Reference Re Securities Act (Can.), (2011) 510 A.R. 200

• Judge: Côté, Conrad, Ritter, O'Brien and Slatter, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: January 24, 2011
• Citations: (2011), 510 A.R. 200;2011 ABCA 77

Ref. Re Securities Act (2011), 510 A.R. 200; 527 W.A.C. 200 (CA)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. MR.075

Her Majesty the Queen in Right of Alberta (appellant) v. Her Majesty the Queen in Right of Canada (respondent) and Attorney General of Québec and Canadian Bankers Association (intervenors)

(1003-0031-AC; 2011 ABCA 77)

Indexed As: Reference Re Securities Act (Can.)

Alberta Court of Appeal

Côté, Conrad, Ritter, O'Brien and Slatter, JJ.A.

March 8, 2011.

Summary:

The Lieutenant Governor in Council (Alta.) referred for hearing and consideration questions relating to the constitutionality of the proposed federal Canadian Securities Act (CSA).

The Alberta Court of Appeal ruled that the Parliament of Canada did not have the legislative authority to pass the CSA.

Constitutional Law - Topic 1007

Interpretation of Constitution Act - General principles - Judicial restraint respecting political issues - In ruling that the Parliament of Canada did not have the legislative authority to pass the proposed Canadian Securities Act, the Alberta Court of Appeal stated as follows: "It is neither appropriate nor necessary for this Court to try and determine whether it is 'better' for Canada to have a national, as compared to a provincial, system of securities regulation. While the Constitution Act should be interpreted in a contextual way having regard to changing social standards, advances in technology, and developments in the way business is conducted, there are limits to how far the courts should go in reallocating the constitutional powers divided up in ss. 91 and 92 ... The questions posed ... must be answered in accordance with the principles of constitutional statutory interpretation, and not based on the Court's assessment of the ideal allocation of jurisdiction between the federal and provincial governments" - See paragraphs 9 to 13.

Constitutional Law - Topic 1581

Extent of powers conferred - Double aspect doctrine - General - The Parliament of Canada proposed to pass the Canadian Securities Act (CSA), "comprehensive legislation regulating the securities industry at the national level" in a way similar to the existing provincial legislation: licensing and regulation of the conduct of participants in the securities industry; regulation of the raising of money; requirements respecting continuous disclosure by way of documents like the prospectus and offering memorandum, etc. - The Government of Canada based the CSA's constitutionality on the "general" branch of the federal trade and commerce power - The Alberta Court of Appeal ruled that the Parliament of Canada did not have the legislative authority to pass the CSA - Securities regulation had for decades been constitutionally characterized as a matter of property and civil rights - The "double aspect" doctrine did not apply - See paragraphs 43 to 46.

Constitutional Law - Topic 5660

Federal jurisdiction (s. 91) - Regulation of trade and commerce - General - The Parliament of Canada proposed to pass the Canadian Securities Act (CSA), "comprehensive legislation regulating the securities industry at the national level" in a way similar to the existing provincial legislation: licensing and regulation of the conduct of participants in the securities industry; regulation of the raising of money; requirements respecting continuous disclosure by way of documents like the prospectus and offering memorandum, etc. - The Government of Canada based the CSA's constitutionality on the "general" branch of the federal trade and commerce power - The Alberta Court of Appeal ruled that the Parliament of Canada did not have the legislative authority to pass the CSA, even if the five-part test in General Motors v. City National Leasing (SCC, 1989) were adopted - While the proposed legislation was a part of a general regulatory scheme and was monitored by a regulatory agency, it did not concern trade as a whole, but rather a particular industry - The provinces were not incapable of regulating the securities industry - Exclusion of some provinces from the regime would not undermine its operation in other provinces - Securities regulation had for decades been constitutionally characterized as a matter of property and civil rights - No authority was cited which sanctioned such a wholesale transfer of constitutional jurisdiction - See paragraphs 33 to 42, 47 to 49.

Constitutional Law - Topic 5660

Federal jurisdiction (s. 91) - Regulation of trade and commerce - General - [See Constitutional Law - Topic 7204 ].

Constitutional Law - Topic 6444

Federal jurisdiction (s. 91) - Criminal law - General - Matters not criminal - The Parliament of Canada proposed to pass the Canadian Securities Act (CSA), "comprehensive legislation regulating the securities industry at the national level" - The Alberta Court of Appeal held that the CSA could not be properly classified as criminal law - See paragraphs 30 to 32.

