Alberta (Treasury Branches) v. Tetz, (1998) 217 A.R. 117 (QBM)

• Court: Court of Queen''s Bench of Alberta (Canada)
• Case Date: Thursday March 26, 1998
• Citations: (1998), 217 A.R. 117 (QBM)

Alta. v. Tetz (1998), 217 A.R. 117 (QBM)

MLB headnote and full text

Temp. Cite: [1998] A.R. TBEd. AP.024

Province of Alberta Treasury Branches (plaintiff/defendant by counterclaim) v. Warren Tetz (defendant/plaintiff by counterclaim)

(Action No. 9403-13053)

Indexed As: Alberta (Treasury Branches) v. Tetz

Alberta Court of Queen's Bench

Judicial District of Edmonton

Funduk, Master in Chambers

March 26, 1998.

Summary:

Alberta Treasury Branches (ATB) loaned monies to a corporation. Tetz, the corpora­tion's principal, guaranteed the loan. ATB gave notice to the corporation of its intention to enforce its security. The corporation was petitioned into bankruptcy. A receiver-man­ager was appointed by the court and sold the corporation's assets. ATB then sued Tetz on his guarantee for the balance of the monies owing. ATB sought summary judgment on the guarantee. Tetz counterclaimed, alleging an improvident sale by the receiver-manager as agent for ATB. Tetz also applied to amend the statement of defence to plead that the guarantee was unenforceable because the Treasury Branches Act was ultra vires the province (i.e., ATB had no jurisdiction to loan monies as banking was exclusive feder­al jurisdiction).

A Master of the Alberta Court of Queen's Bench granted summary judgment on the guarantee, dismissed the counterclaim and denied leave to amend the defence. A court-appointed receiver was not an agent of the creditor and ATB, having done nothing improper in appointing the receiver-man­ager, could not be liable for any improvident sale. ATB had the right to loan monies at com­mon law regardless of the validity of the Treasury Branches Act, which was an aca­demic issue only.

Constitutional Law - Topic 6161

Federal jurisdiction (s. 91) - Banking - General - Alberta Treasury Branches sued a guarantor to enforce payment of the balance owing on the guaranteed loan - The guarantor applied to amend his state­ment of defence to plead that the Treasury Branches Act was ultra vires the province, where banking was an exclusive federal jurisdiction under the Constitution Act, 1867 - Accordingly, it was submitted that the loan was ultra vires and the guarantee could not be enforced - A Master of the Alberta Court of Queen's Bench held that Alberta Treasury Branches was the prov­incial Crown, not a body created by prov­incial legislation - The provincial Crown had the common law right (just like ordi­nary citizens) to lend money and take security - That right existed regardless of whether the Treasury Branches Act was ultra vires or not - Since the validity of the Act was an academic issue only, the Master denied leave to amend the defence - See paragraphs 24 to 55.

Crown - Topic 315

Crown at common law - Power to loan monies - [See Constitutional Law - Topic 6161 ].

Guarantee and Indemnity - Topic 1618

Rights of surety against creditor - Secured transactions - Where receiver appointed - [See Receivers - Topic 1729 ].

Practice - Topic 2143

Pleadings - Amendment of pleadings - Circumstances when amendment denied - [See Constitutional Law - Topic 6161 ].

Receivers - Topic 1729

Appointment - By court - Effect of - General - A court-appointed receiver al­legedly made an improvident sale of the debtor's assets - The guarantor of the debt counterclaimed against the creditor, claim­ing that the receiver-manager was the creditor's agent - There was no complaint concerning the creditor's conduct in ob­taining the court appointment - A Master of the Alberta Court of Queen's Bench held that a court-appointed receiver-man­ager was not an agent of the creditor - Accordingly, if the receiver-manager im­providently sold assets, then the creditor could not be liable - See paragraphs 11 to 23.

Cases Noticed:

Parsons v. Sovereign Bank of Canada, [1913] A.C. 160 (P.C.), refd to. [para. 15].

Burt, Boulton & Hayward v. Bull, [1895] 1 Q.B. 276 (C.A.), refd to. [para. 15].

