime importance in the constitutional pattern of this country. They are the descendants of the Royal Courts of Justice as courts of general jurisdiction. They cross the dividing line, as it were, in the federal-provincial scheme of division of jurisdiction, being organized by the provinces under s. 92(14) of the Constitution Act and are presided over by judges appointed and paid by the federal government (sections 96 and 100 of the Constitution Act). As was said by Pigeon, J. in R. v. Thomas Fuller Construction Co. (1958) Ltd. et al., [1980] 1 S.C.R. 695, at p. 713:
It must be considered that the basic principle governing the Canadian system of judicature is the jurisdiction of the superior courts of the provinces in all matters federal and provincial. The federal Parliament is empowered to derogate from this principle by establishing additional courts only for the better administration of the laws of Canada.
(Attorney General of Canada v. Law Society of British Columbia; Jabour v. Law Society of British Columbia, [1982] 2 S.C.R. 307, at pp. 326-27.)
The transfer of jurisdiction to the Federal Court of Canada, inter alia, in all cases where relief is claimed against the Crown, signifies an exception to the general rule stated above. There remains, however, as a fundamental principle of the court
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system as structured by the Constitution Act, 1867, a presumption of jurisdiction in the provincial courts.
I turn then to the reach of s. 17(2) of the Federal Court Act. That section, as we have seen, provides in part:
(2) …the Trial Division has exclusive original jurisdiction… in all cases… in which the claim arises out of a contract entered into by or on behalf of the Crown…
This provision is in amplification of s. 17(1) which placed the original jurisdiction in the Trial Division in all cases “where relief is claimed against the Crown …”. Dealing with the earlier version of that section (and which version is not essentially different from that presently in effect), Kerwin J., as he then was, stated in Yeats v. Central Mortgage and Housing Corp., [1950] S.C.R. 513, at p. 516:
Section 18 does not apply as this case is not the “subject of a suit or action against the Crown” and the meaning of these words in the early part of the section is not enlarged by the concluding phrase “or in which the claim arises out of a contract entered into by or on behalf of the Crown.” Section 19, so far as it might have any relevancy, makes provision in respect of “claims against the Crown.” Here, the appellants desire to have decided their claims against the Corporation (not the Crown) at the same time as their claims against the other defendants. The provisions of the Central Mortgage and Housing Corporation Act are apt to authorize the Corporation being sued in the Provincial Court…
To like effect are the comments of Robertson J. in McLean v. Vancouver Harbour Commissioners, [1936] 3 W.W.R. 657 (B.C.S.C), at pp. 665-66:
This section [s. 18, now s. 17], I think, applies to contracts to which His Majesty is actually a party, or in which someone actually contracts, in the contract, on behalf of, or as representing, His Majesty. In my opinion it does not apply to a contract made by a corporation such as the defendant.
In determining whether this action may be brought against the Agency in the provincial
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courts, one is faced only with the barrier of s. 17, and that barrier, in my opinion, has been substantially lowered by the comments of this Court in Yeats, supra, as well as in those other authorities dwelling on that point quoted above.
The question then that must be answered is this: Is the action brought by the respondent (plaintiff) one in which relief is claimed against the Crown? In dealing with this question, the other issue which must be addressed is whether the appellant is a separate legal entity which may be made the subject of an action at law under s. 11(1). This issue divides logically into two parts, one raising the question as to whether the Agency is an entity capable of suing and being sued; and the other (if this subquestion be answered in the affirmative) as to whether an action may be brought against it under s. 11(1) of the Act. The determination of this issue rests on the interpretation of s. 11 of the Northern Pipeline Act. These questions can also be expressed in this way: Does the Act, in particular s. 11, permit the appellant Agency to enter a contract in its own name and be sued in its own right? If it does, then, in my view, we are not here concerned with an action against the Crown, and s. 17 of the Federal Court Act does not apply. These issues clearly relate to the alleged contract of employment. If it was entered into by the Agency on its own account and the Agency is suable at law, then the respondent succeeds. It may be that the law permits an extension of that principle one notch further so that an agency may be sued in its own right where such a contract has been entered into by the Agency on its own behalf and on behalf of the Crown as well.
