Citation: Canadian Reform Conservative Alliance Date: 20030911

Party Portage-Lisgar Constituency Docket: AI03-30-05527

Association v. Harms et al., 2003 MBCA 112

IN THE COURT OF APPEAL OF MANITOBA

Coram: Scott C.J.M., Twaddle and Freedman JJ.A.

2003 MBCA 112 (CanLII)

BETWEEN:

THE CANADIAN REFORM ) S. Green, Q.C.

CONSERVATIVE ALLIANCE PARTY ) for the Appellants
PORTAGE-LISGAR CONSTITUENCY )
ASSOCIATION ) P. Halamandaris
) for the Respondent
(Plaintiff) Respondent )
) D. L. Carlson
) for the Attorney General
- and - ) of Manitoba
)
) Appeal heard:
DAVID HARMS and GLEN WHEELER ) June 19, 2003
)
(Defendants) Appellants ) Judgment delivered:
) September 11, 2003

SCOTT C.J.M.

INTRODUCTION

1 The defendants challenge the authority of the plaintiff association to

bring an action in its own name. Two issues are raised on this appeal:

(a) is sec. 92 of The Court of Queen’s Bench Act, C.C.S.M., c. C280

(the Act), which purports to permit the rules committee established
under the Act to make rules “whether or not the rules alter
substantive law,” unconstitutional because it unlawfully delegates

Appeal from (2003), 171 Man.R. (2d) 210, 2003 MBQB 11

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the responsibility of the Legislature of Manitoba to enact law; and

(b) are the Queen’s Bench Rules (8.10-8.12), which permit an

2003 MBCA 112 (CanLII)

association to sue or be sued in its own name (and deeming the
association to be a corporation “for the purposes of these Rules”),
invalid because they are in reality substantive rather than
procedural, and hence beyond the rule-making power of the judges
of the Court of Queen’s Bench?

BACKGROUND

2 In 1989, as part of the omnibus revision of the entire Queen’s Bench

Rules of Practice and Procedure (the rules), Rule 8 was enacted. The rules
made a number of substantial changes to the former practice for proceedings
involving partnerships and other unincorporated entities. Specifically for
our purposes, they provide:
Proceedings by or Against an Association
8.10 A proceeding may be brought by or against an association in
the name of the association.

Effect of Order Against an Association

Enforceable against property
8.11(1) An order against an association may be enforced against the
property of the association, including property held in trust for the
association.
Member not liable
8.11(2) A member of an association is not personally liable for the
payment of money under an order against the association unless that
member is a party to the proceeding and has been held to be personally
liable.

Association is Corporation
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8.12 An association shall, for the purposes of these Rules, be

deemed to be a corporation.

2003 MBCA 112 (CanLII)

3 The power to make rules is found in sec. 92 of the Act, the pertinent
parts of which are as follows:
Subject to subsection 93(1), the rules committee may, upon
consultation with the Minister of Justice, make rules, whether or not the
rules alter substantive law, with respect to the practice and procedure of
the court and, without limiting the generality of the foregoing, in
relation to
(a) the commencement and conduct of proceedings in the court;
.....
(g) proceedings by or against partnerships, sole proprietorships,
associations and other unincorporated entities;

.....

Further clarification is provided by sec. 93 which reads as follows:

No rules to conflict with an Act

93(1) Nothing in section 92 authorizes the making of rules which
conflict with an Act of the Legislature, but rules may supplement the
provisions of an Act.

Rules are regulations

93(2) The rules are regulations within the meaning of The Regulations
Act.

THESE PROCEEDINGS

4 When the plaintiff’s action was commenced, the defendants filed a

statement of defence challenging the plaintiff’s capacity to sue, and
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subsequently moved to dismiss the statement of claim. A notice of

constitutional challenge was filed. Glowacki J., in January 2003, released
reasons dismissing the defendants’ motion. He concluded (at para. 15):

2003 MBCA 112 (CanLII)

Sections 92(a) and (g) of the Act allow the court to make rules with
respect to the practice and procedure of the court in relation to
commencement and conduct of proceedings in the court and
proceedings by or against partnership, sole proprietorship, association
and other unincorporated entities. Queen’s Bench Rules 8.10 to 8.12
allow an unincorporated association to take legal action on a debt.
There is no doubt that these rules create a change in the substantive law
but s. 92 of the Act allows this. The rules deal with proceedings by or
against an association and are within the scope authorized by the Act.
Accordingly, I find that the delegation of authority and the rules
enacted pursuant thereto are valid and that the plaintiff is authorized to
bring the action. The defendants’ motion is dismissed.

