Bank of Montreal v. Hall, (1990) 104 N.R. 110 (SCC)

• Judge: Wilson, La Forest, L'Heureux-Dubé, Sopinka and Cory, JJ.
• Court: Supreme Court (Canada)
• Case Date: February 28, 1989
• Jurisdiction: Canada (Federal)
• Citations: (1990), 104 N.R. 110 (SCC);1990 CanLII 157 (SCC);[1990] 1 SCR 121;[1990] 2 WWR 193;9 PPSAC 177;82 Sask R 120;46 BLR 161;104 NR 110;65 DLR (4th) 361

Bk. of Mtrl. v. Hall (1990), 104 N.R. 110 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Bank of Montreal v. Arthur Hall and Attorney General of Canada, Attorney General for New Brunswick, Attorney General for Saskatchewan and National Farmers Union

(No. 20373)

Indexed As: Bank of Montreal v. Hall

Supreme Court of Canada

Wilson, La Forest, L'Heureux-Dubé, Sopinka and Cory, JJ.

February 1, 1990.

Summary:

A chartered bank brought an action against a mortgagor to enforce a real property mortgage. The mortgagor, a farmer, had also given the bank s. 178 security under the Bank Act on a piece of farm equipment, as additional security for repayment of the mortgage. After the farmer defaulted, the bank seized the equipment. The farmer alleged that the seizure was illegal because the bank failed to comply with the notice provisions in the Limitation of Civil Rights Act, and that therefore the farmer was released from all liability under the mortgage. The parties agreed to refer a point of law to the court for determination, namely, whether the bank was required to comply with the Limitation of Civil Rights Act when enforcing s. 178 security under the Bank Act.

The Saskatchewan Court of Queen's Bench, in a decision reported in 46 Sask.R. 182, held that the bank was not required to comply with the Act when enforcing its security interest in the farm equipment. The farmer appealed.

The Saskatchewan Court of Appeal, in a decision reported in [1987] 3 W.W.R. 525; 54 Sask.R. 30; 36 D.L.R.(3d) 523, allowed the appeal. The Court of Appeal held that the bank was required to comply with the Limitation of Civil Rights Act when enforcing s. 178 security under the Bank Act. Wakeling, J.A., dissented in part. The bank appealed. Three constitutional questions were submitted to the Supreme Court.

The Supreme Court of Canada allowed the appeal and answered the three questions. In the result, the court held that a chartered bank was not required to comply with the Limitation of Civil Rights Act when enforcing s. 178 security under the Bank Act.

Banks and Banking - Topic 5221

Loans - Secured loans, s. 178 loans - General - The Supreme Court of Canada discussed the history of ss. 178 and 179 Bank Act security - See paragraphs 21 to 29.

Banks and Banking - Topic 5222

Loans - Secured loans, s. 178 loans - Nature of security - The Supreme Court of Canada discussed the nature of ss. 178 and 179 Bank Act security - The court stated that the effect of the interest is to vest title to the property in question in the bank when the security interest is taken out - See paragraphs 17 to 20.

Banks and Banking - Topic 5228

Loans - Secured loans, s. 178 loans - Seizure of property - Procedure - Application of provincial legislation - Limitation of Civil Rights Act (Sask.) - The Supreme Court of Canada held that a chartered bank, when enforcing its right to security granted pursuant to s. 178 of the Bank Act, was not required to comply with the provisions of the Saskatchewan Limitation of Civil Rights Act.

Constitutional Law - Topic 3614

Paramountcy of federal statutes - Overlapping legislation - Conflict - What constitutes - Sections 19-36 of the Limitation of Civil Rights Act (Sask.) established procedures for the realization and enforcement of a security interest in Saskatchewan - The Act forbade a creditor from immediately repossessing the secured goods, while the federal Bank Act provided that the holder of s. 178 security may immediately, upon de fault, seize the security - The Supreme Court of Canada held that ss. 19-36, if interpreted to include s. 178 Bank Act security, conflicted with ss. 178 and 179 of the Bank Act, so as to render ss. 19-36 inoperative respecting s. 178 security taken by a chartered bank - See paragraphs 52 to 65.

