Citation:

Bank
          of Nova Scotia v. Supt. Financial Institutions

Date:
20030120

2003
          BCCA 29

Docket:

CA29174

COURT
          OF APPEAL FOR BRITISH COLUMBIA

BETWEEN:

THE BANK OF NOVA SCOTIA

and

OPTIMA COMMUNICATIONS CANADA INC.

APPELLANTS

(PETITIONERS)

AND:

SUPERINTENDENT OF FINANCIAL INSTITUTIONS,

FINANCIAL INSTITUTIONS COMMISSION

and

ATTORNEY GENERAL OF BRITISH COLUMBIA

RESPONDENTS

(RESPONDENTS)

Before:

The
          Honourable Chief Justice Finch

The
          Honourable Madam Justice Prowse

The
          Honourable Mr. Justice Low

D.G.
          Cowper, Q.C.

W.S.
          Martin

E.W.
          Purdy

Counsel
          for the Appellants

S.I.
          Macdonald

N.
          Finkelstein

C.
          Kanya-Forstner

D.T.
          McKnight

B.G.
          Baynham, Q.C.

Counsel
          for the Respondents

Counsel
          for the Intervenor

Canadian
          Bankers Association

Counsel
          for the Intervenor

Insurance
          Council of B.C.

Counsel
          for the Intervenor

Canadian
          Life Insurance and

Health
          Insurance Association

Place
          and Dates of Hearing:

Vancouver,
          British Columbia

September
          3, 4 and 5, 2002

Place
          and Date of Judgment:

Vancouver,
          British Columbia

January 20, 2003

Written
    Reasons by:

The
    Honourable Chief Justice Finch

Concurred
    in by:

The
    Honourable Madam Justice Prowse

The
    Honourable Mr. Justice Low

Reasons
    for Judgment of the Honourable Chief Justice Finch:

I.   INTRODUCTION

[1]

This appeal concerns the true interpretation, and constitutionality,
    of a provincial statute, the
Financial Institutions Act
, R.S.B.C.
    1996, c.141 (
FIA
).

[2]

The broad issue is whether a province has legislative power over the
    activities of a bank and its representatives in the telemarketing of credit
    card balance insurance.  The appellant Bank of Nova Scotia (BNS) and its
    representative Optima Communications Canada Inc. (Optima) market such an
    insurance product  Scotia Visa Balance Insurance (SVBI)  by telephone
    solicitation to some of the banks customers, inviting them to enrol in
    the banks group insurance policy which provides coverage for unpaid credit
    card balances in the event of the customers death, disability or unemployment,
    according to the policys terms.

[3]

The respondents take the position that this telemarketing scheme is
    unlawful because neither the appellants nor their employees are licensed to
    solicit insurance applications under the
FIA
.

[4]

On 10 August 2000, the British Columbia Superintendent of  Financial
    Institutions (the Superintendent) issued a notice of intention to make an
    order to BNS on the following terms:

NOW
    THEREFORE the Superintendent, pursuant to Sections 171(2) and 244(2) of the
    FIA, hereby orders the Bank of Nova Scotia to immediately cease the solicitation
    in the Province of British Columbia of applications for insurance conducted
    by way of telephone solicitations or otherwise by any person, including but
    not limited to Optima, its employees, servants and agents, who:

1.
    is not licensed pursuant to the FIA as an insurance agent or insurance salesperson;
    and

2.
    is not an officer or employee of Scotia Bank    acting as its agent in respect
    of credit    insurance, incidental to the ordinary business of Scotia Bank.

[5]

The Superintendent issued a similar notice expressing an intention
    to make a comparable order in relation to Optima and its employees:

NOW
    THEREFORE the Superintendent, pursuant to Sections 171(2) and 244(2) of the
    FIA, hereby orders Optima, its employees, servants and agents, to immediately
    cease the solicitation in the Province of British Columbia of applications
    for insurance conducted by way of telephone solicitations or otherwise by
    any person who is not licensed pursuant to the FIA as an insurance agent or
    insurance salesperson.

[6]

The appellants take the position that neither the bank, the banks
    employees, Optima, nor Optimas employees, are subject to the
FIA
,
    and therefore that none of them are required to obtain a license under the
    provisions of that
Act
before they may lawfully market SVBI.
     The appellants are supported in that position by the intervenor, the Canadian
    Bankers Association.

[7]

The appellants make three arguments in support of their position.  They
    say first that on a true construction of the
FIA
they are exempt
    from its application.

[8]

The appellants say next that their activity in telemarketing credit
    card insurance is not subject to provincial control because the activity is
    part of the business of banking, a matter within the sole legislative competence
    of Parliament by virtue of s. 91(15) of the
Constitution Act, 1867
(banking,
    incorporation of banks, and the issue of paper money).  They say an essential
    function of banking is the lending of money to the banks customers, and the
    taking of security in respect of such loans.  They say that insuring unpaid
    credit card balances by the customer, with the bank as loss payee, is simply
    one way for the bank to secure the repayment of its loans.

[9]

The appellants say finally that not only is the activity sought to
    be regulated within Parliaments sole legislative competence, but that Parliament
    has in fact legislated in respect of these matters in the
Bank Act
,
    S.C. 1991, c.46, and the Insurance Business (Banks) Regulations (IBBR) promulgated
    pursuant to s.416 of the
Bank Act.

[10]

In
    summary, the appellants say that the
FIA
, if interpreted to
    regulate their telemarketing activities, is
ultra vires
either as an
    invasion of Parliaments exclusive jurisdiction in banking (inter-jurisdictional
    immunity), or by virtue of a conflict with validly passed federal legislation
    and regulation in respect of banking (paramountcy).

[11]

The
    respondents take the position that BNS telemarketing scheme is subject to
    the
FIA
because the telemarketing of SVBI is part of the business
    of insurance.  The respondents say the province has exclusive legislative
    competence in respect of insurance as a matter falling within s.92(13) of
    the
Constitution Act, 1867
(property and civil rights).  They
    are supported in that position by the intervenors, the Insurance Council of
    British Columbia and the Canadian Life and Health Insurance Association.

[12]

The
    learned chambers judge took the view that the telemarketing of SVBI is part
    of the business of insurance subject to provincial regulation.  He held that
    the telemarketing program is not part of, or incidental to, the business of
    banking and that no constitutional issue arose.  He therefore dismissed the
    appellants petition for judicial review seeking declaratory and other relief
    from the application of the provincial legislation, and the proposed orders
    of the Superintendent.

[13]

The
    parties have thus raised the following issues on appeal:

1.

Whether, as a matter of statutory interpretation, BNS and Optima are
    exempt from the application of the
FIA
;

2.

If s.171 of the
FIA
applies to BNS and Optima, whether
    they are immune from its operation by reason of the doctrine of inter-jurisdictional
    immunity; and

3.

Whether the
FIA
is in conflict with valid federal legislation,
    and therefore inapplicable by reason of the doctrine of paramountcy.

II.
    FACTS

[14]

The
    reasons for judgment of the learned chambers judge are reported at (2001)
    95 B.C.L.R. (3d) 327.  With one or two exceptions, the facts found by him,
    and described in paras.13 to 37 of his reasons, are not in dispute.  Questions
    do arise as to the meaning he attributes to the word promote in para.28,
    and the characterization of telemarketing as selling in para.29.  Those
    are, in my view, questions of mixed law and fact, which I will come to later
    in the course of these reasons.  I will state the relevant facts in summary
    form, and the reader may refer to the reasons in the Court below for amplification.

[15]

SVBI
    is one of several types of creditor insurance BNS actively promotes to its
    customers.  Under a group insurance policy underwritten by ACE INA Insurance
    and CIGNA Life Insurance Company of Canada, customers holding BNS Visa credit
    cards may obtain SVBI.  BNS is the policy holder and loss payee under the
    policy.  The insurers agree to pay all of an insured cardholders Scotia Visa
    balance in the event the cardholder dies, and to pay the minimum monthly payment
    if the cardholder becomes disabled or becomes unemployed involuntarily.

[16]

BNS
    promotes SVBI in a number of ways.  Bank personnel are instructed to ask customers
    to complete an SVBI form when they apply for a Visa card at a bank branch.

[17]

The
    bank sends out direct marketing materials for Scotia Visa products which include
    a tick-off option to select SVBI.  The banks website includes an on-line
    credit application form, which offers SVBI to applicants.  New cardholders
    are sent a mailing which explains the features of the credit card, explains
    SVBI, and encloses an enrolment form.  Cardholders are invited to complete
    and return the form to their bank branch.

[18]

BNS
    employs telemarketing for several products, including SVBI.  Approximately
    80% of customer enrolments for SVBI result from telemarketing.  The bank has
    out-sourced the telemarketing of SVBI to Optima since 1994.

[19]

BNS
    maintains close management and control of the telemarketing process.  The
    bank controls the staffing of the telemarketing program.  The Optima staff
    who work on the program are hired specifically for the assignment.  The bank
    has the right to approve new hires and can require Optima to remove individuals
    from the banks program.

[20]

The
    telemarketers are hired in accordance with an employee hiring profile developed
    by Optima and approved by the bank.  The hiring profile does not require experience
    or expertise in insurance generally, or in creditor insurance, or in banking.
    BNS controls the training of the telemarketers.

[21]

BNS
    closely controls the calling process.  The telemarketers follow carefully
    designed scripts that appear on computer screens, giving the exact wording
    to be followed.  The initial scripts were developed by the bank with the assistance
    of Optima, and a third party consultant retained by the bank.  BNS carefully
    reviews and approves any revisions to the scripts.

[22]

BNS
    has complete control over which cardholders are called.  The dialling process
    is executed by computer, using computer tapes prepared weekly by the bank.
    The bank ensures that Optima has the physical and computer systems in place
    to protect the integrity and confidentiality of the information provided.

[23]

BNS
    monitors and audits the calling process in a variety of ways.  The bank applies
    its customer complaints resolution process to any complaints concerning the
    telemarketing process.  During an 18 month period, 540,000 calls were made
    to cardholders in Canada, resulting in 53 complaints relating to the insurance,
    of which 26 related to Optimas telemarketing.

[24]

As
    noted by the learned chambers judge, acquisition of SVBI is not a term of
    the credit card contract, and need not be contemporaneous with the formation
    of that contract.

[25]

Under
    the terms of the policy, the insurers have three days in which to accept or
    reject the customers application.  If the application is accepted, the insurance
    is effective immediately from the date the telephone application is made.
    The learned chambers judge noted that, on the evidence before him, the insurers
    had never denied coverage to any cardholder who applied.

