Supreme Court of Canada
Westeel-Rosco Ltd. v. Board of Governors of South Saskatchewan Hospital Centre, [1977] 2 S.C.R. 238
Date: 1976-10-05
Westeel-Rosco Limited (Plaintiff) Appellant;
and
Board of Governors of South Saskatchewan Hospital Centre (Defendant) Respondent;
and
Sutherland Steel Ltd. (Defendant).
1976: February 18; 1976: October 5.
Present: Laskin C.J. and Ritchie, Spence, Dickson and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN
Mechanics’ liens—Action by unpaid subcontractor against hospital board—Unenforceable lien giving rise to charge upon holdback money—Repeal and re-enactment of statute before trial of action—Rights of subcontractor not impaired—The Mechanics’ Lien Act, R.S.S. 1965, c. 277, as amended by 1971, c. 30, s. 3—The Mechanics’ Lien Act, 1973 (Sask.), c. 62.
Crown—Hospital board established by South Saskatchewan Hospital Centre Act, R.S.S. 1965, c. 254—Unpaid subcontractor—Board not a Crown agent—No bar to enforcement of charge against holdback money—Interpretation Act, R.S.S. 1965, c. 1, s. 7.
The respondent Board of Governors of South Saskatchewan Hospital Centre was constituted to construct and operate a hospital on behalf of the Government of Saskatchewan. The appellant, an unpaid subcontractor, claimed to be entitled to a charge upon a holdback fund retained by the Board in connection with the project. At the instance of the head contractor acting on behalf of the Board, the appellant executed a waiver of its rights against the land occupied by the hospital centre. The land in question was owned by the Wascana Centre Authority.
At the date of the issue of the writ, the appellant’s rights were fixed and determined by The Mechanics’ Lien Act, R.S.S. 1965, c. 277, as amended by 1971, c. 30, s. 3, but before the date of trial that Act was repealed and The Mechanics’ Lien Act, 1973 (Sask.), c. 62, was substituted therefor, and the extent to which the appellant’s rights under the first Act were lost or impaired as a result of its repeal and re-enactment was one of the questions at issue in the appeal.
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The subcontractor was successful at trial. On appeal, the Court of Appeal reversed the trial judgment and dismissed the action. An appeal was then brought to this Court.
Held: The appeal should be allowed.
It was not disputed that the lien which arose in favour of the appellant under The Mechanics’ Lien Act, R.S.S. 1965, c. 277, as amended in 1971, could not be enforced because the land in question, being the property of the Wascana Centre Authority, was subject to the paramount rights of the public. The result was that the appellant’s claim was founded upon an unenforceable lien which gave rise to a charge upon the holdback money by virtue of the provisions of s. 11 (4) of the old statute.
Under s. 61(1) of the new Act, any lien that arose under the earlier Act and “existing when this Act comes into force shall continue to be as valid and effectual in all respects as it would have been if this Act had not been passed…”. One of the respects in which the existing unenforceable lien “continued to be … effectual” was that it entitled the appellant to a charge against the holdback money, and in this respect, as in all others, its effect continued, by virtue of s. 61(1), as if the new Act, including s. 2(4) thereof, had not been passed and the defence which that section would otherwise have afforded to the respondent was not available to it.
As to the waiver executed by the appellant, it was in essence nothing more than an undertaking not to enforce a lien against the property. However, as the appellant’s lien could not be enforced against property dedicated to the public as this was, no legal effect could be attached to the waiver. It was not a waiver or renunciation of a charge against the holdback moneys and this was the only claim which the appellant asserted.
The powers with which the Board was endowed were far removed from those of a Crown agency which is subject at every turn to the control of the Crown in executing its powers. Accordingly, the respondent was not a Crown agent and it followed that s. 7 of The Interpretation Act, R.S.S. 1965, c. 1, which provides that “no provisions in an Act shall affect the rights of Her Majesty unless it is expressly stated therein that Her Majesty is bound thereby”, had no application to it and constituted no bar to the enforcement of the charge against the holdback money.
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APPEAL from a judgment of the Court of Appeal for Saskatchewan[1], reversing a judgment of MacDonald J. in favour of the appellant in a mechanics’ lien action. Appeal allowed.
W.R. Matheson, for the plaintiff, appellant.
G.J.K. Neill, for the defendant, respondent.
