IN THE SUPREME COURT OF NOVA SCOTIA
Citation: Kaeser Compressors Inc. v. Bent, 2006 NSSC 285
Date: 20060929
Docket: S.K. No. 209773
Registry: Kentville
Between:
Kaeser Compressors Inc.
Plaintiff
v.
Henry E. Bent and H. E. Bent Services Limited, a body corporate
Defendants
Judge: The Honourable Justice Allan P. Boudreau
Heard: November 3, 2005 in Kentville, Nova Scotia
Written Decision: September 29, 2006
Counsel: Tim A. M. Peacock, for the Plaintiff
Henry E. Bent (self represented), for the Defendants
By the Court:
INTRODUCTION AND BACKGROUND FACTS:
[1] Kaeser Compressors Inc. (“Kaeser”), in October of 2003, sued Henry E. Bent and H. E. Bent Services Limited (“Bent”) for goods delivered and unpaid and for breach of contract. Bent has filed a defence to Kaeser’s claim and, after the filing of a List of Documents and a Notice of Examination for Discovery by Kaeser and a Demand for Particulars by Bent in March, 2005, the pleadings appeared closed.
[2] In September of 2005 Kaeser filed a Notice of Trial and in October of 2005 it filed a chambers application to fix a trial date. In response to this latter application, Bent filed a chambers application requesting the Court strike out and vacate Kaeser’s Originating Notice and Statement of Claim pursuant to Section 17 (1) of the Corporations Registration Act, Chapter 101 of the Revised Statutes of Nova Scotia, 1989 as amended, alleging that Kaeser could not bring or maintain the within action because it did not hold a certificate of registration that was in force at the relevant times.
[3] Kaeser is incorporated under the Canada Business Corporations Act R.S.C. 1985, c. C-44 as amended. It is agreed that Kaeser was not registered under the above mentioned Corporations Registration Act of Nova Scotia.
ISSUE:
[4] Is a company incorporated under the authority of the Canada Business Corporations Act, supra, subject to the restricting provisions of Section 17(1) of the Corporations Registration Act of Nova Scotia?
LAW:
[5] The operative legislation is the Corporations Registration Act, supra, (“the Act”). Section 17(1) provides as follows:
17(1) Unless and until a corporation holds a certificate of registration that is in force, it shall not be capable of bringing or maintaining any action, suit or other proceeding in any court in the Province in respect to any contract made in whole or in part in the Province in connection with any part of its business done or carried on in the Province while it did not hold a certificate of registration that was in force, provided, however, that this Section shall not apply to any company incorporated by or under the authority of an Act of the Parliament of Canada or by or under the authority of an Act of the Legislature. [Emphasis added]
[6] It is also instructive to look at Section 13(1) of the Act:
13(1) If any corporation, whether incorporated before or on the first day of October, 1912, or at any time thereafter, does or carries on in the Province any part of its business while it does not hold a certificate of registration that is in force, such corporation shall be liable to a penalty of fifty dollars for every day on which it so does or carries on any part of its business, and every director, manager, secretary, agent, traveller or salesman of the corporation, who, with notice that the corporation does not hold a certificate of registration that is in force, transacts in the Province any part of the business of the corporation, shall, for every day on which he so transacts the same, be liable to a penalty of fifty dollars. [Emphasis added]
[7] With regards to the applicability of the Act, Section 3 states the following:
3(1) This Act applies to corporations generally.
(2) Notwithstanding subsection (1), this Act does not apply to a corporation that is incorporated and registered pursuant to the laws of another province of Canada designated by the Governor in Council.
(3) The Governor in Council may designate a province of Canada for the purpose of subsection (2) where that province provides the same exemption from registration to a corporation incorporated pursuant to the Companies Act and registered pursuant to this Act as provided by subsection (2).
...
