No.: 200-09-006746-090 PAGE: 2
Unofficial English TranslationQuébec (Procureure générale) c. Canada (Procureure générale) / 2011 QCCA 591
COURT OF APPEAL
CANADA
PROVINCE OF QUEBEC
REGISTRY OF / QUEBEC
No.: / 200-09-006746-090
DATE: / MARCH 31, 2011
CORAM: / THE HONOURABLE / J.J. MICHEL ROBERT, C.J.
ANDRÉ FORGET, J.A.
PIERRE J. DALPHOND, J.A.
MARIE-FRANCE BICH, J.A.
JEAN BOUCHARD, J.A.
ATTORNEY GENERAL OF QUEBEC
APPLICANT
v.
ATTORNEY GENERAL OF CANADA
RESPONDENT
and
ATTORNEY GENERAL OF ALBERTA
and
BARREAU DU QUÉBEC
and
CANADIAN BANKERS ASSOCIATION
INTERVENERS
REFERENCE RE: POWER OF PARLIAMENT TO REGULATE SECURITIES
[1] The Government of Quebec, by Order in Council No.720-2010, dated August25, 2010, pursuant to section1 of the Court of Appeal Reference Act, R.S.Q., c. R-23, submitted the following constitutional question to this Court:
[translation]
Are the provisions of the Proposed Canadian Securities Act, published by the Government of Canada on May26, 2010, the essential purpose of which is to protect investors and regulate the securities industry, and the provisions to that effect in sections295, 296, and 297 of the Budget Implementation Act, 2009, S.C.2009, c.2, ultra vires the Parliament of Canada under the Constitution Act, 1867?
[2] Answer (Robert C.J.): Yes. Except for the criminal law provisions, the proposed Act is ultra vires the legislative authority of the Parliament of Canada; however, sections 295, 296 and 297 of the Budget Implementation Act, 2009 are valid.
[3] Answer (Forget, Bich and Bouchard JJ.A.): Yes. Except for the criminal law provisions, which are valid pursuant to subsection 91(27) of the Constitution Act, 1867, the proposed Act and section 297 of the Budget Implementation Act, 2009 are not within the legislative authority of the Parliament of Canada pursuant to subsection97(2) of the Constitution Act, 1867.
[4] Answer (Dalphond J.A.): No. The Parliament of Canada has jurisdiction under subsection 91(2) of the Constitution Act, 1867 to enact the entire proposed Act; as regards sections 295, 296 and 297 of the Budget Implementation Act, 2009, they are valid.
[s. J.J. Michel Robert]J.J. MICHEL ROBERT C.J.
[s. André Forget]
ANDRÉ FORGET J.A.
[s. Pierre J. Dalphond]
PIERRE J. DALPHOND, J.A.
[s. Marie-France Bich]
MARIE-FRANCE BICH J.A.
[s. Jean Bouchard]
JEAN BOUCHARD J.A.
Jean-Yves Bernard
Bernard, Roy
For the applicant
France Bonsaint
Hugo Jean
Direction générale des affaires juridiques et législatives (JUSTICE-QUÉBEC)
