A-891-88
Canadian Human Rights Commission (Appellant)
v.
Sun Life Assurance Company of Canada
(Respondent)
INDEXED AS: CANADA (HUMAN RIGHTS COMMISSION) V. SUN
LIFE ASSURANCE CO. OF CANADA (CA.)
Court of Appeal, Heald, Urie and Stone JJ.A.—
Toronto, February 21; Ottawa, March 2, 1990.
Constitutional law — Distribution of powers — Former
bank employee denied disability benefits by insurer — Alleg
ing discrimination by Bank based on disability — Appeal from
order quashing warrant allowing Canadian Human Rights
Commission investigator to search insurer's premises for
employee's long term disability benefits file — Trial Judge
finding matter under provincial jurisdiction as dealing with
insurance — Benefits in question employment benefit —
Banking within federal legislative competence under Constitu
tion Act, 1867, s. 91(15) — Terms of employment contract
part of primary legislative competence — Appeal allowed.
Human rights — Commission investigator denied access to
insurer's files on former bank employee who had complained
of discrimination based on disability by denial of disability
benefits and refusal to continue employment — Trial Judge
quashing search warrant on finding adjudication of claim
outside Commission's jurisdiction as insurance within provin
cial competence — Appeal allowed — Discrimination in
respect of subject-matter over which Parliament having legis
lative authority (banking) — Term of employment contract
integral part of primary federal competence.
Financial institutions — Former bank employee's claim for
long term disability benefits rejected by insurer — Complain
ing of discriminatory practice to CHRC — Whether Commis
sion having jurisdiction to review insurer's decision — Com
plaint against bank, not insurer — Banking under federal
legislative competence — Contract of employment with bank
integral part of primary competence — Investigation of com
plaint based on administration of insurance policy within
federal authority.
Insurance — Insurer denying long term disability benefits
claim by former bank employee — Jurisdiction of CHRC to
investigate discriminatory practice allegation — Insurer refus
ing Commission access to complainant's file — Complaint
against bank — Insurer's conduct not impeached — Although
insurance under provincial legislative authority, alleged dis
crimination in respect of matter (banking) over which Parlia
ment having authority — Order quashing search warrant set
aside.
Labour relations — Entitlement to long term disability
payment employment benefit — Although terms of employ
ment contract not normally within federal competence, may be
so when integral part of primary competence over some other
single federal subject, i.e. banking.
This was an appeal from an order quashing a warrant
authorizing a Canadian Human Rights Commission investiga
tor to enter Sun Life's premises and search for the long term
disability claim file of a former Bank of Montreal employee,
who had lodged a complaint that the Bank had discriminated
against her based on her, disability by denying her disability
benefits and by refusing to continue to employ her. Sun Life, as
issuer and administrator of the Group Policy had refused the
claim for long term disability benefits. The respondent refused
access to its files on the ground that the Commission had no
jurisdiction to review the adjudication of any particular claim.
The warrant was quashed for lack of jurisdiction as the denial
of the disability claim was a decision made within the ambit of
carrying on life insurance business, a matter within provincial
jurisdiction. The Commission argued that the complaint was
against the Bank which is under federal jurisdiction. Sun Life
argued that the Commission was limited to investigating
whether the Bank engaged in a discriminatory practice by
entering into a Group Policy which in its provision of benefits
was discriminatory.
Held, the appeal should be allowed.
Long term disability payments under the Group Policy are
employment benefits, notwithstanding that they are available
pursuant to the terms of a contract between the Bank and a
third party insurer.
Sun Life's arguments lose sight of the essence of the com
plaint, which in no way impeached Sun Life's conduct. It would
be unduly artificial to distinguish between discrimination
brought about by entering into an agreement creating employ
ment benefits and discrimination arising out of the administra
tion of the agreement. What is important is that the alleged
discrimination is in respect of a subject-matter over which
Parliament possesses legislative authority. Although Parliament
has no authority over labour relations as such or the terms of a
contract of employment, it may assert exclusive jurisdiction
over these matters where such jurisdiction is an integral part of
its primary competence over some other single federal subject.
The business of banking falls within federal legislative compe-
tence (Constitution Act, 1867, subsection 91(15)) and the
terms of a contract of employment with a bank is an integral
part of that primary competence. The investigation of a com
plaint of discriminatory practice in such employment based
upon the administration of a policy of insurance entered into by
a bank falls squarely within federal legislative authority. This is
so even though the policy creating the employment benefits
may have been issued and is administered by an insurance
carrier whose business is provincially regulated.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
An Act to incorporate "The Sum Life Insurance Com
pany of Montreal", S.C. 1865, c. 43.