[8] The following definitions found in Section 2 of the Act are also pertinent to the issue in this case:
2 In this Act,
( c) “corporation” means a body corporate that is a domestic corporation or a Dominion corporation or a foreign corporation as hereinafter defined;
(d) “domestic corporation” means a body corporate that is incorporated by or under the authority of an Act of the Legislature and has gain for its purpose or object;
(e) “Dominion corporation” means a body corporate that is incorporated by or under the authority of an Act of the Parliament of Canada and has gain for its purpose or object;
(g) “foreign corporation” means a body corporate that is incorporated otherwise than by or under the authority of an Act of the Legislature or of the Parliament of Canada and has gain for its purpose or object;
[9] Kaeser holds a certificate dated December 2, 1994, which certifies that it was incorporated under the Canada Business Corporations Act, supra. Bent contends that the phrase “by or under the authority of an Act of the Parliament of Canada” must be interpreted to mean by a special act of Parliament creating the body corporate and not under the general provisions of the Canada Business Corporations Act. In support of this argument, Bent points to the fact that Section 17(1) of the Act also employs the same wording with regard to Nova Scotia companies, thereby equally restricting “domestic corporations”, ie., companies incorporated in Nova Scotia, from bringing or maintaining actions if they are not so registered. I have not been referred to any authority which supports the contention that a Nova Scotia company, ie., one incorporated under the authority of an Act of the Legislature, cannot sue in Nova Scotia unless it holds a certificate of registration that is in force under the Act. However, that would have to be the case if one accepted Bent’s argument on the interpretation of the phrase, “by or under the authority of an Act of the Parliament of Canada”, because the same exempting words are used with respect to Nova Scotia companies. It should also be noted that the exempting provisions do not just state “incorporated by an Act” but also state “incorporated under the authority of an Act of either Parliament or the Legislature”. If the exemption was meant to only exempt companies incorporated by a Special Act of those bodies, then the words under the authority would be redundant and have no meaning or purpose.
[10] Bent has also pointed to Section 13(1) of the Act which provides penalties for corporations which carry on business in Nova Scotia while they do not hold a certificate of registration that is in force. That Section applies to “any corporation” and provides no exemptions for any companies, as are provided in Section 17(1).
[11] When one looks at the definitions of “corporation”, “domestic corporation” and “Dominion corporation” as provided in Sections 2( c), (d) and (e) of the Act, it becomes apparent that the definition of those terms employ the exact same language as Section 17(1), ie., “by or under the authority of an Act of the Parliament of Canada or the Legislature”. Therefore, the exempting portion of Section 17(1) of the Act could be said to read as follows:
“provided, however, that this Section shall not apply to any “Dominion corporation” or to any “domestic corporation”.
[12] This Court has on several occasions held that Section 17(1) does not apply to federally incorporated companies, ie., companies incorporated by or under the authority of an Act of the Parliament of Canada. It was so held by Cowan, C.J.T.D., in the 1977 case of Industrial Acceptance Corp. v. Donald E. Hirtle Transport Ltd., 27 N.S.R. (2d) 416; 41 A.P.R. 416; 78 D.L.R. (3d) 90. In that case J. P. Trailer Leasing Inc., a company not registered in Nova Scotia, had assigned a promissory note to the plaintiff, Industrial Acceptance Corp (“I.A.C.”). The defendants had raised then Section 44(1) of the Act, the exact predessor to the present Section 17(1), in the defence of I.A.C.’s claim. I.A.C. was a federally incorporated company. In his ruling, Chief Justice Cowan stated the following at paragraphs 20, 26 and 27:
20 I find that J. P. Trailer Leasing Inc. Was not incorporated by or under the authority of an Act of the Parliament of Canada, or by or under the authority of an Act of the Legislature of Nova Scotia, and that it did not, at any time, hold a certificate of registration under the Corporations Registration Act of Nova Scotia that was in force. It therefore follows that J. P. Trailer Leasing Inc. could not have brought or maintained any action, suit or other proceeding in this court in respect of any contract made, in whole or in part in Nova Scotia, in connection with any part of its business done or carried on in this province, whilst it did not hold a certificate of registration that was in force.