I turn then to the question as to whether or not the Agency may be the subject of an action at law. The Agency is, of course, an unincorporated body and has many of the aspects of a government department. For example, the Agency is headed by a Minister and by a Commissioner with the rank of a Deputy Minister. Also, the Financial Administration Act, R.S.C. 1970, c. F-10, classifies, for the purposes of that Act, certain divisions,
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sectors or elements of the Government of Canada as being departments or otherwise. In the definition in s. 2 of that Act, “department” means:
(a) any of the departments named in Schedule A,
(b) any other division or branch of the public service of Canada, including a commission appointed under the Inquiries Act, designated by the Governor in Council as a department for the purposes of this Act,
…
By Order in Council, SI/78-117, Schedule A to the Financial Administration Act was amended by the addition of the appellant to the list of departments for the purposes of the Financial Administration Act. The statute, by s. 5(1)(e), goes on to authorize the Treasury Board to act:
5. (1) …for the Queen’s Privy Council for Canada on all matters relating to
…
(e) personnel management in the public service, including the determination of terms and conditions of employment of persons employed therein;
By section 7 of that statute it is provided:
7. (1) Subject to the provisions of any enactment respecting the powers and functions of a separate employer but notwithstanding any other provision contained in any enactment, the Treasury Board may, in the exercise of its responsibilities in relation to personnel management including its responsibilities in relations to employer and employee relations in the public service, and without limiting the generality of sections 5 and 6,
(a) determine the manpower requirements of the public service and provide for the allocation and effective utilization of manpower resources within the public service;
…
(d) determine and regulate the pay to which persons employed in the public service are entitled for services rendered, the hours of work and leave of such persons and any matters related thereto;
…
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(i) provide for such other matters, including terms and conditions of employment not otherwise specifically provided for in this subsection, as the Treasury Board considers necessary for effective personnel management in the public service.
Subsection (3) of that section (s. 7) authorizes the Governor in Council to direct that “the separate employer” (which in this case is the Agency, as will be explained below) shall discharge the powers and functions of the Treasury Board in relation to the management of the personnel of the separate employer, but no such Order in Council was laid before this Court. It is to be noted that the role of the Treasury Board under the Financial Administration Act is made “[s]ubject to the provisions of any enactment respecting the powers and functions of a separate employer”. The designation of the appellant as a department of government under the Financial Administration Act, for the purposes of this Act, would, therefore, appear to add nothing to the determination of the status of the appellant and the respondent for the purposes of this litigation.
In maintaining that it was not a separate legal entity which could be sued, the appellant referred to s. 2 of the Public Service Staff Relations Act, R.S.C. 1970, c. P-35 and s. 24 of the Northern Pipeline Act, supra. By section 2 of the former Act, ‘employer’ is defined as follows:
“employer” means Her Majesty in right of Canada as represented by,
(a) in the case of any portion of the public service of Canada specified in Part I of Schedule I, the Treasury Board, and
(b) in the case of any portion of the public service of Canada specified in Part II of Schedule I, the separate employer concerned;…
By section 24 of the Northern Pipeline Act the appellant became listed in Part II of Schedule I of the Public Service Staff Relations Act and was thus a separate employer, as defined above. Again these provisions are not of assistance in ascertaining the status of the Agency before the courts. They simply provide for management/ labour relations and for certain financial procedures in the many and diverse arrangements in public employment.
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Having said all that, I think that the process leads back to the broad principle enunciated by Duff J., as he then was, in the Quebec Liquor Commission case, supra. The liability of the statutory body to action in the courts remains to be determined by a true interpretation of the statute in question. There have been some examples of this process in the provincial courts. In Hollinger Bus Lines Ltd. v. Ontario Labour Relations Board, [1952] O.R. 366, the Ontario Court of Appeal determined that the Ontario Labour Relations Board was not an entity subject to suit in the courts, otherwise than by judicial review by certiorari or like statutory procedure. The statute there in question included a privative clause protecting the decisions of the Board from restraint by both action and review. After a detailed examination of the statute, Roach J.A., speaking for the Court, stated (at pp. 377-78):
There are cases in which it has been held that, notwithstanding the fact that the Act creating a body did not expressly declare it to be a body corporate, that body, as a necessary intendment from the enactment creating it, was liable to be sued and had capacity to sue.
…
Clearly there is nothing in The Labour Relations Act, 1948, c. 51, which created this defendant, supporting any such implication. Indeed, there are provisions in it which deny such an implication.
…
The whole scheme and purpose of the Act is to deal with certain phases of the employer-employee relationship. The Board does not carry on any business. Its function is primarily administrative and it has been given power to exercise certain functions of a judicial nature. There is nothing in the Act remotely suggesting that it was intended by the Legislature that the Board should have the capacity either to sue or to be sued.
