






Citation:


Bank 
          of Nova Scotia v. Supt. Financial Institutions


Date:
20030120







2003 
          BCCA 29


Docket:


CA29174






COURT 
          OF APPEAL FOR BRITISH COLUMBIA






BETWEEN:






THE BANK OF NOVA SCOTIA

and

OPTIMA COMMUNICATIONS CANADA INC.






APPELLANTS

(PETITIONERS)






AND:






SUPERINTENDENT OF FINANCIAL INSTITUTIONS,

FINANCIAL INSTITUTIONS COMMISSION

and

ATTORNEY GENERAL OF BRITISH COLUMBIA






RESPONDENTS

(RESPONDENTS)














Before:


The 
          Honourable Chief Justice Finch







The 
          Honourable Madam Justice Prowse







The 
          Honourable Mr. Justice Low












D.G. 
          Cowper, Q.C.

W.S. 
          Martin

E.W. 
          Purdy




Counsel 
          for the Appellants




S.I. 
          Macdonald



N. 
          Finkelstein

C. 
          Kanya-Forstner



D.T. 
          McKnight





B.G. 
          Baynham, Q.C.






Counsel 
          for the Respondents



Counsel 
          for the Intervenor

Canadian 
          Bankers Association



Counsel 
          for the Intervenor

Insurance 
          Council of B.C.



Counsel 
          for the Intervenor

Canadian 
          Life Insurance and

Health 
          Insurance Association










Place 
          and Dates of Hearing:








Vancouver, 
          British Columbia

September 
          3, 4 and 5, 2002




Place 
          and Date of Judgment:


Vancouver, 
          British Columbia




January 20, 2003










Written 
    Reasons by:

The 
    Honourable Chief Justice Finch



Concurred 
    in by:

The 
    Honourable Madam Justice Prowse

The 
    Honourable Mr. Justice Low







Reasons 
    for Judgment of the Honourable Chief Justice Finch:





I.   INTRODUCTION





[1]

This appeal concerns the true interpretation, and constitutionality, 
    of a provincial statute, the
Financial Institutions Act
, R.S.B.C. 
    1996, c.141 (
FIA
).

[2]

The broad issue is whether a province has legislative power over the 
    activities of a bank and its representatives in the telemarketing of credit 
    card balance insurance.  The appellant Bank of Nova Scotia (BNS) and its 
    representative Optima Communications Canada Inc. (Optima) market such an 
    insurance product  Scotia Visa Balance Insurance (SVBI)  by telephone 
    solicitation to some of the banks customers, inviting them to enrol in 
    the banks group insurance policy which provides coverage for unpaid credit 
    card balances in the event of the customers death, disability or unemployment, 
    according to the policys terms.

[3]

The respondents take the position that this telemarketing scheme is 
    unlawful because neither the appellants nor their employees are licensed to 
    solicit insurance applications under the
FIA
.

[4]

On 10 August 2000, the British Columbia Superintendent of  Financial 
    Institutions (the Superintendent) issued a notice of intention to make an 
    order to BNS on the following terms:

NOW 
    THEREFORE the Superintendent, pursuant to Sections 171(2) and 244(2) of the 
    FIA, hereby orders the Bank of Nova Scotia to immediately cease the solicitation 
    in the Province of British Columbia of applications for insurance conducted 
    by way of telephone solicitations or otherwise by any person, including but 
    not limited to Optima, its employees, servants and agents, who:

1.   
    is not licensed pursuant to the FIA as an insurance agent or insurance salesperson; 
    and

2.   
    is not an officer or employee of Scotia Bank    acting as its agent in respect 
    of credit    insurance, incidental to the ordinary business of Scotia Bank.



[5]

The Superintendent issued a similar notice expressing an intention 
    to make a comparable order in relation to Optima and its employees:

NOW 
    THEREFORE the Superintendent, pursuant to Sections 171(2) and 244(2) of the 
    FIA, hereby orders Optima, its employees, servants and agents, to immediately 
    cease the solicitation in the Province of British Columbia of applications 
    for insurance conducted by way of telephone solicitations or otherwise by 
    any person who is not licensed pursuant to the FIA as an insurance agent or 
    insurance salesperson.



[6]

The appellants take the position that neither the bank, the banks 
    employees, Optima, nor Optimas employees, are subject to the
FIA
, 
    and therefore that none of them are required to obtain a license under the 
    provisions of that
Act
before they may lawfully market SVBI. 
     The appellants are supported in that position by the intervenor, the Canadian 
    Bankers Association.

[7]

The appellants make three arguments in support of their position.  They 
    say first that on a true construction of the
FIA
they are exempt 
    from its application.

[8]

The appellants say next that their activity in telemarketing credit 
    card insurance is not subject to provincial control because the activity is 
    part of the business of banking, a matter within the sole legislative competence 
    of Parliament by virtue of s. 91(15) of the
Constitution Act, 1867
(banking, 
    incorporation of banks, and the issue of paper money).  They say an essential 
    function of banking is the lending of money to the banks customers, and the 
    taking of security in respect of such loans.  They say that insuring unpaid 
    credit card balances by the customer, with the bank as loss payee, is simply 
    one way for the bank to secure the repayment of its loans.

[9]

The appellants say finally that not only is the activity sought to 
    be regulated within Parliaments sole legislative competence, but that Parliament 
    has in fact legislated in respect of these matters in the
Bank Act
, 
    S.C. 1991, c.46, and the Insurance Business (Banks) Regulations (IBBR) promulgated 
    pursuant to s.416 of the
Bank Act.

[10]

In 
    summary, the appellants say that the
FIA
, if interpreted to 
    regulate their telemarketing activities, is
ultra vires
either as an 
    invasion of Parliaments exclusive jurisdiction in banking (inter-jurisdictional 
    immunity), or by virtue of a conflict with validly passed federal legislation 
    and regulation in respect of banking (paramountcy).

[11]

The 
    respondents take the position that BNS telemarketing scheme is subject to 
    the
FIA
because the telemarketing of SVBI is part of the business 
    of insurance.  The respondents say the province has exclusive legislative 
    competence in respect of insurance as a matter falling within s.92(13) of 
    the
Constitution Act, 1867
(property and civil rights).  They 
    are supported in that position by the intervenors, the Insurance Council of 
    British Columbia and the Canadian Life and Health Insurance Association.

[12]

The 
    learned chambers judge took the view that the telemarketing of SVBI is part 
    of the business of insurance subject to provincial regulation.  He held that 
    the telemarketing program is not part of, or incidental to, the business of 
    banking and that no constitutional issue arose.  He therefore dismissed the 
    appellants petition for judicial review seeking declaratory and other relief 
    from the application of the provincial legislation, and the proposed orders 
    of the Superintendent.

[13]

The 
    parties have thus raised the following issues on appeal:

1.

Whether, as a matter of statutory interpretation, BNS and Optima are 
    exempt from the application of the
FIA
;

2.

If s.171 of the
FIA
applies to BNS and Optima, whether 
    they are immune from its operation by reason of the doctrine of inter-jurisdictional 
    immunity; and

3.

Whether the
FIA
is in conflict with valid federal legislation, 
    and therefore inapplicable by reason of the doctrine of paramountcy.

II.  
    FACTS

[14]

The 
    reasons for judgment of the learned chambers judge are reported at (2001) 
    95 B.C.L.R. (3d) 327.  With one or two exceptions, the facts found by him, 
    and described in paras.13 to 37 of his reasons, are not in dispute.  Questions 
    do arise as to the meaning he attributes to the word promote in para.28, 
    and the characterization of telemarketing as selling in para.29.  Those 
    are, in my view, questions of mixed law and fact, which I will come to later 
    in the course of these reasons.  I will state the relevant facts in summary 
    form, and the reader may refer to the reasons in the Court below for amplification.