The judgment of the Court was delivered by
RITCHIE J.—This is an appeal from a judgment of the Saskatchewan Court of Appeal which reversed the judgment rendered at trial by Mr. Justice MacDonald and dismissed the action brought by Westeel-Rosco Ltd., (hereinafter sometimes referred to as “Westeel”) against the Board of Governors of the South Saskatchewan Hospital Centre. The appellant is an unpaid subcontractor who claims to be entitled to a charge upon the holdback fund retained by the Board in connection with a hospital construction project. There is no dispute that Westeel has received only $150,640 on account of the total contract price of $200,000, leaving an unpaid balance of $49,360. It cannot recover the balance from the head contractor because the head contractor is insolvent. The question is whether Westeel is entitled to the relief it claims against the Board in the circumstances to be detailed.
The Board contracted with Sutherland Steel Ltd., (hereinafter referred to as “Sutherland”) to erect the structural steel and steel decking for the Hospital. Sutherland subcontracted part of the work to Westeel. The steel work was the second of five phases involved in the construction project.
The date of substantial completion, for the second phase, according to the architects’ certificate, was May 28, 1971. That was nearly four months after the date of completion set by Sutherland’s contract. The corresponding delay in commencing the third phase of construction prompted the head contractor on the third phase to bring a claim of $49,272 against Sutherland. At this date, the Board had $149,122.33 in the holdback fund for the second phase of construction.
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The trial judge summarized the correspondence which ensued between Westeel, the Board, and the architects as follows:
On 1 June 1971, Westeel wrote to the Centre as follows:
As requested in our recent telephone conversation the balance owing to us by Sutherland Steel Company Limited on the South Saskatchewan Hospital Centre project is $50,070.50. This amount represents the holdback. Please let us know when you expect to be in a position to release the holdback.
(This figure included the cost of a bond in the amount of $710.50, the plaintiff dropped its claim for the bond premium so that the correct figure is $49,360.00).
The Centre replied:
In reply to your letter of June 1, 1971 this is to advise that “Substantial Completion” has been established and set as of May 28, 1971 for Sutherland Steel Limited.
Additional details may be obtained from Hospital Design Partners (Ramsay & Ramsay), 1860 Cornwall Street, Regina.
On 9 June 1971, the architects wrote to Westeel as follows:
Replying to your letter of June 7, 1971, we wish to advise that the Contractor (Sutherland Steel) will be eligible for holdback release thirty-one (31) days after date of Substantial Completion which has been established as May 28, 1971. Release of entire amount is contingent upon all deficiencies being attended to at that time.
At this point the Board asked Sutherland to obtain lien waivers from all its subcontractors. Westeel purported to comply with this request on June 21, 1971, by executing a waiver of its rights against the land occupied by the South Saskatchewan Hospital Centre in a form which is hereinafter more fully set forth. The land in question was owned by Wascana Centre Authority. This document was delivered to Sutherland who in turn delivered it to the Board.
The ensuing circumstances are well described in the reasons for judgment rendered at trial by Mr. Justice MacDonald which are now conveniently reported in 42 D.L.R. (3d) at 710 where the following passage occurs at p. 713:
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On July 23, 1971, the Centre was authorized by the architects to pay out the moneys due to Sutherland of $99,850.33 plus the $49,272 holdback. The Centre was to retain $6,800 for incomplete work ($3,600 of this was for steel decking which was completed by Westeel). The Centre was advised that Poole had a claim against Sutherland for delay so it did not pay out the holdback and as a result Sutherland did not pay Westeel $49,272 which was the amount of a claim of Poole, the phase 3 contractor, against Sutherland for delay, etc. The Centre paid approximately the $6,800 aforementioned to Poole to complete work that Sutherland should have done. The $6,800 was not owing to Sutherland by the Centre as the work was not done. The retained funds of $49,272 were held by the Centre until the Centre made a settlement with Poole on its claim against Sutherland in the amount of $25,000 in 1973. The balance of the funds ($24,791) held by the Centre have been paid into Court in this action. Sutherland did not complete the work under the contract but Westeel completed all of its work, including the work to the value of $3,600 that was incomplete as of July, 1971. Poole completed the work not completed by Sutherland which the architect estimated to be of a value of $3,200. Poole charged the Centre approximately $6,800 for such completion and was paid by the Centre.
