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The national securities regulator and judicial Stockholm Syndrome

Why the Court’s adherence to a 19th-century precedent is too rigid and cautious


 

For much of its history, the Supreme Court of Canada was described as a “captive court” because it was bound by the rulings of Britain’s Judicial Committee of the Privy Council (JCPC), which served as Canada’s final court of appeal until 1949. Indeed, many scholars argue that the Court remained captive until the Charter of Rights came into effect in 1982, when its judges finally began to exercise real policy-making power and assert “judicial creativity” into their decisions.

If today’s unanimous reference opinion on the federal government’s proposed legislation to create a national securities regulator is any indication, the Court may still be suffering from judicial Stockholm Syndrome.

Such a critique may be harsh (and perhaps even unwarranted). For decades the provinces have been responsible for regulating the securities market under their constitutional powers relating to “property and civil rights,” and their ability to do so was not questioned in this case.

Accordingly, the judges ruled that the federal government cannot implement the “wholesale takeover” of regulation of the securities market as represented by its proposed legislation (though, notably, they left the door open for a scheme premised on intergovernmental cooperation that accomplishes similar goals, leaving it to the respective governments to decide what that might look like).

In one sense the decision should be applauded for maintaining consistency, predictability and clarity in the law. It preserves a long-established understanding of the scope of the federal trade and commerce powers and avoids the temptation of determining the constitutional validity of a law based on whether it represents good policy (a temptation the Court often fails to avoid in the Charter context).

On the other hand, adherence to an 1881 JCPC decision—a ruling by a group of English judges an ocean away well over a century ago—that took a questionable stance on the balance of powers between the provinces and federal government in the first place is certainly questionable.

As the Court acknowledged today, the JCPC decided that a literal interpretation of the words “the Regulation of Trade and Commerce” in our 1867 Constitution was “inappropriate.” Literally.

The belief was that federal powers over trade and commerce matters might be interpreted so broadly that it would threaten to override much of what should fall under the provincial powers regarding property and civil rights. And so the JCPC severely curtailed the former and broadened the latter—a decision the Supreme Court has been largely faithful to ever since.

This faithfulness to a 19th-century precedent seems all the more questionable when you consider that the Court has no problem overturning its own precedents in a Charter of Rights context mere years after they were first established.

In the Charter context, the “living tree” notion of constitutional interpretation thrives, such that changing societal contexts or changing “values” can result in new rights springing forth (usually emanating as much from the creative judicial mind as from society). If the “dead tree” approach adopted in today’s federalism opinion was applied to Charter rulings, the Court’s decision earlier this year to preserve Vancouver’s safe injection site—Insite—would never have occurred.

The living tree metaphor was never meant to be applied in as robust a manner in the division of powers context, given the belief that progressive interpretation would throw off the balance between the orders of government developed by the constitutional framers. But a case could be made (if you’ll pardon the pun) that the Court’s interpretation here is too rigid and cautious.

The judges write that “a long-standing exercise of power does not confer constitutional authority to legislate, nor does the historic presence of the provinces in securities regulation preclude a federal claim to regulatory jurisdiction,” but then demand evidence that the economic activity at issue has been so transformed that it now falls under federal authority. In effect, the Court treats the long-standing exercise of power and historic presence of provinces in securities market regulation as paramount while saying the exact opposite.

The Court is caught, as it often is, in the tension between the principle and virtues of legal clarity and consistency on the one hand, and the common sense of judicial flexibility on the other.

Recognizing that fact, perhaps, is why the Court throws the issue back to the federal government and provinces at the end of its opinion: “It is not for the Court to suggest to the governments of Canada and the provinces the way forward by, in effect, conferring in advance an opinion on the constitutionality on this or that alternative scheme. Yet we may appropriately note the growing practice of resolving the complex governance problems that arise in federations, not by the bare logic of either/or, but by seeking cooperative solutions that meet the needs of the country as a whole as well as its constituent parts.

“Cooperation is the animating force. The federalism principle upon which Canada’s constitutional framework rests demands nothing less.”