[15]

SVBI 
    is one of several types of creditor insurance BNS actively promotes to its 
    customers.  Under a group insurance policy underwritten by ACE INA Insurance 
    and CIGNA Life Insurance Company of Canada, customers holding BNS Visa credit 
    cards may obtain SVBI.  BNS is the policy holder and loss payee under the 
    policy.  The insurers agree to pay all of an insured cardholders Scotia Visa 
    balance in the event the cardholder dies, and to pay the minimum monthly payment 
    if the cardholder becomes disabled or becomes unemployed involuntarily.

[16]

BNS 
    promotes SVBI in a number of ways.  Bank personnel are instructed to ask customers 
    to complete an SVBI form when they apply for a Visa card at a bank branch.

[17]

The 
    bank sends out direct marketing materials for Scotia Visa products which include 
    a tick-off option to select SVBI.  The banks website includes an on-line 
    credit application form, which offers SVBI to applicants.  New cardholders 
    are sent a mailing which explains the features of the credit card, explains 
    SVBI, and encloses an enrolment form.  Cardholders are invited to complete 
    and return the form to their bank branch.

[18]

BNS 
    employs telemarketing for several products, including SVBI.  Approximately 
    80% of customer enrolments for SVBI result from telemarketing.  The bank has 
    out-sourced the telemarketing of SVBI to Optima since 1994.

[19]

BNS 
    maintains close management and control of the telemarketing process.  The 
    bank controls the staffing of the telemarketing program.  The Optima staff 
    who work on the program are hired specifically for the assignment.  The bank 
    has the right to approve new hires and can require Optima to remove individuals 
    from the banks program.

[20]

The 
    telemarketers are hired in accordance with an employee hiring profile developed 
    by Optima and approved by the bank.  The hiring profile does not require experience 
    or expertise in insurance generally, or in creditor insurance, or in banking.  
    BNS controls the training of the telemarketers.

[21]

BNS 
    closely controls the calling process.  The telemarketers follow carefully 
    designed scripts that appear on computer screens, giving the exact wording 
    to be followed.  The initial scripts were developed by the bank with the assistance 
    of Optima, and a third party consultant retained by the bank.  BNS carefully 
    reviews and approves any revisions to the scripts.

[22]

BNS 
    has complete control over which cardholders are called.  The dialling process 
    is executed by computer, using computer tapes prepared weekly by the bank.  
    The bank ensures that Optima has the physical and computer systems in place 
    to protect the integrity and confidentiality of the information provided.

[23]

BNS 
    monitors and audits the calling process in a variety of ways.  The bank applies 
    its customer complaints resolution process to any complaints concerning the 
    telemarketing process.  During an 18 month period, 540,000 calls were made 
    to cardholders in Canada, resulting in 53 complaints relating to the insurance, 
    of which 26 related to Optimas telemarketing.

[24]

As 
    noted by the learned chambers judge, acquisition of SVBI is not a term of 
    the credit card contract, and need not be contemporaneous with the formation 
    of that contract.

[25]

Under 
    the terms of the policy, the insurers have three days in which to accept or 
    reject the customers application.  If the application is accepted, the insurance 
    is effective immediately from the date the telephone application is made.  
    The learned chambers judge noted that, on the evidence before him, the insurers 
    had never denied coverage to any cardholder who applied.

[26]

Premiums 
    payable by the cardholder are based upon the unpaid balance of the Visa card, 
    and are added to the account.  The bank remits the premiums payable to the 
    credit of the insurer, and the insurer pays the bank collection, general administration, 
    marketing and promotion fees, and expense recovery.

[27]

The 
    judge noted (para.16) that the evidence did not disclose the number of BNS 
    customers who have SVBI.  Nor does the evidence disclose the importance of 
    the BNS telemarketing business to Optima (para.19), nor the amount of income 
    earned annually by the bank from this telemarketing program.

III. 
    LEGISLATION

A.   
    The Constitution

[28]

Parliamentary 
    legislative authority over banking is conferred by s.91(15) of the
Constitution 
    Act, 1867
:

91.
It shall be lawful for the Queen, by and with the Advice and Consent 
    of the Senate and House of Commons, to make Laws for the Peace, Order, and 
    good Government of Canada, in relation to all Matters not coming within the 
    Classes of Subjects by this Act assigned exclusively to the Legislatures of 
    the Provinces; and for greater Certainty, but not so as to restrict the Generality 
    of the foregoing Terms of this Section, it is hereby declared that (notwithstanding 
    anything in this Act) the exclusive Legislative Authority of the Parliament 
    of Canada extends to all Matters coming within the Classes of Subjects next 
    hereinafter enumerated; that is to say,



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







[29]

Provincial 
    legislative authority over insurance lies in the power conferred by s.92(13) 
    in respect of property and civil rights as follows:

92.
In each Province the Legislature may exclusively make Laws in relation 
    to Matters coming within the Classes of Subjects next hereinafter enumerated; 
    that is to say,



13.
Property and Civil Rights in the Province.

B.   
    The Provincial Legislation and Regulations

[30]

The 
    legislative provisions whose interpretation and constitutionality are questioned 
    in this case are contained in the
Financial Institutions Act
.  
    The following provisions are relevant:

168
In this Division, unless the context otherwise requires,



insurance 
    agent
means a person, other than an insurance company or an extraprovincial 
    insurance corporation, who
solicits, obtains or takes an application for 
    insurance
, or negotiates for or procures insurance, or signs or delivers 
    a policy, or collects or receives a premium;



insurance 
    salesperson
means an individual who is employed 
    by an insurance agent or by an insurer to solicit, obtain or take an application 
    for general insurance, or to negotiate for or procure general insurance, or 
    to collect or receive a premium for general insurance;





171
(1)  In subsection (3)(i),
credit insurance
means 
    insurance against loss caused by the insolvency, default or death of a person 
    to whom credit is given, not being insurance included in or incidental to 
    any other class of insurance.



(2)
A person must not act in
British Columbia 
    as an insurance agent or insurance salesperson unless the person is licensed 
    as an insurance agent or insurance salesperson, as the case may be.







(3)
Subsection (2) does not apply to a person who

(a)  
    does not act for compensation or hope or promise of it,

(b)  
    acts only for the purpose of collecting and receiving premiums,

(c)  
    acts on behalf of a mutual fire insurance company,

(d)  
    acts on behalf of a society that makes contracts of life insurance, accident 
    insurance or sickness insurance,

(e)  
    is an insurers manager or branch manager who is in charge of the insurers 
    head office or branch office in British Columbia and is paid a salary and 
    not by commissions,

(f)  
    is an employee of an insurer or insurance agent if the employee does not solicit 
    insurance, is paid a salary by the insurer or insurance agent and does mainly 
    clerical work,

(g)  
    is employed in an office of a transportation company to sell its tickets or 
    carry on business as a ticket agent of the company in respect of accident 
    insurance against accidents to persons only while travelling, or in respect 
    of inland transportation insurance or marine insurance against loss of or 
    damage to baggage of persons only while travelling, if the company holds a 
    licence under this Division in respect of those classes of insurance,

(h)  
    by a certificate given to the council by

(i)  
    a reciprocal exchange that has a permit under section 187, or

(ii) 
    a company registered under the Insurance (Captive Company Act)

is 
    certified as being a full time salaried employee of the exchange or company 
    who does not act as an insurance agent or insurance salesperson in any other 
    capacity and who does not receive commissions, or

(i)  
    is a trust company, credit union, an extraprovincial trust corporation or
a bank or the officers and employees of any of them, while acting as agent 
    in respect of credit insurance, incidental to the ordinary business of
the trust company, credit union, extraprovincial trust corporation
or bank
.

