Supreme Court of Canada

Langille et al. v. Toronto-Dominion Bank, 1982 CanLII 154 (SCC), [1982] 1 SCR 34

Date: 1982-01-26

Herbert M. Langille and Leon M. Langille, carrying on business under the firm name and style of H & L Langille Enterprises Appellants;

and

The Toronto-Dominion Bank Respondent.

File No.: 16441.

1981: June 22; 1982: January 26.

Present: Martland, Ritchie, Dickson, McIntyre and Lamer JJ.

ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA, APPEAL DIVISION

Bankruptcy—Petition in bankruptcy—Petition for the appointment of an interim receiver—Whether partnership considered “individuals” engaged solely in farming—Bankruptcy Act, R.S.C. 1970, c. B-3, ss. 2, 25, 28, 30.

Appellants were engaged in dairy farming as a registered partnership. Respondent filed against them a petition in bankruptcy under s. 25 of the Bankruptcy Act and applied under s. 28 for the appointment of an interim receiver. Based upon the provisions of s. 30, appellants objected to the appointment contending that they were “individuals” engaged solely in farming and that s. 28 did not apply to them. This objection was not sustained in the trial court and appellants’ appeal to the Appeal Division was dismissed.

Held: The appeal should be dismissed.

Section 30 did not preclude a creditor from filing a petition in bankruptcy and applying for the appointment of an interim receiver in respect of a debtor which is a partnership, even though the partnership is engaged solely in the business of farming. The deliberate decision by Parliament in 1949 to delete the word “persons”—used in s. 7 (now s. 30) of the 1927 Bankruptcy Act and defined so as to include a partnership—from s. 30 and its replacement by the word “individuals” manifested a clear intention that the protection of the section would only be afforded to those who engaged solely in the occupation of farming as individual operators.

Re Witchekan Lake Farms Ltd. (1974), 1974 CanLII 972 (SK CA), 50 D.L.R. (3d) 314; D.R. Fraser & Co. Ltd. v. M.N.R., 1948 CanLII 318 (UK JCPC), [1949] A.C. 24, referred to.

APPEAL from a judgment of the Supreme Court of Nova Scotia, Appeal Division (1981), 43

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N.S.R. (2d) 608, 1981 CanLII 2620 (NS CA), 81 A.P.R. 608, 37 C.B.R. (N.S.) 35, dismissing an appeal from an interlocutory decision of Glube J. Appeal dismissed.

Stewart McInnes, Q.C., for the appellants.

W.L. MacInnes and B.L. MacLellan, for the respondent.

The judgement of the Court was delivered by

MARTLAND J.—This appeal is from a judgment of the Supreme Court of Nova Scotia Appeal Division (1981), 1981 CanLII 2620 (NS CA), 43 N.S.R. (2d) 608, which sustained a judgment in chambers in the Trial Division, in Bankruptcy, which decided that the respondent was not prevented from applying for the appointment of an interim receiver pursuant to s. 28 of the Bankruptcy Act, R.S.C. 1970, c. B-3 (“the Act”) by reason of the operation of s. 30 of the Act. Section 30 provides as follows:

30. Sections 25 to 28 do not apply to individuals engaged solely in fishing, farming or the tillage of the soil or to any individual who works for wages, salary, commission or hire at a rate of compensation not exceeding twenty-five hundred dollars per year and who does not on his own account carry on business.

The appellants, Herbert M. Langille and Leon M. Langille, are engaged in the business of dairy farming at Brooklyn, Annapolis County, Nova Scotia, the business being carried on by them under the firm name and style of H & L Langille Enterprises, which is a registered partnership. Loans were made by the respondent to the partnership. As of August 5, 1980, according to the petition in bankruptcy, the total indebtedness to the respondent was $1,038,092.81. On that date, the respondent filed a petition in bankruptcy which read, in part:

We, The Toronto-Dominion Bank, one of the Chartered Banks of Canada, carrying on business at Halifax, in the County of Halifax and Province of Nova Scotia, hereby petition the Court that the partnership of Herbert M. Langille and Leon M. Langille, carrying on business under the firm name and style of H & L Langille Enterprises, a registered partnership, be judged bankrupt and that a Receiving Order be made in respect

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of the property of Herbert M. and Leon M. Langille, carrying on business under the firm name and style of H & L Langille Enterprises,…

The petition alleged that the appellants had committed acts of bankruptcy within the six months next preceding the date of the filing of the petition.