Credit Foncier Franco-Canadien v. Ed­monton Airport Hotel Co. (1966), 55 W.W.R.(N.S.) 734 (Alta. T.D.), affd. (1966), 56 W.W.R.(N.S.) 623 (C.A.), refd to. [para. 15].

Panamericana De Bienes y Servicios, S.A. v. Northern Badger Oil & Gas Ltd. (Bankrupt) (1992), 117 A.R. 44; 2 W.A.C. 44 (C.A.), refd to. [para. 15].

Royal Bank of Canada v. Got (W.) & Associates Electric Ltd. (1997), 196 A.R. 241; 141 W.A.C. 241 (C.A.), refd to. [para. 16].

Foss v. Harbottle (1843), 67 E.R. 189, refd to. [para. 21].

Hongkong Bank of Canada et al. v. 414577 Alberta Ltd. et al., [1998] A.R. Uned. 15 (C.A.), refd to. [para. 21].

Breckenridge Speedway Ltd. v. Reginam, [1967] 6 W.W.R. 257 (Alta. C.A.), refd to. [para. 29].

Reference Re Remuneration of Judges of the Provincial Court (P.E.I.) (1997), 217 N.R. 1; 206 A.R. 1; 121 Man.R.(2d) 1; 156 W.A.C. 1; 156 Nfld. & P.E.I.R. 1; 483 A.P.R. 1; 150 D.L.R.(4th) 577 (S.C.C.), refd to. [para. 34].

Lamont v. Canadian Pacific Railway Co. (1900), 5 Terr. L.R. 60 (N.W.T.S.C.), refd to. [para. 42].

Tennant v. Union Bank of Canada, [1894] A.C. 31 (P.C.), refd to. [para. 51].

Canadian Pioneer Management Ltd. et al. v. Labour Relations Board (Sask.) et al., [1980] 1 S.C.R. 433; 31 N.R. 361; 2 Sask.R. 217, refd to. [para. 51].

Alberta (Provincial Treasurer) v. Work­men's Compensation Board (1962), 39 W.W.R.(N.S.) 291 (Alta. Q.B.), affd. (1963), 42 W.W.R. 226 (C.A.), refd to. [para. 55].

Siewert v. Seward, [1974] 4 W.W.R. 211 (Alta. Dist. Ct.), refd to. [para. 55].

CNCP Telecommunications v. Alberta Government Telephones and CRTC, [1989] 2 S.C.R. 225; 98 N.R. 161, refd to. [para. 55].

Statutes Noticed:

Financial Administration Act, R.S.A. 1980, c. F-9, sect. 9 [para. 34].

Treasury Branches Act, S.A. 1938, c. 3, sect. 3, sect. 4, sect. 5, sect. 10 [para. 32].

Treasury Branches Act, R.S.A. 1980, c. T-7, sect. 2, sect. 3(1), sect. 4, sect. 5. sect. 6(2) [para. 33].

Authors and Works Noticed:

Blackstone's Commentaries on the Laws of England (Lewis Ed.), Book 1, p. 216 [para. 43].

Hogg, Peter W., Constitutional Law of Canada (3rd Ed.), pp. 13 [para. 45]; 624 [para. 40]; 625 [para. 52].

Mundell, David W., Legal Nature of Fed­eral and Provincial Executive Govern­ments: Some Comments on Transactions between them (1960-63), 2 Osgoode Hall L.J. 56, pp. 58 to 61 [para. 44]; 62 [para. 47].

Swinton, Katherine, Federalism and Prov­incial Government Immunity (1979), 29 U. of T.L.J. 1, pp. 28, 29 [para. 54].

Waldron, Mary Ann, The Law of Interest in Canada (1992), p. 2 [para. 38].

Wedgwood, C.V., Civil Wars (1642-48), The Trial of Charles I (1964), p. 9 [para. 46].

Counsel:

D.R. Bieganek (Cruickshank Karvellas), for the plaintiff;

P.G. Kirman (Weir Bowen), for the de­fendant.

This application was heard before Funduk, Master in Chambers, of the Alberta Court of Queen's Bench, Judicial District of Edmon­ton, who delivered the following judgment on March 26, 1998.