The Labour Relations Board, of course, is not a board with any operative functions. It is rather a regulatory board, operating in a quasi-judicial sense to determine issues assigned to it by a statute manifesting the broad policies of the Legislature in the field of labour relations. The board has more of the attributes of a tribunal than it has of a
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functioning agency in the executive branch of government.
Houlden J., then sitting in the Ontario High Court, determined in Westlake v. The Queen in right of the Province of Ontario (1971), 21 D.L.R. (3d) 129 that the Ontario Securities Commission was not a legal entity capable of being sued in an action for damages. In reaching this conclusion, he collected and analysed the cases bearing on the problem, and produced a distillation of the characteristics of those bodies which can or cannot be sued, dividing them into six helpful categories:
(1) There are bodies corporate which are not expressly declared to be suable.
…
As regards this type of body, s. 26 of the Interpretation Act, R.S.O. 1960, c. 191 [now R.S.O. 1970, c. 225], is applicable. It provides as follows:
26. In every Act, unless the contrary intention appears, words making any association or number of persons a corporation or body politic and corporate,
(a) vest in the corporation power to sue and be sued,
…
(The comparable federal provision [the Interpretation Act, R.S.C. 1970, c. I-23] provides:
20. (1) Words establishing a corporation shall be construed
(a) to vest in the corporation power to sue and be sued, to contract and be contracted …)
(2) There are bodies corporate which are expressly declared to be suable…
(3) There are bodies corporate which are expressly declared not to be suable…
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These first three categories all relate to bodies which, by their parent statutes, are made corporate, which is not the case here.
(4) There are non-corporate bodies which are, by the terms of the statute creating them, expressly liable to suit…
(5) There are non-corporate bodies which are not by the terms of the statute incorporating them expressly liable to suit but which are by necessary implication liable to be sued in an action for damages…
(at pp. 130-31)
(6) It will be obvious from what has been said that there is a sixth category of statutory bodies and it is in this category that, in my opinion, the Ontario Securities Commission belongs. These are non-corporate bodies which are not by the terms of the statute incorporating them or by necessary implication liable to be sued in an action for damages, but who are legal entities in that their actions may be reviewed in proceedings brought against them by way of the extraordinary remedies of certiorari, mandamus and prohibition.
(at p. 134)
Again it should be observed that the Securities Commission is a non-operative regulatory agency functioning in a legislative capacity by way of regulation, and in a quasi-judicial capacity as a tribunal determining issues arising under the statute. It would appear that Houlden J., as he then was, determined, for this reason, that the statute did not by implication establish the Commission as a non-corporate body intended by law to be the subject of a suit for damages. I find these classifications reflective of the conclusions reached in the authorities, and have concluded below that the Agency falls into the fifth category.
A case involving a statute closer in its terminology to that before us on this appeal is found in Bank of Montreal v. Bole, [1931] 1 W.W.R. 203. Taylor J., of the Court of King’s Bench of Saskatchewan, considered the suability of the provin-
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cial liquor board as established by a provincial statute (at p. 206):
It may be unnecessary to point out the absence of the usual provisions in an incorporating enactment expressly declaring the body created to be a body corporate and politic, empowering it to sue and be sued. The conclusion that the board may under its designated name be made amenable to the ordinary process of the Courts must be discovered as a necessary intendment from the enactment.
It is not necessary before such a finding can be drawn to conclude that the Board is a body corporate.
Later in his judgment he said (at p. 206):
There can be no objection from the standpoint of public policy in holding that the Board may be sued as express statutory provision therefor is found in many Acts in pari materia, and my own view would be that to limit the Board in suing and being sued might well be taken as unnecessarily curtailing the due execution of its powers.
There the Court found the unincorporated board, all of whose property, profits, etc. “shall belong to the Crown”, was nonetheless subject to action in the ordinary courts.
Much earlier, in Taff Vale Railway Co. v. Amalgamated Society of Railway Servants, [1901] A.C. 426, the Privy Council confirmed a judgment in the lower Court by Farwell J., who had stated (at p. 429):
Now, although a corporation and an individual or individuals may be the only entity known to the common law who can sue or be sued, it is competent to the Legislature to give to an association of individuals which is neither a corporation nor a partnership nor an individual a capacity for owning property and acting by agents, and such capacity in the absence of express enactment to the contrary involves the necessary correlative of liability to the extent of such property for the acts and defaults of such agents. It is beside the mark to say of such an association that it is unknown to the common law. The Legislature has legalised it, and it must be dealt with by the Courts according to the intention of the Legislature.
