LEXPERT MAGAZINE
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OCTOBER 2019 25
erative System imposes a legal limit on the
participating provinces' legislative authority
to enact, amend and repeal their respective
securities laws as they see fit. Accordingly,
primary legislative authority would be
maintained and no improper delegation
would occur.
Constitutionality of the CMSA
e Quebec Court of Appeal unanimously
held that Parliament had the constitutional
authority to enact the CMSA. However,
four judges determined that certain sec-
tions that dealt with the Council's role and
powers in the making of federal regulations
were unconstitutional and would, unless
removed, render the CMSA as a whole
unconstitutional. One dissenting judge dis-
agreed with the majority's analysis regard-
ing the Council's role and powers.
e SCC agreed with the dissenting
judge. e SCC applied the principles that it
developed in its 2011 decision, Reference re
Securities Act, in which it rejected a prior at-
tempt to form a national securities regulator,
and concluded that the CMSA falls within
Parliament's general trade and commerce
power. Moreover, the manner in which the
CMSA delegates regulation-making respon-
sibilities to the Council accords with Parlia-
ment's constitutional powers.
Political Versus Legal Effects
e SCC was careful to distinguish the
Memorandum's political and practical ef-
fects from its legal effects; pointing out that
only the latter were relevant to its analysis.
While the Memorandum does not and
cannot legally bind the provinces' respec-
tive legislatures, its political objective is to
achieve uniformity in provincial securities
laws across Canada.
e SCC observed that "[p]ractically
speaking . . . the Council of Ministers may
well play an important political role in the
area of securities regulation if the Coopera-
tive System operates as planned". Further,
the Cooperative System will require a "sig-
nificant commitment from its participants"
including dissolving their existing securities
commissions and merging the administra-
tion of those commissions into the contem-
"A legislature has
broad author-
ity to delegate
subordinate law-
making powers
to a person or an
administrative
body. However, a
legislature may
not delegate its
primary authority
to legislate in
respect of mat-
ters that fall with-
in its exclusive
jurisdiction
under the
Constitution."
plated organizational structure.
e SCC observed that, "[o]nce this
has been done, it would undoubtedly be
impractical for those provinces to extricate
themselves from the Cooperative System at
a later date".
ese practical implications, although
irrelevant to the constitutional issues to be
determined, are "likely to weigh heavily in
the exercise of each jurisdiction's sovereign
will — especially given that, at present, no
dra of the Authority's enabling legislation
has yet been published," the SCC noted.
Next Steps
In April of 2019, Nova Scotia signed on the
Cooperative System, the only jurisdiction
to join since the SCC ruled that the Coop-
erative System was constitutional.
e last published implementation
timeline for the Cooperative System was
released in July 2016. e Participating Ju-
risdictions at that time issued a statement
in May 2018 indicating that they would
provide an update on the launch of the
Cooperative System once the SCC had is-
sued its decision on the constitutionality of
the Cooperative System. However, no new
timeline has been provided.
As well, dra legislation establishing
the Authority has not yet been released.
However, the SCC cautioned that such
legislation would "need to be carefully
draed so as to respect the limits on over-
lapping, yet distinct federal and provin-
cial authority."
In order for the Cooperative System to
operate, the legislature of each Participat-
ing Jurisdiction will need to adopt the uni-
form CMA.
e effect of the results of the recent
federal election, which returned a minority
parliament, on the prospects and timing for
implementation of the Cooperative System
are unclear. None of the four national par-
ties with members elected to seats in the
43rd Parliament touched on the implemen-
tation of the Cooperative System in their
election platforms.
John Tuzyk, Andrea Laing and Liam
Churchill practise at Blake, Cassels & Gray-
don LLP
SECURITIES FEATURES