[26]

Premiums
    payable by the cardholder are based upon the unpaid balance of the Visa card,
    and are added to the account.  The bank remits the premiums payable to the
    credit of the insurer, and the insurer pays the bank collection, general administration,
    marketing and promotion fees, and expense recovery.

[27]

The
    judge noted (para.16) that the evidence did not disclose the number of BNS
    customers who have SVBI.  Nor does the evidence disclose the importance of
    the BNS telemarketing business to Optima (para.19), nor the amount of income
    earned annually by the bank from this telemarketing program.

III.
    LEGISLATION

A.
    The Constitution

[28]

Parliamentary
    legislative authority over banking is conferred by s.91(15) of the
Constitution
    Act, 1867
:

91.
It shall be lawful for the Queen, by and with the Advice and Consent
    of the Senate and House of Commons, to make Laws for the Peace, Order, and
    good Government of Canada, in relation to all Matters not coming within the
    Classes of Subjects by this Act assigned exclusively to the Legislatures of
    the Provinces; and for greater Certainty, but not so as to restrict the Generality
    of the foregoing Terms of this Section, it is hereby declared that (notwithstanding
    anything in this Act) the exclusive Legislative Authority of the Parliament
    of Canada extends to all Matters coming within the Classes of Subjects next
    hereinafter enumerated; that is to say,

15.
Banking, Incorporation and Banks, and the Issue of Paper Money.

[29]

Provincial
    legislative authority over insurance lies in the power conferred by s.92(13)
    in respect of property and civil rights as follows:

92.
In each Province the Legislature may exclusively make Laws in relation
    to Matters coming within the Classes of Subjects next hereinafter enumerated;
    that is to say,

13.
Property and Civil Rights in the Province.

B.
    The Provincial Legislation and Regulations

[30]

The
    legislative provisions whose interpretation and constitutionality are questioned
    in this case are contained in the
Financial Institutions Act
.
    The following provisions are relevant:

168
In this Division, unless the context otherwise requires,

insurance
    agent
means a person, other than an insurance company or an extraprovincial
    insurance corporation, who
solicits, obtains or takes an application for
    insurance
, or negotiates for or procures insurance, or signs or delivers
    a policy, or collects or receives a premium;

insurance
    salesperson
means an individual who is employed
    by an insurance agent or by an insurer to solicit, obtain or take an application
    for general insurance, or to negotiate for or procure general insurance, or
    to collect or receive a premium for general insurance;

171
(1)  In subsection (3)(i),
credit insurance
means
    insurance against loss caused by the insolvency, default or death of a person
    to whom credit is given, not being insurance included in or incidental to
    any other class of insurance.

(2)
A person must not act in
British Columbia
    as an insurance agent or insurance salesperson unless the person is licensed
    as an insurance agent or insurance salesperson, as the case may be.

(3)
Subsection (2) does not apply to a person who

(a)
    does not act for compensation or hope or promise of it,

(b)
    acts only for the purpose of collecting and receiving premiums,

(c)
    acts on behalf of a mutual fire insurance company,

(d)
    acts on behalf of a society that makes contracts of life insurance, accident
    insurance or sickness insurance,

(e)
    is an insurers manager or branch manager who is in charge of the insurers
    head office or branch office in British Columbia and is paid a salary and
    not by commissions,

(f)
    is an employee of an insurer or insurance agent if the employee does not solicit
    insurance, is paid a salary by the insurer or insurance agent and does mainly
    clerical work,

(g)
    is employed in an office of a transportation company to sell its tickets or
    carry on business as a ticket agent of the company in respect of accident
    insurance against accidents to persons only while travelling, or in respect
    of inland transportation insurance or marine insurance against loss of or
    damage to baggage of persons only while travelling, if the company holds a
    licence under this Division in respect of those classes of insurance,

(h)
    by a certificate given to the council by

(i)
    a reciprocal exchange that has a permit under section 187, or

(ii)
    a company registered under the Insurance (Captive Company Act)

is
    certified as being a full time salaried employee of the exchange or company
    who does not act as an insurance agent or insurance salesperson in any other
    capacity and who does not receive commissions, or

(i)
    is a trust company, credit union, an extraprovincial trust corporation or
a bank or the officers and employees of any of them, while acting as agent
    in respect of credit insurance, incidental to the ordinary business of
the trust company, credit union, extraprovincial trust corporation
or bank
.

(my emphasis)

[31]

The
    Insurance Licensing Exemptions Regulation, B.C. Reg. 328/90 (ILER), promulgated
    pursuant to the
Financial Institutions Act
, are also relevant.
    They provide in part:

Exemption
    from section 171(2) of the Act

2
Section 171(2) of the Act does not apply

(c)
    to a person whose only activity as an insurance agent or insurance salesperson
    is in connection with credit insurance sold incidentally to the granting of
    credit, or arranged by, that person or that persons employer,

C.
    The Federal Legislation

[32]

Provisions
    of the
Bank Act
which may be relevant are:

15.
(1) A bank has the capacity of a natural person and, subject to this
    Act, the rights, powers and privileges of a natural person.

(2) A bank shall not carry on any business or exercise any power that it is
    restricted by this Act from carrying on or exercising, or exercise any of
    its powers in a manner contrary to this Act.

409.
(1) Subject to this Act, a bank shall not engage in or carry on any
    business other than the business of banking and such business generally as
    appertains thereto.

(2)
    For greater certainty, the business of banking includes

(a)  providing any financial service;

(b)  acting as a financial agent;

(c)
    providing investment counselling services and portfolio management services;
    and

(d)
    issuing payment, credit or charge cards and, in accordance with others including
    other financial institutions, operating a payment, credit or charge card plan.

416.
(1) A bank shall not undertake the business of insurance except to
    the extent permitted by this Act or the regulations.

(2)
    A bank shall not act in Canada as agent for any person in the placing of insurance
    and shall not lease or provide space in any branch in Canada of the bank to
    any person engaged in the placing of insurance.

(3)
    The Governor in Council may make regulations respecting the matters referred
    to in subsection (1) and regulations respecting relations between banks and

(a)
    entities that undertake the business of insurance; or

(b)
    insurance agents or insurance brokers.

(4)
    Nothing in this section precludes a bank from

(a)
    requiring insurance to be placed by a borrower for the security of the bank;
    or

(b)
    obtaining group insurance for its employees or the employees of any bodies
    corporate in which it has a substantial investment pursuant to section 468.

(5)
    REPEALED: S.C. 1997, c.15, s.45, effective September 30, 1998 (SI/98-98).

(6)
    For the purposes of this section, the business of insurance includes the issuance
    of any annuity where the liability thereon is contingent on the death of a
    person.

S.C.
    1991, c.46, s.416; S.C. 1997, c.15, s.45.

[33]

Pursuant
    to the provisions of s.416, the Insurance Business (Banks) Regulations (IBBR)
    were promulgated on 21 May 1992.  The following provisions of the IBBR may
    be relevant:

2.
In these Regulations

authorized types of insurance means

(a)  credit or charge card-related insurance,

(b)  creditors disability insurance,

(c)  creditors life insurance,

(d)  creditors loss of employment insurance,

4.
(1) A bank may administer an authorized type of    insurance and personal
    accident insurance.

(2) A bank may administer a group insurance policy      for its employees
    or the employees of any bodies   corporate in which it has a substantial investment
        that was acquired pursuant to section 468 of the    Bank Act.

5.
(1) A bank may provide advice regarding an    authorized type of
    insurance or a service in respect of an authorized type of insurance.

(2) A bank may provide advice in respect of an     insurance policy that
    is not of an authorized type   of insurance, or services in respect thereof,
    if

(a)  the advice is general in nature;

(b)  the advice is not in respect of

(i)  a specific risk, proposal in respect                 of life insurance,
    insurance policy                  or service, or

(ii) a particular insurance company, agent                or broker; and

(c)  the bank does not thereby refer any person           to a particular
    insurance company, agent           or broker.

6.
No bank shall, in Canada, promote an insurance
    company, agent or broker unless

(a)
    the company, agent or broker deals only in authorized types of insurance;
    or

(b)
    the promotion takes place outside a branch of the bank and is directed to

(i)
    all of the holders of credit or charge cards issued by the bank who receive
    regularly mailed statements of account,

(ii)
    all of the banks customers who are natural persons and who receive regularly
    mailed statements of account, or

(iii)the
    general public.

7.
(1)
No bank shall, in
Canada, promote an insurance
    policy of an insurance company, agent or brokers, or a service in respect
    thereof, unless

(a)
the policy is of an authorized type of insurance or the service is in respect
    of such a policy
;

(b)
    the policy is to be provided by a corporation without share capital, other
    than a mutual insurance company or a fraternal benefit society, that carries
    on business without pecuniary gain to its members and the policy provides
    insurance to a natural person in respect of the risks covered by travel insurance;

(c)
    the policy is a personal accident insurance policy and the promotion takes
    place outside a branch of the bank;

(d)
    the service is in respect of a policy referred to in paragraph (b) or of a
    policy referred to in paragraph (c) that is promoted as described in that
    paragraph; or

(e)
    the promotion takes place outside a branch of the bank and is directed to

(i)
    all of the holders of credit or charge cards issued by the bank who receive
    regularly mailed statements of account,

(ii)
    all of the banks customers who are natural persons and who receive regularly
    mailed statements of account, or

(iii)the
    general public

(2)
    Notwithstanding subsection (1) and section 6, a bank may exclude from a promotion
    referred to in paragraph (1)(e) or 6(b) persons

(a)
    in respect of whom the promotion would contravene an Act of Parliament or
    of the legislature of a province;

(b)
    who have notified the bank in writing that they do not wish to receive promotional
    material from the bank; or

(c)
    who are holders of a credit or charge card that was issued by the bank and
    in respect of which the account is not in good standing.
    (my emphasis)

IV.
    REASONS FOR JUDGMENT OF THE CHAMBERS JUDGE

[34]

The
    learned chambers judge held that the telemarketing of SVBI was part of the
business of insurance
(paras.10 and 55); that the activity is not part
    of, or an essential element of, a banking transaction (paras.52 and 55); and
    that because telemarketing of SVBI is part of the business of insurance, and
    not part of the business of banking, it is subject to provincial regulation
    (para.55).

[35]

He
    held the telemarketing of SVBI is not permitted by the federal IBBR.  Section
    4 permits a bank to administer an authorized type of insurance (para.62)
    and s.5 permits a bank to provide advice regarding an authorized type of
    insurance.  (para.63)  Section 6 limits the promotion of an insurance company
    or an
insurance product
(para.64).