For the applicant
Claude Joyal
René Leblanc
Alexander Pless
Robert Frater
Joyal, Leblanc
For the respondent
D. Brian Foster, Q.C.
E. David D. Tavender, Q.C.
Jordan Milne
Fraser, Milner, Casgrain
For the intervener (counsel for the Attorney General of Alberta)
L. Christine Enns
(of the Ministry of Justice of Alberta, for the Attorney General of Alberta)
Raymond Doray
Mathieu Quenneville
Lavery, De Billy
For the intervener (Barreau du Québec)
Mahmud Jamal
Éric Préfontaine
Osler, Hoskin, Harcourt
For the intervener (Canadian Bankers Association)
Date of hearing: / January 17 to 20, 2011
No.: 200-09-006746-090 PAGE: 75
REASONS OF THE CHIEF JUSTICETABLE OF CONTENTS
I. PROCEDURAL BACKGROUND 3
1. Reference by Attorney General of Quebec to Court of Appeal of Quebec 3
2. Reference by Attorney General of Alberta to Alberta Court of Appeal 3
3. Reference by Attorney General of Canada to Supreme Court of Canada 3
4. Motion to stay reference to Court of Appeal of Quebec 4
II. QUESTION 4
III. POSITIONS OF THE PARTIES 6
1. Attorney General of Quebec 6
2. Attorney General of Alberta 7
3. Barreau du Québec 7
4. Attorney General of Canada 9
5. Canadian Bankers Association 10
IV. ANALYSIS 11
1. Method 11
2. Pith and substance analysis 12
a) Intrinsic evidence 15
i. The proposed Act 15
ii. Sections of the Budget Implementation Act, 2009 22
b) Extrinsic evidence 23
i. History of harmonization initiatives 23
ii. Parliamentary statements and debates 27
iii. Expert reports 28
iv. Existing provincial legislation 33
v. Finding on pith and substance 37
3. Provincial power over property and civil rights 40
a) Historical origins 40
b) Provincial residual clause 45
c) Scope of power 47
d) Finding on property and civil rights power 52
4. Federal jurisdiction over trade and commerce 53
a) Interprovincial and international trade 55
b) General jurisdiction 60
c) Application to this case 63
i. General scheme of regulation and supervision by a regulatory organization 64
ii. Trade in general 64
iii. Provincial inability 66
iv. Requirement of unanimity 72
v. Finding on power over trade in general 73
5. Sections from the Budget Implementation Act, 2009 73
V. CONCLUSION 74
Introduction 1
Preliminary Comments 1
Regulation of activities relating to securities is historically within the authority of two levels of government 7
Two major trends in conflict 24
Authority of Parliament to enact the proposed Act 27
Comments on Parts 12 and 13 50
The Budget Implementation Act, 2009 51
Final remarks 52
Conclusion 54
I. PROCEDURAL BACKGROUND
1. Reference by Attorney General of Quebec to Court of Appeal of Quebec
[5] On July 8, 2009, the Government of Quebec, by Order in Council No.8692009,[1] referred three constitutional questions to this Court for an opinion pursuant to the Court of Appeal Reference Act.[2] These questions concerned a federal government initiative to establish a federal securities regulation commission.
[6] On May 26, 2010, the Government of Canada published a proposed Securities Act (hereafter “proposed Act”). In reaction, the Government of Quebec, by Order in Council 720-2010, amended the questions referred to this Court, so that the reference contained only one question.[3]
2. Reference by Attorney General of Alberta to Alberta Court of Appeal
[7] On January 26, 2010, pursuant to the Judicature Act,[4] the Lieutenant Governor in Council of Alberta, by Order in Council No.20-2010, referred two constitutional questions to the Alberta Court of Appeal regarding the legislative authority of the government of that province to enact a law that would oust the application of the Securities Act[5] in certain circumstances. In reaction to the publication of the proposed Act, the Lieutenant Governor in Council amended the questions by Order in Council No.181-2010, dated June9, 2010, to make reference to the proposed Act.
3. Reference by Attorney General of Canada to Supreme Court of Canada
[8] On May 26, 2010, the day the proposed Act was published, the Government of Canada referred to the Supreme Court of Canada, by Order in Council P.C. 2010-667, the question of whether the proposed Act is within the legislative authority of the Parliament of Canada and gave notice to all provinces and territories in accordance with the Supreme Court Act.[6] The attorneys general of the provinces of Ontario, Quebec, Nova Scotia, NewBrunswick, Manitoba, British Columbia, Saskatchewan, and Alberta were granted intervener status in that proceeding, which is scheduled to be heard on April13 and 14, 2011.
4. Motion to stay reference to Court of Appeal of Quebec
[9] On January 22, 2010, the Attorney General of Canada (hereafter “AGC”) asked this Court to temporarily stay proceedings in this reference until June20, 2010, a date near the week marking the end of the session of Parliament. The AGC argued that the reference was premature, interfered in the political and legislative processes, threatened the judicial independence of the Court, and would be an unreasonable burden on the Court’s resources. A panel of this Court (Robert C.J. and Bich and Léger JJ.A.) dismissed that motion in a judgment delivered from the Bench on March26, 2010.[7]
II. QUESTION
[10] The questions initially submitted by the Government of Quebec were the following:
[translation]
1. Do the provisions proposed in the Draft Securities Act annexed to the Final Report of the Expert Panel on Securities Regulation, January 2009, the essential purpose of which is to protect investors and regulate the securities industry, and the provisions pertaining thereto at sections295, 296 and 297 of the Budget Implementation Act, 2009, S.C.2009, c.2, exceed the legislative authority of the Parliament of Canada pursuant to the Constitution Act, 1867?
2. Does the Parliament of Canada have legislative authority pursuant to the Constitution Act, 1867 to enact legislation allowing issuers and registrants to voluntarily submit to a federal securities act to the exclusion of provincial legislation, as proposed in the Final Report of the Expert Panel on Securities Regulation, January 2009?
3. Does the Parliament of Canada have legislative authority pursuant to the Constitution Act, 1867 to enact legislation stipulating that provincial securities acts are inapplicable, as proposed in the Final Report of the Expert Panel on Securities Regulation, January 2009?