The Privy Council concluded that a trade union, not being a body corporate, was subject to an ordinary action for damages (Earl of Halsbury,
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L.C., p. 436). This Court reviewed some of the foregoing and other authorities in International Longshoremen’s Association, Local 273 v. Maritime Employers’ Association, [1979] 1 S.C.R. 120, at p. 137:
It would take the clearest possible language in my view on the part of Parliament when enacting the Code to show that Parliament did not wish to establish the bargaining agent and the employer as legal entities for the purpose of employer relations regardless of the status of each under pre-existing statute law or the common law generally. In the result, the Association is a legal entity fully capable of bringing these proceedings; and the three Locals are likewise each legal entities fully capable at law of being added as a party defendant.
In International Railway Co. v. Niagara Parks Commission, [1941] 2 All E.R. 456, Luxmoore L.J. stated (at pp. 461-62):
The Acts of incorporation plainly constitute the commission as a corporation with a separate legal entity, and in some, at any rate, of its powers it was obviously recognized that it would have contractual capacity separate from the Crown—e.g., the power to make itself responsible for the moneys secured by debentures issued under the Act, for it is provided that the repayment of the moneys secured by the debentures “may be guaranteed by the Crown.” This provision would be meaningless if the commission was not to be under any liability in the first instance.
The statute there established a corporate body which is not here the case, but it illustrates the process of reasoning followed by the court in analysing the parent statute to determine liability for suit on a particular contract entered into in the course of performing its statutory role.
I turn then to the root question: can the Agency be sued in its own right on the employment contract here at issue? I suggested earlier that an agency which enters into a contract both in its own name and on behalf of the Crown may nonetheless be liable in an action against the agency alone.
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Such a result was adverted to in the International Railway Co. case, supra:
In their Lordships’ view, the commission entered into the 1891 agreement on the express condition that it was to be liable for its fulfilment, and it is, therefore, unnecessary to consider further the more difficult question which would have arisen if the words “on its own behalf had been omitted for there is nothing to prevent an agent from entering into a contract on the basis that he is himself to be liable to perform it as well as his principal. The words in the 1891 agreement “on its own behalf are prima facie directed to separate liability when read in conjunction with the words which follow—namely, “as well as on behalf of the Crown.
(Per Luxmoore L.J., at p. 461.)
A circumstance not dissimilar to that arising in this appeal is found in Yeats v. Central Mortgage and Housing Corp., supra. In that proceeding, the jurisdiction of the Supreme Court of Alberta was challenged in an action for breach of contract against the federal crown corporation, Central Mortgage and Housing Corporation, with reference to contracts relating to the construction of a house. All parties agreed and the case was argued on the basis that the Corporation entered into the contract on behalf of His Majesty, and that the Corporation at the same time incurred obligations in its own name. The relevant provisions of the statute [Central Mortgage and Housing Corporation Act, 1945 (Can.), c. 15] were as follows:
5. (1) Except as provided in section fourteen of this Act, the Corporation is for all purposes an agent of His Majesty in right of Canada and its powers under this Act may be exercised by it only as an agent of His Majesty.
(2) The Corporation may, on behalf of His Majesty, enter into contracts in the name of His Majesty or in the name of the Corporation.
(3) Property acquired by the Corporation is the property of His Majesty and title thereto may be vested in the name of His Majesty or in the name of the Corporation.
(4) Where the Corporation has acquired or incurred a right or obligation in the name of the Corporation, it may sue or be sued in respect thereof in the name of the Corporation.
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Kerwin J., as he then was, stated the issue at p. 515 in this way:
…the only matter to be determined is whether the Corporation is subject to the jurisdiction of the Supreme Court of Alberta.
His Lordship found jurisdiction to reside in the Alberta Court, stating (at p. 513):
While by subsection 1 of section 5 of the Act the Corporation is for all purposes an agent of His Majesty and its powers under the Act may be exercised by it only as an agent of His Majesty, subsection 2 provides that the Corporation may on behalf of His Majesty enter into contracts in the name of His Majesty or in the name of the Corporation. It being agreed that the contracts in question were entered into in the name of the Corporation, therefore, by virtue of subsection 4, it may sue or be sued in respect of any right or obligation so acquired or incurred.
