Twenty Years of Supreme Court Reference Decisions: Putting the Securities Reference Decision in Context

• Author: Poonam Puri
• Pages: 13-36

• 13

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Twenty Years of Supreme Court

Reference Decisions:

Putting the Securities Reference

Decision in Context

Poonam Puri

A. Introduction

In recent years capital markets have expanded dramatically

throughout Canada and around the world. At present two-thirds

of reporting issuers in Canada report in more than one jurisdic-

tion, a phenomenon made possible, in part, by the development

of electronic trading platforms and other technologies that al-

low investors to instantaneously purchase and sell securities of

companies based outside their jurisdiction.1 As a result of the

increased integration of capital markets in Canada, the need for

national oversight of the securities industry has become more

pronounce d.

The Supreme Court of Canada’s decision in the Reference Re

Securities Act2 surprised many observers in the academic and legal

communities who expected the Court to hold that the federal gov-

ernment has jurisdiction to create a national securities regulator.3

1 Poonam Puri, “L ocal and Regional Interests in the Debate on Optimal

Securities Regulatory Str ucture” Resea rch Study for the Wise Persons’

Committee (7 October 2003), online: www.wise-averties.ca/reports/

WPC_6.pdf [ Puri, “Local and Reg ional Interests”].

2 Reference Re Securities Act, 2011 SCC 66 [Securities Reference].

3 See, generally, Poonam Puri, “ The Capital Markets Perspective on a

National Securities Regulator” (2010) 51 Sup Ct L Rev (2d) 603 [Pur i,

“Capital Markets”]; Peter W Hogg, Constitutional Law of Canada, 5th ed

(Toronto: Carswell, 2010) at 16.4; Ian B Lee, “Balancing and its Alter-

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Instead the Supreme Court adopted a highly de-contextualized

and formulaic approach. This approach failed to engage the ques-

tion of whether the securities industry had evolved to acquire a

national dimension in the eighty years following the Privy Coun-

cil’s decision, in Lymburn v Mayland that the securities industry

was a local matter falling under the provinces’ property and civil

rights powers and that offences within the Alberta Act at the

time did not encroach on federal criminal law powers.4

Securities

Referen ce appears inconsistent with other reference decisions ren-

dered over the past twenty years. Unlike prior decisions, in which

the Court thoroughly considered the legal dimensions of the policy

issues before it as well as the evolution of the subject matter being

considered and the submissions to the Court, by contrast, the Se-

curities Reference adopted a very narrow, abstract approach and

paid little regard to the submissions and substantial evidence

from experts who demonstrated that the securities industry had

become national in scope. However, the decision may be partly

understood by examining the McLachlin Court’s approach to his-

tory as well as other trends within the Court. While the Securities

Referen ce was certainly the most pronounced example, an exam-

ination of the decisions of the McLachlin Court suggests that the

Securities Reference was not completely unprecedented. Although

the Lamer Court appeared willing to consider the evolving na-

ture of an issue, references under the McLachlin Court seem to

have adopted a more originalist jurisprudence. Thus, the Court’s

unwillingness to consider the evolution of Canadian capital mar-

kets is partially explicable by putting the Securities Reference de-

cision into context.

natives: Jurisprudential Choice, Federal Securities Legislation and the

Trade and Commerce Power” (2011) 50 Can Bus LJ 72; Expert Panel on

Securities Regulation, Creating an Advantage in Global Capital Mar-

kets: Final Report (Ottawa: Department of Finance Canada, 20 09); Wise

Persons’ Committee to Review the Structure of Securities Regu lation in

Canada , It’s Time (Ottawa: Department of Finance, 200 3), online: Wise

Persons’ Committee www.wise averties.ca/reports/WPC%20Final.pdf

[WPC]; Crawford Panel on A Single Canadian Secur ities Regulator, A

Blueprint for a Canadian Securities Commission (Ott awa: Crawfo rd Pan-

el on A Single Canadian Securities Regulator, 200 6) [Crawford Report].

 Lymburn]; Securities Reference, above note 2 (Re cord of

the AG of Canada, Vol 1, Expert Report, Michael J Trebilcock, “National

  