Constitutional Law - Topic 6161

Federal jurisdiction - Banking - General - The Supreme Court of Canada held that ss. 178 and 179 of the Bank Act were intra vires the federal Parliament under the federal banking power - The court stated "the federal banking power empowers Parliament to create an innovative form of financing and to define, in a comprehensive and exclusive manner, the rights and obligations of borrower and lender pursuant to that interest" - The court held that the federal banking power allowed Parliament not only to define a security interest and permit borrowing on the strength of that interest, but also to legislate respecting the requirements relating to the realization and enforcement of that interest - See paragraphs 14 to 51.

Constitutional Law - Topic 7283

Provincial legislation - Property and civil rights - Personal property security - Sections 19-36 of the Limitation of Civil Rights Act (Sask.), gave protection to debtors and, inter alia, required secured creditors to give notice to debtors before enforcing their security - The Supreme Court of Canada held that apart from questions of paramountcy, the legislation was intra vires the province under the property and civil rights power - See paragraph 13.

Personal Property - Topic 6566

Security interests - Remedies - Statutory conditions - Notice of intention to realize on security - A chartered bank seized farm equipment pledged as s. 178 security under the Bank Act - The farmer alleged that the seizure was illegal because the bank failed to give prior notice pursuant to the Limitation of Civil Rights Act (Sask.) - The Supreme Court of Canada held that the bank was not required to comply with the provisions of the Saskatchewan Act before enforcing s. 178 Bank Act security.

Cases Noticed:

Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; 44 N.R. 181, appld. [para. 8].

Abitibi Power & Paper Co. v. Montreal Trust Co., [1943] A.C. 536 (P.C.), refd to. [para. 13].

Canada Trust Co. v. Hanson, [1949] 1 D.L.R. 375, affd. [1951] S.C.R. 366, refd to. [para. 13].

Tennant v. Union Bank of Canada, [1894] A.C. 31, appld. [para. 14].

Merchants' Bank of Canada v. Smith (1884), 8 S.C.R. 512, refd to. [para. 14].

Bank of Montreal v. Guaranty Silk Dyeing & Finishing Co., [1935] 4 D.L.R. 483 (Ont. C.A.), refd to. [para. 28].

Landry Pulpwood Co. v. Banque Canadienne Nationale, [1927] S.C.R. 605, consd. [para. 31].

Royal Bank of Canada v. Workmen's Compensation Board of Nova Scotia, [1936] S.C.R. 560, consd. [para. 32].

Flintoft v. Royal Bank of Canada, [1964] S.C.R. 631, consd. [para. 34].

Canadian Imperial Bank of Commerce v. R. (1984), 52 C.B.R.(N.S.) 145 (F.C.T.D.), refd to. [para. 35].

Attorney General for Canada v. Attorney General for Quebec, [1947] A.C. 33, refd to. [para. 39].

Attorney General for Alberta v. Attorney General for Canada, [1947] A.C. 503, refd to. [para. 39].

Reference re Alberta Statutes, [1938] S.C.R. 100, refd to. [para. 39].

Montcalm Construction Inc. v. Minimum Wage Commission, [1979] 1 S.C.R. 754; 25 N.R. 1, refd to. [para. 40].

Canadian Pioneer Management Ltd. v. Labour Relations Board of Saskatchewan, [1980] 1 S.C.R. 433; 31 N.R. 361, not appld. [para. 46].

Attorney General for Alberta and Winstanley v. Atlas Lumber Co., [1941] S.C.R. 87, refd to. [para. 59].