On September 10, 1971, the architects advised the plaintiff herein that:
It is our opinion that your problem lies directly with Sutherland Steel Limited, the Phase 2 Contractor. The owner has fulfilled his obligations, as described above, to the Contractor and when so doing received a Waiver of Lien from your firm and other major subtrades. This document of course cannot be returned.
The plaintiff issued a writ on August 16, 1972, against the Centre and Sutherland claiming $49,360, the balance of its contract price. The Centre is sued, as, at that time it had retained $49,272 from Sutherland. The plaintiff’s claim is made pursuant to s. 11 of the Mechanics’ Lien Act, R.S.S. 1965, c. 277, as amended by 1971, c. 30, s. 3. The plaintiff claims:
(a) A declaration that it is entitled to a charge on the money being held back by the Defendant Hospital pursuant to its contract with the Defendant Sutherland to the extent of $49,360.00, or to the extent of
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the amount of such holdback fund if it is less than $49,360.00.
(b) An order directing the Defendant Hospital to pay to the Plaintiff from the said holdback fund the amount of the Plaintiff’s claim as aforesaid, or, alternatively, the amount of the holdback fund if it should be less than the amount of the plaintiffs claim.
(c) In the event that the holdback fund is less than the amount of the Plaintiff’s claim, judgment against the Defendant Sutherland for the deficiency.
(d) The costs of this action against the Defendant Hospital.
Sutherland never participated in the litigation.
As of the date of the issue of the writ, the appellant’s rights were, in my opinion, fixed and determined by the said Mechanics’ Lien Act, R.S.S. 1965, c. 277, amended as aforesaid, (hereinafter referred to as the old Act), but before the date of the trial (December 3, 1973) that Act was repealed and The Mechanics’ Lien Act, 1973 (Sask.), c. 62, (hereinafter referred to as the new Act) was substituted therefor, and the extent to which the appellant’s rights under the first Act were lost or impaired as a result of its repeal and re-enactment is one of the questions which lies at the heart of this appeal.
The appellant’s right to a charge against the holdback money was established by s. 11(3) and (4) of the first Act which reads as follows:
(3) Subject to subsection (3) of section 17, in all cases in which for any reason a lien cannot arise under the provisions of this Act or cannot be enforced against the lands of any party to the contract the person primarily liable upon the contract or any subcontract thereunder shall nevertheless, as the work is done, services are rendered or materials are furnished under the contract retain for the statutory period twenty per cent of the value of the work done, services rendered or materials furnished irrespective of whether the contract provides for periodical payments or payment on completion of the work, services or furnishing of the materials or otherwise, as the case may be.
(4) The Claims of the persons who have done or caused to be done any work, rendered any services on or in respect of an improvement or furnished any materials to be used in or on an improvement for the owner,
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contractor or subcontractor named in any contract mentioned in subsection (3) shall, for so much of the price of the work, services and materials as remains owing, be a charge upon the amount directed to be retained by subsection (3) in favour of the claimants who claim under the persons to whom the moneys so required to be retained are respectively payable.
(The italics are my own.)
The appellant took the position that a lien arose in its favour under the old Act, but that it could not be enforced because, the land being the property of the Wascana Centre Authority, was subject to the paramount rights of the public (See The Wascana Centre Act, R.S.S. 1965, c. 401). This position is reinforced by reference to the case of Alspan Wrecking Ltd. v. Dineen Construction Ltd.[2], and in any event it was not disputed by the respondent. In this regard the learned trial judge observed at p. 715:
The plaintiff alleged that it was not entitled to enforce a lien against the lands upon which the Centre was constructed as the lands were owned by Wascana Centre Authority at the time and may still be. It was not alleged by the plaintiff that Wascana Centre Authority was exempt from a lien because it was a Crown appendage but on the ground of the paramount rights of the public: see Alspan Wrecking Ltd. v. Dineen Construction Ltd., a judgment of the Supreme Court of Canada (1972), 26 D.L.R. (3d) 238, [1972] S.C.R. 829. In any case the defendant did not dispute the allegation of the plaintiff that it was not entitled to a lien against the property.