(my emphasis)







[31]

The 
    Insurance Licensing Exemptions Regulation, B.C. Reg. 328/90 (ILER), promulgated 
    pursuant to the
Financial Institutions Act
, are also relevant.  
    They provide in part:

Exemption 
    from section 171(2) of the Act



2
Section 171(2) of the Act does not apply



(c)  
    to a person whose only activity as an insurance agent or insurance salesperson 
    is in connection with credit insurance sold incidentally to the granting of 
    credit, or arranged by, that person or that persons employer,





C.   
    The Federal Legislation

[32]

Provisions 
    of the
Bank Act
which may be relevant are:

15.
(1) A bank has the capacity of a natural person and, subject to this 
    Act, the rights, powers and privileges of a natural person.



(2) A bank shall not carry on any business or exercise any power that it is 
    restricted by this Act from carrying on or exercising, or exercise any of 
    its powers in a manner contrary to this Act.

409.
(1) Subject to this Act, a bank shall not engage in or carry on any 
    business other than the business of banking and such business generally as 
    appertains thereto.



(2) 
    For greater certainty, the business of banking includes

(a)  providing any financial service;

(b)  acting as a financial agent;

(c)  
    providing investment counselling services and portfolio management services; 
    and

(d)  
    issuing payment, credit or charge cards and, in accordance with others including 
    other financial institutions, operating a payment, credit or charge card plan.



416.
(1) A bank shall not undertake the business of insurance except to 
    the extent permitted by this Act or the regulations.

(2) 
    A bank shall not act in Canada as agent for any person in the placing of insurance 
    and shall not lease or provide space in any branch in Canada of the bank to 
    any person engaged in the placing of insurance.



(3) 
    The Governor in Council may make regulations respecting the matters referred 
    to in subsection (1) and regulations respecting relations between banks and

(a)  
    entities that undertake the business of insurance; or

(b)  
    insurance agents or insurance brokers.



(4) 
    Nothing in this section precludes a bank from

(a)  
    requiring insurance to be placed by a borrower for the security of the bank; 
    or

(b)  
    obtaining group insurance for its employees or the employees of any bodies 
    corporate in which it has a substantial investment pursuant to section 468.

(5) 
    REPEALED: S.C. 1997, c.15, s.45, effective September 30, 1998 (SI/98-98).



(6) 
    For the purposes of this section, the business of insurance includes the issuance 
    of any annuity where the liability thereon is contingent on the death of a 
    person.

S.C. 
    1991, c.46, s.416; S.C. 1997, c.15, s.45.



[33]

Pursuant 
    to the provisions of s.416, the Insurance Business (Banks) Regulations (IBBR) 
    were promulgated on 21 May 1992.  The following provisions of the IBBR may 
    be relevant:

2.
In these Regulations

authorized types of insurance means

(a)  credit or charge card-related insurance,

(b)  creditors disability insurance,

(c)  creditors life insurance,

(d)  creditors loss of employment insurance,



4.
(1) A bank may administer an authorized type of    insurance and personal 
    accident insurance.



(2) A bank may administer a group insurance policy      for its employees 
    or the employees of any bodies   corporate in which it has a substantial investment 
        that was acquired pursuant to section 468 of the    Bank Act.




5.
(1) A bank may provide advice regarding an    authorized type of 
    insurance or a service in respect of an authorized type of insurance.

(2) A bank may provide advice in respect of an     insurance policy that 
    is not of an authorized type   of insurance, or services in respect thereof, 
    if

(a)  the advice is general in nature;

(b)  the advice is not in respect of

(i)  a specific risk, proposal in respect                 of life insurance, 
    insurance policy                  or service, or

(ii) a particular insurance company, agent                or broker; and

(c)  the bank does not thereby refer any person           to a particular 
    insurance company, agent           or broker.



6.
No bank shall, in Canada, promote an insurance 
    company, agent or broker unless

(a)  
    the company, agent or broker deals only in authorized types of insurance; 
    or

(b)  
    the promotion takes place outside a branch of the bank and is directed to

(i)  
    all of the holders of credit or charge cards issued by the bank who receive 
    regularly mailed statements of account,

(ii) 
    all of the banks customers who are natural persons and who receive regularly 
    mailed statements of account, or

(iii)the 
    general public.



7.
(1)
No bank shall, in
Canada, promote an insurance 
    policy of an insurance company, agent or brokers, or a service in respect 
    thereof, unless

(a)
the policy is of an authorized type of insurance or the service is in respect 
    of such a policy
;

(b)  
    the policy is to be provided by a corporation without share capital, other 
    than a mutual insurance company or a fraternal benefit society, that carries 
    on business without pecuniary gain to its members and the policy provides 
    insurance to a natural person in respect of the risks covered by travel insurance;

(c)  
    the policy is a personal accident insurance policy and the promotion takes 
    place outside a branch of the bank;

(d)  
    the service is in respect of a policy referred to in paragraph (b) or of a 
    policy referred to in paragraph (c) that is promoted as described in that 
    paragraph; or

(e)  
    the promotion takes place outside a branch of the bank and is directed to

(i)  
    all of the holders of credit or charge cards issued by the bank who receive 
    regularly mailed statements of account,

(ii) 
    all of the banks customers who are natural persons and who receive regularly 
    mailed statements of account, or

(iii)the 
    general public



(2) 
    Notwithstanding subsection (1) and section 6, a bank may exclude from a promotion 
    referred to in paragraph (1)(e) or 6(b) persons

(a)  
    in respect of whom the promotion would contravene an Act of Parliament or 
    of the legislature of a province;

(b)  
    who have notified the bank in writing that they do not wish to receive promotional 
    material from the bank; or

(c)  
    who are holders of a credit or charge card that was issued by the bank and 
    in respect of which the account is not in good standing.                   
    (my emphasis)







IV.  
    REASONS FOR JUDGMENT OF THE CHAMBERS JUDGE

[34]

The 
    learned chambers judge held that the telemarketing of SVBI was part of the
business of insurance
(paras.10 and 55); that the activity is not part 
    of, or an essential element of, a banking transaction (paras.52 and 55); and 
    that because telemarketing of SVBI is part of the business of insurance, and 
    not part of the business of banking, it is subject to provincial regulation 
    (para.55).

[35]

He 
    held the telemarketing of SVBI is not permitted by the federal IBBR.  Section 
    4 permits a bank to administer an authorized type of insurance (para.62) 
    and s.5 permits a bank to provide advice regarding an authorized type of 
    insurance.  (para.63)  Section 6 limits the promotion of an insurance company 
    or an
insurance product
(para.64).

[36]

Section 
    7 authorizes a bank or its agent to promote credit insurance (para.66).  
    He held, however, the purpose of the telemarketing scheme is not limited to 
    promotion, but includes
the sale
of an insurance product:

[28] 
    I find as a fact that the purpose of the telemarketing is not to inform or 
    advise in relation to credit card balance insurance nor to promote such insurance. 
    The script used by the telemarketer makes it clear that the objectives of 
    the call are to procure immediate enrolment in the plan and obtain the cardholders 
    agreement to permit the premiums to be charged to the holders credit card 
    on a monthly basis.