Canadian Human Rights Act, S.C. 1976-77, c. 33, ss.
3(1) (as am. by S.C. 1980-81-82-83, c. 143, s. 2), 7(b),
35(2.2) (as enacted by S.C. 1985, c. 26, s. 68), (2.3)
(as enacted idem), (2.4) (as enacted idem).
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as
am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule
to the Constitution Act, 1982, Item 1) [R.S.C., 1985,
Appendix II, No. 5], s. 91(15).
CASES JUDICIALLY CONSIDERED
APPLIED:
Northern Telecom Ltd. v. Communications Workers of
Canada, [1980] 1 S.C.R. 115; (1979), 98 D.L.R. (3d) 1;
79 C.L.L.C. 14,211; 28 N.R. 107.
REFERRED TO:
Bell Canada v. Quebec (Commission de la santé et de la
sécurité du travail), [1988] 1 S.C.R. 749; (1988), 51
D.L.R. (4th) 161; 85 N.R. 295; 15 Q.A.C. 217.
COUNSEL:
Anne Troller for appellant.
Mary Eberts and Wendy M. Matheson for
respondent.
SOLICITORS:
Canadian Human Rights Commission,
Ottawa, for appellant.
Tory, Tory, Deslauriers & Binnington,
Toronto, for respondent.
The following are the reasons for judgment
rendered in English by
STONE J.A.: This is an appeal from an order of
McNair J. in the Trial Division made on June 27,
1989 granting an application for certiorari quash-
ing a warrant issued by Teitelbaum J. on June 1,
1988 pursuant to subsection 35(2.2)' of the
Canadian Human Rights Act, S.C. 1976-77, c. 33,
as am. by S.C. 1985, c. 26, s. 68 ("the Act"). The
warrant authorized an investigator designated by
the appellant to enter premises of the respondent
and there to search for "The Sun Life Long-Term
Disability Claim Files of Betty Abraham" and "to
require of any individual found on the premises to
produce the above listed documents for inspection
or for the purpose of obtaining copies".
BACKGROUND
Betty Abraham is a former employee of the
Bank of Montreal with whom she was employed in
Toronto as a stenographer for about ten years. In
May, 1986, she gave the respondent written notice
of a claim for long term disability benefits on the
basis that she was suffering "hypertension anxie
ty" rendering her unable to continue in employ
ment. The respondent is the issuer of Group Policy
No. 13520-G in favour of the Bank of Montreal,
whereby it undertook to "pay the benefits provided
under this policy to the persons entitled to receive
them". Premiums are paid by the Bank; claims are
paid out of the respondent's own resources. By the
terms of this policy, benefits for long term disabili
ty are payable where an employee is "totally disa-
' Subsections 35.(2.2), (2.3) and (2.4) read as follows:
35....
(2.2) Where on ex parte application a judge of the Feder
al Court is satisfied by information on oath that there are
reasonable grounds to believe that there is in any premises
any evidence relevant to the investigation of a complaint, the
judge may issue a warrant under the judge's hand authoriz
ing the investigator named therein to enter and search those
premises for any such evidence subject to such conditions as
may be specified in the warrant.
(2.3) In executing a warrant issued under subsection
(2.2), the investigator named therein shall not use force
unless the investigator is accompanied by a peace officer and
the use of force has been specifically authorized in the
warrant.
(2.4) An investigator may require any individual found in
any premises entered pursuant to this section to produce for
inspection or for the purpose of obtaining copies thereof or
extracts therefrom any books or other documents containing
any matter relevant to the investigation being conducted by
the investigator.
bled" as defined therein. Ms. Abraham's claim
was declined in writing by the respondent in
December, 1986.
A short time earlier, on November 13, 1986,
Ms. Abraham lodged a complaint with the appel
lant in which she alleged that she had reasonable
grounds for believing that the Bank of Montreal
was or had engaged in a discriminatory practice in
contravention of the Act:
The Bank of Montreal has discriminated against me on the
basis of my disability denying me short term and long term
disability benefits and by refusing to continue to employ me in
violation of section 7 of the Canadian Human Rights Act.
The particular provisions of the Act relied upon
appears to be those of paragraph 7(b):
7. It is a discriminatory practice, directly or indirectly,
(b) in the course of employment, to differentiate adversely in
relation to an employee,
on a prohibited ground of discrimination.
The prohibited grounds of discrimination enumer
ated in subsection 3(1) [as am. by S.C. 1980-81-
82-83, c. 143, s. 2] include "disability".