26 The solicitor for the defendants stated that he would be satisfied with a certificate from the Registrar of Joint Stock Companies of Nova Scotia and from the Name Search Division of the Corporations Branch of the Department of Consumer & Corporate Affairs, Ottawa. The solicitor for the plaintiff has now filed a certificate on behalf of the Minister of Consumer & Corporate Affairs, certifying that the plaintiff was incorporated under the Canada Corporations Act. This certificate has been marked as Exhibit 10 for identification.
27 I therefore find that the plaintiff was incorporated under the authority of an act of the Parliament of Canada, and that s. 44 of the Corporations Registration Act does not, by its terms, apply to the plaintiff, and that s. 44 provides no defence to the defendants with respect to a claim made by the plaintiff. [Emphasis added]
[13] The Industrial Acceptance Corp. case, supra, went on appeal to the Nova Scotia Supreme Court, Appeal Division. That 1978 judgment is found at 29 N.S.R. (2d) 482; 45 A.P.R. 482; 92 D.L.R. (3d) 87, and MacKeigan, C.J.N.S., for the unanimous court, upheld the decision and reasoning of Chief Justice Cowan with respect to the applicability of Section 17(1) (then 44(1)) of the Act to federally incorporated companies or to companies incorporated in Nova Scotia. Chief Justice MacKeigan stated the following at paragraphs 9 and 10 of the I.A.C. appeal judgment:
9 But the proviso to s. 44(1), which states: “provided, however, that this Section shall not apply” to federally incorporated companies or to companies incorporated in Nova Scotia, was held by Chief Justice Cowan to apply to the whole of s. 44, including s-s (2) which was enacted many years after s-s (1) was enacted by itself with the same proviso (Stats. N.S. 1931, c.47). With some hesitation, I am compelled to the same conclusion. Were the conclusion otherwise, s. 44(2) would bar action by a federal company on a federal subject matter, viz., bills of exchange, and to at least that degree might well be ultra vires the provincial legislature, as were the restrictions on suing contained in the provincial legislation involved in John Deere Plow Company, Limited v. Wharton, [1915] A.C. 330, and in Great West Saddlery Company, Limited v. The King, [1921] 2 A.C. 91. I must conclude that the draftsman of s. 44(2) assumed that the proviso would apply to all “this Section”, even though he would have made the way easier for the subsequent interpreter had he made that intention a little clearer.
10 It follows that s. 44(2) should be construed as if it read (I have applied the proviso by inserting the emphasized phrases):
An assignment of a debt or any chose in action by a corporation which does not hold a Certificate of Registration that is in force and which is not a Nova Scotia or a Dominion company, to an individual or a corporation which holds a Certificate of Registration that is in force and which is not a Nova Scotia or a Dominion company, shall not enable the assignee . . .to bring or maintain any such action . . . [Emphasis added]
CONCLUSION:
[14] I find that Section 17(1) of the Act does not apply to “domestic or Dominion corporations”, ie., companies incorporated by or under the authority of an Act of the Parliament of Canada or the Legislature of Nova Scotia. I am especially persuaded to this conclusion by the definitions of “domestic and Dominion” corporations found in the definition sections [2 ( c), (d), (e) and (g)] of the Act. It appears that Section 17(1) applies only to “foreign corporations” as defined in Section 2(g) of the Act, unlike the penalty section, Section 13(1), which applies to “any corporation”. I must confess that the different applications of Sections 17(1) and 13(1) produces a somewhat perplexing anomaly; ie., a domestic or Dominion corporation can sue in Nova Scotia without registering under the Act, but it cannot carry on any part of its business without a daily monetary penalty if it is not so registered.
[15] In any event, based on my findings, Bent’s application to strike out and vacate Kaeser’s action is dismissed.
[16] Kaeser shall have costs of $450.00 against Bent, payable in any event of the cause.
[17] The plaintiff may contact my judicial assistant to arrange a telephone date assignment conference to fix a trial date.
Boudreau J.