5 The trial judge did not deal with the constitutionality of Rules 8.10-
8.12.

ARGUMENT

6 The defendants argue that an association is not a legal entity and has
no capacity at law to sue or be sued. Law can be made in only two ways it is
submitted: by the courts through development of the common law or by
statute. A statute may empower Cabinet or some other designated body to
make regulations having the force of law, but the nature of the regulation
must be clear and the body to whom the authority is delegated must itself
operate strictly within the designated power under the enabling statute. It is
alleged that the purpose and effect of the impugned rules is to enable the
rules committee rather than the Legislature to alter the common law, as in
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this instance where, at common law, unincorporated associations are merely

conglomerates of individuals, and that this is an unconstitutional delegation.

2003 MBCA 112 (CanLII)

7 The foundation of the defendants’ second argument is that the rules in
question would be ultra vires as being beyond the rule-making power of the
rules committee in the absence of sec. 92 of the Act. See the judgment of
Smith C.J.M., writing for himself with Freedman J.A. concurring, though
dissenting on the merits, in Montreal Trust Company v. Pelkey et al. (1970),
73 W.W.R. 7 (Man.C.A.) (at p. 18):

The conclusion to which I have come is that R. 284A(1), commendable

though its purpose is, interferes with the substantive right of a plaintiff
to have his action adjudicated upon by the court, and that it does so to a
substantial degree and in a manner which in some instances may, by the
elimination of judicial discretion, actually prevent essential justice
being done. I cannot believe that the legislature intended, by the
language employed in sec. 101(1) of The Queen’s Bench Act [the
distinctly different predecessor to sec. 92], to confer upon the judges
the power to make such a Rule. In my view, therefore, R. 284A(1) is
invalid.

8 The defendants then argue that sec. 92 cannot grant to the rules
committee the power to alter the common law of the province as it relates to
substantive rights. There is simply no precedent, Mr. Green submits, for a
Legislature to do this. He relies on the following excerpt from In re Gray
(1918), 57 S.C.R. 150 (at pp. 156-57):

The practice of authorizing administrative bodies to make regulations

to carry out the object of an Act, instead of setting out all the details in
the Act itself, is well known and its legality is unquestioned. But it is
said that the power to make such regulations could not constitutionally
be granted to such an extent as to enable the express provisions of a
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statute to be amended or repealed; that under the constitution

Parliament alone is to make laws, the Governor-in-council to execute
them, and the court to interpret them; that it follows that no one of these
fundamental branches of government can constitutionally either

2003 MBCA 112 (CanLII)

delegate or accept the functions of any other branch.
In view of Rex v. Halliday, [1917] A.C. 260 [86 L.J.K.B. 1119], I do
not think this broad proposition can be maintained. Parliament cannot,
indeed, abdicate its functions, but within reasonable limits at any rate it
can delegate its powers to the executive government. Such powers
must necessarily be subject to determination at any time by Parliament,
and needless to say the acts of the executive, under its delegated
authority, must fall within the ambit of the legislative pronouncement
by which its authority is measured.
[emphasis added]

9 In summary, the defendants’ position is that conferring corporate

status with limited liability upon an association is not a matter of “practice
and procedure,” but is rather an alteration of a fundamental principle of
substantive common law and beyond the rule-making capacity of the rules
committee.

10 In response, counsel for the Attorney General submits that a

delegation cannot be successfully challenged simply because it confers a
legislative power on another body. See R. v. Furtney, [1991] 3 S.C.R. 89,
per Stevenson J. (at p. 104):
The prohibition is against delegation to a legislature. There is no
prohibition against delegating to any other body. The power of
Parliament to delegate its legislative powers has been unquestioned, at
least since the Reference as to the Validity of the Regulations in
Relation to Chemicals, [1943] S.C.R. 1. The delegate is, of course,
always subordinate in that the delegation can be circumscribed and
withdrawn.
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11 In Gray, earlier referred to, the Supreme Court added the following
comment (at p. 176):

2003 MBCA 112 (CanLII)

A complete abdication by Parliament of its legislative functions is
something so inconceivable that the constitutionality of an attempt to
do anything of the kind need not be considered. Short of such an
abdication, any limited delegation would seem to be within the ambit of
a legislative jurisdiction certainly as wide as that of which it has been
said by incontrovertible authority that it is

as plenary and as ample … as the Imperial Parliament in the

plenitude of its powers possessed and could bestow… [Hodge
v. The Queen (1883), 9 App. Cas. 117 (P.C.)].