The paramount right of the public under consideration in the Dineen Construction Ltd. case, supra, was the right to use a public bridge in the City of Winnipeg, and it was there decided that a mechanics’ lien could not be enforced against the bridge. In reaching this conclusion, reliance was placed on the judgment rendered by Mr. Justice Dickson, then sitting as a judge of the Court of Queen’s Bench of Manitoba, in the case of Re Shields and City of Winnipeg[3], where the question was whether the interest of the City of Winnipeg in a public street could become subject to a mechanics’ lien. In the course of his reasons for
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judgment in that case, Mr. Justice Dickson said:
Clearly, the object of the Mechanics’ Liens Act is to prevent owners of land getting the benefit of work done on their land without paying for it. Although the statutory holdback may be available to meet the claims of lienholders, I am fully in accord with the view that the substance of the Mechanics’ Liens Act is the sale. And I cannot conceive that the sale or attempted sale of the city’s possessory rights in Church and Sheppard Sts. could be otherwise than a denial of, or gravely prejudicial to, the paramount right of the public to pass and repass over those streets.
And he later concluded by saying:
I would add that those opposing the validity of the liens advanced the argument that the streets are, in fact, by virtue of s. 683 of the Winnipeg Charter, Crown land; that s. 15 of the Interpretation Act, 1957 (Man.), c. 33, provides:
15. No enactment is binding on Her Majesty or affects Her Majesty or Her Majesty’s rights or prerogatives in any manner unless it is expressly stated therein that Her Majesty is bound thereby.
—that the Mechanics’ Liens Act does not bind the Crown, and, therefore, no lien can exist against the streets. I prefer to rest the conclusion which I have reached on the ground that the city has a possessory estate or interest in its streets; that such possessory estate or interest might be offered for sale but in my opinion any such sale would be clearly contrary to the public interest and should not be permitted.
The last words of this quotation in my opinion apply with equal force to the present circumstances and I am satisfied that any sale of the hospital property in the present case “would be clearly contrary to the public interest and should not be permitted”. I agree also that the ultimate recourse for the enforcement of the mechanics’ lien is recovery from the proceeds of the sale of the property.
The result is that the appellant’s claim is founded upon an unenforceable lien which gave rise to a charge upon the holdback money by virtue of the provisions of s. 11(4) of the old statute.
By way of defence the respondent contends that this is an action for the enforcement of a lien which was commenced and pending when the new
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Act came into force and that, under s. 61 of that Act all of its provisions “apply mutatis mutandis to the action”. Section 2(4) of the new Act, however, provides that “This Act does not apply to the Crown as defined by The Public Works Creditors’ Payments Act, 1973” and under the Schedule to that Act, “Crown” includes for the purpose of that Act the South Saskatchewan Hospital Centre. Accordingly this action would fail if it were held to be subject to all the provisions of the new Act.
This argument can best be tested by considering the text of s. 61 of the new Act in conjunction with s. 11(3) of the old. As I have observed, it is not disputed that the present lien, which arose under The Mechanics’ Lien Act, R.S.S. 1965, c. 277, as amended in 1971, is not enforceable against the property in question which is subject to the paramount rights of the public.
Section 61 of the new Act reads as follows:
61. (1) Subject to subsections (2) and (3), any lien that arose under The Mechanics’ Lien Act, being chapter 277 of The Revised Statutes of Saskatchewan, 1965, and existing when this Act comes into force shall continue to be as valid and effectual in all respects as it would have been if this Act had hot been passed and if any such lien has not been registered when this Act comes into force it may be registered under and in accordance with the provisions of this Act.
(2) A lien mentioned in subsection (1) may be enforced by action in the court in accordance with the provisions of this Act but if any action has been commenced to enforce the lien and is pending when this Act comes into force all the provisions of this Act and all the remedies provided in this Act shall, on and from the coming into force of this Act, apply mutatis mutandis to the action and a judge upon the application of any party to the action or any interested person may make all such orders and give all such directions as may be necessary to give full force and effect to those provisions.
(3) Where a lien or charge has arisen in respect of work done, services rendered or materials furnished under a contract that was entered into before this Act comes into force but has been completed, abandoned or otherwise terminated after this Act comes into force, all the provisions of this Act apply to the lien or charge and to the enforcement thereof as if the work had been done,
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services rendered or the materials furnished after this Act came into force.
(The italics are my own.)
In my view, s. 61(2) can have no application to the present action as it is not one which was “commenced to enforce the lien” but rather for a declaration that the appellant is entitled to “a charge” on the holdback money. Section 61(3) is equally inapplicable because the work was not “completed, abandoned or otherwise terminated after” the new Act came into force.