[29] 
    The insurance policy stipulates that the relationship between BNS and the 
    insurer is not one of principal and agent. The insurer appears to have three 
    business days from the time the application is taken over the phone to agree 
    to extend coverage. There is no evidence that the insurer has ever denied 
    coverage under the plan to any cardholder. Regardless of the wording of the 
    policy,
the substance of the arrangement is that coverage begins with completion 
    of the application by the telemarketer in the telephone conversation. By whatever 
    name the activity is called, Optima and BNS are selling credit insurance.
There is no evidence that the group insurance is sold by anyone other than 
    BNS and Optima.              (my emphasis)







[37]

He 
    held the
Bank Act
and IBBR do not authorize banks to sell credit 
    card insurance:

[67] 
    Advice and promotion are frequently part of the selling or solicitation process. 
    The fact that the more specific terms advice and promotion have been used 
    in the
Regulation
while the general word sale has not, indicates 
    that Parliament did not intend to grant banks the capacity to be directly 
    involved in the completion of the sale contract between the cardholder and 
    the insurance company.



[68] 
    The fact that Parliament is aware of the difference between the concepts of 
    promotion and sale is evident in s.410(1) of the
Bank Act
.  Section 
    (1)(d) permits a bank to promote merchandise and services to the holders 
    of any payment, credit or charge card issued by the bank. Section 1(e) permits 
    a bank to engage in the sale of tickets including lottery tickets offered 
    in connection with special, temporary and infrequent non-commercial celebrations 
    or projects that are of local, municipal, provincial or national interest 
    as well as federal, provincial, or municipal lottery tickets.



[69] 
    Had Parliament intended to permit banks to engage in all aspects of the placement 
    of credit insurance, including solicitation and enrolment or sale, it would 
    have said so in a much-shortened
Regulation
.



[70] 
    In my opinion, the
Regulation
does not countermand the general prohibition 
    contained in s.416(1) to the extent necessary to permit the kind of soliciting 
    and enrolment undertaken by Optima on behalf of BNS. None of the provisions 
    of the
Regulation
with respect to administration, advice and promotion 
    suggest that BNS may pursue and capture insurance subscribers by telemarketing.



[38]

The 
    chambers judge held the unlicensed telemarketing of SVBI to its customers 
    by BNS is not permitted by provincial law. The
FIA
and the ILER 
    specify that the credit transaction be incidental to the ordinary business 
    of the bank or the granting of credit respectively.  The judge interpreted 
    incidental to require the insurance transaction to occur at the time the 
    credit card contract is approved.  In his view, the timing of the credit insurance 
    transaction as much as the requirement of security determines whether the 
    activity fits within the exemption:

[83] 
    The
Regulation
refers to insurance sold incidentally to the granting 
    of credit. The definitions to which I have referred indicate that in order 
    to be regarded as incidental to the granting of credit, the insurance activity 
    must occur in conjunction with, concurrently with, or consequent upon the 
    granting of credit. In my opinion, an activity that is independent of the 
    act or process of granting credit is not incidental within the meaning of 
    the
FIA
and the
Regulation
.



. . .



[86] 
    Were BNS and its employees to sell credit insurance or solicit or enrol purchasers
at the time
of approving the credit card contract, licensing would 
    be unnecessary even if the ownership of insurance were not a requirement of 
    the contract. In the context of the
FIA
and
Regulation
, it is 
    the timing of the credit insurance transaction as much as the requirement 
    of security, that is important when seeking the protection of the exemption.

(my 
    emphasis)



[39]

The 
    judge held that Optima, as the banks telemarketing representative, could 
    not claim the benefit of a provincial exemption in respect of credit insurance 
    because that agent does not grant credit, and the employees of the agent are 
    not bank employees:

[79] 
    Optima is not a bank. Whatever the nature of the activities, Optima and its 
    employees may not claim exemption under s.171(3)(i) of the
FIA
. Optima 
    does not grant credit of any kind to anyone and s.2(c) of the
Regulation
cannot apply to it or its employees.







DISCUSSION AND ANALYSIS

V.   WHETHER 
    ON A TRUE CONSTRUCTION OF THE
FIA
AND THE ILER, BNS AND OPTIMA ARE 
    EXEMPT FROM THE
ACTS
OPERATION.

[40]

BNS 
    and Optima say they are not governed by the
FIA
either because:

1.   They do not fit within the definition of insurance       agent in s.168; 
    or

2.   They fit within the exemption granted by

s.171(3)(i) of the
FIA
; or

3.   They fit within the exemption of Regulation 2(c) of       the ILER.



The 
    definition of insurance agent in s.168



[41]

To repeat, s.168 of the
FIA
reads in part:

168
In this Division, unless the context otherwise requires,




insurance 
    agent
 means a person, other than an insurance company or an extraprovincial 
    insurance corporation, who
solicits, obtains or takes an application for 
    insurance
, or negotiates for or procures insurance, or signs or delivers 
    a policy, or collects or receives a premium.

(my emphasis)







[42]

The 
    crux of the appellants argument is that the activity of
enrolling
persons under an existing group insurance policy is excluded from this definition. 
     Specifically, they say that the expression solicits, obtains or takes an 
    application for insurance refers to the placement of new contracts of insurance 
    by an intermediary who represents an insurer and not the enrolment of persons 
    under an existing group insurance contract.

[43]

The 
    respondents submit that BNS and Optima are not simply performing the clerical 
    and administrative functions of enrolling persons in a group policy.  They 
    say that telemarketing by way of a sales pitch is soliciting, obtaining 
    or taking an application for insurance.

[44]

The 
    ordinary rules of statutory interpretation must be applied to determine the 
    ambit of the expression solicits, obtains or takes an application for insurance. 
     In
R.
v.
Sharpe,
[2001] 1 S.C.R. 45, 2001 SCC 2 (
Sharpe
), 
    Chief Justice McLachlin, writing for the majority, endorses the approach to 
    statutory interpretation articulated by E.A. Driedger in
Construction of 
    Statutes
(2
nd
ed. 1983) at 74:

Today 
    there is only one principle or approach, namely, the words of an Act are to 
    be read in their entire context and in their grammatical and ordinary sense 
    harmoniously with the scheme of the Act, the object of the Act, and the intention 
    of Parliament.







[45]

One 
    begins with the ordinary meaning of the words of the
Act
, and 
    specifically the meaning of the word solicit in s.168 of the
FIA
. 
     The
Concise Oxford Dictionary of Current English
, 7
th
ed. 
    provides the following definition:

Solicit
1. invite, make appeals or requests to, importune, ask importunately 
    or earnestly for







[46]

The 
    sole purpose of the carefully prepared scripts, reviewed and approved by BNS, 
    is to invite and encourage BNS customers to apply for SVBI.  In my view, therefore, 
    on a plain reading of s.168, the telemarketing activity engaged in by BNS 
    and Optima is soliciting applications within the meaning of the section.

[47]

Consideration 
    of the legislative context and the legislative intent does not appear to displace 
    or modify the plain meaning of the words.  Nor do these considerations support 
    the narrow interpretation of s.168 advanced by the appellants.  On its face, 
    the definition does not distinguish between the types of contracts solicited. 
     The legislative scheme suggests that the legislature intends to regulate 
    all soliciting activity generally, and then exempt specific persons who 
    engage in the activity.  It is therefore my opinion that BNS and Optima are 
    within the definition of insurance agent in s.168 of the
FIA
because they solicit applications for insurance.

The 
    exemption granted by s.171(3)(i) of the
FIA



[48]

To 
    repeat, s.171(3)(i) reads in part:

(3) 
    Subsection (2) does not apply to a person who



(i)

is a trust company, credit union, an extraprovincial trust corporation 
    or a bank or the officers and employees of any of them,
while acting as 
    agent in respect of credit insurance, incidental to the ordinary business
of the trust company, credit union, extraprovincial trust corporation or bank. 
                                (emphasis added)







[49]

It 
    is also relevant that s.171(1) defines credit insurance:

171

(1) In subsection (3)(i), credit insurance 
    means insurance against loss caused by the insolvency, default or death of 
    a person to whom credit is given, not being insurance included in or incidental 
    to any other class of insurance.