There are, of course, features in the statute in Yeats, supra, which distinguish it significantly from s. 11 and related provisions of the Northern Pipeline Act. First of all, there is a permissive authority in the Corporation to enter into contracts in its own name; this is expressly stated, whereas in s. 11 it is, in my view, to be found by necessary implication. By section 5(4) in the Yeats statute, there is express provision to sue and for exposure to suit, whereas such a right and such a liability must be found by inference in the parent statute of this Agency. Section 5(1) expressly provided that all the statutory powers of the Corporation may be exercised only as an agent of the Crown. To this I shall return shortly. This Court, in Yeats, cited with favour the International Railway decision of the Privy Council, supra, and thereby, in my view, broadened the law applicable in the disposition of the issue raised in Yeats and here. In International Railway, supra, the plaintiffs sued only the statutory agency and not the Crown or the officers of the agency. The Commissioners in International Railway were incorporated by a public statute for the performance of public duties respecting the preservation of the park areas in the vicinity of the Niagara Falls. The governmental nature of the issue was illustrated by the fact that most of the powers accorded by statute to the Commission were subject to the direct control of the Lieutenant Governor in Council. Yet the action directly and
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solely against the public body was approved by the Privy Council.
This Court returned to the problem in Langlois v. Canadian Commercial Corporation, [1956] S.C.R. 954. The statute [Canadian Commercial Corporation Act, 1946 (Can.), c. 40] in that appeal provided as follows:
3. (5) The Corporation is for all its purposes an agent of His Majesty and its powers may be exercised only as an agent of His Majesty.
9. The Corporation may, on behalf of His Majesty, contract in its corporate name without specific reference to His Majesty.
10. The Corporation may sue and be sued in respect of any right or obligation acquired or incurred by it on behalf of His Majesty as if the right or obligation had been acquired or incurred on its own behalf.
15. (2) From the day this Act comes into force, all rights and obligations acquired or incurred by the Canadian Export Board shall, for the purposes of legal proceedings, be deemed to have been acquired or incurred by the Corporation on behalf of His Majesty.
Chief Justice Kerwin, writing for himself and Fauteux and Abbott JJ., at pp. 955-56, stated:
As long as it keeps within the powers thus conferred, it may, by s. 9, contract in its corporate name without specific reference to His Majesty, and by s. 10, which is the important provision, not only may it sue and be sued in respect of any right or obligation acquired or incurred by it on behalf of His Majesty (which includes the contract in question made with Canadian Export Board), but some meaning must be attached to the latter part of the section “as if the right or obligation had been acquired or incurred on its own behalf. If the obligation in this case had been incurred on its own behalf, the decision of the Judicial Committee in International Railway Company v. Niagara Parks Commission [supra] would apply. It was there held that there was nothing to prevent an agent from entering into a contract on the basis that he is himself to be liable to perform it as well as his principal and that the Commis-
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sioners, having entered into a certain agreement “on their own behalf as well as on behalf of the Crown, had done so on the express terms that they were to be liable for its fulfilment. By the latter part of s. 10 of the respondent’s Act, the obligation here in question is to be taken to have been incurred on its own behalf. It is, therefore, in the same position as if it were not an agent for the Crown and it is subject to the general law of the province of Quebec, as the case was fought on the basis that it was the law of that province that was applicable.
Taschereau and Kellock JJ. reached the same result with a different interpretation, not here of concern, of s. 10, supra. Again the statute is different from that applying on this appeal in that the Crown Corporation was expressly exposed to suit in respect of any obligation incurred on behalf of the Crown as if such obligation had been incurred in its own right. It is significant that, notwithstanding s. 15 which provided that all obligations shall be deemed to have been incurred on behalf of the Crown, the Court found that the Crown Corporation was in the same position as any private corporation and could be sued in its own right.
These authorities again illustrate the principle that in the field of public agency liability the issue remains to be decided according to the terminology employed in the constituting legislation. In the result, it appears to make no difference whether the public body is or is not a Crown agency. Central Mortgage and Housing Corporation and the Canadian Commercial Corporation, for example, were both described by express statutory declarations as agents of the Crown. Each entity was nonetheless found to be liable in its own right. These cases have clearly brought into the law of Canada the reasoning of the Privy Council in the International Railway case, supra. There can now be no doubt that Crown agents can be liable on their own contracts in their own right, and may be so liable whether or not the words “on its own behalf appear in the statute.