See as well Morrissey v. Morrissey (2000), 196 D.L.R. (4th) 94, 2000 NFCA
67, and K Mart Canada Ltd./K Mart Canada Ltee v. Millmink Developments
Ltd. et al. (1986), 31 D.L.R. (4th) 135 (Ont.H.C.). Counsel noted that it is
not at all uncommon for the rules to affect or deal with substantive matters;
for example, those concerning production and disclosure of documents, or
attendance of officers on discovery.

12 In the result, it is argued, the delegated rule-making power contained

in sec. 92 is undoubtedly constitutional.

13 Counsel for the plaintiff placed great emphasis upon the general
statement contained in the following passage from the judgment of Hughes
J. in K Mart Canada which confirms that (at p. 142):

While the Legislature of Ontario purports to confer upon that

committee wide powers to make rules for the Supreme and District
Courts in relation to the practice and procedure of the courts, even
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though they alter or conform to the substantive law, in relation to, inter
alia¸ discovery and other forms of disclosure before hearing, including
the scope thereof and the admissibility and use of such discovery and
disclosure in a proceeding, I am not persuaded that that legislation

2003 MBCA 112 (CanLII)

either expressly, or by necessary inference, confers the power to
discriminate between individuals, i.e., litigants against whom a claim is
made in a civil action.

14 But the quotation in its entirety also confirms that there are limits to
such delegation. In Morrissey, the Newfoundland Court of Appeal, dealing
with similar legislation and rules to those under consideration in this appeal,
concluded that while the rule-making committee did have the power to alter
substantive law relating to litigation privilege in the context of a rule
permitting the physical or mental examination of a party in a civil
proceeding, it did not have the capacity to change the law of solicitor/client
privilege, “a right fundamental to the administration of justice,” in the
absence of “a specific directive of the Legislature that the rules committee
has such power” (at para. 25). In the result, Cameron J.A., writing for the
court, held that even though the rules committee had made a deliberate
decision to overrule litigation privilege “in the context of orders for medical
examinations” (at para. 32) the statutory wording was not (at para. 34):

… sufficiently clear to demonstrate an intention by the Legislature to

deny the litigation privilege respecting medical reports which meet the
dominant purpose test and which are not intended to be used at trial.

DECISION

15 The constitutional challenge can be quickly disposed of. Clearly, for

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the reasons advanced by counsel for the province, sec. 92 of the Act is not
unconstitutional.

2003 MBCA 112 (CanLII)

16 It becomes a question then of interpretation of secs. 92 and 93 of the
Act, applying the modern statutory analysis as explained in Rizzo & Rizzo
Shoes Ltd. (Re), [1998] 1 S.C.R. 27, per Iacobucci J. (at para. 21):
Although much has been written about the interpretation of legislation
(see, e.g., Ruth Sullivan, Statutory Interpretation (1997); Ruth
Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994)
(hereinafter “Construction of Statutes”); Pierre-André Côté, The
Interpretation of Legislation in Canada (2nd ed. 1991)), Elmer
Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates
the approach upon which I prefer to rely. He recognizes that statutory
interpretation cannot be founded on the wording of the legislation
alone. At p. 87 he states:

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.

17 Since the rules drew their inspiration from the (then) recently
completed omnibus revision of the Ontario rules, it is helpful to examine
jurisprudence from that province. Once this is done, it is evident that
Ontario decisions support the view that a rule which has the effect of altering
the substantive law to be effective must, in essence, be about court practice
and procedure. One example is Unical Properties v. 784688 Ontario Ltd.
(1990), 75 O.R. (2d) 284 (Gen.Div.). Steele J., in a proceeding where the
defendants moved to dismiss the action commenced in the name of a
partnership, observed (at p. 287):

While s. 65(2) [rep. & sub. 1989, c. 55, s. 2; am. 1989, c. 67, s. 1] of
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the Courts of Justice Act, 1984, S.O. 1984, c. 11, permits the civil
Rules Committee to make rules even though they alter the substantive
law, such rules must relate to the enumerated items. In my opinion,
any change in the substantive law must be to such portions of the

2003 MBCA 112 (CanLII)

common law that relate to issues such as evidence, practice or
procedure. Section 65(2) does not give the Rules Committee the right
to alter the common law relating to partnerships.

18 Granger J. in Alexander v. Alexander (1988), 15 R.F.L. (3d) 316

(Ont.S.C.), put the matter this way: “Section 90 provides the Rules
Committee with the new power to make rules which affect, yet do not
conflict with, the substantive law” (at p. 319). See as well K Mart Canada.