Whether the Harper government will pursue the type of cooperative federalism the Court holds in such high esteem is unclear. But one wonders whether the judges were trying to send a message to the various political actors at a time when intergovernmental tensions are running high over issues like this week’s health transfer announcement and the preservation of the long-gun registry data.

More likely, the Court was doing what it often does when confronted with big policy issues: speak with one voice (a unanimous opinion), keep the ruling narrow (limit the decision to the proposed law and not other possible schemes) and hand the issue back to the elected branches.

If the Court is not captive to the JCPC, it remains captive to its caution. Whether that’s a bad thing in this particular case is for each of us to decide.

Emmett Macfarlane is a political scientist and Senior Instructor at the University of Victoria. You can follow him on Twitter @EmmMacfarlane


 

The national securities regulator and judicial Stockholm Syndrome

  1. SCOC says: ”
    It is not for the Court to suggest to the governments of Canada and the provinces the way forward by, in effect, conferring in advance an opinion on the constitutionality on this or that alternative scheme. ”

    Why not?  I thought SCOC references re: constitutionality of proposed legislation were part of their gig?

    I’m curious what kind of co-operative solution would be acceptable and what form that might take compared to the feds’ scheme.  

    I guess in one way the courts are cautious and rigid, but on the whole this is the same SCOC which showed great dexterity and creativity, to put it civilly, in “reading in”, or inventing, new Charter rights on the fly.  When a conservative libel case (Rafe Mair case) finally made it to the SCOC, they simply changed the definition of libel on the fly – that seemed pretty creative and daring.  It’s only a matter of time before prohibiting ‘transphobia’ – a word and concept which did not exist 18 months ago – gets read into the constitution.  

    Many years after the SCOC first acknowledged “pay equity” as a right only 3 jurisdictions on Earth (Canada, Ontario, Quebec) recognize it as such – that seems pretty daring and creative to me, to invent brand new human rights which years after being invented are still not recognized by a single jurisdiction outside of Canada.

  2. It is past time to reconstitute Canada, yet no vision has yet been considered by our Politicians, with the exception of Quebec.  It really is time for Quebec to demand separation, then the rest of the Provinces will have to consider their futures as well and hopefully make some reasonable decisions.  There I go again, trying to equate reasonableness with politicians, but it really can’t get any worse — this decision is laughable.

  3. Well at least the ‘justices’ are looking very ‘Christmassy’, lol

  4. Strange angle to criticize from – *Hodge* and other early JCPC decisions are a part of Canada’s unique constitutional development. SCC’s approach to Charter jurisprudence should not be equated with division of powers jurisprudence. In the latter case, to overturn early JCPC decisions is tantamount to reconstituting the Canadian federation. It’s hardly ‘questionable’ for the SCC to refrain from fundamentally altering the relationship between trade and commerce and property and civil rights in the Province.

    • I wonder why it was OK for the JCPC to “reconstitute” the Canadian federation in the first 7 decades of its existence but not OK for the SCC now?

      • The JCPC was higher than the SCC and can’t be reversed? :p

        Of course not.  (Just teasing my anti-imperialist friends.)

        I figured the SCC had plenty of room to uphold the proposed bill — but they chose not to.  

        Well, Maxime Bernier is probably happy today!

      • The JCPC didn’t *re*constitute anything. ss. 91 and 92 are not self-executing, they needed to be interpreted and as a result of historical happenstance, the JCPC was the body to do it.

        I just think there needs to be some better justification for reinterpreting key sections of ss. 91 and 92 than simply saying that the JCPC did it once, so we should do it again. The impact of overturning division of powers jurisprudence is far more significant, operationally, than overturning Charter jurisprudence. The simple fact that the JCPC was located in the UK does not de-legitimize it’s interpretation of the BNA Act – we can’t ignore our colonial past.

        • Your argument appears predicated on the assumption that the original JCPC interpretation was somehow “correct” or more authoritative than any modern formulation the Supreme Court might apply – the fact that reinterpretation (or “error correction”) risks being disruptive to the federal-provincial balance isn’t sufficient reason to avoid doing so, especially when we get decisions that make little sense on a plain reading of the Constitution’s text, such as one that says an order of government that has authority to regulate trade and commerce can’t establish a regulatory body.