The petition was filed pursuant to s. 25(1) of the Act which provides:

25. (1) Subject to this section, one or more creditors may file in court a petition for a receiving order against a debtor if, and if it is alleged in the petition that,

(a) the debt or debts owing to the petitioning creditor or creditors amount to one thousand dollars, and

(b) the debtor has committed an act of bankruptcy within six months next preceding the filing of the petition.

A “creditor” is defined in s. 2 of the Act as meaning a person having a provable claim; a “debtor” is defined as including an insolvent “person” and any “person” who at the time an act of bankruptcy was committed by him resided or carried on business in Canada.

The word “person” is defined as follows:

“person” includes a partnership, an unincorporated association, a corporation, a cooperative society or organization, the successors of such partnership, association, corporation, society or organization, and the heirs, executors, administrators or other legal representative of a person, according to the law of that part of Canada to which the context extends;

At the same time that it filed the petition in bankruptcy, the respondent applied for the appointment of an interim receiver pursuant to s. 28(1) of the Act. That section provides as follows:

28. (1) The court may, if it is shown to be necessary for the protection of the estate, at any time after the filing of a petition and before a receiving order is made, appoint a licensed trustee as interim receiver of the property of the debtor or of any part thereof and direct him to take immediate possession thereof upon such undertaking being given by the petitioner as the court may impose as to interference with the debtor’s legal

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rights and as to damages in the event of the petition being dismissed.

At the hearing of the respondent’s application, the appellants raised a preliminary objection to the appointment of an interim receiver based upon the provisions of s. 30 of the Act, previously cited. It was contended that they were “individuals” engaged solely in farming and that, in consequence, s. 28 of the Act did not apply to them. This objection was not sustained in the trial court and the appellants’ appeal to the Appeal Division was dismissed, Jones J.A. dissented.

In order to interpret the meaning of s. 30, it is necessary to consider the prior history of that section. Section 7 of the Bankruptcy Act, R.S.C. 1927, c. 11 provided that:

7. The provisions of this Part shall not apply to wage-earners or to persons engaged solely in farming or the tillage of the soil.

Part I of that Act, which included s. 7, also included the provisions equivalent to ss. 25 and 28 of the present Act. A “person” was defined in that Act as including a firm or partnership and an unincorporated association of persons. It also included a corporation incorporated under an Act of the Parliament of Canada, or of any of the provinces of Canada.

A new Bankruptcy Act was enacted in 1949, 1949 (Can.) (2nd. Sess.), c. 7, which repealed and replaced the earlier Act. Section 7 of the earlier Act, cited above, was replaced by s. 25, which was in the same terms as s. 30 of the present Act. In the result, Parliament, in relation to farming, deleted the word “persons” and replaced it with the word “individuals”, while at the same time making the section applicable to individuals engaged in fishing.

As noted above, the word “person” in the 1927 Act was defined so as to include a firm or partnership. The word “individual” in the 1949 Act was not defined.

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In the case of Re Witchekan Lake Farms Ltd. (1974), 1974 CanLII 972 (SK CA), 50 D.L.R. (3d) 314, the Saskatchewan Court of Appeal had to consider whether a corporation carrying on the business of farming was entitled to the protection of s. 30. Chief Justice Culliton, who delivered the judgment of the Court, after dealing with the changes effected by the 1949 Act, referred to the words of Lord Macmillan, in delivering the judgment of the Judicial Committee of the Privy Council in D.R. Fraser & Co. Ltd. v. M.N.R., 1948 CanLII 318 (UK JCPC), [1949] A.C. 24, at p. 33:

When an amending Act alters the language of the principal statute, the alteration must be taken to have been made deliberately.