Constitutional Law - Topic 7204

Provincial jurisdiction (s. 92) - Property and civil rights - General - Extent of power or subject matter - The Alberta Court of Appeal stated that the specific mention in s. 91 of the Constitution Act of economic topics such as banking, bankruptcy and insolvency, bills of exchange, interest, patents and copyrights, and the exclusion of the securities industry, the insurance companies and the trust companies (which were regulated by the provinces under their property and civil rights power) pointed to the width of the provincial property and civil rights power, and the intended narrowness of the federal trade and commerce power - See paragraphs 2, 28 and 29.

Constitutional Law - Topic 7285

Provincial jurisdiction (s. 92) - Property and civil rights - Regulatory statutes - Securities - The Parliament of Canada proposed to pass the Canadian Securities Act (CSA), "comprehensive legislation regulating the securities industry at the national level" in a way similar to the existing provincial legislation: licensing and regulation of the conduct of participants in the securities industry; regulation of the raising of money; requirements respecting continuous disclosure by way of documents like the prospectus and offering memorandum, etc. - The CSA would be effective in a province only if it consented to it - The Alberta Court of Appeal ruled that the Parliament of Canada did not have the legislative authority to pass the CSA - The pith and substance of the proposed regulatory regime was property and civil rights, not any established federal head of power - The CSA was not a response to a "crisis" in the constitutional sense - It resulted from the promotion of economic policy - The legislation was not primarily focussed on the type of irresponsible investment decisions or products that could create systemic risks - The focus was still on protecting individual investors, by providing them with the information they needed to make rational investment decisions - The existing case law "clearly" supported the proposition that regulating the securities industry was a matter of property and civil rights - See paragraphs 14 to 27.

Cases Noticed:

Canadian Western Bank et al. v. Alberta, [2007] 2 S.C.R. 3; 362 N.R. 111; 409 A.R. 207; 402 W.A.C. 207; 2007 SCC 22, refd to. [para. 2].

Potato Marketing Board (P.E.I.) v. Willis, [1952] 2 S.C.R. 392, refd to. [para. 8].

Nova Scotia (Attorney General) v. Canada (Attorney General), [1951] S.C.R. 31, refd to. [para. 8].

Fédération des producteurs volailles du Québec et al. v. Pelland, [2005] 1 S.C.R. 292; 332 N.R. 201; 2005 SCC 20, refd to. [para. 8].

Reference Re Employment Insurance Act, [2005] 2 S.C.R. 669; 339 N.R. 279; 2005 SCC 56, refd to. [para. 10].

Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters et al., [2009] 3 S.C.R. 407; 395 N.R. 276; 469 A.R. 150: 470 W.A.C. 150; 2009 SCC 53, refd to. [para. 10].

City National Leasing Ltd. v. General Motors of Canada Ltd., [1989] 1 S.C.R. 641; 93 N.R. 326; 32 O.A.C. 332, consd. [para. 13].

Reference Re Assisted Human Reproduction Act (2010), 410 N.R. 199; 2010 SCC 61, refd to. [para. 14].

Pezim v. British Columbia Securities Commission et al., [1994] 2 S.C.R. 557; 168 N.R. 321; 46 B.C.A.C. 1; 75 W.A.C. 1, refd to. [para. 14].

Global Securities Corp. v. British Columbia Securities Commission et al., [2000] 1 S.C.R. 494; 252 N.R. 290; 134 B.C.A.C. 207; 219 W.A.C. 207; 2000 SCC 21, refd to. [para. 14].

Anti-Inflation Act, Re, [1976] 2 S.C.R. 373; 9 N.R. 541, consd. [para. 16].

Canadian National Transportation Ltd. et al. v. Canada (Attorney General), [1983] 2 S.C.R. 206; 49 N.R. 241; 49 A.R. 39, refd to. [para. 17].

Law Society of British Columbia v. Mangat, [2001] 3 S.C.R. 113; 276 N.R. 339; 157 B.C.A.C. 161; 256 W.A.C. 161; 2001 SCC 67, refd to. [para. 18].

Multiple Access Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 18].

Gregory & Co. v. Quebec Securities Commission, [1961] S.C.R. 584, refd to. [para. 18].