[36]

Section
    7 authorizes a bank or its agent to promote credit insurance (para.66).
    He held, however, the purpose of the telemarketing scheme is not limited to
    promotion, but includes
the sale
of an insurance product:

[28]
    I find as a fact that the purpose of the telemarketing is not to inform or
    advise in relation to credit card balance insurance nor to promote such insurance.
    The script used by the telemarketer makes it clear that the objectives of
    the call are to procure immediate enrolment in the plan and obtain the cardholders
    agreement to permit the premiums to be charged to the holders credit card
    on a monthly basis.

[29]
    The insurance policy stipulates that the relationship between BNS and the
    insurer is not one of principal and agent. The insurer appears to have three
    business days from the time the application is taken over the phone to agree
    to extend coverage. There is no evidence that the insurer has ever denied
    coverage under the plan to any cardholder. Regardless of the wording of the
    policy,
the substance of the arrangement is that coverage begins with completion
    of the application by the telemarketer in the telephone conversation. By whatever
    name the activity is called, Optima and BNS are selling credit insurance.
There is no evidence that the group insurance is sold by anyone other than
    BNS and Optima.              (my emphasis)

[37]

He
    held the
Bank Act
and IBBR do not authorize banks to sell credit
    card insurance:

[67]
    Advice and promotion are frequently part of the selling or solicitation process.
    The fact that the more specific terms advice and promotion have been used
    in the
Regulation
while the general word sale has not, indicates
    that Parliament did not intend to grant banks the capacity to be directly
    involved in the completion of the sale contract between the cardholder and
    the insurance company.

[68]
    The fact that Parliament is aware of the difference between the concepts of
    promotion and sale is evident in s.410(1) of the
Bank Act
.  Section
    (1)(d) permits a bank to promote merchandise and services to the holders
    of any payment, credit or charge card issued by the bank. Section 1(e) permits
    a bank to engage in the sale of tickets including lottery tickets offered
    in connection with special, temporary and infrequent non-commercial celebrations
    or projects that are of local, municipal, provincial or national interest
    as well as federal, provincial, or municipal lottery tickets.

[69]
    Had Parliament intended to permit banks to engage in all aspects of the placement
    of credit insurance, including solicitation and enrolment or sale, it would
    have said so in a much-shortened
Regulation
.

[70]
    In my opinion, the
Regulation
does not countermand the general prohibition
    contained in s.416(1) to the extent necessary to permit the kind of soliciting
    and enrolment undertaken by Optima on behalf of BNS. None of the provisions
    of the
Regulation
with respect to administration, advice and promotion
    suggest that BNS may pursue and capture insurance subscribers by telemarketing.

[38]

The
    chambers judge held the unlicensed telemarketing of SVBI to its customers
    by BNS is not permitted by provincial law. The
FIA
and the ILER
    specify that the credit transaction be incidental to the ordinary business
    of the bank or the granting of credit respectively.  The judge interpreted
    incidental to require the insurance transaction to occur at the time the
    credit card contract is approved.  In his view, the timing of the credit insurance
    transaction as much as the requirement of security determines whether the
    activity fits within the exemption:

[83]
    The
Regulation
refers to insurance sold incidentally to the granting
    of credit. The definitions to which I have referred indicate that in order
    to be regarded as incidental to the granting of credit, the insurance activity
    must occur in conjunction with, concurrently with, or consequent upon the
    granting of credit. In my opinion, an activity that is independent of the
    act or process of granting credit is not incidental within the meaning of
    the
FIA
and the
Regulation
.

. . .

[86]
    Were BNS and its employees to sell credit insurance or solicit or enrol purchasers
at the time
of approving the credit card contract, licensing would
    be unnecessary even if the ownership of insurance were not a requirement of
    the contract. In the context of the
FIA
and
Regulation
, it is
    the timing of the credit insurance transaction as much as the requirement
    of security, that is important when seeking the protection of the exemption.

(my
    emphasis)

[39]

The
    judge held that Optima, as the banks telemarketing representative, could
    not claim the benefit of a provincial exemption in respect of credit insurance
    because that agent does not grant credit, and the employees of the agent are
    not bank employees:

[79]
    Optima is not a bank. Whatever the nature of the activities, Optima and its
    employees may not claim exemption under s.171(3)(i) of the
FIA
. Optima
    does not grant credit of any kind to anyone and s.2(c) of the
Regulation
cannot apply to it or its employees.

DISCUSSION AND ANALYSIS

V.   WHETHER
    ON A TRUE CONSTRUCTION OF THE
FIA
AND THE ILER, BNS AND OPTIMA ARE
    EXEMPT FROM THE
ACTS
OPERATION.

[40]

BNS
    and Optima say they are not governed by the
FIA
either because:

1.   They do not fit within the definition of insurance       agent in s.168;
    or

2.   They fit within the exemption granted by

s.171(3)(i) of the
FIA
; or

3.   They fit within the exemption of Regulation 2(c) of       the ILER.

The
    definition of insurance agent in s.168

[41]

To repeat, s.168 of the
FIA
reads in part:

168
In this Division, unless the context otherwise requires,

insurance
    agent
 means a person, other than an insurance company or an extraprovincial
    insurance corporation, who
solicits, obtains or takes an application for
    insurance
, or negotiates for or procures insurance, or signs or delivers
    a policy, or collects or receives a premium.

(my emphasis)

[42]

The
    crux of the appellants argument is that the activity of
enrolling
persons under an existing group insurance policy is excluded from this definition.
     Specifically, they say that the expression solicits, obtains or takes an
    application for insurance refers to the placement of new contracts of insurance
    by an intermediary who represents an insurer and not the enrolment of persons
    under an existing group insurance contract.

[43]

The
    respondents submit that BNS and Optima are not simply performing the clerical
    and administrative functions of enrolling persons in a group policy.  They
    say that telemarketing by way of a sales pitch is soliciting, obtaining
    or taking an application for insurance.

[44]

The
    ordinary rules of statutory interpretation must be applied to determine the
    ambit of the expression solicits, obtains or takes an application for insurance.
     In
R.
v.
Sharpe,
[2001] 1 S.C.R. 45, 2001 SCC 2 (
Sharpe
),
    Chief Justice McLachlin, writing for the majority, endorses the approach to
    statutory interpretation articulated by E.A. Driedger in
Construction of
    Statutes
(2
nd
ed. 1983) at 74:

Today
    there is only one principle or approach, namely, the words of an Act are to
    be read in their entire context and in their grammatical and ordinary sense
    harmoniously with the scheme of the Act, the object of the Act, and the intention
    of Parliament.

[45]

One
    begins with the ordinary meaning of the words of the
Act
, and
    specifically the meaning of the word solicit in s.168 of the
FIA
.
     The
Concise Oxford Dictionary of Current English
, 7
th
ed.
    provides the following definition:

Solicit
1. invite, make appeals or requests to, importune, ask importunately
    or earnestly for

[46]

The
    sole purpose of the carefully prepared scripts, reviewed and approved by BNS,
    is to invite and encourage BNS customers to apply for SVBI.  In my view, therefore,
    on a plain reading of s.168, the telemarketing activity engaged in by BNS
    and Optima is soliciting applications within the meaning of the section.

[47]

Consideration
    of the legislative context and the legislative intent does not appear to displace
    or modify the plain meaning of the words.  Nor do these considerations support
    the narrow interpretation of s.168 advanced by the appellants.  On its face,
    the definition does not distinguish between the types of contracts solicited.
     The legislative scheme suggests that the legislature intends to regulate
    all soliciting activity generally, and then exempt specific persons who
    engage in the activity.  It is therefore my opinion that BNS and Optima are
    within the definition of insurance agent in s.168 of the
FIA
because they solicit applications for insurance.

The
    exemption granted by s.171(3)(i) of the
FIA

[48]

To
    repeat, s.171(3)(i) reads in part:

(3)
    Subsection (2) does not apply to a person who

(i)

is a trust company, credit union, an extraprovincial trust corporation
    or a bank or the officers and employees of any of them,
while acting as
    agent in respect of credit insurance, incidental to the ordinary business
of the trust company, credit union, extraprovincial trust corporation or bank.
                                (emphasis added)

[49]

It
    is also relevant that s.171(1) defines credit insurance:

171

(1) In subsection (3)(i), credit insurance
    means insurance against loss caused by the insolvency, default or death of
    a person to whom credit is given, not being insurance included in or incidental
    to any other class of insurance.

[50]

It
    is common ground that SVBI is insurance against loss caused by the insolvency,
    default or death of a person to whom credit is given, and is therefore credit
    insurance as defined in the
FIA
.

[51]

On
    appeal, the parties focused their arguments on the meaning of incidental
    and bank in the context of the exemption.  The position of BNS hinges on
    the meaning of incidental and the position of Optima hinges on the meaning
    of bank or employees of a bank.

The
    position of BNS

[52]

To
    come within the exemption provided by s.171(3)(i) BNS must show that its activity
    in soliciting customers to enrol in SVBI is incidental to its ordinary banking
    business.  The appellants say the plain meaning of incidental does not import
    a temporal connection.  They say that where the insurance is intended to support
    the credit, it should be irrelevant whether the borrower buys the insurance
    at the time the credit is granted or at some point after the credit is granted.
     They say that in the ordinary business of banking, the extension of credit
    to a credit cardholder occurs on a continuing basis.  Therefore, the credit
    insurance is incidental to the ordinary business of the bank, as required
    by the exemption.

[53]

The
    respondents say the sale of credit insurance
after
the credit card
    has been issued is not incidental to the ordinary business of the bank.
     They say the legislative aim of this type of exemption is to make specific
    forms of insurance in relation to a product or service readily and conveniently
    available to the consumer
when
they purchase the product or service.

[54]

The
    principles of statutory interpretation, set out in
Sharpe
, apply
    to ascertain the meaning of incidental in the context of s.171(3)(i).  The
    dictionary definitions of incidental referred to by the chambers judge are
    of assistance:

Something
    occurring or liable to occur in fortuitous or subordinate conjunction with
    something else (
The Compact Oxford English Dictionary,
23
rd
ed.); and

Depending
    upon or appertaining to something else as primary; something necessary, appertaining
    to, or depending upon another which is termed the principal, something incidental
    to the main purpose (
Blacks Law Dictionary
, 6
th
ed.)

[55]

The
    chambers judge cited Estey J. in
Canadian National Railway
v.
Harris
,
    [1946] S.C.R. 352

at 386 for the statement: that which is incidental
    is something which is usually or naturally associated with or arising out
    of the work of transportation.