The provisions of s. 61(1) do, however, appear to govern the present circumstances and one of the respects in which the existing unenforceable lien “continued to be … effectual” was that it entitled the appellant to a charge against the holdback money, and in this respect, as in all others, its effect continues, by virtue of s. 61(1), as if the new Act, including s. 2(4) thereof, had not been passed and the defence which that section would otherwise have afforded to the respondent is not available to it.
The respondent relied on a further defence arising out of the waiver executed by the appellant at the instance of the contractor Sutherland acting on behalf of the respondent Board.
The waiver in question reads as follows:
KNOW ALL MEN BY THESE PRESENTS that
the undersigned for the purpose of
| Purpose of Waiver, e.g. to allow a loan to be obtained on the land and premises. |
upon the property hereinafter described do hereby renounce and waive any right, which have or may have to any lien for work done, services rendered or to be rendered, or materials supplied or to be supplied, for or in connection with the building now in course of construction upon the said land hereinafter described and any and all right to register a claim |
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| Witness |
of Lien against the said land or building, which land is described as That occupied by the South Saskatchewan Hospital Centre, Phase 2, perimeter route Regina, Saskatchewan. IN WITNESS WHEREOF the parties have hereunto set their hands and seals this 21st day of June A.D. 1971 ) ) WESTEEL-ROSCO ) LIMITED ) ) “W.D. Dutell” ) per…………………………………. ) ) Vice-President ) |
The purpose of this document is expressly stated to be “to allow a loan to be obtained on the land and premises” and it constitutes a renunciation of the appellant’s rights, including the right to register a claim of lien, against the land.
The fact that the respondent made the obtaining of this waiver a prerequisite to the release of the holdback moneys does not change its character. It is in essence nothing more than an undertaking not to enforce a lien against the property, but as I share the view that the appellant’s lien cannot be enforced against property dedicated to the public as this was, I am unable to attach any legal effect to the waiver. It is not a waiver or renunciation of a charge against the holdback moneys and this is the only claim which the appellant asserts.
The respondent further contends, however, that even if the old Act were the governing statute, the appellant’s action must fail because that statute did not state expressly that it did not apply to the Crown or its agent.
By The Interpretation Act, R.S.S. 1965, c. 1, it is provided that “No provisions in an act shall
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affect the rights of Her Majesty unless it is expressly stated therein that Her Majesty is bound thereby.” As the Crown is not mentioned in the old Act, it cannot be bound by its provisions and the sole question raised by this contention is whether the respondent is an agent of the Crown. This question was dealt with in the Court of Appeal in the following passages of Mr. Justice Hall’s reasons for judgment which are now reported in [1975] 4 W.W.R. 220, where he said at p. 221:
The appellant Board was constituted to construct and operate the hospital on behalf of the Government of Saskatchewan. Its members are appointed by the Lieutenant‑Governor in Council. Neither the Board nor any of its individual members have a financial interest in the project. Although the appellant has the power to borrow moneys and to charge for services supplied by the hospital it is manifest from reading the entire South Saskatchewan Hospital Centre Act that the hospital is to be built by and operated with public funds. Sections 15 and 16 of the Act provide:
“15. There shall be paid annually to the board such sums as may be appropriated by the Legislature for the purpose of making provision for the maintenance and support of the hospital and payment of the expenses of the board.
16. The accounts of the board shall be audited at least once a year by the Provincial Auditor or by a person appointed by the Lieutenant Governor in Council for that purpose.”
Section 17 of the Act requires the appellant to make an annual report to the Minister of Public Health, in which shall be set forth in detail revenues, expenditures, and estimates.
When these factors are considered along with the principles set out in Halifax v. Halifax Harbour Commrs., [1935] S.C.R. 215, [1935] 1 D.L.R. 657; and Re Sask. Govt. Insur. Office and Saskatoon, [1947] 2 W.W.R. 1028, [1948] 2 D.L.R. 30 (Sask. C.A.), it must be said that the appellant is an agent of the Crown and that The Mechanics’ Lien Act does not apply to it. The respondent therefore never had a right of action against the appellant.
With the greatest respect I do not share these views.