[50]

It 
    is common ground that SVBI is insurance against loss caused by the insolvency, 
    default or death of a person to whom credit is given, and is therefore credit 
    insurance as defined in the
FIA
.

[51]

On 
    appeal, the parties focused their arguments on the meaning of incidental 
    and bank in the context of the exemption.  The position of BNS hinges on 
    the meaning of incidental and the position of Optima hinges on the meaning 
    of bank or employees of a bank.

The 
    position of BNS



[52]

To 
    come within the exemption provided by s.171(3)(i) BNS must show that its activity 
    in soliciting customers to enrol in SVBI is incidental to its ordinary banking 
    business.  The appellants say the plain meaning of incidental does not import 
    a temporal connection.  They say that where the insurance is intended to support 
    the credit, it should be irrelevant whether the borrower buys the insurance 
    at the time the credit is granted or at some point after the credit is granted. 
     They say that in the ordinary business of banking, the extension of credit 
    to a credit cardholder occurs on a continuing basis.  Therefore, the credit 
    insurance is incidental to the ordinary business of the bank, as required 
    by the exemption.

[53]

The 
    respondents say the sale of credit insurance
after
the credit card 
    has been issued is not incidental to the ordinary business of the bank. 
     They say the legislative aim of this type of exemption is to make specific 
    forms of insurance in relation to a product or service readily and conveniently 
    available to the consumer
when
they purchase the product or service.

[54]

The 
    principles of statutory interpretation, set out in
Sharpe
, apply 
    to ascertain the meaning of incidental in the context of s.171(3)(i).  The 
    dictionary definitions of incidental referred to by the chambers judge are 
    of assistance:

Something 
    occurring or liable to occur in fortuitous or subordinate conjunction with 
    something else (
The Compact Oxford English Dictionary,
23
rd
ed.); and



Depending 
    upon or appertaining to something else as primary; something necessary, appertaining 
    to, or depending upon another which is termed the principal, something incidental 
    to the main purpose (
Blacks Law Dictionary
, 6
th
ed.)







[55]

The 
    chambers judge cited Estey J. in
Canadian National Railway
v.
Harris
, 
    [1946] S.C.R. 352

at 386 for the statement: that which is incidental 
    is something which is usually or naturally associated with or arising out 
    of the work of transportation.

[56]

The 
    respondents cite a decision of this Court,
British Columbia (Assessor 
    of Area No. 10  Burnaby/New Westminster)
v.
S.C.I. Canada Ltd.
(2000), 
    136 B.C.A.C. 153, 2000 BCCA 217 as authority for the proposition that incidental 
    requires sufficient integration between two activities.  In this case, Lambert 
    J.A. commented on the meaning of incidental in the context of the
Cemetery 
    and Funeral Services Act
:

Assuming 
    a consistent use of the word incidental, then the usage in s.35 illustrates 
    that it does not mean simply connected with or convenient for. It must 
    be more than a simple unrelated connection and more than simple convenience. 
    There must be a relationship of primary function with the subordinate function 
    and the subordinate function must relate to the carrying out of the primary 
    function.







[57]

The 
    Supreme Court of Canada has also considered the meaning of incidental in
R. v
.
Sundown
, [1999] 1 S.C.R. 393 (an authority not 
    referred to by counsel) in the context of a First Nations treaty right to 
    pursue activities incidental to hunting and fishing rights.  The Court commented: 
    Incidental activities are not only those which are essential, or integral, 
    but include, more broadly, activities which are meaningfully related or linked.

[58]

In 
    my view, the definitions and judicial consideration of incidental referred 
    to above are consistent with one another.  In its simplest formulation, the 
    plain meaning of incidental is connected with in a meaningful way and 
    includes an activity that is subordinate to a principal activity.

[59]

With 
    respect, a plain reading of incidental does not support the interpretation 
    adopted by the learned chambers judge and advanced by the respondents on this 
    appeal.  That is to say, in my opinion the ordinary sense of incidental 
    does not imply or import a temporal connection between the two related activities. 
     I see nothing in the scheme of the
FIA
that would add a requirement 
    for a temporal connection.

[60]

In 
    my view, credit card insurance supports the banks and customers credit transaction 
    in a meaningful way.  It is incidental to the banks business with the result 
    that BNS may rely on the exemption granted by s.171(3)(i).





The 
    position of Optima



[61]

With 
    respect to the position of Optima, the appellants say that the reference in 
    s.171(3)(i) to banks includes anyone acting on behalf of the bank.  They 
    say the additional reference to officers and employees should not be interpreted 
    as restricting the breadth of the primary reference, which is to the listed 
    financial institution.  The intervenor Canadian Bankers Association adds that 
    BNS is effectively the employer of the Optima telemarketers by virtue of the 
    control it exercises over all aspects of their work.

[62]

The 
    respondents say there is no basis for asserting that the province intended 
    the term bank to include any representative of a bank.  They say s.171(3) 
    is specific in its references as to whom the exemption applies and distinguishes 
    between employees, officers, salaried and commissioned employees, and managers. 
     They say that in order to be internally consistent, the extended definition 
    of banks would have to apply to other sections, such as s.81, which prohibits 
    unauthorized deposit business.  They say that Optima and BNS are separate 
    businesses and that there is an important difference between a salaried bank 
    employee offering the insurance, and a part-time telemarketer working on commission.

[63]

I 
    agree with the respondents that, on a plain reading, the term bank does 
    not include a separate entity acting on behalf of a bank.  In my view, however, 
    the position of Optima turns on whether or not those persons it hires to staff 
    BNS telemarketing program are to be treated as employees of BNS in interpreting 
    the exemption in s.171(3)(i).

[64]

The 
    general purpose of s.171 is to limit or control the persons who can act as 
    insurance agents through the imposition of a licensing scheme.  Section 171(2) 
    prohibits a person from acting as an insurance agent without being duly licensed.  
    Section 171(3) exempts certain persons from the licensing requirements, notably 
    in s.171(3)(i), a bank and its officers and employees.

[65]

The
FIA
does not define employee.  It must be otherwise defined 
    by common law principles, bearing in mind the policy objectives of the
FIA
.  
    Resort to general common law notions of an employee is not without difficulty 
    given that the principles are traditionally based on bipartite relationships, 
    involving an employee and an employer.  In this case, the traditional attributes 
    of an employer are shared by both Optima and BNS.  The Supreme Court of Canada 
    decision of
Pointe-Claire (City) v.
Quebec (Labour Court)
, [1997] 1 S.C.R. 1015 refers to the problem of identifying the real 
    employer in a tripartite relationship where the applicable legislation is 
    silent on the issue.  At 1055 (or para.63) Lamer C.J.C. comments: The tripartite 
    relationship does not fit easily into the classic pattern of bilateral relationships.  
    Lamer C.J.C. does not disapprove of a comprehensive approach that accords 
    with the purpose of the legislation.

[66]

In 
    England, Christie & Christie,
Employment Law in
Canada, 
    3
rd
ed
., vol.1 (Vancouver: Butterworths, 
    1998), the authors note that the common law approach to employee status 
    is context specific, and different tests have evolved to reflect the particular 
    purpose of the statute in question.  At para.2.2:

The 
    point cannot be over-emphasized that, even more obviously than at common law,
the purpose of the particular statute should and generally does determine 
    whether or not a given relationship falls within its scope
. It follows 
    that precedents arising under the common law or under a particular statute 
    can legitimately be rejected or modified when the question of employee status 
    is asked for a different purpose.