[56]

The
    respondents cite a decision of this Court,
British Columbia (Assessor
    of Area No. 10  Burnaby/New Westminster)
v.
S.C.I. Canada Ltd.
(2000),
    136 B.C.A.C. 153, 2000 BCCA 217 as authority for the proposition that incidental
    requires sufficient integration between two activities.  In this case, Lambert
    J.A. commented on the meaning of incidental in the context of the
Cemetery
    and Funeral Services Act
:

Assuming
    a consistent use of the word incidental, then the usage in s.35 illustrates
    that it does not mean simply connected with or convenient for. It must
    be more than a simple unrelated connection and more than simple convenience.
    There must be a relationship of primary function with the subordinate function
    and the subordinate function must relate to the carrying out of the primary
    function.

[57]

The
    Supreme Court of Canada has also considered the meaning of incidental in
R. v
.
Sundown
, [1999] 1 S.C.R. 393 (an authority not
    referred to by counsel) in the context of a First Nations treaty right to
    pursue activities incidental to hunting and fishing rights.  The Court commented:
    Incidental activities are not only those which are essential, or integral,
    but include, more broadly, activities which are meaningfully related or linked.

[58]

In
    my view, the definitions and judicial consideration of incidental referred
    to above are consistent with one another.  In its simplest formulation, the
    plain meaning of incidental is connected with in a meaningful way and
    includes an activity that is subordinate to a principal activity.

[59]

With
    respect, a plain reading of incidental does not support the interpretation
    adopted by the learned chambers judge and advanced by the respondents on this
    appeal.  That is to say, in my opinion the ordinary sense of incidental
    does not imply or import a temporal connection between the two related activities.
     I see nothing in the scheme of the
FIA
that would add a requirement
    for a temporal connection.

[60]

In
    my view, credit card insurance supports the banks and customers credit transaction
    in a meaningful way.  It is incidental to the banks business with the result
    that BNS may rely on the exemption granted by s.171(3)(i).

The
    position of Optima

[61]

With
    respect to the position of Optima, the appellants say that the reference in
    s.171(3)(i) to banks includes anyone acting on behalf of the bank.  They
    say the additional reference to officers and employees should not be interpreted
    as restricting the breadth of the primary reference, which is to the listed
    financial institution.  The intervenor Canadian Bankers Association adds that
    BNS is effectively the employer of the Optima telemarketers by virtue of the
    control it exercises over all aspects of their work.

[62]

The
    respondents say there is no basis for asserting that the province intended
    the term bank to include any representative of a bank.  They say s.171(3)
    is specific in its references as to whom the exemption applies and distinguishes
    between employees, officers, salaried and commissioned employees, and managers.
     They say that in order to be internally consistent, the extended definition
    of banks would have to apply to other sections, such as s.81, which prohibits
    unauthorized deposit business.  They say that Optima and BNS are separate
    businesses and that there is an important difference between a salaried bank
    employee offering the insurance, and a part-time telemarketer working on commission.

[63]

I
    agree with the respondents that, on a plain reading, the term bank does
    not include a separate entity acting on behalf of a bank.  In my view, however,
    the position of Optima turns on whether or not those persons it hires to staff
    BNS telemarketing program are to be treated as employees of BNS in interpreting
    the exemption in s.171(3)(i).

[64]

The
    general purpose of s.171 is to limit or control the persons who can act as
    insurance agents through the imposition of a licensing scheme.  Section 171(2)
    prohibits a person from acting as an insurance agent without being duly licensed.
    Section 171(3) exempts certain persons from the licensing requirements, notably
    in s.171(3)(i), a bank and its officers and employees.

[65]

The
FIA
does not define employee.  It must be otherwise defined
    by common law principles, bearing in mind the policy objectives of the
FIA
.
    Resort to general common law notions of an employee is not without difficulty
    given that the principles are traditionally based on bipartite relationships,
    involving an employee and an employer.  In this case, the traditional attributes
    of an employer are shared by both Optima and BNS.  The Supreme Court of Canada
    decision of
Pointe-Claire (City) v.
Quebec (Labour Court)
, [1997] 1 S.C.R. 1015 refers to the problem of identifying the real
    employer in a tripartite relationship where the applicable legislation is
    silent on the issue.  At 1055 (or para.63) Lamer C.J.C. comments: The tripartite
    relationship does not fit easily into the classic pattern of bilateral relationships.
    Lamer C.J.C. does not disapprove of a comprehensive approach that accords
    with the purpose of the legislation.

[66]

In
    England, Christie & Christie,
Employment Law in
Canada,
    3
rd
ed
., vol.1 (Vancouver: Butterworths,
    1998), the authors note that the common law approach to employee status
    is context specific, and different tests have evolved to reflect the particular
    purpose of the statute in question.  At para.2.2:

The
    point cannot be over-emphasized that, even more obviously than at common law,
the purpose of the particular statute should and generally does determine
    whether or not a given relationship falls within its scope
. It follows
    that precedents arising under the common law or under a particular statute
    can legitimately be rejected or modified when the question of employee status
    is asked for a different purpose.

(my emphasis)

[67]

To
    date, there has been no judicial consideration of the meaning of employee
    within the context of the
FIA
.  One must, therefore, begin by
    identifying the policy objectives of the
FIA
in granting an
    exemption to a banks employee.  In my view, the
FIA
specifies
    officers and employees of a bank for the purpose of exempting not only the
    bank itself, but also those persons who facilitate the banks solicitation
    of credit insurance applications, over whom the bank exercises control, and
    who may otherwise be caught by the definition of an insurance agent in the
Act
.

[68]

In
    my view, therefore, whether a person is an employee within the meaning of
    s.171(3)(i) depends on whether a bank exercises fundamental control over the
    work performed by those persons marketing the credit insurance.  To fall within
    the exemption a person must be acting on behalf of a bank, and under the direction
    of a bank, in respect of all aspects of the telemarketing program.

[69]

In
    my view, there are sufficient indicia of control in the telemarketing program
    to place BNS in the position of employer of the Optima telemarketers of SVBI.
    Optima hires people specifically for the BNS assignment and in accordance
    with a hiring profile approved by BNS.  BNS has the right to approve new hires
    and can require Optima to remove individuals from the banks program.  BNS
    controls the training of the telemarketers.  BNS controls the calling process;
    the bank, with the assistance of Optima and a third party consultant, developed
    a carefully designed script for the telemarketers to follow, and reviews and
    approves all revisions to the script.  BNS prepares computer tapes to control
    which cardholders are called.  BNS monitors and audits the calling process
    in a variety of ways, including fielding complaints concerning the telemarketing
    process.  In my view, BNS exerts fundamental control over the Optima telemarketers
    of SVBI, bringing them within the meaning of employees in s.171(3)(i).
    Accordingly, the Optima telemarketers fall within the licensing exemption.

[70]

I
    wish to make clear, if it is not already, that the conclusion that the telemarketers
    are BNS employees is reached only for the purpose of construing s.171(3)(i)
    of the
FIA
, and not for any other purpose.  Whether the telemarketers
    might also be considered to be Optima employees in a labour relations context,
    or for the purposes of other legislation, is not addressed by these reasons.

[71]

It
    necessarily follows that the Superintendent is without authority to issue
    the order in respect of Optima.  As the Optima telemarketers are exempt from
    the licensing requirement under the
FIA
, Optima is not engaged
    in any activity that would attract the licensing requirements imposed by that
Act
.  Accordingly, it is my view that neither the bank, the
    banks employees, nor Optima are subject to the
FIA
.

The
    exemption granted by Regulation 2(c) of the ILER

[72]

In
    the alternative, the appellants say that BNS and Optima are exempt from the
    operation of the
FIA
by virtue of the exemption granted by Regulation
    2(c) of the ILER.

[73]

Regulation
    2(c) of the ILER reads:

2

Section 171(2) of the Act does not apply

(c)

to a person whose only activity as an insurance agent or insurance
    salesperson is in connection with credit insurance sold incidentally to the
    granting of credit, or arranged by, that person or that persons employer,

[74]

The
    language of Regulation 2(c) mirrors the language used in s.171(3)(i) of the
FIA
.  Consequently, the position of BNS and Optima can be addressed
    summarily.  In my opinion, BNS can rely on the Regulation exemption for the
    reasons outlined above in respect of the meaning of incidental and because
    BNS grants credit.  The Optima telemarketers can rely on the exemption because
    BNS exercises such control over the workers as to be their employer in the
    context of the Regulation.

[75]

To
    summarize on the issue of statutory interpretation, I conclude that both BNS
    and those persons hired by Optima to staff the BNS program are exempt from
    the licensing requirements under the
FIA
.  As a result, the
    Superintendent is without legislative authority to order BNS and Optima to
    cease the telephone solicitations by any person who is not licensed pursuant
    to the
FIA
.

[76]

This
    conclusion is sufficient to dispose of this appeal, which in my view must
    be allowed.

[77]

However,
    as the constitutional issues were fully argued, and may be considered elsewhere,
    and because the status of the telemarketers as BNS employees is an issue
    not free from doubt, I will turn to those arguments raised by the appellants.

VI.  WHETHER SECTION 171 OF THE
FIA
IS INAPPLICABLE TO BNS AND/OR
    OPTIMA BY VIRTUE OF INTER-JURISDICTIONAL IMMUNITY.

[78]

This
    alternative analysis proceeds on the assumption that the Optima telemarketers
    are not employees of BNS, but are rather the employees of Optima.  It is therefore
    necessary to consider the doctrine of inter-jurisdictional immunity in relation
    to both BNS and Optima.

[79]

The
    doctrine of inter-jurisdictional immunity protects the core aspects of a federal
    power from provincial regulation.  This area of exclusive federal jurisdiction
    has been characterized in a number of ways in the case law, including, the
    unassailable core, a vital part of the federal enterprise, what makes
    [those subjects] specifically of federal jurisdiction, and an integral part
    of the undertaking:
Commission du Salaire Minimum v.

Bell Telephone
    Co. of Canada
, [1966] S.C.R. 767 (
Bell No. 1
);
Bell Canada v.

Quebec (Commission de la santé et de la sécurité du
    travail)
,
[1988] 1 S.C.R. 749 (
Bell No. 2
);
Greater
    Toronto Airport Authority v.

Mississauga (City)
(2000), 192
    D.L.R. (4
th
) 443 (Ont. C.A.) (
Greater
Toronto
    Airport Authority
).

[80]

The
    variations in the language do not in my view result in divergent legal approaches.
     Rather, there is one test expressed in a number of ways.  I take the law
    to be as stated in
Bell No. 1

and affirmed recently in
Greater Toronto Airport Authority
.  It

poses this test:

Does
    the provincial law affect a vital part of the federal enterprise?

