Sovereign Life Insurance Co. v. Canada (Minister of Finance), (1997) 135 F.T.R. 81 (TD)

• Judge: Gibson, J.
• Court: Federal Court (Canada)
• Case Date: July 29, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1997), 135 F.T.R. 81 (TD)

Sovereign Life v. Can. (1997), 135 F.T.R. 81 (TD)

MLB headnote and full text

Temp. Cite: [1997] F.T.R. TBEd. AU.014

The Sovereign Life Insurance Company (appellant) v. The Minister of Finance (respondent)

(T-3105-92)

Indexed As: Sovereign Life Insurance Co. v. Canada (Minister of Finance)

Federal Court of Canada

Trial Division

Gibson, J.

July 29, 1997.

Summary:

The Minister of Finance directed the Superintendent of Financial Institutions (the Superintendent) to take control of Sovereign Life Insurance Company's assets (Insurance Companies Act, s. 680). Sovereign appealed.

The Federal Court of Canada, Trial Division, dismissed the appeal.

Editor's note: For related decisions see 77 F.T.R. 210; 82 F.T.R. 243; 100 F.T.R. 81; and 174 N.R. 217.

Administrative Law - Topic 608

Hearing and decision - Disclosure by tribunal - To parties of material used or relied upon by the tribunal in making its decision - [See Administrative Law - Topic 2617 ].

Administrative Law - Topic 2617

Natural justice - Evidence and proof - Disclosure - The Minister of Finance directed the Superintendent of Financial Institutions (the Superintendent) to take control of Sovereign Life Insurance Company's assets (Insurance Companies Act, s. 680) - Sovereign appealed the decision arguing, inter alia, that the Minister breached the duty of fairness by failing to share with Sovereign a report from the Minister of State who presided at a meeting with Sovereign intended to provide Sovereign with a reasonable opportunity to be heard - Particularly, the report contained analysis, conclusions and recommendations respecting Sovereign's future - The Federal Court of Canada, Trial Division, rejected this argument - The duty of fairness owed by the Minister to Sovereign was fairly low - In this case the analysis and conclusions contained the report reflected no new facts and therefore the Minister was under no obligation to share it with Sovereign - See paragraphs 58 to 63.

Administrative Law - Topic 7503

Delegated powers - General - Delegation - What constitutes - The Minister of Finance directed the Superintendent of Financial Institutions (the Superintendent) to take control of Sovereign Life Insurance Company's assets (Insurance Companies Act, s. 680) - Sovereign appealed the decision arguing, inter alia, that the Minister improperly delegated his authority under s. 680(2) to the Minister of State when he had the Minister of State preside at a meeting with Sovereign intended to provide Sovereign with a reasonable opportunity to be heard, while retaining to himself the decision-making responsibility - The Federal Court of Canada, Trial Division, rejected this argument - See paragraphs 48 to 51.

Administrative Law - Topic 8264

Administrative powers - Discretionary powers - Fettering of discretion - The Minister of Finance directed the Superintendent of Financial Institutions (the Superintendent) to take control of Sovereign Life Insurance Company's assets (Insurance Companies Act, s. 680) - Sovereign appealed the decision arguing, inter alia, that the Minister did not make the decision, but rather fettered his discretion by simply acting on the recommendation of the Superintendent without forming his own belief respecting Sovereign's financial state, contrary to his authority under s. 680(2) - The Federal Court of Canada, Trial Division, rejected this argument - See paragraphs 35 to 47.

Administrative Law - Topic 8264

Administrative powers - Discretionary powers - Fettering of discretion - The Minister of Finance directed the Superintendent of Financial Institutions (the Superintendent) to take control of Sovereign Life Insurance Company's assets (Insurance Companies Act, s. 680) - Sovereign appealed the decision arguing, inter alia, that the Minister improperly fettered his discretion by receiving and presumably taking into account a report from the Minister of State who presided at a meeting with Sovereign intended to provide Sovereign with a reasonable opportunity to be heard - Particularly, the report contained analysis, conclusions and recommendations respecting Sovereign's future - The Federal Court of Canada, Trial Division, rejected this argument - In an administrative decision-making process, it was "open to the Minister of the Crown charged with making a decision of wide and significant import to seek advice where he or she considers it appropriate to do so, subject of course to conflict of interest considerations and limitations provided by law" - See paragraphs 52 to 56.