Statutes Noticed:

Bank Act, R.S.C. 1985, c. B-1, sect. 178 [paras. 1, 2, 5, 7-9, 11, 14, 17, 20-22, 29-31, 35-37, 41-44, 52, 58, 61, 62, 65, 67]; sect. 178(1)(a), sect. 178(1)(b), sect. 178(1)(c), sect. 178(1)(d), sect. 178(1)(e), sect. 178(1)(f), sect. 178(1)(g), sect. 178(1)(g), sect. 178(1)(h), sect. 178(1)(i), sect. 178(1)(j) [para. 17]; sect. 178(2), sect. 178(2)(c) [para. 18]; sect. 178(3) [paras. 6, 20]; sect. 179 [paras. 1, 11, 14, 17, 36, 37, 41, 42, 52, 58, 61, 65, 67]; sect. 179(4) [para. 20]; sect. 186 [para. 18].

Bank Act, S.C. 1890 [para. 24].

Banks, An Act Respecting Incorporated, C.S.C. 1859, c. 54 [para. 22].

Constitution Act, 1867, sect. 91(15) [para. 14].

Limitation of Civil Rights Act, R.S.S. 1978, c. L-16, sect. [para. 7]; sect. 19 - sect. 36 [paras. 11, 13, 52, 65, 67]; sect. 19(f) [para. 5]; sect. 20 [para. 56]; sect. 21 [para. 13]; sect. 21 - sect. 35 [paras. 56, 57]; sect. 27 [paras. 13, 56]; sect. 33 [para. 57].

Authors and Works Noticed:

Anstie, The Historical Development of Pledge Lending in Canada, Pt. I, The Canadian Banker, 74, 2 (Summer 1967), 81-82 [para. 29]; 81-89, and Pt. II, The Canadian Banker 74, 3 (Autumn 1967), 35-44, pp. 81 [para. 25]; 82, 83 [para. 22]; 84 [para. 23]; 88 [para. 25].

Crawford and Falconbridge, Banking and Bills of Exchange (8th Ed. 1986), vol. 1, generally [para. 21]; pp. 403-407 [para. 27].

Falconbridge, Banking and Bills of Exchange (4th Ed. 1929), p. 222 [para. 24].

Lederman, The Concurrent Operation of Federal and Provincial Laws in Canada (1963), 9 McGill L.J. 185 [para. 54].

Moodie, Accounts Receivable, Section 88 of the Bank Act, and Inventory Financing - A Banker's View, in Security in Moveable Property, Meredith Memorial Lectures, 1967 Series, Notes, p. 50 [para. 27].

Moull, Security under Sections 177 and 178 of the Bank Act (1986), 65 Can. Bar Rev. 242, pp. 243 [paras. 28-29]; 243, n. 3 [para. 24]; 244 [para. 28]; 251 [para. 19].

Walker, Sir Edmund, Bank Act Revision Proceedings (1933), p. 236 [para. 24].

Counsel:

William Softley and Dale Doan, for the appellant;

Gary Semenchuck, Q.C., for the respondent;

T.B. Smith, Q.C., and James Mabbutt, Q.C., for the intervenor, the Attorney General of Canada;

Robert G. Richards, for the intervenor, the Attorney General for Saskatchewan;

Bruce Judah, for the intervenor, the Attorney General for New Brunswick;

Audrey Brent, for the intervenor, the National Farmers Union.

Solicitors of Record:

Balfour, Moss, Milliken, Laschuk & Kyle, Regina, Saskatchewan, for the appellant;

Hleck, Kanuka, Thuringer, Semenchuk, Sandomirsky, Boyd & Baker, Regina, Saskatchewan, for the respondent;

J.C. Tait, Ottawa, Ontario, for the intervenor, the Attorney General of Canada;

Brian Barrington-Foote, Regina, Saskatchewan, for the intervenor, the Attorney General for Saskatchewan;

G.F. Gregory, Fredericton, New Brunswick, for the intervenor, the Attorney General for New Brunswick;

Brent & Lamontagne, Saskatoon, Saskatchewan, for the intervenor, the National Farmers Union.

This appeal was heard before Wilson, La Forest, L'Heureux-Dubé, Sopinka and Cory, JJ., of the Supreme Court of Canada on February 28, 1989. The decision of the Supreme Court was delivered in both official languages by La Forest, J., on February 1, 1990.