24 LEXPERT MAGAZINE
|
OCTOBER 2019
its other powers, the Council would be
required to approve regulations proposed
by the board of directors of the Authority
and any changes to the CMA.
SCC Decision
e SCC's decision overturns the Quebec
Court of Appeal's ruling in the Reference
re Pan-Canadian Securities Regulation.
A four-judge majority of the five-mem-
ber panel of the Quebec Court of Appeal
previously determined that the Coopera-
tive System was unconstitutional because
it fettered the sovereignty of the respective
participating provincial legislatures and was
inconsistent with principles of federalism.
For more information, please see our May
2017 Blakes Bulletin: National Securities
Regulator on the Ropes? Quebec Court of
Appeal Rules Proposed Cooperative Sys-
tem Unconstitutional.
In reaching its decision, the SCC ad-
dressed two questions from the Quebec
Court of Appeal:
Does Canada's Constitution authorize
the implementation of a pan-Canadian se-
curities regulator under the authority of a
single regulator, in the model proposed in
the Memorandum?
Does the dra CMSA exceed the author-
ity of Parliament over the general branch of
the federal trade and commerce power un-
der subsection 91(2) of the Constitution?
Constitutionality of Pan-Canadian
Regulator
e SCC held that the proposed Coop-
erative System does not fetter parliamentary
sovereignty because it does not require the
legislatures of the participating provinces to
adopt amendments to the CMA approved
by the Council. Nor does it preclude pro-
vincial legislatures from making any other
amendments to their securities laws. e
executive signatories to the Memorandum
were simply bound to "use their best efforts
to cause their respective legislatures to enact
or approve the Cooperative System Legisla-
tion". is demonstrates that the legislatures
remain free to reject the proposed statutes if
they wish.
e SCC concluded that the proposed
Cooperative System is consistent with prin-
ciples of parliamentary sovereignty and the
rule that the executive cannot bind the leg-
islature.
It also rejected the Quebec government's
argument that the proposed Cooperative
System represents an unconstitutional del-
egation of authority. A legislature has broad
authority to delegate subordinate law-mak-
ing powers to a person or an administrative
body. However, a legislature may not del-
egate its primary authority to legislate in re-
spect of matters that fall within its exclusive
jurisdiction under the Constitution.
e SCC concluded that the argument
was premised on a misunderstanding about
how the Cooperative System is designed to
operate. Neither the Memorandum nor the
Cooperative System empowers the Council
to unilaterally amend the provinces' secu-
rities legislation. No aspect of the Coop-
"The SCC held
that the proposed
Cooperative
System does not
fetter parliamen-
tary sovereignty
because it does
not require the
legislatures of
the participat-
ing provinces to
adopt amend-
ments to the
CMA approved
by the Council."
JOHN TUZYK ANDREA LAING LIAM CHURCHILL