Administrative Law - Topic 9026

Boards and tribunals - Jurisdiction - Loss of - By fettering of discretion - [See both Administrative Law - Topic 8264 ].

Insurance - Topic 268

Regulation - Insurers - Licensing - Cancellation - Grounds - Inadequate assets - Sovereign was a chartered financial institution licensed to carry on business in each province and territory of Canada - In 1991, the Office of the Superintendent of Financial Institutions Act (OSFI) commenced monitoring Sovereign's activities - It was determined that Sovereign's asset situation was critical because of the problems with its loan and real estate portfolio which had virtually wiped out its margin of free capital and surplus - OSFI advised that it could not allow the situation to continue unless the capital was injected on a monthly basis equal in amount to Sovereign's monthly loss - The required money was not injected and after numerous meetings were held with Sovereign, the Minister of Finance directed the Superintendent of Financial Institutions (the "Superintendent") to take control of Sovereign (Insurance Companies Act, s. 680) - The Federal Court of Canada, Trial Division, affirmed the decision.

Cases Noticed:

Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875, refd to. [para. 33, footnote 3].

Williams v. Canada (Minister of Citizenship and Immigration) (1997), 212 N.R. 63 (F.C.A.), refd to. [para. 33, footnote 4].

Muliadi v. Minister of Employment and Immigration, [1986] 2 F.C. 205; 66 N.R. 8 (F.C.A.), refd to. [para. 40, footnote 6].

Martinoff v. Canada et al., [1994] 2 F.C. 33; 165 N.R. 309 (F.C.A.), refd to. [para. 40, footnote 7].

Save Richmond Farmland Society et al. v. Richmond (Township) et al., [1990] 3 S.C.R. 1213; 116 N.R. 68, refd to. [para. 57].

League for Human Rights of B'Nai Brith Canada v. Commission of Inquiry on War Criminals (1986), 69 N.R. 110; 28 D.L.R.(4th) 264 (F.C.A.), dist. [para. 58].

Mercier v. Commission canadienne des droits de la personne, [1994] 3 F.C. 3; 167 N.R. 241 (F.C.A.), dist. [para. 59, footnote 10].

Cardinal Insurance Co., Re (1982), 44 N.R. 428; 138 D.L.R.(3d) 693 (F.C.A.), refd to. [para. 59, footnote 11].

Statutes Noticed:

Financial Institutions and Deposit Insurance System Amendment Act, S.C. 1987, c. 23, sect. 6(1), sect. 6(2) [para. 5].

Insurance Companies Act, S.C. 1991, c. 47, sect. 679(1)(d), sect. 679(1)(e), sect. 679(1)(f); sect. 680(1)(b)(viii), sect. 680(1)(b)(ix), sect. 680(2), sect. 681(1), sect. 681(2); sect. 702(1), sect. 702(2), sect. 704 [para. 3].

Authors and Works Noticed:

Wade, William, and Forsyth, Christopher, Administrative Law (7th Ed. 1994), pp. 347 [para. 36, footnote 5]; 356 [para. 38].

Counsel:

Thomas G. Heintzman and Timothy S. Ellan, for the plaintiffs;

Edward R. Sojonky and Lyndsay K. Jeanes, for the defendants.

Solicitors of Record:

McCarthy Tétrault, Toronto, Ontario, for the plaintiffs;

George Thomson, Deputy Attorney General of Canada, Ottawa, Ontario, for the defendants.

This appeal was heard on April 23 and 24, 1997, at Calgary, Alberta, before Gibson, J., of the Federal Court of Canada, Trial Division, who delivered the following judgment on July 29, 1997.