Regional Trust Co. v. Superintendent of Insurance, (1987) 72 N.R. 194 (FCA)

• Judge: Stone, Heald and Hugessen, JJ.
• Court: Federal Court of Appeal (Canada)
• Case Date: December 18, 1986
• Jurisdiction: Canada (Federal)
• Citations: (1987), 72 N.R. 194 (FCA)

Regional Trust v. Superintendent of Ins. (1987), 72 N.R. 194 (FCA)

MLB headnote and full text

Regional Trust Co. v. Superintendent of Insurance

(No. A-587-86)

Indexed As: Regional Trust Co. v. Superintendent of Insurance

Federal Court of Appeal

Stone, Heald and Hugessen, JJ.

January 19, 1987.

Summary:

In its 1985 fiscal year Regional Trust Co. incurred losses in closing out transactions in trading of interest rate futures contracts. The trust company sought to include the deferred portion of the losses among "Other Assets" as "Deferred Loss on Futures Contracts" for purposes of its 1985 annual statement to the Department of Insurance. Pursuant to a ruling under s. 76(c) of the Trust Companies Act, the Superintendent of Insurance treated the deferred portion of the losses as "Assets Not Admitted", thus having an adverse impact on the trust company's borrowing base. The trust company appealed under s. 78(1) of the Act, arguing that the decision of the Superintendent should be set aside.

The Federal Court of Appeal, allowed the appeal and set aside the Superintendent's decision, ordering that he reconsider the case on its merits.

Administrative Law - Topic 8266

Administrative powers - Discretionary powers - Exercise of - Limitations - Reasonableness - Trust Companies Act, R.S.C. 1970, c. T-16, s. 76(c) - S. 76(c) provided that in his annual report to the Minister of Finance on the affairs of trust companies, the Superintendent of Insurance could increase or diminish the value of a trust company's assets or liabilities to the "true and correct amounts thereof as ascertained by him" - The Federal Court of Appeal discussed the scope of the Superintendent's discretion under s. 76(c) - The court held that the words "as ascertained by him" did not give the Superintendent power to act in a totally subjective matter, but that he must act reasonably - See paragraphs 20 to 24.

Banks and Banking - Topic 8084

Trust companies - Regulation - Superintendent - Powers - Discretionary - [see Administrative Law - Topic 8266 above].

Banks and Banking - Topic 8084

Trust companies - Regulation - Superintendent - Powers - Discretionary - Trust Companies Act, R.S.C. 1970, c. T-16, s. 76(c) - S. 76(c) provided that in his annual report to the Minister of Finance on the affairs of trust companies, the Superintendent of Insurance could increase or diminish the value of the trust company's assets or liabilities to "the true and correct amounts thereof as ascertained by him" - The Superintendent exercised his discretion and treated the deferred portion of a trust company's losses on closing out transactions in the trading of interest rate futures contracts as "Assets Not Admitted" rather than "Other Assets" (Deferred Losses on Futures Contracts) as claimed by the trust company - The Federal Court of Appeal held that the Superintendent exercised his discretion unreasonably and should reconsider his decision where, inter alia, the proposed classification of the loss by the trust company was in accordance with accepted accounting principles.

Banks and Banking - Topic 8087

Trust companies - Regulation - Company's annual statement to superintendent - Content - Deferred losses from trading interest rate futures contracts - Trust Companies Act, R.S.C. 1970, c. T-16, s. 72(1), required trust companies to deposit an annual statement of affairs with the Department of Insurance - A trust company incurred losses in closing out transactions in trading of interest rate futures contracts - The Federal Court of Appeal discussed how the deferred portion of these losses might be accounted for in the annual statement required by s. 72(1).

Evidence - Topic 7401

Assessors - General - The Federal Court Rules, rule 492, permitted the court to call in the aid of one or more assessors and determine a matter, wholly or partially, with the assistance of such assessor or assessors - The Federal Court of Appeal discussed the role of an assessor appointed under rule 492 - See paragraphs 7 to 9.

Cases Noticed:

Richardson v. Redpath, Brown & Company Limited, [1944] A.C. 62, refd to. [para. 8].

"Sun Diamond", Ship v. Ship "Erawan" et al. (1975), 55 D.L.R.(3d) 138, refd to. [para. 8].

"Australia", The, [1927] A.C. 145, refd to. [para. 8].

"SS. Melanie" v. "SS. San Onofre" (No. 1), [1927] A.C. 162, refd to. [para. 9].

"Miraflores", The and The "Abadesa", [1966] 1 Lloyd's Rep. 97, refd to. [para. 9].

"Kathy K", The, [1974] 1 F.C. 657, refd to. [para. 9].

Sun Life Assurance Co., Re [1927] 4 D.L.R. 287 (Ex. Ct.), refd to. [para. 22].

Discount & Loan Corporation v. Superintendent of Insurance, [1938] 4 D.L.R. 225 (Ex. Ct.), refd to. [para. 22].

Roberts v. Hopwood and Others, [1925] A.C. 578, refd to. [para. 24].

Performing Rights Organization of Canada Limited v. Canadian Broadcasting Corporation (1986), 64 N.R. 330, refd to. [para. 24].

Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, [1948] 1 K.B. 223 (C.A.), refd to. [para. 24].

Statutes Noticed:

Trust Companies Act, R.S.C. 1970, c. T-16, sect. 72(1), sect. 72(2) [para. 1]; sect. 76(c) [para. 2 et seq.]; sect. 78(1) [para. 2].

Counsel:

Brian G. McLean, for the appellant;

Derek Aylen, Q.C., and Joseph C. de Pencier, for the respondent.

Solicitors of Record:

Edwards, Kenny & Bray, Vancouver, B.C., for the appellant;

F. Iacobucci, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard in Ottawa, Ontario, on December 18, 1986, before Stone, Heald and Hugessen, JJ., of the Federal Court of Appeal. The following decision of the Court of Appeal was delivered by Stone, J., on January 19, 1987: