Viegas v. BANIF Banco Internacional do Funchal, 2013 HRTO 1903

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Sandra Viegas

Applicant

-and-

BANIF Banco Internacional do Funchal, S.A. and Jose Faria

Respondents

DECISION

Adjudicator: Kathleen Martin

Date: November 18, 2013

Citation: 2013 HRTO 1903

Indexed as: Viegas v. BANIF Banco Internacional do Funchal

APPEARANCES

Sandra Viegas, Applicant

Self-represented

BANIF Banco Internacional do Funchal, S.A. and Jose Faria, Respondents

Andrew W. MacDonald, Counsel

1This is an Application filed under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”) alleging discrimination in employment. The applicant alleges that she was subjected to inappropriate questions and comments during an interview for a position in a foreign bank representative office and was not selected for the position because of her marital status, family status and age.

2A single Response was filed by both respondents. BANIF Banco is the foreign bank operating the representative office where the alleged discrimination occurred. The individual respondent, Mr. Faria, is the chief representative of the representative office. The respondents submit that BANIF Banco, a Portuguese bank, is federally-regulated and therefore the Application is outside of the Tribunal’s jurisdiction.

3The Tribunal directed that notice be provided to the Attorney Generals of Ontario and Canada pursuant to Rule 4 of the Tribunal’s Rules of Procedure. Neither sought to intervene. The Attorney General of Ontario provided copies of cases which, in its view, were germane to the constitutional issue and provided brief submissions to the effect that much of the case may turn on the facts. Neither party objected to the Tribunal considering these submissions.

4Submissions were received by the parties and an in-person hearing was scheduled to hear evidence and further submissions. At the subsequent hearing, the respondent stated that its name should be amended from Banco Banif E Comercial dos Acores, S.A. to the name now reflected in the style of cause because of an ownership change. Having regard to the evidence about that ownership change, which was unchallenged, the organizational respondent’s name is amended and the style of cause accordingly.

5At the hearing, I heard from one witness, Mr. Faria. Mr. Faria adopted a witness statement as his evidence, which he supplemented with further oral evidence including through cross-examination by the applicant. In addition, I accepted an affidavit of Glynis Taylor, a law clerk, into evidence that reported on the results of an Ontario Business Information Systems (ONBIS) search. While the applicant did not challenge the factual information presented (which reflected that Ms. Taylor’s search of ONBIS revealed no entries for BANIF Banco), she questioned the relevance of the same. I address the relevance of the affidavit below.

6I have decided that the Application is outside of the Tribunal’s jurisdiction. My reasons follow.

Foreign Bank Representative Offices and the Bank Act

7I begin with a review of the relevant provisions of the Bank Act, S.C. 1991, c. 46, as amended.

8Section 2 of the Bank Act provides a definition of “foreign bank”. Among other things, a foreign bank is a bank according to the laws of any foreign country where it carries on business or carries on a business in any foreign country that, if carried on in Canada, would be wholly or to a significant extent, the business of banking. The respondents submit and the applicant does not dispute that the organizational respondent fits within the definition of a foreign bank.

9Under s. 507(1) of the Bank Act, a “representative office” is defined as:

“representative office” means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank.

10Section 522 of the Bank Act provides that a foreign bank may maintain representative offices in Canada that are registered with the federal Superintendent of Financial Institutions in the prescribed manner:

522. A foreign bank may

(a) with the approval of the Superintendent and

(i) subject to any terms and conditions that are attached to the approval, and

(ii) subject to and in accordance with rules that are prescribed in relation to the operation of representative offices and the conduct of their personnel,

maintain representative offices in Canada that are registered with the Superintendent in the prescribed manner; and

(b) with the approval of the Governor in Council and subject to any terms and conditions that are attached to the approval, locate its head office in Canada and, from that office, issue directions and do all other things reasonably necessary for the conduct of its banking business outside Canada.

11Under s. 522.01(1) of the Bank Act, the Superintendent shall, from time to time, make or cause to be made any examination and inquiry into the conduct of any representative office of the foreign bank and the conduct of the personnel that the Superintendent considers necessary for the purpose of ascertaining whether the office is being operated and the personnel are conducting themselves in accordance with the rules prescribed for the purpose of s. 522 (a) above.

12Pursuant to sections 509 and 559 of the Bank Act, regulations have been made respecting the registration and operation of foreign bank representative offices: Foreign Bank Representative Offices Regulations, SOR/92-299 (the Regulations). The Regulations provide further details of what activities a representative office can engage in and how it is regulated including reporting requirements.

13With respect to its operation, s. 6 (1) of the Regulations provides:

6. (1) No representative office of a foreign bank shall undertake a business activity other than:

(a) promoting the services of a foreign bank or an affiliate of the foreign bank other than an affiliate incorporated in Canada; or

(b) acting as a liaison between clients of the foreign bank and other offices of the foreign bank or of affiliates of the foreign bank other that an affiliate incorporated in Canada.

14The foreign bank representative office has annual filing requirements regarding its activities which include the number of persons who are employed and provision of audited financial statements of the foreign bank.

The Evidence

15The facts applicable to the jurisdiction issue were provided by the respondents and were not contested by the applicant. As a result, I accept the following summary of the evidence.

16BANIF Banco is a bank formed under the laws of and providing banking services in Portugal. The respondent is listed on the Portuguese stock exchange and provides a full range of commercial banking services in Portugal. The current corporate name reflects a merger by incorporation of the former Portuguese bank (Banco Comercial dos Acores, SA) with BANIF Banco.

17The representative office at issue in this proceeding was registered in 1994. It has been in continuous operation (either operated by the predecessor bank or the current BANIF Banco) since that time.

18The representative office is operated directly by and under the management of BANIF Banco. There is no separate corporate or legal entity associated with the representative office. Mr. Faria, the chief representative, reports directly to the General Director of the Commercial Division in Azores of BANIF Banco, who in turn reports to the Board of Directors of BANIF Banco. All of the staff are employed directly by BANIF Banco. Indeed, in the case of the applicant’s hiring, the interviews were conducted by Mr. Faria and the then General Director. The General Director forwarded the résumés to the human resources department in Lisbon, which made the decision of which candidate to hire.

19In elaborating on the functions and regulation of the representative office, Mr. Faria states in part:

…As Chief Representative, I report to and comply with the requirements of the federal Office of the Superintendent of Financial Institutions (OSFI). On an annual basis, OSFI requires that BANIF Banco provide basic information about the operation of the office, pay a fee, file a certificate of compliance, and file an information request form. The FBRO does not report to any other federal government department or agency….

As Chief Representative, I do not report on behalf of BANIF Banco to any provincial regulatory body of any kind; the FBRO is not required to do so. BANIF Banco’s FBRO does not hold an operating licence from the provincial government and is not otherwise registered with any ministry or agency of the provincial government because this is not required for its operation in Ontario. Specifically, BANIF Banco does not hold a licence under the Extra-Provincial Corporations Act and does not file returns under the provincial Corporations Information Act. BANIF Banco does not file tax returns in Canada.

BANIF Banco is explicitly prohibited by Canada’s Bank Act and the Foreign Bank Representative Offices Regulations from engaging in or carrying on any kind of business whatsoever in Canada without specific authorization of that Act. The FBRO only promotes BANIF Banco within the Portuguese community in Toronto and other Canadian cities and liaises with clients and potential clients of BANIF Banco in Canada in accordance with the regulations. These activities include attending and sponsoring events within the Portuguese communities in Toronto, Montreal and Ottawa and advertising occasionally in community newspapers and magazines and on community radio station. In addition, we provide information to customers, such as that related to interest rates, foreign exchange rates, terms and conditions of accounts and investments and other banking products offered by BANIF Banco outside of Canada

The FBRO does not take deposits or operate a bank branch in Canada. However, we regularly meet with clients and prospective clients to describe and answer questions about BANIF Banco’s banking services and products, management fees, investment holdings, key personnel in Portugal, how to transfer funds to and from BANIF Banco accounts through a deposit taking institution in Canada. We forward information, including advice about Portuguese pensions and other investments to clients in Canada from our offices in Portugal. Clients and potential clients are able to attend at our offices to obtain information about BANIF Banco’s banking products (savings accounts, term deposits, etc.) and to fill out forms necessary to apply for accounts and products. Our office then forwards these forms to a branch of BANIF Banco in Portugal where they are processed and accounts are opened. Essentially, we act as a window to BANIF Banco in Canada.

20Mr. Faria estimated that nearly half his time is spent attending community events organized by the Portuguese-Canadian populations of Toronto, Montreal, Ottawa and other towns and cities, the purpose of which is to promote BANIF Banco and to provide information to clients and potential clients. The remainder of his time is spent in the office in Toronto meeting with clients and potential clients of BANIF Banco and administering the office, including reporting to the Director General and to OSFI.

21The other employees at the representative office (in general there are no more than two or three other employees) support the chief representative in his activities and duties, engage in general administrative duties and provide information about BANIF Banco services and products directly to clients and potential clients in person and over the phone. On a typical day, five to ten clients visit the office seeking information about their accounts and investments with BANIF Banco.

22The job for which the applicant interviewed was one of the positions supporting the chief representative. The duties included general office administration, but its focus was on communicating with and providing customer service and information to clients and potential clients in Portuguese and in English, in writing and verbally.

23The affidavit of Ms. Taylor is consistent with the evidence about the absence of provincial regulation of BANIF Banco. The ONBIS search (reflecting information recorded by Ontario Companies and Personal Property Security Branch on Ontario Corporations incorporated under the Business Corporations Act, the Corporations Act not-for-profit corporation and extra-provincial corporations) did not contain any listing of BANIF Banco.

The Parties’ Submissions

24The respondents argue that this Application is outside of the Tribunal’s jurisdiction because the respondent is engaged in banking. The respondents submit that the Canadian Human Rights Act, R.S.C. 1985, c. H-6, and not the Code, applies to federally-regulated undertakings such as banks. As a result the respondents submit the Application should be dismissed.

25The respondents urge the Tribunal to follow the approach of the Supreme Court of Canada in Canadian Pioneer Management Ltd. et al. v. Labour Relations Board of Saskatchewan et al., 1979 CanLII 180 (SCC), [1980] 1 S.C.R. 433, and adopt an institutional test in determining that BANIF Banco is engaged in the business of banking. The respondents submit that in that case, the Supreme Court of Canada concluded that provincial regulation applied to the trust company that was carrying on business identical to that of a chartered bank because it was not recognized as a bank within the meaning of the Bank Act and had not been brought into the federal regulatory regime governing banking. By analogy, the respondents submit that BANIF Banco is a foreign bank within the meaning of the Bank Act, is subject to the federal regulatory regime governing banks and is engaged in the business of banking.

26The respondents further submit that the employees of BANIF Banco in the representative office are directly engaged in the business of banking and that their roles are vital and essential to the business of banking carried on by BANIF Banco.

27In the alternative, even if a functional test is applied, the respondents submit that the Tribunal should conclude that BANIF Banco is engaged in banking. The respondents submit that in examining the normal or habitual activities of the business to determine whether an entity is provincial or federal, the source of regulatory oversight is a critical consideration. For example in NIL/TU, O Child and Family Services Society v. B.C. Government and Service Employees’ Union, 2010 SCC 45, [2010] 2 S.C.R. 696 (“NIL/TU,O”), the Supreme Court of Canada concluded that the NIL/TU,O (an entity providing child welfare services to certain First Nations children and families) was a provincial undertaking relying on the fact that it was wholly regulated by a provincial statute and was directly subject to the province’s oversight. Likewise, the respondents submit that BANIF Banco is subject to federal oversight only and is not accountable to any provincial legislature.

28Finally, the respondents submit that practical considerations support a conclusion that BANIF Banco should be treated as federal. The respondents state that BANIF Banco could apply to operate a foreign bank branch in Canada instead of the representative office or as well. The respondents submit that it is clear that foreign banks that operate branches are treated as federal by the Tribunal (See Buragina v. HBC Capital One Bank (Canada Branch)/Capital One Bank (USA), 2011 HRTO 2136; Akhlaghi v. Amex Bank of Canada, 2013 HRTO 239; and Gaetano v. HSBC Bank of Canada, 2011 HRTO 159). If both were operated at the same time, the respondents submit that it would be very difficult to see how the jurisdictional question would be determined in the case of a human rights application involving a foreign bank and that such a result would not benefit foreign banks, applicants or the human rights system in general.

29The applicant made only brief submissions. The applicant submits that it is her belief that BANIF Banco is not a bank but is only an office representing a bank. In her earlier written submissions, the applicant elaborated, stating that the representative office cannot open and close accounts for its clients, cannot exchange money for clients visiting Canada, is unable to cash or deposit a cheque for its clients, and does not have a debit or Interact machine on site for its clients.

ANALYSIS AND DECISION

General Constitutional Principles

30Section 91(15) of the Constitution Act, 1867, provides as follows:

…it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming with the Classes of Subjects next hereinafter enumerated; that is to say,

…15. Banking, Incorporation of Banks, and the Issue of Paper Money.

31Thus, the federal government has exclusive legislative authority with respect to “banking”. The central issue in this case is whether or not the representative office is engaged in banking either directly or as an integral part of a federal undertaking. The onus of establishing an entity as a federal work, undertaking or business lies on the party making the claim.