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In Conseil des Ports Nationaux v. Langelier, [1969] S.C.R. 60, the same line of reasoning was applied by Martland J., writing on behalf of the unanimous Court, to the liability of a Crown Corporation for the tortious acts of its employees. Martland J. expressed this view in this way (at p. 70):
What is in issue here is the responsibility of a person, whether individual or corporate, who, though a Crown agent, and purporting to act as such, commits an act which is unlawful. My understanding of the law is that a personal liability will result. The liability arises, not because he is an agent of the Crown, but because, though he is an agent of the Crown, the plea of Crown authority will not avail in such event.
I refer to the above appeal only because of the possible claim by the respondent-plaintiff for compensation for alleged tortious actions by the appellant-defendant.
In the conduct of its affairs pursuant to s. 11(1), the Agency here (accepting the statement of claim at its face value) entered into an agreement for employment on its own behalf, without any express reference to any rights or liabilities “on behalf of the Crown”. The statute does not have any deeming provision in that regard, nor does it characterize the result in the sense of the Commercial Corporation case, supra.
The aforementioned cases decided in this Court have not yet reached the point of determining (with the possible exception of International Railway), in a way binding upon these proceedings, that a contract entered into by an agent of the Crown in its own name and on its own behalf, which is, by statute, entered into as well on behalf of the Crown, is nonetheless actionable against the agent rather than the Crown at the election of the plaintiff. It should be borne in mind that in the International Railway case, supra, the contract in question was entered into on its face and throughout the document on behalf of the Commission itself without reference to the Crown. In the Yeats case, supra, the statute in question expressly provided for an action against the Corporation when it enters into contracts in its own name. There is a like provision in the Canadian Commercial Corpo-
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ration statute, supra, and these provisions are of course not present in the statute now before us.
Some light is shed on this problem in two cases in the British Columbia Court of Appeal. In McLean v. Vancouver Harbour Commissioners, supra, the headnote states:
An action on contract can be brought against a corporation entered into by it as the servant or agent of the Crown.
The statute there in question did not expressly authorize the bringing of an action against the Crown agency on a contract entered into by that agency. Robertson J., sitting as trial judge, started with the proposition that the law of England since 1901 (referring to Graham & Sons v. Works and Public Buildings Commissioners, [1901] 2 K.B. 781) has been that an action could be brought on a contract against a corporation where the contract was entered into by it as the agent of the Crown (p. 663). From that His Lordship proceeded to the judgment of this Court by Duff J., as he then was, in Quebec Liquor Commission v. Moore, supra, at p. 551 where it was stated:
The broad principle, of course, is that the liability of a body created by statute must be determined by the true interpretation of the statute.
In the end the Court found that the action would lie and the succinct statement in the headnote is indeed supported by the ratio of the judgment itself.
A case before the British Columbia Court of Appeal with facts remarkably similar to those here encountered is found in Washer v. British Columbia Toll Highways and Bridges Authority (1965), 53 W.W.R. 225. Bull J.A., for a unanimous court, in concluding that an employee of a corporation which was admittedly an agent of the Crown could bring an action against the agency in question for breach of his employment agreement, stated (at pp. 231-32):
In sec. 9 the right is given to the appellant [British Columbia Toll Highways and Bridges Authority] to contract in its own name, but only “on behalf of Her Majesty.” In distinction, sec. 12, which authorizes it to
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employ its own officers and servants and set and pay their remunerations, omits any such words of agency… Although the matter is, to my mind, not entirely free from doubt, my consideration of the statute and the regulations in the light of the nature of the activities of the appellant and its relation to government as described in the statute leads me to reject the very able and persuasive argument of appellant’s counsel and to agree with the learned trial judge that the [respondent] was not a servant of the crown, but only a servant of a crown corporation which was an agency of the crown;
The statute then in question included the following provision:
4. The Authority is, for all purposes, an agent of Her Majesty in right of the Province, and its powers may be exercised only as an agent of Her Majesty.
I return to the essential elements of this case, which are found in the very brief passages of the statement of claim wherein a hiring arrangement is pleaded between the respondent‑plaintiff and the defendant-Agency. This hiring arrangement came into being in exercise of the statutory powers in s. 11(1) whereby “[t]he Agency may employ such… officers and employees as it considers necessary for the purposes of this Act …”, supra.