Lymburn v. Mayland, [1932] A.C. 318 (P.C.), refd to. [para. 18].

Smith v. R., [1960] S.C.R. 776, refd to. [para. 18].

Cowen v. British Columbia (Attorney General), [1941] S.C.R. 321, refd to. [para. 18].

Krieger et al. v. Law Society of Alberta, [2002] 3 S.C.R. 372; 293 N.R. 201; 312 A.R. 275; 281 W.A.C. 275; 2002 SCC 65, refd to. [para. 18].

Duplain v. Cameron, [1961] S.C.R. 693, refd to. [para. 19].

Kirkbi AG et al. v. Ritvik Holdings Inc. et al., [2005] 3 S.C.R. 302; 341 N.R. 234; 2005 SCC 65, refd to. [para. 27].

Reference Re Secession of Quebec, [1998] 2 S.C.R. 217; 228 N.R. 203, refd to. [para. 28].

R. v. Advance Cutting & Coring Ltd. et al., [2001] 3 S.C.R. 209; 276 N.R. 1; 2001 SCC 70, refd to. [para. 28].

Reference Re Firearms Act (Can.), [2000] 1 S.C.R. 783; 254 N.R. 201; 261 A.R. 201; 225 W.A.C. 201; 2000 SCC 31, refd to. [para. 31].

Citizens Insurance Co. of Canada v. Parsons (1881), 7 App. Cas. 96 (P.C.), refd to. [para. 34].

R. v. Dominion Stores Ltd. and Ontario (Attorney General), [1980] 1 S.C.R. 844; 30 N.R. 399, refd to. [para. 36].

R. v. Eastern Terminal Elevator Co., [1925] S.C.R. 434, refd to. [para. 36].

Deere (John) Plow Co. v. Wharton, [1915] A.C. 330 (P.C.), refd to. [para. 37].

Reference Re Insurance Companies - see Canada (Attorney General) v. Alberta (Attorney General).

Canada (Attorney General) v. Alberta (Attorney General) (1913), 48 S.C.R. 260, affd. [1916] 1 A.C. 588 (P.C.), refd to. [para. 42].

Reciprocal Insurance Legislation, Re, [1924] 1 D.L.R. 789; [1924] A.C. 328 (P.C.), refd to. [para. 42].

Insurance Act and Special War Revenue Act, Re, [1932] 1 D.L.R. 97; [1932] A.C. 41 (P.C.), refd to. [para. 42].

Section 16 of the Special War Revenue Act, Re, [1942] S.C.R. 429, leave to appeal refused [1943] 4 D.L.R. 657 (P.C.), refd to. [para. 42].

Canadian Indemnity Co. et al. v. British Columbia (Attorney General), [1977] 2 S.C.R. 504; 11 N.R. 466, refd to. [para. 42].

Canadian Pioneer Management Ltd. et al. v. Labour Relations Board (Sask.) and Saskatchewan Joint Board, Retail, Wholesale and Department Store, [1980] 1 S.C.R. 433; 31 N.R. 361; 2 Sask.R. 217, refd to. [para. 42].

Bell Canada v. Commission de la santé et de la sécurité du travail (Qué.) and Bilodeau et al., [1988] 1 S.C.R. 749; 85 N.R. 295; 15 Q.A.C. 217, consd. [para. 43].

Statutes Noticed:

Constitution Act, 1867, sect. 91(2), sect. 92(15) [para. 29].

Authors and Works Noticed:

Armstrong, Christopher, Federalism and Government Regulation: the Canadian Insurance Industry 1927-34 (1976), 19 Can. Pub. Admin. 88, generally [para. 42].

Counsel:

E.E.D. Tavender, Q.C., D.B. Foster, Q.C., L.C. Enns and J.C. Milne, for the appellant;

P.W. Hogg, Q.C., K.N. Lambrecht, Q.C., R.J. Frater and M. Vincent, for the respondent;

J-Y. Bernard, for the intervener, Attorney General of Québec;

M. Jamal, for the intervener, Canadian Bankers Association.

This reference was heard on January 24, 2011, by Côté, Conrad, Ritter, O'Brien and Slatter, JJ.A., of the Alberta Court of Appeal. The following reasons for judgment reserved were delivered for the Court of Appeal by Slatter, J.A., at Edmonton, Alberta, on March 8, 2011.