(my emphasis)



[67]

To 
    date, there has been no judicial consideration of the meaning of employee 
    within the context of the
FIA
.  One must, therefore, begin by 
    identifying the policy objectives of the
FIA
in granting an 
    exemption to a banks employee.  In my view, the
FIA
specifies 
    officers and employees of a bank for the purpose of exempting not only the 
    bank itself, but also those persons who facilitate the banks solicitation 
    of credit insurance applications, over whom the bank exercises control, and 
    who may otherwise be caught by the definition of an insurance agent in the
Act
.

[68]

In 
    my view, therefore, whether a person is an employee within the meaning of 
    s.171(3)(i) depends on whether a bank exercises fundamental control over the 
    work performed by those persons marketing the credit insurance.  To fall within 
    the exemption a person must be acting on behalf of a bank, and under the direction 
    of a bank, in respect of all aspects of the telemarketing program.

[69]

In 
    my view, there are sufficient indicia of control in the telemarketing program 
    to place BNS in the position of employer of the Optima telemarketers of SVBI.  
    Optima hires people specifically for the BNS assignment and in accordance 
    with a hiring profile approved by BNS.  BNS has the right to approve new hires 
    and can require Optima to remove individuals from the banks program.  BNS 
    controls the training of the telemarketers.  BNS controls the calling process; 
    the bank, with the assistance of Optima and a third party consultant, developed 
    a carefully designed script for the telemarketers to follow, and reviews and 
    approves all revisions to the script.  BNS prepares computer tapes to control 
    which cardholders are called.  BNS monitors and audits the calling process 
    in a variety of ways, including fielding complaints concerning the telemarketing 
    process.  In my view, BNS exerts fundamental control over the Optima telemarketers 
    of SVBI, bringing them within the meaning of employees in s.171(3)(i).  
    Accordingly, the Optima telemarketers fall within the licensing exemption.

[70]

I 
    wish to make clear, if it is not already, that the conclusion that the telemarketers 
    are BNS employees is reached only for the purpose of construing s.171(3)(i) 
    of the
FIA
, and not for any other purpose.  Whether the telemarketers 
    might also be considered to be Optima employees in a labour relations context, 
    or for the purposes of other legislation, is not addressed by these reasons.

[71]

It 
    necessarily follows that the Superintendent is without authority to issue 
    the order in respect of Optima.  As the Optima telemarketers are exempt from 
    the licensing requirement under the
FIA
, Optima is not engaged 
    in any activity that would attract the licensing requirements imposed by that
Act
.  Accordingly, it is my view that neither the bank, the 
    banks employees, nor Optima are subject to the
FIA
.



The 
    exemption granted by Regulation 2(c) of the ILER



[72]

In 
    the alternative, the appellants say that BNS and Optima are exempt from the 
    operation of the
FIA
by virtue of the exemption granted by Regulation 
    2(c) of the ILER.

[73]

Regulation 
    2(c) of the ILER reads:

2

Section 171(2) of the Act does not apply



(c)

to a person whose only activity as an insurance agent or insurance 
    salesperson is in connection with credit insurance sold incidentally to the 
    granting of credit, or arranged by, that person or that persons employer,







[74]

The 
    language of Regulation 2(c) mirrors the language used in s.171(3)(i) of the
FIA
.  Consequently, the position of BNS and Optima can be addressed 
    summarily.  In my opinion, BNS can rely on the Regulation exemption for the 
    reasons outlined above in respect of the meaning of incidental and because 
    BNS grants credit.  The Optima telemarketers can rely on the exemption because 
    BNS exercises such control over the workers as to be their employer in the 
    context of the Regulation.

[75]

To 
    summarize on the issue of statutory interpretation, I conclude that both BNS 
    and those persons hired by Optima to staff the BNS program are exempt from 
    the licensing requirements under the
FIA
.  As a result, the 
    Superintendent is without legislative authority to order BNS and Optima to 
    cease the telephone solicitations by any person who is not licensed pursuant 
    to the
FIA
.

[76]

This 
    conclusion is sufficient to dispose of this appeal, which in my view must 
    be allowed.

[77]

However, 
    as the constitutional issues were fully argued, and may be considered elsewhere, 
    and because the status of the telemarketers as BNS employees is an issue 
    not free from doubt, I will turn to those arguments raised by the appellants.

VI.  WHETHER SECTION 171 OF THE
FIA
IS INAPPLICABLE TO BNS AND/OR 
    OPTIMA BY VIRTUE OF INTER-JURISDICTIONAL IMMUNITY.



[78]

This 
    alternative analysis proceeds on the assumption that the Optima telemarketers 
    are not employees of BNS, but are rather the employees of Optima.  It is therefore 
    necessary to consider the doctrine of inter-jurisdictional immunity in relation 
    to both BNS and Optima.

[79]

The 
    doctrine of inter-jurisdictional immunity protects the core aspects of a federal 
    power from provincial regulation.  This area of exclusive federal jurisdiction 
    has been characterized in a number of ways in the case law, including, the 
    unassailable core, a vital part of the federal enterprise, what makes 
    [those subjects] specifically of federal jurisdiction, and an integral part 
    of the undertaking:
Commission du Salaire Minimum v.

Bell Telephone 
    Co. of Canada
, [1966] S.C.R. 767 (
Bell No. 1
);
Bell Canada v.

Quebec (Commission de la santé et de la sécurité du 
    travail)
,
[1988] 1 S.C.R. 749 (
Bell No. 2
);
Greater 
    Toronto Airport Authority v.

Mississauga (City)
(2000), 192 
    D.L.R. (4
th
) 443 (Ont. C.A.) (
Greater
Toronto 
    Airport Authority
).

[80]

The 
    variations in the language do not in my view result in divergent legal approaches. 
     Rather, there is one test expressed in a number of ways.  I take the law 
    to be as stated in
Bell No. 1

and affirmed recently in
Greater Toronto Airport Authority
.  It

poses this test:

Does 
    the provincial law affect a vital part of the federal enterprise?







The 
    position of BNS



[81]

The 
    appellants say the federal banking power has been given a broad and expansive 
    meaning in the case law.  They say an essential function of banking is the 
    lending of money to the banks customers, and the taking of security in respect 
    of such loans.  They say the promotion of an arrangement whereby the customer 
    insures unpaid credit card balances, with the bank as loss payee, is one way 
    for the bank to secure repayment of its loans.  They say the licensing regime 
    allows the province to decide who gets the license and under what conditions. 
     If the province can license, it can stop the bank from taking security in 
    a certain way.  Finally, as a matter of policy, the appellants say there should 
    be a uniform scheme for all of Canada and that a checkerboard, province by 
    province, approach is undesirable.

[82]

The 
    respondents say credit insurance is not simply security, but that it is a 
    profitable business in itself that generates income for the bank.  They say 
    if the purpose of the insurance were integral to the granting of the credit, 
    it would be a condition of the loan.  They refer to s.416(4) of the
Bank 
    Act
which allows the bank to require insurance to be placed by the 
    borrower.

[83]

It 
    is well established that a federal enterprise, such as a bank, is subject 
    to provincial laws that are general in their application, provided that the 
    application of these provincial laws does not trench on core aspects of the 
    federal power:
Bell No. 2
.
On this appeal, the application 
    of inter-jurisdictional immunity turns on whether the credit insurance activity 
    is at the core of the federal banking power.  To put this in another way, 
    is the credit insurance activity a vital part of the banking enterprise?

[84]

Tennant v.