The
    position of BNS

[81]

The
    appellants say the federal banking power has been given a broad and expansive
    meaning in the case law.  They say an essential function of banking is the
    lending of money to the banks customers, and the taking of security in respect
    of such loans.  They say the promotion of an arrangement whereby the customer
    insures unpaid credit card balances, with the bank as loss payee, is one way
    for the bank to secure repayment of its loans.  They say the licensing regime
    allows the province to decide who gets the license and under what conditions.
     If the province can license, it can stop the bank from taking security in
    a certain way.  Finally, as a matter of policy, the appellants say there should
    be a uniform scheme for all of Canada and that a checkerboard, province by
    province, approach is undesirable.

[82]

The
    respondents say credit insurance is not simply security, but that it is a
    profitable business in itself that generates income for the bank.  They say
    if the purpose of the insurance were integral to the granting of the credit,
    it would be a condition of the loan.  They refer to s.416(4) of the
Bank
    Act
which allows the bank to require insurance to be placed by the
    borrower.

[83]

It
    is well established that a federal enterprise, such as a bank, is subject
    to provincial laws that are general in their application, provided that the
    application of these provincial laws does not trench on core aspects of the
    federal power:
Bell No. 2
.
On this appeal, the application
    of inter-jurisdictional immunity turns on whether the credit insurance activity
    is at the core of the federal banking power.  To put this in another way,
    is the credit insurance activity a vital part of the banking enterprise?

[84]

Tennant v.

The Union Bank of Canada
, [1894] A.C. 31 (P.C.) is a useful starting point in that it establishes
    generally the breadth of the federal banking power.  At 46, Lord Watson states
    that banking is an expression which is wide enough to embrace every transaction
    coming within the legitimate business of a banker.  The issue, however, was
    the
vires
of certain provisions of the
Bank Act
.  The
    reference to banking refers to the totality of activity that Parliament
    could legislate in respect of pursuant to s.91(15) and not the vital elements
    of its power.

[85]

In
Alberta (Attorney General) v
.
Canada (Attorney General),
[1947]
    A.C. 503, the validity of the
Alberta Bill of Rights Act
, S.A.
    1946, c. II, was in issue: specifically, whether the province had constitutional
    authority to enact provisions that controlled the creation of credit by chartered
    banks and other credit institutions above and beyond their cash reserves.
     The provinces argued that although banks dealt with credit as part of ordinary
    business operations, the practice which the bank had assumed of expanding
    credit over and above their cash reserves did not constitute the practice
    at the time of confederation, was not a banking practice within the meaning
    of s.91(15), and properly fell within the provincial power over property and
    civil rights.  Viscount Simon held that banking was not limited to the extent
    and kinds of business carried on by banks in Canada in 1867, and that the
    concept of banking included the granting of credit by banks.

[86]

In
Bank of Montreal v
.
Hall
, [1990] 1 S.C.R. 121 (
Hall
),
    the Supreme Court addressed the importance of the taking of security to the
    business of banking.  The province argued that the statutory entitlement under
    the
Bank Act
to seize security of a borrower was
ultra vires
the federal government.  The provincial law at issue purported to qualify
    this right with the effect of delaying the banks ability to take possession
    of the security.  The Court held that the provincial law could fairly be said
    to come within property and civil rights in the province.  The federal law
    created a security interest, facilitated access to capital and formed part
    of the business of banking so that it was
intra vires
the federal government.
    The Court ultimately held that the two laws conflicted so that the doctrine
    of paramountcy applied.

[87]

At
    147, La Forest J., writing on behalf of the Court, commented:

In
    summary, I conclude that the definition of the exact manner in which a bank
    may realize on property secured pursuant to the s. 178 security interest
is
    integral to the exercise of Parliament of the federal jurisdiction in the
    field of banking
. (my emphasis)

[88]

Although
    this case was decided on the basis of paramountcy, the Supreme Court recognized
    the taking of security as an integral aspect of federal legislative jurisdiction.

[89]

The
    following principles emerge from these authorities:

1.   The federal banking power is broad in scope;

2.   The nature of the federal banking power is not            static and
    must reflect changing conditions; and

3.   The taking of security is an integral part of the         federal banking
    power.

[90]

These
    principles support the conclusion that inter-jurisdictional immunity applies
    to the insurance activities of BNS.  The promotion of SVBI provides security
    to BNS by enhancing its ability to receive payment on loans.  In my view,
Hall

supports the proposition that the taking of security
    is a vital part of a banking enterprise.  A provincial licensing regime, which
    allows the province to say who gets a license and under what conditions, and
    which could prevent the bank from obtaining security in a certain way, would
    affect a vital part of a federal enterprise.  Therefore, in my opinion, the
FIA
is inapplicable to BNS and the Superintendent is without
    authority to issue the BNS order.

[91]

The
    learned chambers judge noted and the respondents argue that the record fails
    to disclose the significance of the telemarketing of SVBI to the business
    of banking.  Consequently, they argue that the appellants have failed to establish
    that SVBI is a vital part of the banking enterprise, and inter-jurisdictional
    immunity cannot be said to apply. I think it is sufficient to say that the
    taking of security generally is a core aspect of the banking power. SVBI,
    as a form of security, is within the core aspect of the banking power.

[92]

The
    appellants also advanced the policy argument that the banking industry would
    benefit from a uniform scheme.  The opposing argument is that it would always
    be open to Parliament to protect banks against provincial regulation by legislating
    in the area.  I think that the comments of Beetz J. in
Bell
    Canada No. 2

are of assistance.  At 843, Beetz J. comments
    on the area of occupational health and safety and the desirability of a twofold
    jurisdiction:

A
    division of jurisdiction in the area is likely to be the source of uncertainty
    and endless disputes in which the courts will be called on to decide whether
    a conflict exists between the most trivial federal and provincial regulations,
    such as those specifying the thickness or colour of safety boots or hard hats.

[93]

In
    my view, the same considerations hold true for the regulation of insurance
    agents.  The licensing of agents may involve many aspects, such as education,
    experience requirements, disciplinary authority, and investigative powers.
     Concerns over uncertainty and endless disputes are best addressed by uniform
    control.  I therefore think that policy considerations also support the application
    of inter-jurisdictional immunity in the present case.

[94]

In
    summary, I hold that the doctrine of inter-jurisdictional immunity applies
    to the credit insurance activities of BNS.

The
    position of Optima

[95]

I
    have said above that the conclusion that BNS is an employer of the Optima
    telemarketers for the purposes of s.171(3)(i) is not free from doubt.  I will,
    therefore, consider the alternative which proceeds on the premise that Optima
    employs the telemarketers.  This assumption gives rise to the additional issue
    of the constitutional status of Optima.

[96]

With
    respect to inter-jurisdictional immunity, the appellants say Optima is in
    exactly the same position as BNS.  They say that where an activity falls within
    exclusive federal jurisdiction, it does not matter whether the federal entity
    carries on that activity by its own employees or through other representatives.

[97]

The
    respondents say Optima is subject to the considerations relevant to the question
    of inter-jurisdictional immunity in general.  They say that in both cases
    the question to be determined is whether the activity is central or integral
    to the operation of the federal undertaking.

[98]

The
    appellants rely on
National Battlefields Commission v
.
Commission
    de Transport de la Communaute Urbaine de Quebec
, [1990] 2 S.C.R. 838
    (
National Battlefields
).  In my view, this judgment is conclusive
    of Optimas position.

[99]

In
National Battlefields
, the Supreme Court held that the permit
    scheme imposed by the Quebec
Transport Act
did not apply to
    the sightseeing transport service provided by the appellant, a federally created
    Commission.  The transport service was operated in a federal park and the
    permit scheme was held to have a massive and intrusive impact on vital aspects
    of the federal service.  The Court held, at 863, that [t]he status of the
    person providing the service is not relevant for this purpose: the permit
    system is simply not applicable to the service.  The Court did stipulate
    that the exemption was only in respect of the federal service.  Any service
    provided by the appellant outside the limits of the federal service would
    be subject to the licensing scheme.

[100]

The situation in
National Battlefields
is, in my opinion,
    closely analogous to the situation on appeal.  The taking of security is a
    vital aspect of the banking enterprise, just as the provision of the sightseeing
    transport service was vital to the purpose and function of the Battlefield
    Commission.  The status or identity of the person promoting the security is
    no more relevant than the status or identity of the person providing the transport
    service.  The
FIA
licensing system cannot apply to the promotional
    activities of BNS representative, just as the Quebec licensing scheme could
    not apply to the Commissions representative.  I therefore hold the view that
    inter-jurisdictional immunity applies to the credit insurance activities of
    the Optima workers who market SVBI, as well as BNS.

[101]

In summary, I conclude that inter-jurisdictional immunity applies to
    the promotional activities in respect of credit insurance, specifically SVBI,
    carried out by BNS and Optima.  Therefore, insofar as the
FIA
purports to regulate the promotion of SVBI carried out by BNS and Optima,
    it must be read down to exclude BNS and Optima.  The Superintendent is therefore
    without authority to issue either order.

VII. WHETHER SECTION 171 IS INOPERATIVE IN RESPECT OF BNS AND/OR OPTIMA
    BECAUSE THE LEGISLATION CONFLICTS WITH THE FEDERAL SCHEME, WHICH MUST PREVAIL
    BY REASON OF PARAMOUNTCY. THIS ISSUE RAISES THE TRUE INTERPRETATION OF THE
BANK ACT
AND IBBR, INCLUDING THE MEANING OF THE WORD PROMOTE IN SECTION
    7

[102]

The doctrine of paramountcy arises when there is some overlap between
    provincial and federal regulation.  The overlap must be tolerable in the sense
    that the provincial law does not strike at the core of a federal power.  The
    federal and provincial laws can coexist unless they conflict.  If there is
    a conflict, the doctrine of paramountcy will render the provincial law inoperative
    to the extent of the conflict.

[103]

I have reached the conclusion that inter-jurisdictional immunity applies
    to the telemarketing of SVBI and Optima.  There can therefore be no overlap
    in jurisdictions; the province lacks legislative competence in the area.  As
    a result, there is no potential for conflict.

Comments
    on the Chambers Judgment

[104]

I have not found it necessary to address directly the issue of the
    true construction of the
Bank Act
and IBBR.