Whether or not a particular body is an agent of the Crown depends upon the nature and degree of
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control which the Crown exercises over it. This is made plain in a paragraph in the reasons for judgment of Mr. Justice Laidlaw, speaking on behalf of the Court of Appeal for Ontario in R. v. Ontario Labour Relations Board, Ex p. Ontario Food Terminal Board[4], at p. 534, where he said:
It is not possible for me to formulate a comprehensive and accurate test applicable in all cases to determine with certainty whether or not an entity is a Crown agent. The answer to that question depends in part upon the nature of the functions performed and for whose benefit the service is rendered. It depends in part upon the nature and extent of the powers entrusted to it. It depends mainly upon the nature and degree of control exercisable or retained by the Crown.
The case of Halifax City v. Halifax Harbour Commissioners[5], upon which Mr. Justice Hall placed so much reliance, is a case in which the respondent Commissioners had been clearly designated as Crown agents. In the course of the reasons for judgment which he delivered on behalf of this Court, Duff C.J. summarized the situation as follows at p. 226:
To state again, in more summary fashion, the nature of the powers and duties of the respondents: Their occupation is for the purpose of managing and administering the public harbour of Halifax and the properties belonging thereto which are the property of the Crown; their powers are derived from a statute of the Parliament of Canada; but they are subject at every turn in executing those powers to the control of the Governor representing His Majesty and acting on the advice of His Majesty’s Privy Council for Canada, or of the Minister of Marine and Fisheries …
After enumerating the various powers delegated to the Commissioners, the Chief Justice went on to say:
I cannot doubt that the services contemplated by this legislation are, not only public services in the broad sense, but also, in the strictest sense, Government services …
In order to understand the wide difference existing between a body which is subject at every turn in executing its powers to the control of the Crown
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and one such as the present respondent, it is necessary to examine the provisions of the South Saskatchewan Hospital Centre Act, R.S.S. 1965, c. 254, which “constituted a body corporate to be known as the Board of Governors of the South Saskatchewan Hospital Centre”, consisting of “seven persons appointed by the Lieutenant Governor in Council” of whom “one shall be appointed as a representative of the College of Medicine of the University of Saskatchewan” and another “as a representative of the University of Saskatchewan”.
The Board so constituted was endowed with wide powers for the construction and administration of the Hospital, of which the most relevant to this inquiry are to be found in the following sections:
7. The board shall:
(a) examine the factors to be considered in establishing and operating a hospital centre at or near the city of Regina for the benefit of the residents of southern Saskatchewan;
(b) subject to the approval of the Lieutenant Governor in Council, establish a hospital centre at or near the city of Regina to be known as The South Saskatchewan Hospital Centre.
8. (1) The board may, with the approval of the Lieutenant Governor in Council:
(a) purchase, lease or otherwise acquire land for the purpose of the hospital;
(b) sell, lease or otherwise dispose of land when no longer required for hospital purposes or whenever it considers it advisable to do so.
(2) The board may construct, purchase, lease or otherwise acquire buildings for use as a hospital or for any other purpose related thereto and may sell, lease or otherwise dispose of such buildings when no longer required for hospital purposes or whenever it considers it advisable to do so.
(3) The management, administration and control of land and buildings acquired by the board for use as a hospital shall be vested in the board.
Section 9 provides what might be called ancillary powers consisting of (a) equipping the hospital; (b) providing for education of students; (c)
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providing facilities re disease; (d) employment and supplies. Paragraphs (e) to (i) are sufficiently important to set out in full:
(e) enter into an agreement with any person, board, commission, department of the Government of Saskatchewan or of Canada, municipality, board of health of a health region, or agency, or with any other hospital, for:
(i) the joint operation of any hospital facility; or
(ii) the joint provision of any hospital services; or
(iii) any purpose incidental to the administration, operation or management of a hospital;
(f) determine the charges to be made for services supplied by the hospital;
(g) receive grants or other moneys from Canada and
Saskatchewan;
(h) accept subscriptions and donations, whether of real or personal property, and devises and bequests, for all or any of the purposes provided for by this Act, and sell and dispose of, and manage all property so received and not required to be, or capable of being, used for the purposes of the hospital;
(i) manage, invest and expend all moneys, and manage all property, belonging to the hospital;
(The italics are my own.)
Section 10 confers on the Board the power to make by-laws, rules, or regulations relating to the operation, administration, and management of the hospital. Sections 12, 13 and 14 confer upon the Board power to borrow on security such sums of money as may be required to meet operating expenses, to purchase or lease land and buildings, and to construct buildings. Section 15 provides that the Legislature may appropriate funds for the maintenance of the hospital and expenses of the Board. Section 16 directs an annual audit by the Provincial Auditor. Section 17 directs the Board to make an annual report on its finances and estimates of the next year’s expenses to the Minister of Public Health.