The Union Bank of Canada
, [1894] A.C. 31 (P.C.) is a useful starting point in that it establishes 
    generally the breadth of the federal banking power.  At 46, Lord Watson states 
    that banking is an expression which is wide enough to embrace every transaction 
    coming within the legitimate business of a banker.  The issue, however, was 
    the
vires
of certain provisions of the
Bank Act
.  The 
    reference to banking refers to the totality of activity that Parliament 
    could legislate in respect of pursuant to s.91(15) and not the vital elements 
    of its power.

[85]

In
Alberta (Attorney General) v
.
Canada (Attorney General),
[1947] 
    A.C. 503, the validity of the
Alberta Bill of Rights Act
, S.A. 
    1946, c. II, was in issue: specifically, whether the province had constitutional 
    authority to enact provisions that controlled the creation of credit by chartered 
    banks and other credit institutions above and beyond their cash reserves. 
     The provinces argued that although banks dealt with credit as part of ordinary 
    business operations, the practice which the bank had assumed of expanding 
    credit over and above their cash reserves did not constitute the practice 
    at the time of confederation, was not a banking practice within the meaning 
    of s.91(15), and properly fell within the provincial power over property and 
    civil rights.  Viscount Simon held that banking was not limited to the extent 
    and kinds of business carried on by banks in Canada in 1867, and that the 
    concept of banking included the granting of credit by banks.

[86]

In
Bank of Montreal v
.
Hall
, [1990] 1 S.C.R. 121 (
Hall
), 
    the Supreme Court addressed the importance of the taking of security to the 
    business of banking.  The province argued that the statutory entitlement under 
    the
Bank Act
to seize security of a borrower was
ultra vires
the federal government.  The provincial law at issue purported to qualify 
    this right with the effect of delaying the banks ability to take possession 
    of the security.  The Court held that the provincial law could fairly be said 
    to come within property and civil rights in the province.  The federal law 
    created a security interest, facilitated access to capital and formed part 
    of the business of banking so that it was
intra vires
the federal government. 
    The Court ultimately held that the two laws conflicted so that the doctrine 
    of paramountcy applied.

[87]

At 
    147, La Forest J., writing on behalf of the Court, commented:

In 
    summary, I conclude that the definition of the exact manner in which a bank 
    may realize on property secured pursuant to the s. 178 security interest
is 
    integral to the exercise of Parliament of the federal jurisdiction in the 
    field of banking
. (my emphasis)

[88]

Although 
    this case was decided on the basis of paramountcy, the Supreme Court recognized 
    the taking of security as an integral aspect of federal legislative jurisdiction.

[89]

The 
    following principles emerge from these authorities:

1.   The federal banking power is broad in scope;

2.   The nature of the federal banking power is not            static and 
    must reflect changing conditions; and

3.   The taking of security is an integral part of the         federal banking 
    power.

[90]

These 
    principles support the conclusion that inter-jurisdictional immunity applies 
    to the insurance activities of BNS.  The promotion of SVBI provides security 
    to BNS by enhancing its ability to receive payment on loans.  In my view,
Hall

supports the proposition that the taking of security 
    is a vital part of a banking enterprise.  A provincial licensing regime, which 
    allows the province to say who gets a license and under what conditions, and 
    which could prevent the bank from obtaining security in a certain way, would 
    affect a vital part of a federal enterprise.  Therefore, in my opinion, the
FIA
is inapplicable to BNS and the Superintendent is without 
    authority to issue the BNS order.

[91]

The 
    learned chambers judge noted and the respondents argue that the record fails 
    to disclose the significance of the telemarketing of SVBI to the business 
    of banking.  Consequently, they argue that the appellants have failed to establish 
    that SVBI is a vital part of the banking enterprise, and inter-jurisdictional 
    immunity cannot be said to apply. I think it is sufficient to say that the 
    taking of security generally is a core aspect of the banking power. SVBI, 
    as a form of security, is within the core aspect of the banking power.

[92]

The 
    appellants also advanced the policy argument that the banking industry would 
    benefit from a uniform scheme.  The opposing argument is that it would always 
    be open to Parliament to protect banks against provincial regulation by legislating 
    in the area.  I think that the comments of Beetz J. in
Bell 
    Canada No. 2

are of assistance.  At 843, Beetz J. comments 
    on the area of occupational health and safety and the desirability of a twofold 
    jurisdiction:

A 
    division of jurisdiction in the area is likely to be the source of uncertainty 
    and endless disputes in which the courts will be called on to decide whether 
    a conflict exists between the most trivial federal and provincial regulations, 
    such as those specifying the thickness or colour of safety boots or hard hats.







[93]

In 
    my view, the same considerations hold true for the regulation of insurance 
    agents.  The licensing of agents may involve many aspects, such as education, 
    experience requirements, disciplinary authority, and investigative powers. 
     Concerns over uncertainty and endless disputes are best addressed by uniform 
    control.  I therefore think that policy considerations also support the application 
    of inter-jurisdictional immunity in the present case.

[94]

In 
    summary, I hold that the doctrine of inter-jurisdictional immunity applies 
    to the credit insurance activities of BNS.

The 
    position of Optima



[95]

I 
    have said above that the conclusion that BNS is an employer of the Optima 
    telemarketers for the purposes of s.171(3)(i) is not free from doubt.  I will, 
    therefore, consider the alternative which proceeds on the premise that Optima 
    employs the telemarketers.  This assumption gives rise to the additional issue 
    of the constitutional status of Optima.

[96]

With 
    respect to inter-jurisdictional immunity, the appellants say Optima is in 
    exactly the same position as BNS.  They say that where an activity falls within 
    exclusive federal jurisdiction, it does not matter whether the federal entity 
    carries on that activity by its own employees or through other representatives.

[97]

The 
    respondents say Optima is subject to the considerations relevant to the question 
    of inter-jurisdictional immunity in general.  They say that in both cases 
    the question to be determined is whether the activity is central or integral 
    to the operation of the federal undertaking.

[98]

The 
    appellants rely on
National Battlefields Commission v
.
Commission 
    de Transport de la Communaute Urbaine de Quebec
, [1990] 2 S.C.R. 838 
    (
National Battlefields
).  In my view, this judgment is conclusive 
    of Optimas position.

[99]

In
National Battlefields
, the Supreme Court held that the permit 
    scheme imposed by the Quebec
Transport Act
did not apply to 
    the sightseeing transport service provided by the appellant, a federally created 
    Commission.  The transport service was operated in a federal park and the 
    permit scheme was held to have a massive and intrusive impact on vital aspects 
    of the federal service.  The Court held, at 863, that [t]he status of the 
    person providing the service is not relevant for this purpose: the permit 
    system is simply not applicable to the service.  The Court did stipulate 
    that the exemption was only in respect of the federal service.  Any service 
    provided by the appellant outside the limits of the federal service would 
    be subject to the licensing scheme.

[100]

The situation in
National Battlefields
is, in my opinion, 
    closely analogous to the situation on appeal.  The taking of security is a 
    vital aspect of the banking enterprise, just as the provision of the sightseeing 
    transport service was vital to the purpose and function of the Battlefield 
    Commission.  The status or identity of the person promoting the security is 
    no more relevant than the status or identity of the person providing the transport 
    service.  The
FIA
licensing system cannot apply to the promotional 
    activities of BNS representative, just as the Quebec licensing scheme could 
    not apply to the Commissions representative.  I therefore hold the view that 
    inter-jurisdictional immunity applies to the credit insurance activities of 
    the Optima workers who market SVBI, as well as BNS.