Whatever the nature of the Agency is in law, and whether or not the statute had expressly made the Agency a body corporate, there can be no doubt that in the world of realities the plaintiff-respondent entered into a hiring arrangement with the Agency and not with the Crown. Section 11, in my view, read reasonably in the light of the prevailing practices of government as reflected in the cases cited above, intended that the hiring arrangement should arise between the Agency and those persons it deemed necessary to employ for the discharge of the public responsibilities. That being so, it is a necessary concomitant that the Agency would thereby be empowered to enforce those hiring arrangements and that the other party to the agreement would be able to enforce the arrangement as against the Agency. Even though this Agency is not by explicit language in the statute creating it made expressly liable to suit, it is by necessary implication an entity which can be
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sued in an action for damages. Parliament should not be read as intending to grant an illusory right in the citizen where such a right logically and reasonably can be said to arise under a public statute. The statute, in my view, accords to the respondent an election to sue the Agency directly and alone, and without any obligation to include the Crown as a defendant in such action.
That the contract or hiring agreement was entered into by the Agency in its own right or on behalf of the Crown as well does not matter, in my view, and in this I find support in the views as expressed in International Railway, supra and McLean, supra, as well as in Washer, supra. On the view I take of the language used by Parliament, particularly in s. 11 of this statute, this result necessarily follows. Parliament has therein revealed its intention that the statutory entity, the Agency, corporate in form or not, may enter into such an agreement in its own right and on its own behalf, albeit that it may be entered on behalf of the Crown as well. It follows from this interpretation of the wording employed by Parliament that the contracting party would have the right to enforce that agreement in the provincial courts of general jurisdiction, that is the superior courts. The converse, of course, is that the section contemplates no restriction on the other contracting party to bring action in the courts on the agreement. This was recognized many years ago by Meredith C.J. in Metallic Roofing Co. v. Local Union No. 30 (1903), 5 O.L.R. 424, affirmed 9 O.L.R. 171, when he said (at p. 425):
It is competent, however, to the legislature Ho give to an association of individuals which is neither a corporation, nor a partnership, nor an individual, a capacity for owning property and acting by agents; and such capacity, in the absence of express enactment to the contrary, involves the necessary correlative of liability to the extent of such property for the acts and defaults of such agents:’
For reasons already given, the Federal Court Act would not exclude these proceedings from the jurisdiction of the provincial superior courts.
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The reality of the present world of government operations, in all their complex and extensive manifestations, gives rise to important policy considerations which favour a clarification, and indeed a broadening of the law in this field so as to ensure a straightforward result where Parliament has, by the clearest inference, expressed its intention. Service for the state takes many forms in today’s world, including the employment, on a considerable scale, of individuals by agencies such as the one involved in this appeal. The Agency, as a plain reading of the statute indicates, must be seen as the employer of its staff. It is as much an entity within its own sphere of operations as is a trade union, and, in the latter case, the law already recognizes the reality of the legal entity even though the corporate form has not been expressly provided by the statutes.
Where a fair construction of the enabling statute permits an agency to enter into a contract on its own behalf, even if it may be on behalf of the Crown as well, the agency, having entered the contract in its own name, may be sued in its own right in an action for breach of that contract. This would place the agency in question here within the fifth category enunciated by Holden J. in Westlake, supra. In my opinion, the appellant, pursuant to s. 11 of the Act, is an entity which can enter a contract of employment on its own behalf, and sue or be sued on that contract in its own name. Consequently, the respondent (plaintiff), in commencing an action on this employment contract, is entitled to claim relief against the Agency itself. That is what the respondent has done in this case, and it is therefore unnecessary to decide whether the respondent might have taken proceedings against the Crown itself, or the Agency and the Crown jointly, in another forum. Regardless of whom the respondent might have named as the parties to this action, the respondent has chosen to proceed against the Agency alone. In my view, so long as the party named is suable, the respondent is entitled to make this election.
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In the result, in my opinion, this is not a case where relief is claimed against the Crown within the meaning of s. 17 of the Federal Court Act, supra.
I therefore would dismiss the appeal with costs.
The following are the reasons delivered by
DICKSON J.—I concur in the result reached by Mr. Justice Estey and would dismiss the appeal with costs.
Appeal dismissed with costs.
Solicitor for the appellant: Roger Tassé, Ottawa.
Solicitors for the respondent: Milner & Steer, Calgary.