The Court of Appeal stressed the fact that the hospital was to be built and operated out of public funds, apart from the power to borrow and to charge for services. This contention was advanced in the case of Fox v. The Government of
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Newfoundland[6], where the various boards of education in Newfoundland received all their money by way of appropriations from the Colonial Treasury paid into a certain bank. When the bank became insolvent, the Government claimed priority on the basis, inter alia, that the boards were merely “distributing agents” of the Government. The Privy Council rejected this argument in that case on the ground that the boards of education of Newfoundland possessed “within the limit of general educational purposes a discretionary power in expending [the money]—a power which is independent of the Government.” In the present case, the Board clearly has very wide discretionary powers of spending. It is required to submit to an audit and to make an annual financial report, but to borrow the language employed in the Fox case, supra at p. 672, “this seems to be for the information of the Government and Legislature, and not in order that any item of expenditure may be disallowed if the Government does not approve of it.”
Indeed, there are only two aspects of the Board’s activities which are controlled by the Crown. Under s. 7(b) the Board shall establish the hospital “subject to the approval of the Lieutenant Governor in Council”. Under s. 8(1), the Board may “with the approval of the Lieutenant Governor in Council” acquire and dispose of lands for hospital purposes, but in all other respects the Board appears to be endowed with complete discretion to conduct its own affairs within the limits of its statutory powers. In particular, s. 8(2) confers upon the Board the power to construct buildings for use as a hospital.
In my opinion, as I have indicated, the powers with which the Board is endowed are far removed from those of a Crown agency which is subject at every turn to the control of the Crown in executing its powers as was the case with the Halifax Harbour Commissioners, and the Board’s functions are, in my view, even further removed from those of the Saskatchewan Government Insurance Office which was the subject of the other case (i.e. Re
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Saskatchewan Government Insurance Office v. Saskatoon[7]) upon which Mr. Justice Hall relied in the passage which I have cited from his reasons for judgment.
In the latter case the insurance office in question was described by Martin C.J.S., speaking for the Saskatchewan Court of Appeal, in the following terms:
Under the provisions of this statute it is the Government or the Crown in right of the Province which is authorized to carry on the business of insurance. In order to enable the Government to carry out the intent of the Act an office is provided for with a manager in charge. This office is, in my opinion, in effect a department of the Government of the Province, and functions through a manager who is created a corporation sole.
In my opinion the powers of the Hospital Board in the present case are more analogous to those of the Metropolitan Meat Industry Board which were under review in the case of Metropolitan Meat Industry Board v. Sheedy[8], where Lord Haldane, in deciding that a debt due to that Board was not a debt due to the Crown, described the Board’s powers as follows:
They are a body with discretionary powers of their own. Even if a Minister of the Crown has power to interfere with them, there is nothing in the statute which makes the acts of administration his as distinguished from theirs. That they were incorporated does not matter. It is also true that the Governor appoints their members and can veto certain of their actions. But these provisions, even when taken together, do not outweigh the fact that the Act of 1915 confers on the appellant Board wide powers which are given to it to be exercised at its own discretion and without consulting the direct representatives of the Crown. Such are the powers of acquiring land, constructing abattoirs and works, selling cattle and meat, either on its own behalf or on behalf of other persons, and leasing its property. Nor does the Board pay its receipts into the general revenue of the State, and the charges it levies go into its own fund.
That case was cited by Duff C.J., in the Halifax Harbour Commissioners case, supra, at p. 229, for the purpose of distinguishing it, and in my view the
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present case is equally distinguishable from that of the Halifax Harbour Commissioners.
It will be seen from all the above that I have concluded that the respondent is not a Crown agent and it follows that s. 7 of The Interpretation Act has no application to it and constitutes no bar to the enforcement of the charge against the holdback money.
For all these reasons I would allow this appeal, restore the judgment of the learned trial judge so that the funds in Court will be paid out to the appellant which will have judgment against the respondent and Sutherland Steel Limited for the balance of its claim. The appellant is entitled to its costs in this Court and in the Court of Appeal.
Appeal allowed with costs.
Solicitors for the plaintiff, appellant: MacPherson, Leslie & Tyerman, Regina.
Solicitors for the defendant, respondent: Davidson, Davidson & Neill, Regina.