  5. I find it beyond strange that the Court would take such a formalistic view of 100+ year old precedent in federalism cases, where there are rarely any overt or controversial normative decisions to be made, and yet so blithely overturn the legislature in Charter cases.  The cases where one would think we need the Court to admit they “don’t have power to declare legislation constitutional simply because they conclude it may be best option in terms of public policy” would be those cases that involve complex and contentious moral issues upon which reasonable people can disagree.  I really don’t think I would mind if they identified the best option in terms of public policy with respect to centuries old, wildly ambiguous phrases like “trade and commerce” or “property and civil rights”.

  6. “If the “dead tree” approach adopted in today’s federalism opinion was applied to Charter rulings, the Court’s decision earlier this year to preserve Vancouver’s safe injection site—Insite—would never have occurred.”

    Is that really the case? Didn’t the court uphold the federal right to enforce drug laws on the books, but also allow that an exception was still in effect and not withdrawn as slippery Tony belatedly attempted to claim. I don’t see that as being particularly activist.

    “It preserves a long-established understanding of the scope of the federal trade and commerce powers and avoids the temptation of determining the constitutional validity of a law based on whether it represents good policy (a temptation the Court often fails to avoid in the Charter context).”

    This one is way over my payscale, but isn’t that a tad of over the top? The court defining what is good policy -really?

  7. “…I thought SCOC references re: constitutionality of proposed legislation were part of their gig?…”

    Yeah, but that role usually relates to the relationship between the intrinsic rights of individuals and the governments they elect. In this case the issue is between two forms of elected government, and the court doesn’t think it should be ruling on agreements/disagreements that haven’t really been fully fleshed out yet.”…I’m curious what kind of co-operative solution would be acceptable and what form that might take compared to the feds’ scheme….”

    What’s acceptable is whatever is negotiated between the confederation partners, essentially.

    I think the court made a perfectly understandable ruling here.

  8. SCC is stiff and rigid when anglophones language rights are involved, but they switch to generous liberal interpretation of language rights for francophones.

  9. The SCC’s ruling did note the 19th century origins of the General Trade and Commerce power in s.91 (Citizen’s Insurance v Parsons), but as SRneiler points out, that power is not self executing. Furthermore, all Parsons actually did, as far as the current court is concerned, is establish that the power exists and give it a name. The actual reasons for classifying this securities regulator as beyond the scope of Federal Action comes from GM v City National Leasing. THAT was the case the created the five criteria the court uses, and this has been the case for about the last twenty years.
    par. 76: “In the late 1970s and early 1980s, this Court revisited the general trade and commerce power.  The “modern” trade and commerce cases have affirmed Parsons and taken up the task of developing indicia for matters that would properly fall within the general branch of s. 91(2) — an effort that culminated with the five indicia proposed in General Motors of Canada v. City National Leasing, [1989] 1 S.C.R. 641.  The test set forth in General Motors, to which we will shortly return, finds it origin in Attorney General of Canada v. Canadian National Transportation Ltd., [1983] 2 S.C.R. 206.  In that case, Dickson J. (as he then was) emphasized the balance that Parsons sought to maintain, and built on indicia relied on by Laskin C.J. in MacDonald v. Vapor Canada Ltd., [1977] 2 S.C.R. 134.”

    The court only mentions the ruling in Parsons insofar as it is background to GM v City National. The court also notes that Dickson CJC’s logic has been upheld and added to continuously over the last twenty years, most importantly in Kirkbi AG v Ritvik (the “Lego” Case) in 2005. To suggest the court is still beholden to a 19th century case is to trivialize nearly 40 years of fairly consistent jurisprudence, or to suggest that they are being held at gunpoint by the nature of how legal systems work in all common law countries. 

  10. The purpose of the Canadian Supreme Court should be to interpret the laws of this country independent of Parliament, not “make policy” in a “creative manner.” 

  11. The article reflects a far too optimistic and flattering view of the Supreme Court.   The Court has become too activist, and has over stepped the bounds from “interpreting law”, into “making law and policy”.   It is not supposed to be the American model of a “balance of powers”. 

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