[101]

In summary, I conclude that inter-jurisdictional immunity applies to 
    the promotional activities in respect of credit insurance, specifically SVBI, 
    carried out by BNS and Optima.  Therefore, insofar as the
FIA
purports to regulate the promotion of SVBI carried out by BNS and Optima, 
    it must be read down to exclude BNS and Optima.  The Superintendent is therefore 
    without authority to issue either order.

VII. WHETHER SECTION 171 IS INOPERATIVE IN RESPECT OF BNS AND/OR OPTIMA 
    BECAUSE THE LEGISLATION CONFLICTS WITH THE FEDERAL SCHEME, WHICH MUST PREVAIL 
    BY REASON OF PARAMOUNTCY. THIS ISSUE RAISES THE TRUE INTERPRETATION OF THE
BANK ACT
AND IBBR, INCLUDING THE MEANING OF THE WORD PROMOTE IN SECTION 
    7



[102]

The doctrine of paramountcy arises when there is some overlap between 
    provincial and federal regulation.  The overlap must be tolerable in the sense 
    that the provincial law does not strike at the core of a federal power.  The 
    federal and provincial laws can coexist unless they conflict.  If there is 
    a conflict, the doctrine of paramountcy will render the provincial law inoperative 
    to the extent of the conflict.

[103]

I have reached the conclusion that inter-jurisdictional immunity applies 
    to the telemarketing of SVBI and Optima.  There can therefore be no overlap 
    in jurisdictions; the province lacks legislative competence in the area.  As 
    a result, there is no potential for conflict.

Comments 
    on the Chambers Judgment

[104]

I have not found it necessary to address directly the issue of the 
    true construction of the
Bank Act
and IBBR.

[105]

I would say, however, with respect, that the learned chambers judge 
    erred in his approach.  He interpreted the
Bank Act
and the 
    IBBR independent of the paramountcy issue, which he found no need to address.  
    In my opinion, the need to interpret the
Bank Act
and the IBBR 
    only arises in the context of the paramountcy analysis.  The broad issue between 
    the parties is whether the provincial Superintendent has the authority to 
    issue the orders.  The federal regulator (Office of the Superintendent of 
    Financial Institutions) is not party to the action.  Consequently, the interpretation 
    of the
Bank Act
and the IBBR is not relevant to this dispute 
    except as it relates to the paramountcy issue.

[106]

I am also of the view that the learned chambers judge erred in concluding 
    that the term promote did not include BNS and Optimas telemarketing activities.  
    Although not necessary to my conclusions, as the chambers judge addressed 
    the federal legislation, and because the paramountcy issue was fully argued 
    and may be considered elsewhere, I offer the following comments.

The
Bank Act
and the IBBR

[107]

The starting point is s.416 of the
Bank Act.
Subsection 
    416(1) prohibits a bank from undertaking the business of insurance except 
    to the extent permitted by this
Act
or regulations.

[108]

Subsection 416(2) prohibits a bank from acting as agent for any person 
    in the placing of insurance .  It is noteworthy that agent is not defined 
    in the
Bank Act
and, in my view, the use of the term agent 
    must be taken to refer to a formal act of agency.  Support for this interpretation 
    is found in M.H. Ogilvie,
Canadian Banking Law
, (Scarborough: Carswell, 
    1991).  Professor Ogilvie discussed the former version of this prohibition, 
    then s.174(3), which also prohibited a bank from acting as agent for any 
    insurance company or any person in the placing of insurance.  Professor Ogilvie 
    comments at 339:

This 
    prohibition ensures the separation of the financial service of banking from 
    that of insurance. However, the means of separation is the legal concept of 
    agency which is not defined by the Act. Presumably then, the law of agency 
    is applicable here and that would not operate to prohibit banks from activities 
    in which they have engaged for some time such as distributing and collecting 
    Blue Cross and other similar insurance application forms or insurance forms 
    for credit card plans. The Act prohibits formal acts of agency by banks







[109]

Subsection 416(2) creates an absolute prohibition against a bank acting 
    as an agent in the placing of insurance.  Unlike subsection 416(1) there are 
    no agency activities that are permitted to a bank under the
Act
or Regulations.

[110]

In summary, the
Bank Act
creates a prohibition against 
    a bank undertaking the business of insurance subject to those insurance related 
    activities which are permitted to a bank under the Regulations.  Second, the
Bank Act
contains an absolute prohibition against a bank acting 
    as a formal agent in the placing of insurance, that is to say, a bank cannot 
    bind any party to an insurance contract.

[111]

It is then necessary to look at the IBBR in order to determine the 
    limits of insurance related activities that are permitted to a bank.  The 
    IBBR permits a bank to administer, provide advice, and promote authorized 
    types of insurance to its customers.  SVBI is an authorized type of insurance, 
    as defined in s.2 of the IBBR, being a combination of creditors disability 
    insurance, creditors life insurance and creditors loss of employment insurance.

[112]

The appellants say the telemarketing activity is permitted under s.7 
    of the IBBR.  Section 7 prohibits the promotion of an insurance policy of 
    an insurance company, agent or broker unless the policy is an authorized type 
    of insurance or the service is in respect of such a policy.  The appellants 
    say the chambers judge erred in narrowly construing promote so as to exclude 
    the telemarketing activity.  The respondents say the chambers judge was correct 
    in concluding that promote does not include the telemarketing of BNS customers, 
    such that the activity is not permitted by s.7.

[113]

The word promote is defined in
Blacks Law Dictionary
, 5
th
ed. as follows:

To 
    contribute to growth, enlargement, or prosperity of; to forward; to further; 
    to encourage; to advance.







[114]

The
Canadian Dictionary of the English Language
,
An Encyclopaedic 
    Reference
defines promote as:

4. to attempt to sell or popularize by advertising or publicity







[115]

In my opinion, the plain meaning of promote would encompass activities 
    in furtherance of the sale of a product or service.

[116]

The legislative context of promote qualifies the breadth of this 
    definition.  The bank cannot bind an insurer to a risk because of s.416(2).  
    Therefore, in my opinion, Parliament chose the term promote to connote any 
    activity in furtherance of the sale of an authorized insurance policy, short 
    of binding any party to the policy.

[117]

In summary, the
Bank Act
and IBBR permit banks to engage 
    in promotional activities in respect of an authorized type of insurance.  
    In promoting an authorized type of insurance, the bank may not actually bind 
    any party to the insurance contract.

[118]

The appellants telemarketing activity is in furtherance of the sale 
    of SVBI, an authorized insurance policy.  The record discloses that the insurance 
    company must approve the application and issue the certificate.  It follows 
    that BNS and Optima are not binding the insurer.  In my view therefore, BNS 
    is engaged in insurance activities permitted by the
Bank Act
and Regulations, because promote is broad enough to cover the telemarketing 
    activities.

VIII. 
    SUMMARY AND DISPOSITION



[119]

I conclude that:

1.   On a true statutory interpretation of the
FIA
, BNS and 
    Optima are not subject to its provisions because BNS and the Optima telemarketers 
    are exempt; and

2.   In the alternative, the telemarketing activity of both BNS and Optima 
    is immune from the
FIA
licensing scheme by virtue of the doctrine 
    of inter-jurisdictional immunity.

[120]

I would allow the appeal.  I would grant a declaration that the Superintendent 
    is without legislative authority to issue orders in respect of BNS and Optima, 
    because BNS and the Optima telemarketers are exempt from the licensing requirements 
    of the
FIA
, and further declare that the provisions of the
FIA
are inapplicable to BNS and Optima by virtue of the doctrine of inter-jurisdictional 
    immunity.







The 
    Honourable Chief Justice Finch









I AGREE:







The Honourable Madam 
    Justice Prowse









I AGREE:







The Honourable Mr. 
    Justice Low