32While there is clearly some authority for applying an institutional test in the specific area of banking, more typically the courts have applied a functional test in determining whether an entity is federal. In so doing, the focus in on its normal or habitual activities and daily operations of the entity in question as those of a going concern (see, for example, NIL/TU,O, cited above, at para. 3). As highlighted by the respondents, in this inquiry, the Supreme Court of Canada has relied on the fact of provincial regulatory oversight as a relevant consideration in finding an operation to be provincial: NIL/TU, O at para. 38.

33In determining whether or not the representative office is engaged in banking, I have also had regard to cases that specifically address the factual circumstances where there are several operations.

34In cases involving several operations, the courts have accepted that the operations are part of a single federal undertaking when they are functionally integrated and subject to common management, control and direction. See Westcoast Energy Inc. v. Canada (National Energy Board), 1998 CanLII 813 (SCC), [1998] 1 S.C.R. 322; United Transportation Union v. Central Western Railway Corp., 1990 CanLII 30 (SCC), [1990] 3 S.C.R. 1112.

35In addition, where an operation provides services for the benefit of or to a federal work, undertaking or business, the courts have found an operation to be federal where the relationship is “vital”, “essential” or “integral” to a federal work undertaking or business (Northern Telecom v. Communications Workers, 1979 CanLII 3 (SCC), [1980] 1 S.C.R. 115 at p. 132). In determining whether the necessary relationship is established in the labour context, the courts have considered the general nature of the operation as a going concern and the role of those working at it, the nature of the relationship between the operation and the federal undertaking, the importance of the work done by the operation for the federal undertaking and the physical and operational connection between the operation and the federal undertaking (see Northern Telecom at p. 135 and its application in R. v. EllisDon Corporation Ltd., 2008 ONCA 789 at para. 25 and following).

36In Tessier Ltée v. Quebec (Commission de la santé et de la sécurité du travail), 2012 SCC 23 at paragraphs 48 and 49, the Supreme Court of Canada noted that it has applied this “derivative” jurisdiction in two contexts: when the services provided to the federal undertaking forms the exclusive or principal part of the related work’s activities and where the services provided form a functionally discrete unit that can be constitutionally characterized separately from the rest of the related operation.

Application of Principles to the Facts to this Case

37There appears to be no issue between the parties and I accept that, if the respondent BANIF Banco operated a branch at the Toronto location (i.e. consistent with the full range of banking services it offers in Portugal as set out in the summary of evidence above), it would be a federal undertaking. Authorized foreign bank branches are listed as Schedule III banks in the Bank Act. However, what sets this case apart is that the representative office is only engaged in those banking activities permitted by the Bank Act and Regulations, i.e. promotion of services and liaison with clients and potential clients regarding their accounts. Further, it is clear that BANIF Banco does not operate a full service operation in Toronto or elsewhere in Canada (such that there is an actual physical presence of the federal undertaking). However, notwithstanding these facts, I do not find that the analysis changes insofar as the question still remains — is it part of a single federal undertaking or is it integral to a federal undertaking.

38Although I find these facts close to the line, on balance, I am satisfied that the representative office is federal and thus is outside of the Tribunal’s jurisdiction. On the basis of the facts presented which were unchallenged, I am satisfied that the representative office is part of a single federal undertaking or in any event is integral to a federal undertaking.

39The representative office is not a separate entity from BANIF Banco. In fact, the representative office is functionally integrated with BANIF Banco insofar as the functions performed by the representative office (the promotional and liaison functions) relate specifically and exclusively to BANIF Banco. In addition, the chief representative in the representative office reports directly through to the General Director at BANIF in Portugal. Notably, there appears to be centralized control of human resources issues insofar as hiring is overseen in Portugal, including for staff in the representative office.

40While the functions performed do not include some of the core banking functions of taking in deposits and loaning money, I find that on balance, the functions performed are vital and/or integral to these core banking functions of the named corporate respondent in Portugal. The promotional and liaison functions performed by the office and the employees in it relate directly to the core banking activities of BANIF Banco as detailed in paragraph 19 above. As the respondent argued at the hearing, the functions performed by the employees in the representative office are identical to functions routinely performed by employees of chartered banks on a daily basis in Canada.

41Further, the singular federal oversight of the representative office is also a consideration which supports a conclusion that the operation is federal. The representative office only exists because it is permitted to exist by the Bank Act. Apart from the Bank Act, the governmental oversight is limited to the Superintendent of Financial Institutions at the federal level. Based on the evidence received which was unchallenged there is no provincial regulation of the representative office or the named foreign bank.

42Having regard to the foregoing I find that the operation of BANIF Banco is federal. Therefore the Application is outside of the Tribunal’s jurisdiction.

43The Application is dismissed.