In the course of investigating the complaint, the
appellant was informed by the Bank of Montreal
that:
The Long Term Disability (LTD) plan of the Bank is adminis
tered by Sun Life Company of Canada. Eligibility for long
term disability benefits is determined by Sun Life on the basis
of records provided by the employee and records forwarded by
the Bank's Medical Centre. We are advised however that Sun
Life has rejected Mrs. Abraham's claim. 2
The appellant then pursued its investigation
with the respondent on the ground that the long
term disability plan constituted "an employment
benefit", and requested "access to the complai
nant's file to review the decision taken by Sun Life
of Canada to disallow her long term disability
2 Appeal Book, p. 23.
benefits".' The respondent resisted this request on
the basis that it was "completely independent of
the Bank of Montreal" which "plays no part in the
claim decision process", and that while the appel
lant "may have the authority to review the terms
of the policy ... it has no jurisdiction to review
Sun Life's adjudication of any particular claim"
and, accordingly, that the appellant lacked
"authority to demand access to Sun Life's file on
Ms. Abraham's claim". 4
Thereafter, correspondence ensued between the
appellant's legal counsel and the respondent's
solicitors, but the impasse between the parties
remained unresolved. In an affidavit supporting
the application for the warrant, the investigator
designated under the Act to conduct the investiga
tion expressed belief "that the material contained
in this file would be relevant to my investigation of
the complaint . .. in that they will provide evidence
of the treatment of Betty Abraham's long-term
disability claim by Sun Life which was operating
the Bank of Montreal's long-term disability
plan". 5
The reason for quashing the warrant appears on
the face of the order under attack. The learned
Motions Judge first noted "a defect of jurisdiction
... in that the decision to deny Betty Abraham's
long term disability claim was a decision made by
Sun Life Assurance Company of Canada within
the ambit of carrying on the business of life insur
ance which is constitutionally a matter within the
provincial jurisdiction and not the federal jurisdic
tion"; he then observed that section 2 of the Act
provides that the purpose of the statute is "to
extend the present laws in Canada to give effect
within the purview of matters coming within the
legislative authority of the Parliament of Cana-
da...".
3 Ibid., p. 27.
' Ibid., pp. 28-29.
5 Ibid., p. 16.
ARGUMENT
The appellant points out that the complaint is
not directed against the respondent, but against
the Bank of Montreal over which the Parliament
of Canada has jurisdiction by virtue of subsection
91(15) of the Constitution Act, 1867 [30 & 31
Vict., c. 3 (U.K.) (as am. by Canada Act 1982,
1982, c. 11 (U.K.), Schedule to the Constitution
Act, 1982, Item 1) [R.S.C., 1985, Appendix II,
No. 5]]. 6 It says, moreover, that the warrant is in
aid of that investigation and is for that purpose
only. The information sought from the claim file is
"evidence relevant to the investigation of a com
plaint" within the meaning of subsection 35(2.2)
of the Act, and could be made the subject of a
warrant. Without that information, it claims, the
appellant would be powerless to properly investi
gate the complaint of a person engaged in federal
ly regulated employment.
The respondent, incorporated in 1865 under a
statute of the late Province of Canada,' asserts
that its business as a mutual insurance corporation
in Ontario is a matter exclusively within the legis
lative authority of the provincial legislature. It
holds a licence from the Department of Financial
and Commercial Affairs of the province of Ontario
and the Office of the Superintendent of Insurance
of Ontario pursuant to which it may "undertake
contracts of insurance of the following classes: life,
accident and sickness". 8 That being so, the
respondent contends that the appellant is quite
without authority to investigate its decision to
decline the long term disability claim, and that the
dispute is one for determination in the civil courts
6 By the terms of this head of power, it is declared that "the
exclusive Legislative Authority of the Parliament of Canada
extends to"
15. Banking, Incorporation of Banks, and the Issue of Paper
Money.
' [An Act to incorporate "The Sun Insurance Company of
Montreal"] S.C. 1865, c. 43 (assented to 18th March, 1865).
This statute was subsequently amended by the Parliament of
Canada.
8 Appeal Book, p. 51.
of Ontario or by the Human Rights Commission
of that province rather than by the appellant.
DISCUSSION
I accept the submission that the monthly indem
nity or other amounts payable in respect of long
term disability to an "eligible" "employee" with
an "employer" in "employment", as defined in the
Group Policy, 9 are benefits arising out of Ms.
Abraham's employment with the Bank of Mon-
treal and that she was eligible for this kind of
protection only because of her employment. I
cannot see that these amounts, which are subject
to the terms and conditions of the Group Policy,
are any less employment benefits because they
happened to be available pursuant to the terms of
a contract entered into by the Bank with a third
party insurance carrier rather than directly from
the Bank as in the case of short term disability
benefits.