[105]

I would say, however, with respect, that the learned chambers judge
    erred in his approach.  He interpreted the
Bank Act
and the
    IBBR independent of the paramountcy issue, which he found no need to address.
    In my opinion, the need to interpret the
Bank Act
and the IBBR
    only arises in the context of the paramountcy analysis.  The broad issue between
    the parties is whether the provincial Superintendent has the authority to
    issue the orders.  The federal regulator (Office of the Superintendent of
    Financial Institutions) is not party to the action.  Consequently, the interpretation
    of the
Bank Act
and the IBBR is not relevant to this dispute
    except as it relates to the paramountcy issue.

[106]

I am also of the view that the learned chambers judge erred in concluding
    that the term promote did not include BNS and Optimas telemarketing activities.
    Although not necessary to my conclusions, as the chambers judge addressed
    the federal legislation, and because the paramountcy issue was fully argued
    and may be considered elsewhere, I offer the following comments.

The
Bank Act
and the IBBR

[107]

The starting point is s.416 of the
Bank Act.
Subsection
    416(1) prohibits a bank from undertaking the business of insurance except
    to the extent permitted by this
Act
or regulations.

[108]

Subsection 416(2) prohibits a bank from acting as agent for any person
    in the placing of insurance .  It is noteworthy that agent is not defined
    in the
Bank Act
and, in my view, the use of the term agent
    must be taken to refer to a formal act of agency.  Support for this interpretation
    is found in M.H. Ogilvie,
Canadian Banking Law
, (Scarborough: Carswell,
    1991).  Professor Ogilvie discussed the former version of this prohibition,
    then s.174(3), which also prohibited a bank from acting as agent for any
    insurance company or any person in the placing of insurance.  Professor Ogilvie
    comments at 339:

This
    prohibition ensures the separation of the financial service of banking from
    that of insurance. However, the means of separation is the legal concept of
    agency which is not defined by the Act. Presumably then, the law of agency
    is applicable here and that would not operate to prohibit banks from activities
    in which they have engaged for some time such as distributing and collecting
    Blue Cross and other similar insurance application forms or insurance forms
    for credit card plans. The Act prohibits formal acts of agency by banks

[109]

Subsection 416(2) creates an absolute prohibition against a bank acting
    as an agent in the placing of insurance.  Unlike subsection 416(1) there are
    no agency activities that are permitted to a bank under the
Act
or Regulations.

[110]

In summary, the
Bank Act
creates a prohibition against
    a bank undertaking the business of insurance subject to those insurance related
    activities which are permitted to a bank under the Regulations.  Second, the
Bank Act
contains an absolute prohibition against a bank acting
    as a formal agent in the placing of insurance, that is to say, a bank cannot
    bind any party to an insurance contract.

[111]

It is then necessary to look at the IBBR in order to determine the
    limits of insurance related activities that are permitted to a bank.  The
    IBBR permits a bank to administer, provide advice, and promote authorized
    types of insurance to its customers.  SVBI is an authorized type of insurance,
    as defined in s.2 of the IBBR, being a combination of creditors disability
    insurance, creditors life insurance and creditors loss of employment insurance.

[112]

The appellants say the telemarketing activity is permitted under s.7
    of the IBBR.  Section 7 prohibits the promotion of an insurance policy of
    an insurance company, agent or broker unless the policy is an authorized type
    of insurance or the service is in respect of such a policy.  The appellants
    say the chambers judge erred in narrowly construing promote so as to exclude
    the telemarketing activity.  The respondents say the chambers judge was correct
    in concluding that promote does not include the telemarketing of BNS customers,
    such that the activity is not permitted by s.7.

[113]

The word promote is defined in
Blacks Law Dictionary
, 5
th
ed. as follows:

To
    contribute to growth, enlargement, or prosperity of; to forward; to further;
    to encourage; to advance.

[114]

The
Canadian Dictionary of the English Language
,
An Encyclopaedic
    Reference
defines promote as:

4. to attempt to sell or popularize by advertising or publicity

[115]

In my opinion, the plain meaning of promote would encompass activities
    in furtherance of the sale of a product or service.

[116]

The legislative context of promote qualifies the breadth of this
    definition.  The bank cannot bind an insurer to a risk because of s.416(2).
    Therefore, in my opinion, Parliament chose the term promote to connote any
    activity in furtherance of the sale of an authorized insurance policy, short
    of binding any party to the policy.

[117]

In summary, the
Bank Act
and IBBR permit banks to engage
    in promotional activities in respect of an authorized type of insurance.
    In promoting an authorized type of insurance, the bank may not actually bind
    any party to the insurance contract.

[118]

The appellants telemarketing activity is in furtherance of the sale
    of SVBI, an authorized insurance policy.  The record discloses that the insurance
    company must approve the application and issue the certificate.  It follows
    that BNS and Optima are not binding the insurer.  In my view therefore, BNS
    is engaged in insurance activities permitted by the
Bank Act
and Regulations, because promote is broad enough to cover the telemarketing
    activities.

VIII.
    SUMMARY AND DISPOSITION

[119]

I conclude that:

1.   On a true statutory interpretation of the
FIA
, BNS and
    Optima are not subject to its provisions because BNS and the Optima telemarketers
    are exempt; and

2.   In the alternative, the telemarketing activity of both BNS and Optima
    is immune from the
FIA
licensing scheme by virtue of the doctrine
    of inter-jurisdictional immunity.

[120]

I would allow the appeal.  I would grant a declaration that the Superintendent
    is without legislative authority to issue orders in respect of BNS and Optima,
    because BNS and the Optima telemarketers are exempt from the licensing requirements
    of the
FIA
, and further declare that the provisions of the
FIA
are inapplicable to BNS and Optima by virtue of the doctrine of inter-jurisdictional
    immunity.

The
    Honourable Chief Justice Finch

I AGREE:

The Honourable Madam
    Justice Prowse

I AGREE:

The Honourable Mr.
    Justice Low


Citation:

Davies
          v. Pedersen

Date:
20030120

2003
          BCCA 36

Docket:

CA030125

Registry:
          Vancouver

COURT OF APPEAL FOR BRITISH COLUMBIA

BETWEEN:

JULIE ANNE DAVIES, JUDITH DIANE DUCHARME and

VICTORIA DALE GREIDANUS

RESPONDENTS

(PLAINTIFFS)

AND:

DONALD HARVEY PEDERSEN

APPELLANT

(DEFENDANT)

Before:

The
          Honourable Madam Justice Saunders

(In
          Chambers)

M.
          Skorah

Counsel
          for the Appellant

L.G.
          Schafer

Counsel
          for the Respondent J. Davies

Place
          and Date of Hearing:

Vancouver,
          British Columbia

December
          10, 2002

Place
          and Date of Judgment:

Vancouver,
          British Columbia

January
          20, 2003

Reasons for Judgment of the Honourable
    Madam Justice Saunders:

[1]

This is an application for leave to appeal a Chambers order made August
    22, 2002, and if leave is granted, for an order for a stay of proceedings.

[2]

The order sought to be appealed dismissed Mr. Pedersen's application
    for an order that Mr. Schafer cease to act as counsel or as solicitor of record
    for the plaintiffs.

[3]

The underlying action arises from a landlord tenant dispute.  Mr. Pedersen,
    the landlord, visited premises he owned and rented to the plaintiffs.  An
    altercation ensued between Mr. Pedersen and the plaintiff Ms. Greidanus, and
    a subsequent fire destroyed the premises.  Mr. Pedersen was charged with arson,
    breaking and entering, assault and uttering a threat.  The arson charge was
    stayed by the trial judge, and Mr. Pedersen was acquitted of the other charges
    by the jury.

[4]

The plaintiffs claim damages for destruction of their possessions and
    Ms. Greidanus claims additionally for damages for assault.  All plaintiffs
    are represented by Mr. Schafer.  Mr. Pedersen denies the claim, pleading in
    his Amended Statement of Defence that the actions of the plaintiffs caused
    the fire and that Ms. Greidanus assaulted him.  He has counterclaimed for
    damages, alleging malicious prosecution by Ms. Greidanus.  Mr. Pedersen's
    theory is that Ms. Greidanus set the fire.

[5]

At a pre-trial conference the trial judge on the criminal matters advised
    the parties that he would not be the trial judge on the civil matters, and
    added, without deciding, that there could be an issue of conflict of interest
    for plaintiffs' counsel because of the allegation by Mr. Pedersen that one
    of the plaintiffs caused the fire which destroyed the other plaintiffs' possessions.

[6]

In the matter now sought to be appealed, the learned Chambers judge
    dismissed Mr. Pedersen's application to have the plaintiffs represented by
    different counsel, accepting Mr. Schafer's assurance that he had complied
    with the provisions in the
Professional Conduct

Handbook
, that
    are applicable when a lawyer represents clients in circumstances that might
    give rise to divided loyalties, that is, the provisions for informed consent.

[7]

In order to satisfy this Court that leave to appeal should be granted
    on an interlocutory order, the applicant must satisfy this Court of the requisite
    merits and importance of the proposed issues, and generally persuade this
    Court that it is in the interest of justice that the appeal should be heard.

[8]

In this case the learned Chambers judge relied, as he was entitled
    to do, upon an assurance from counsel that he had complied with the
Handbook
.
    He found there was no demonstrated prejudice to Mr. Pedersen by Mr. Schafer's
    continuing to act, and he referred to the relevant jurisprudence.  Considering
    the general practice that plaintiffs who sue together should be jointly represented
    (
Attorney General of Canada v. Canadian Pacific Limited and Marathon
    Realty Company Limited
(1981), 30 B.C.L.R. 230 (B.C.S.C.), and the
    restraint usually exercised by courts in interfering with counsel of choice
    (
Mara v. Blake
(1996), 23 B.C.L.R. (3d) 225 (C.A.), I see little
    prospect that a panel of this Court would interfere with the Chamber judge's
    exercise of discretion.

[9]

Nor is an appeal at this stage, in my view, conducive to efficient
    conclusion of that underlying litigation.  Rather, an appeal may well delay
    the conclusion of the action.  And given recent cases on the issue of conflict
    of interest, I do not consider that an appeal should be heard simply to elucidate
    the issue.

[10]

Mr.
    Skorah, for Mr. Pedersen on this application, eloquently addressed the possibility
    that the interests of the plaintiffs may diverge at some later point in the
    litigation.  While that potential exists, the development of real prejudice
    may be dealt with in costs and a fresh application to the Supreme Court of
    British Columbia at that time.

[11]

For
    these reasons I would not grant leave to appeal.