19 In Holmested and Watson, Ontario Civil Procedure, vol. 1, looseleaf

(Carswell, 1993) at CJA-123, §2, in discussing sec. 66 of the Ontario Courts
of Justice Act (which also authorizes the rules committee to enact rules
which alter substantive law) the authors opine:

This section does not give the Rules Committee the right to alter the
common law relating to partnerships; any change in the substantive law
made by rules must be to such portions of the common law as relate to
issues such as evidence, practice or procedure: Unical Properties v.
784688 Ontario Ltd. ….

To the same effect see Carthy, Millar & Cowan, Ontario Annual Practice,
2003-2004 ed. (Canada Law Book, 2003) at CJA-64. The editors’ note in
describing this provision states: “The Rules Committee may make
amendments which touch upon substantive law” [emphasis added].

20 This statement is entirely consistent with the well-recognized

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distinction between substantive and adjectival law. As Lambert J.A.

explained in Brotherhood of Railway, Airline and Steamship Clerks, System
Board of Adjustment No. 435 v. Canadian Pacific Air Lines Limited et al.

2003 MBCA 112 (CanLII)

(1984), 55 B.C.L.R. 18 (C.A.) (at p. 35):

In my opinion, the Rules can create new substantive law. But they are
intended to be a collection of procedural rules for the enforcement of
substantive rights that are derived from the true sources of substantive
law, namely, the common law, equity, the Constitution and the statutes.
It is only in exceptional cases that the Rules create new substantive law.
And, in cases of ambiguity, the Rules should be interpreted in such a
way as to restrict them to procedure.

21 My conclusion is that sec. 92 means what it says – by its very wording

it is restricted to rules of “practice and procedure.” While the rules may
“alter substantive law,” the pith and substance of the rules must be
procedural. If in fact the central point of the rule is not a matter of adjectival
law but a fundamental alteration in substantive law, then it is beyond the
ambit of the authority of the rules committee. This is not to say that there
are not other ways to accomplish such a result, i.e. by specific statutory
amendment to the appropriate Act, but only that it cannot be done by the
rules committee, and subsequent regulation, under the guise of a procedural
rule.

22 What then is the essence, or focus, of the rules in question? The

fundamental principle that an unincorporated association is not a legal entity
is well established. See, for example, Society Brand Clothes Ltd. v.
Amalgamated Clothing Workers of America et al., [1931] S.C.R. 321,
Canada Morning News Company v. W. G. B. Thompson et al., [1930] S.C.R.
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338, and Yue Shan Society v. Chinese Workers’ Protective Association,

[1944] 2 D.L.R. 287 (B.C.C.A.). Such an association has no standing to sue
or be sued. See Halsbury’s Laws of England, 4th ed. (reissue) (London:

2003 MBCA 112 (CanLII)

Butterworths, 1998) vol. 9(1), and Residential Schools (Re) (2001), 204
D.L.R. (4th) 80, 2001 ABCA 216. For the same reason, associations in and
for themselves cannot own property; instead, the authorities speak to the
ownership of property vesting in the members or in trustees on behalf of the
association. See Halsbury’s Laws of England, 4th ed. (reissue) (London:
Butterworths, 1991) vol. 6 at paras. 242 and 251, and Canadian
Encyclopedic Digest (Western), 3rd ed., vol. 2, at paras. 65-66. If property is
not held by trustees, then it rests in the members of the association. See
Massie & Renwick Limited v. Underwriters’ Survey Bureau, Limited, [1940]
S.C.R. 218, and MacDonald et al. v. Bezzo et al. (1998), 108 O.A.C. 232.

23 There can be no doubt, in my opinion, that the effect on substantive

law of the impugned rule is profound and cannot be regarded as incidental or
merely touching upon substantive law. Indeed, it seems that the problem in
question is based on a fundamental misconception, namely, that an
unincorporated association can own property.

24 I hasten to caution that the profession should not draw the wrong
conclusion from the result in this case. Where a challenge similar to that
advanced in this case is made, it will be necessary in each case to conduct
the kind of analysis that has taken place in the instant appeal. It is only
where after such a process the pith and substance of the rule is found to be
substantive rather than adjectival that the rule will be struck down.
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Doubtless in the vast majority of cases the rule in question will be found
fundamentally to be about practice and procedure.

2003 MBCA 112 (CanLII)

25 Here it is plain and obvious that the real focus of the rules in question
is to alter in a very real way the substantive law relating to the nature and
status of unincorporated associations. They are in reality about substantive
law and only peripherally about practice and procedure. This is the reverse
of what they should be. In such circumstances, the rules in question must be
struck down.

26 The appeal is accordingly allowed, with costs throughout.

_____________________________ C.J.M.

I Agree:

_______________________________ J.A.

I Agree:

_______________________________ J.A.