[11] By a second order in council, the Government of Quebec replaced these questions with a single question, as follows:
[translation]
Are the provisions of the Proposed Canadian Securities Act, published by the Government of Canada on May26, 2010, the essential purpose of which is to protect investors and regulate the securities industry, and the provisions to that effect in sections295, 296 and 297 of the Budget Implementation Act, 2009, S.C.2009, c.2, ultra vires the Parliament of Canada under the Constitution Act, 1867?
[12] In my view, this Court enjoys some discretion in answering this question. For example, it should be noted that the question characterizes the purpose of the proposed Act as being to protect investors and regulate the securities industry. This characterization is by no means binding on us. Similarly, I think it would be acceptable to conclude that some of the provisions of the proposed Act are within the jurisdiction of Parliament while others are not, even though the question concerns the proposed Act as a whole.
[13] This approach is consistent with this Court’s discretion, pursuant to its appellate jurisdiction, to rephrase questions of law raised by the parties. The Legislature intended to transpose this discretion to our reference jurisdiction, under section5 of the Court of Appeal Reference Act:
5.The court shall send to the Government for its information its opinion duly certified upon the questions so referred, giving its reasons in support thereof, in like manner as in the case of judgments rendered upon appeals brought before the said court. [Emphasis added.]
[14] This approach is also consistent with the fundamental role of the courts under the distribution of powers, which role is to act as “ultimate umpire of the federal system” and requires, as Chief Justice Dickson noted in The Queen v. Beauregard, that it be autonomous and completely independent of government.[8] Finally, the Reference re Secession of Quebec established that appellate courts have discretion to refuse to answer reference questions if they are not directed to legal issues, or for pragmatic reasons.[9] The importance of the courts’ autonomy and independence as umpires of federalism and the discretion of appellate courts not to answer reference questions are indicative of the need for this Court to exercise discretion in assessing a reference. This discretion should, at the very least, allow the Court to define the questions on which its opinion is sought as it sees fit, without being strictly bound by the terms of the question submitted.
III. POSITIONS OF THE PARTIES
1. Attorney General of Quebec
[15] The Attorney General of Quebec (hereafter “AGQ”) proposes that the pith and substance of the proposed Act be characterized as the protection of investors in the securities market through the supervision of intermediaries and the imposition on issuers of duties to disclose. The AGQ argues that this sphere of activity has always been recognized as being within the exclusive powers of the provinces in relation to property and civil rights and matters of a merely local nature, pursuant to subsections92(13) and 92(16) of the Constitution Act, 1867.[10] In the view of the AGQ, the securities trade is still, generally speaking, a series of intraprovincial transactions, despite the revolution in information technology and the globalization of stock exchanges which occurred in recent decades.
[16] The AGQ also submits that the pith and substance of the proposed Act is not within the federal trade and commerce power under subsection91(2) of the Constitution Act, 1867. The AGQ argues that the proposed Act does not meet three of the five indicia established by the Supreme Court in General Motors of Canada Ltd. v. City National Leasing[11] and Kirkbi AG v. Gestions Ritvik Inc.[12]
[17] More specifically, the AGQ is of the opinion that the proposed Act does not concern trade as a whole, but one industry in particular. In this sense, securities regulation is more akin to the regulation of insurance, manufacturing, the oil industry, professional bodies or consumer protection than to the regulation of business corporations or competition. Further, the AGQ argues that the proposed Act is not of such nature that the provinces, jointly or severally, would be constitutionally unable to enact it. In this regard, the AGQ submits that the current system is considered to be one of the best in the world in terms of regulation. The AGQ adds that the objective of reducing systemic risks to the financial system cannot be used to otherwise characterize the pith and substance of the proposed Act, since the pursuit of this objective is not its dominant characteristic. Finally, the AGQ argues that the proposed Act’s application will not be compromised by the failure of one or more province or locality to opt in and notes that the proposed Act itself contemplates the possibility that certain provinces may not take part in the scheme.
[18] Finally, we note that the AGQ considers sections 295, 296 and 297 of the Budget Implementation Act, 2009[13] to be invalid by their inseverability, since they are ancillary to the proposed Act and share its pith and substance.
2. Attorney General of Alberta
[19] The Attorney General of Alberta (hereafter “AGA”) proposes a broader characterization of the pith and substance of the proposed Act than does the AGQ. In the AGA’s view, the pith and substance of the proposed Act is to regulate the securities trade to protect investors, ensure a fair market, prevent systemic risks, and foster interprovincial and international cooperation among securities authorities.
[20] The AGA submits that such an act falls within the provinces’ property and civil rights power since it essentially deals with transactions of a local nature between provincially registered intermediaries. The fact that some issuers or registrants are located outside the province would only have an incidental effect on interprovincial or international trade and would not change the pith and substance of the proposed Act.