The
    Honourable Madam Justice Saunders


Citation:

R.
          v. ONeill

Date:
20030120

2003
          BCCA 35

Docket:

CA029630

Registry:
          Vancouver

COURT
          OF APPEAL FOR BRITISH COLUMBIA

BETWEEN:

REGINA

RESPONDENT

AND:

BRIAN PATRICK JAMES ONEILL

APPELLANT

Before:

The
          Honourable Chief Justice Finch

The
          Honourable Mr. Justice Lambert

The
          Honourable Mr. Justice Thackray

In
          Person

The
          Appellant

F.G.
          Tischler

Counsel
          for the Respondent

Place
          and Date of Hearing:

Vancouver,
          British Columbia

January 13, 2003

Place
          and Date of Judgment:

Vancouver,
          British Columbia

January 20, 2003

Written
    Reasons by:

The
    Honourable Chief Justice Finch

Concurred
    in by:

The
    Honourable Mr. Justice Lambert

The
    Honourable Mr. Justice Thackray

Reasons for Judgment of the Honourable
    Chief Justice Finch:

[1]

Mr. ONeill, who appears in person, applies for leave to appeal, and
    if leave is granted, appeals from the sentence imposed on him in B.C. Supreme
    Court on 14 March 2002.  The appellant was sentenced to imprisonment for two
    years less a day, and three years probation, for his conviction on one count
    of sexual assault upon an 11 year old girl (M.R.).  A second count of sexual
    assault involving a 14 year old girl (K.B.) was dismissed by the trial judge.
    The appellant had served ten months in custody prior to the imposition of
    sentence.  The effective sentence, if one gives double credit for the time
    served, is about three years and eight months.

[2]

Before the sentencing judge counsel for the appellant agreed that two
    years less one day, and three years probation, was an appropriate sentence.
    But counsel submitted that the sentence should be served in the community
    on conditions.

[3]

On this appeal, the appellant contends that the custodial sentence
    is excessive, harsh and unfit, and that the probation order is unnecessary.
    He says he did not agree with his counsels submission that two years less
    a day was the appropriate length of sentence.  He says he has serious medical
    conditions requiring treatment which is not being provided to him in prison.
    He says he has successfully completed all programs offered to him while in
    custody, that he is truly remorseful, and has apologized to the complainant
    and her mother.

[4]

The circumstances of the offence are that at about 10:30 p.m. on December
    20, 1999 the appellant was driving his truck in Surrey when he saw the two
    girls out walking K.B.s dogs.  The appellant knew K.B. through her father.
    K.B. asked for a ride.  The appellant agreed and drove to a beer and wine
    store where he bought beer for himself and coolers for the children.  Next
    he drove to a secluded area along the Fraser River where they walked the dogs.
    They tied the dogs to the rear of the truck, and sat in the truck drinking
    alcohol and listening to music.  K.B. then performed oral sex on the appellant.
    The appellant testified that K.B. willingly did so in return for $20.

[5]

The appellant then grabbed M.R. by her long bangs and forced her head
    down onto his penis.  M.R. tried to pull away but the appellant pulled harder
    on her hair, causing more pain.  After the appellant ejaculated, M.R. got
    out of the truck, spat on the ground, wiped her hand across her mouth and
    then wiped it off on her sweat pants.  The appellant started to drive off
    with the dogs still tied to the truck.  The girls ran after the truck and
    untied the dogs, then ran to a nearby pub where they asked for help.  The
    police later tested the sweat pants which proved to contain the appellants
    semen.  The appellant denied that M.R. performed oral sex on him.

[6]

The appellant was 43 years old at the time of the offence and had accumulated
    a record of 43 convictions including indecent assault in 1981, sexual assault
    in 1987, assault causing bodily harm in 1976, 1981, and 1987, and assault
    in 1991 and 1994.  In addition, the appellant has 17 alcohol or drug related
    convictions.  While on bail in the case at bar the appellant violated his
    recognizance by consuming alcohol.

[7]

The learned sentencing judge addressed the issue of the appellants
    health and his need for medical attention:

[18]
    It is argued that Mr. ONeill has been on a form of house arrest since August
    3, 2001, and that I should look to those bail conditions as the underpinnings
    of the conditions for a sentence to be served in the community. It is also
    argued that Mr. ONeill has abstained from alcohol since October 14, 2000
    because of cirrhosis of the liver arising from hepatitis, no doubt exacerbated
    by his alcohol abuse.

[19]
    While I have no medical evidence, I am told that Mr. ONeill is waiting for
    a liver transplant, and that he has an appointment to see a specialist, Dr.
    Henry Wong, on May 15 of this year.

. . .

[23]
    Given Mr. ONeills concerns that he will not be able to obtain proper medical
    treatment if he remains in custody, I have, as requested, received a letter
    from Crown counsel addressing those concerns. I have also today heard submissions
    from Mr. Ray. As matters presently stand, Mr. ONeill requires a blood sample
    to be taken and tested every three months. Depending on the results of the
    test, Mr. ONeill may or may not be placed on Interferon. If he is, the drug
    is injected and he is required to take a pill. There is no suggestion that
    Dr. Wong himself needs to take the blood sample or needs to test the blood
    sample. Dr. Wongs role, as I understand it, at least to date, is to interpret
    the blood sample.

[24]
    I am satisfied that should Mr. ONeill require medical attention, he will
    receive it. If, as Mr. Ray contends, Dr. Wong will not treat Mr. ONeill if
    he is incarcerated and he requires treatment by Dr. Wong, that can be dealt
    with when the occasion arises. As matters stand, I have nothing from Dr. Wong
    indicating that to be the case.

[8]

As was the case before the learned sentencing judge, there is no evidence
    before us to support the appellants submissions in respect of his health,
    his need for medical attention or his inability to obtain the same while in
    custody.  During the hearing Mr. ONeill handed up a bio-medical laboratory
    report which reports a diagnosis of hepatitis C on a blood test.  Beyond
    that we have nothing.

[9]

I do not consider that the learned sentencing judge erred in fixing
    the length of sentence at two years less a day, or in concluding that the
    sentence should be served in custody.  This was a serious sexual assault involving
    a child who was given alcohol to drink, and who was physically forced into
    performing the sexual act.  The appellant has a long criminal record, including
    previous convictions for assault and sexual assault.  There is no medical
    evidence to support the request for a conditional sentence.  Having regard
    for sentences in other similar cases it cannot be said that an effective custodial
    sentence of three years and eight months is outside the range of sentence
    that is fit for this offence and this offender.

[10]

I
    am similarly of the view that this was an appropriate case for the probation
    order of three years duration that was made.  The order contains a condition
    prohibiting the appellant from the consumption of alcohol, and the need for
    such a condition and the power to monitor it was amply justified in the circumstances.

[11]

I
    would grant leave to appeal but would dismiss the appeal.

The
    Honourable Chief Justice Finch

I AGREE:

The Honourable Mr.
    Justice Lambert

I AGREE:

The Honourable Mr.
    Justice Thackray


COURT OF APPEAL
        FOR BRITISH COLUMBIA

Citation:

K.J.W. v. M.D.W.,

2003 BCCA 410

Date: 20030120

Docket: CA030454

Between:

K.J.W.

Respondent

(
Plaintiff
)

And

M.D.W.

Appellant

(
Defendant
)

Before:

The Honourable Mr. Justice Braidwood

(In Chambers)

Oral Reasons for Judgment

Appellant appearing on his own behalf

B. Kerfoot

Counsel for
            the Respondent

Place and Date:

Vancouver, British
        Columbia

January 20, 2003

[1]

BRAIDWOOD,
          J.A.
: This is a matter in which the applicant
          seeks indigent status.  One of the matters that must be demonstrated
          is whether or not there is a possible likelihood that the underlying
        appeal will be successful.

[2]

The
        case involves, at this stage, an analysis as to whether or not the learned
        chambers judge erred when he granted the parties a divorce.  As I understand
        it, the respondent seeks a nullity rather than a divorce, on the basis
        of fraud.  Namely, that when his wife, if that word can be used at this
        stage, entered into the contract, as he calls it, of a ceremony of marriage,
        she did so with fraudulent intent to deprive him of his assets.  That,
      the allegation is, should result in a nullity instead of a divorce.

[3]

I
        have reviewed the material filed before me and I see no possibility of
        overturning the decision of the chambers judge to grant a divorce.  Any
        other remedies that the applicant here may have to be sent onto the trial
        list.  An allegation of bias has been made against the learned chambers
        judge.  A number of points have been made in an attempt to support that
        allegation.  One of which was that the applicant did not agree to the date
        upon which the hearing took place and he had no input into it being set.  However,
        of course, the applicant failing the ability to reach an agreement is able
        to set down these cases as he sees fit so long as the appropriate notice
        is given.  Next of all, the applicant complains, according to para. 4 of
        the filed Reasons for Judgment, that he was not given an opportunity to
        approve the order.  I see no bias in that.  That is a standard way to approach
        things when the person is not represented by counsel.  Also there is
        no complaint about the order itself as opposed to the merits in granting
      it.

[4]

Underlying
        all of this is an indication that on a prior occasion he was told that
        he would obtain assistance at the Law Society or Law School.  Most certainly
        they will not help in matters to do with domestic affairs, although the
      library is there to be used.

[5]

Accordingly,
        in all of these circumstances, I do not see that there is any possibility
        of this case succeeding, namely that the divorce should be overturned.  I,
        of course, say nothing about the merits of the other allegations which
      will be the subject matter of a trial.

[6]

Accordingly,
      this application is dismissed.

The Honourable Mr. Justice Braidwood


Court of Appeal for
British
    Columbia

Citation:

Deline
v. Whittle
,

2003
          BCCA 40

Date:
    20030121

Docket: CA030110

Between:

Toni
    E.
Deline

Appellant

(
Plaintiff
)

And

Vernon
    Norman Whittle

Respondent

(
Defendant
)

Before:

The
          Honourable Madam Justice Prowse

(In
          Chambers)

Appellant
          appearing on his own behalf

M.P.S.
          Spearing

Counsel
          for the Respondent

Place
          and Date of Hearing:

Vancouver, British Columbia

January 16, 2003

Place
          and Date of Judgment:

Vancouver, British Columbia

January
          21, 2003

Reasons for Judgment of the Honourable Madam Justice
    Prowse:

[1]

Mr.
Deline
is seeking leave to appeal the decision of Madam Justice Gill, made August
    13, 2002, affirming the order of Master Patterson, made June 14, 2002, dismissing
    Mr.
Deline's
application to compel the defendant
    to produce a list of documents pursuant to Rule 26(1) of the
Rules
    of Court.

[2]

Counsel for Mr. Whittle submits that
    the application should be dismissed on the basis that it is without merit.