The respondent contends that the power of the
appellant to investigate Ms. Abraham's complaint
on a ground of discrimination does not extend to
the production of its claim files but, rather, is
limited to investigating whether the Bank engaged
in a discriminatory practice by entering into a
Group Policy which in its provision of benefits is
discriminatory, and that discrimination in the
processing of Ms. Abraham's claim, if any exists,
is a matter falling wholly within provincial legisla
tive authority. The granting of the warrant, there
fore, was an intrusion into the provincial domain
and was quite beyond the powers which Parlia
ment could, and in fact, did confer under subsec
tion 35(2.2) of the Act. The effect of upholding
the warrant would be to allow the appellant to
determine that the respondent itself engaged in a
discriminatory practice, a matter within the juris
diction of the provincial Human Rights Commis
sion.
In my view, these arguments lose sight of the
true essence of the complaint. To begin with, that
9 Appeal Book, p. 56.
complaint in no way impeaches the respondent's
conduct. It states in terms that it is the Bank that
"has discriminated against me on the basis of my
disability denying me ... long-term disability
benefits". Secondly, it would be unduly artificial in
the context of this case to distinguish between
discrimination brought about by virtue of the
entering into of an agreement creating employ
ment benefits and discrimination arising out of the
administration of the agreement. What is impor
tant in either case is that the alleged discrimina
tion is in respect of a subject-matter over which
the Parliament of Canada possesses legislative
authority.
The principles applicable for determining
whether an operation falls within federal legisla
tive authority were summarized by Dickson J. (as
he then was) in Northern Telecom Ltd. v. Com
munications Workers of Canada, [1980] 1 S.C.R.
115, at pages 132-133:
(1) Parliament has no authority over labour relations as such
nor over the terms of a contract of employment; exclusive
provincial competence is the rule.
(2) By way of exception, however, Parliament may assert
exclusive jurisdiction over these matters if it is shown that such
jurisdiction is an integral part of its primary competence over
some other single federal subject.
(3) Primary federal competence over a given subject can pre
vent the application of provincial law relating to labour rela
tions and the conditions of employment but only if it is demon
strated that federal authority over these matters is an integral
element of such federal competence.
(4) Thus, the regulation of wages to be paid by an undertak
ing, service or business, and the regulation of its labour rela
tions, being related to an integral part of the operation of the
undertaking, service or business, are removed from provincial
jurisdiction and immune from the effect of provincial law if the
undertaking, service or business is a federal one.
(5) The question whether an undertaking, service or business is
a federal one depends on the nature of its operation.
(6) In order to determine the nature of the operation, one must
look at the normal or habitual activities of the business as those
of "a going concern", without regard for exceptional or casual
factors; otherwise, the Constitution could not be applied with
any degree of continuity and regularity.
A recent decision of the British Columbia Labour Relations
Board, Arrow Transfer Co. Ltd., [[1974] 1 Can. L.R.B.R. 29]
provides a useful statement of the method adopted by the
courts in determining constitutional jurisdiction in labour mat
ters. First, one must begin with the operation which is at the
core of the federal undertaking. Then the courts look at the
particular subsidiary operation engaged in by the employees in
question. The court must then arrive at a judgment as to the
relationship of that operation to the core federal undertaking,
the necessary relationship being variously characterized as
"vital", "essential" or "integral". As the Chairman of the
Board phrased it, at pp. 34-5:
In each case the judgment is a functional, practical one about
the factual character of the ongoing undertaking and does
not turn on technical, legal niceties of the corporate structure
or the employment relationship.
See also Bell Canada v. Quebec (Commission de
la santé et de la sécurité du travail), [1988] 1
S.C.R. 749.
The business of banking in Canada is, as I have
indicated, a subject falling within federal legisla
tive competence under subsection 91(15) of the
Constitution Act, 1867, and the terms of a con
tract of employment with a bank is an integral
part of that primary competence. In my view, the
investigation of a complaint of discriminatory
practice in such employment based upon the
administration of a policy of insurance entered
into by a bank falls squarely within federal legisla
tive authority. This is so even though the policy
creating the employment benefits may have been
issued and is administered by an insurance carrier
whose business is provincially regulated. To accept
the distinction put forward by the respondent
would frustrate the appellant's power to investi
gate and determine the existence of a discriminato
ry practice at the point where that practice may
truly exist.
For the foregoing reasons, I would allow this
appeal with costs and would restore the warrant
issued by Teitelbaum J. on June 1, 1988.
HEALD J.A.: I concur.
URIE J.A.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.