Chief Justice Culliton, at p. 315, went on to say:

I think the principle stated by Lord Macmillan applies here. When Parliament substituted “individuals” for “persons”, it did so deliberately. If Parliament intended that “individuals” be given the same meaning as “persons”, then there would have been no purpose in Parliament altering the law. I am satisfied that, in altering the section as it did, Parliament intended to change the law by making more restrictive the application of s. 30 than had been the situation when the word “persons” was used and effect must be given to this change.

I agree with this reasoning. While the words of Lord Macmillan refer to an amendment to a principal statute, they apply, with at least equal force, to the situation in which an existing statute is completely replaced by a new statute.

Under the provisions of the earlier statute, the words “persons engaged solely in farming” when read with the definition of “person” made s. 7 applicable to a partnership or corporation engaged solely in farming. The effect of the definition of the word “person” in the Act is to provide that where that word is used in the Act, in addition to its ordinary meaning, it shall also include certain business associations of two or more individuals, in the form of a partnership, an unincorporated association, a corporation or a cooperative society or organization. If the word “persons” had continued to be used in s. 30, as it had been used in s. 7 of the 1927 Act, then s. 30 would apply to partnerships, unincorporated associations, corporations, or cooperative societies or organizations engaged solely in

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farming. The deliberate decision to omit the word “persons” from s. 30 and its replacement by the word “individuals” to me manifests a clear intention that, thereafter, the protection of the section would only be afforded to those who engaged solely in the occupation of fishing, farming, or the tillage of the soil as individual operators and that associations of individuals in the form of partnerships, unincorporated associations, corporations and cooperative societies or organizations would not enjoy that protection.

Counsel for the appellants laid stress on the use of the plural, “individuals”, in the portion of s. 30 dealing with fishing, farming and tillage of the soil and the use of the words “any individual” in the portion of the section dealing with wage earners, etc. He adopted the view expressed by Jones J.A. in his dissenting reasons [at p. 619]:

In my view individuals do not cease to be engaged in farming as individuals merely because they are operating as a partnership whether registered or unregistered. That is the significance of the usage of the plural “individuals” in the first part of the section. Assuming a narrow interpretation of the word, partners are still engaged in farming, as individuals. Allowing that the Act recognizes partnerships, they are not separate entities apart from the individual partners for all purposes.

In the light of the legislative history of the section which is now s. 30, I would not, with respect, be prepared to construe the words “individuals engaged solely in… farming” as including a farming partnership. I would also refer to the reasons of Chief Justice MacKeigan who makes the point that a partnership is something different from two or more individuals engaged in a business activity [at pp. 611-12]:

In Nova Scotia a partnership is not merely two or more individuals or natural persons engaged in a business activity. The partners when becoming partners by agreement or by operation of law under the Partnership Act R.S.N.S. 1967, c. 224 become clothed with additional rights and duties. A partnership is (s. 3) “the relation which subsists between persons carrying on a

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business in common, with view of profit”. Joint or common property “does not of itself create a partnership” whether the owners do or do not share profits or gross returns derived from the use of the property (s. 4(a) and (b)). A partnership becomes a firm which can operate under a firm name. It owns “partnership property” (s. 22), against which execution can issue after judgment against the firm (s. 25). The rights and duties of the partners in relation to the partnership property are defined by the Partnership Act.

My conclusion is that s. 30 of the Act does not preclude a creditor from filing a petition in bankruptcy and applying for the appointment of an interim receiver in respect of a debtor which is a partnership, even though the partnership is engaged solely in the business of farming. I would, therefore, dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitor for the appellants: Stewart McInnes, Halifax.

Solicitor for the respondent: William L. MacInnes, Halifax.