He submits that, even if Mr.
Deline
could show that Master Patterson or Madam Justice Gill
    erred in his or her interpretation of Rule 26(1), Mr.
Deline
could not succeed on appeal since he failed to file an amended statement of
    claim in accordance with an earlier order of Mr. Justice Blair.

Thus, there was no valid statement of claim
    outstanding at the time of the order under appeal, and no basis upon which
    Mr.
Deline
could demand production of documents.

[3]

In my view, counsel for Mr. Whittle
    is correct.

In the absence of an amended
    statement of claim, there is no factual foundation upon which Mr.
Deline
could succeed on the issue he has raised on appeal
    as to the proper interpretation of Rule 26(1).

This was clearly the view of Master Patterson
    and of Madam Justice Gill.

[4]

Mr.
Deline
advised the Court that he had filed an application for leave to appeal the
    order of Mr. Justice Blair.

That application
    was dismissed by Madam Justice Saunders, and her decision was upheld on review
    by a panel of this Court.

While Mr.
Deline
stated that he was preparing materials seeking
    leave to appeal that decision to the Supreme Court of Canada, that does not
    detract from the fact that the foundation for his legal argument on this application
    for leave to appeal does not exist.

[5]

In the result, I do not find it necessary
    to refer to the other matters discussed by the parties on this application.

While I granted Mr.
Deline's
earlier application for an extension of time in order
    to bring this application, I conclude on the materials now before me that
    Mr.
Deline's
application for leave to appeal must
    be dismissed on the basis that it has no reasonable prospect of success.

[6]

I would grant Mr. Whittle the costs
    of this application, and the costs of the previous application before me.

The Honourable Madam Justice Prowse


COURT OF
APPEAL FOR BRITISH COLUMBIA

Citation:

Four Star Management Ltd. v. Solid
  Gold Capital et al,

2003 BCCA 160

Date: 20030121

Docket: CA030219

Between:

Four Star Management Ltd.

Respondent

(
Plaintiff
)

And

Solid Gold Capital Corp.

Defendant

And

A. Ted Ewachniuk,

Formerly
  dba A. Ted Ewachniuk & Associates

Appellant

Before:

The Honourable Mr. Justice Braidwood

(In Chambers)

Oral Reasons for Judgment

J. Dawson

Counsel
  for the Appellant

F. Lamer

Counsel
  for the Respondent

Place and Date:

Vancouver, British
        Columbia

January 21, 2003

[1]

BRAIDWOOD, J.A.
: The application before
  me is for leave to appeal an order made in chambers on October 16, 2002, when
  the learned chambers judge dismissed the applicants
  motion for an interim injunction.  On that day two actions were in front of
  the chambers judge. In the first action, an application was brought on behalf
  of
  Mr. Ewachniuk in the style of Four Star Management Limited v. Solid Gold
  Capital Corporation. In this action, Mr. Ewachniuk sought to preserve the
  availability of certain shares which were to be sold to satisfy Mr. Ewachniuks
  fees. The second action was brought in the style of A. Ted Ewachniuk v. BMF
  Trading et al. In this action, Mr. Ewachniuk sought a declaration of trust
  in relation to the same shares.

[2]

The writ in the second suit is as follows:

THE PLAINTIFFS CLAIM IS:

For a declaration against the Defendants, other
  than the defendant, MONTREAL TRUST COMPANY OF CANADA, that certain property
  registered in the name of those Defendants (or with respect to which they claim
  title ownership or interest), obtained in or around June, 1992, and consisting
  of shares of Consolidated Ruskin Development Ltd. (or any predecessor or
  successor), now known as LML Payment Systems Inc., and redeemed or redeemable
  for shares in LML Payment Systems Inc. are to the extent a 50% thereof
  (hereinafter the Shares) legally and beneficially the property of the
  Plaintiff and are held by or on behalf of the Defendants in trust, express,
  constructive or resulting, for the Plaintiff, such trust arising by an
  agreement between the Plaintiff and the Defendants, BMF TRADING and ABRAXIS
  HOLDINGS LTD., for the provision of legal services and payment of legal
  expenses and disbursements by the Plaintiff in the period between 1989 and
  1996.

[3]

In this latter action, which I will call No. 2,
  counsel brought a motion under Rule 18 of the Supreme Court Rules to dismiss
  the action.  The notice of motion filed in the first action reads in part as
  follows:

TAKE NOTICE for directions and for an order
  pursuant to 79 of the
Legal Profession Act,
S.B.C. 1998 s. 39 of the
  Law and Equity Act and the inherent jurisdiction of this Honourable Court
  that:

2.   an
  interim injunction be granted restraining the Plaintiff from selling, pledging,
  transferring, redeeming, converting or otherwise disposing of or dealing with
  the Property.

[4]

The learned trial judge, in her Reasons for
  Judgment, wrote as follows:

[1]
THE COURT:
This is the application
  of the defendant, Abraxis Holding Ltd., pursuant to
Rule 18,
to dismiss
  the plaintiff's action on the basis that it is limitation barred.  There is,
  as well, the plaintiff's application to preserve the subject matter of the
  dispute, some shares.

[2] The plaintiff's action was commenced by
  writ on May 4, 2001.  The
  plaintiff asserts a 50 percent interest in shares pursuant to a contingency
  agreement, which he claims was amended by oral agreement.  No statement of
  claim has been filed.  The nature of the action, as endorsed on the writ, is
  framed in trust, not in contract.  This is necessary to escape a limitation
  bar.  The admissible material filed in support of this application, including
  the plaintiff's affidavits, does not support a claim in trust.  Any claim,
  tenuous as it may be, could only be in contract and is limitation barred since
  entitlement would have crystallized in May 1991.

[3] There is no evidence the cause of action
  was confirmed at a later date.  The plaintiff's action is dismissed with costs.

(Submissions re costs)

[4]
THE COURT
:  It may be close to the
  line but in my view it is not a circumstance for special costs.  Is there any
  reason why it would not be set on Scale 3?  All right.  Costs on Scale 3.

[5]

I am of the opinion that an appeal in this case
  has no possibility of success and that the chambers judge was plainly correct.
  Case No. 2 is framed in trust.  An appeal concerning it can proceed without
  leave.  Case No. 1 is a claim for a solicitors lien.  The solicitors lien is
  based on contract.  This alone precludes any claim based on trust in the case
  now under review.  The contingency agreement, however, reads as follows:

In consideration of your acting as my
  solicitor, in connection with my claim for damages and injuries, I agree to pay
  for professional services rendered by you, exclusive of disbursements a fee
  based on a portion of the amount recovered as follows

The typing
    is 50% of any amount recovered.  There is an ink stroke through 50% and above it
  written in ink is 25% on the first $250,000 and 33 1/3 % on the balance.  I
  will just pause here to note that in these reasons that alteration makes no
  difference.  It is not in dispute.

The aforementioned fee based on a portion of
  the amount recovered relates to all professional services rendered up to and
  including settlement of any claim or obtaining judgment after trial, but does
  not include any fees for services that may arise out of an Appeal.  Amount
  recovered means all general and special damages, plus court order interest.

[6]

Here the amount received means, as defined,
  general and special damages plus court order interest.

[7]

In the Statement of Facts in the Respondents
  Motion Book, para. 3 reads as follows:

3. The appellant Ewachniuk took over as counsel
  for Four Star Management Ltd.  (Four Star), now known as Abraxis Holdings
  Ltd.) on or about January 9, 1991, after executing a contingency agreement
  dated January 9, 1991 (Contingency Agreement).  Two
  weeks after his appointment, the Defendant Solid Gold Capital Corp. (Solid
  Gold) filed a proposal in bankruptcy, thereby staying all proceedings against
  it (including this action).  The proposal in bankruptcy then called for the
  payment to creditors of 1 share in the capital of Solid Gold for every dollar
  indebtedness owing to is creditors.  Solid Gold is now known as LML Payment
  Systems Ltd. (LML).  A proof of claim was filed by Four Star in the amount of
  approximately $406,000.  This proof of claim was rejected by Solid Golds
  trustee in Bankruptcy.  In or about May 1991, the Appellant Ewachniuk settled
  the proof of claim for 225,000 shares (Solid Gold Shares) in the capital
  of Solid Gold (Solid Gold Settlement).

[8]

The shares were obtained as a result of a
  settlement of proceedings in bankruptcy and cannot be characterized as special
  or general damages.  So any claim to shares is outside the written terms of the
  contract.  It was admitted that at the time of settlement the shares were
  worthless, although they later came to be quite valuable.  Further, the
  underpinning of any trust is vague and confusing and the evidence said to
  support an inference of trust is too vague to meet any standard of a
prima
  facia
case.  Paras. 6 and 7 of the argument read as follows:

6. In May 1991, the Solid Gold Shares were
  worthless.  In any event, both Four Star and its president Mr. Bryon Williams
  were governed by a 12 year trading ban issued on December 31, 1989 by the Securities
  Commission.  This trading ban precluded any trade of these shares within British
  Columbia and the share
  certificates were issued with a trading legend in which this restriction was
  set out.  In effect, Mr. Ewachniuk had achieved nothing of value for Four Star.

7. The appellant Ewachniuk never retained
  possession of any of the share certificates issued by Solid Gold pursuant to
  the Solid Gold Settlement.  By the spring of 1992, Solid Gold had become
  (through amalgamations) Consolidated Ruskin Developments ltd. and new share
  certificates were issued by Consolidated Ruskin to Four Star in replacement of
  the Solid Gold share certificates originally issued.  Mr. Ewachniuk was given
  two of these share certificates representing 20,000 shares in Consolidated
  Ruskin Developments Ltd.  as security for the disbursements incurred by Four
  Star and other clients of his in an unrelated action, namely
Four Star Management
  Ltd. et al v. Coopers Lybrand Ltd.
Mr. Ewachniuk confirmed this fact to
  the Securities Commission in 1994 when he attempted to obtain permission to
  sell these 20,000 shares.  In this correspondence, Mr. Ewachniuk never
  mentioned to the Securities Commission any entitlement to any of the shares
  issued as part of the Solid Gold Settlement, under the Contingency Agreement
  or otherwise.

[9]

The contingency agreement for fees must be in
  writing.  The only written agreement is the one mentioned above and has nothing
  to do with shares.  The case before me is, in reality, a claim for specific
  performance of an oral agreement and so is inappropriate as a claim under the
Legal
  Professions Act
, and, is statute barred, as a claim in contract.

[10]

Accordingly, I am of the opinion that this application should be
  refused.

The Honourable Mr. Justice Braidwood