The Alberta Court of Appeal in a unanimous decision in early March held that the proposed federal Securities Act (the “Act”) is unconstitutional.
Justice Slatter, writing for the unanimous court stated that if the legislation “were to be enacted, it would be unconstitutional”. The core of Justice Slatter’s reasoning is that securities regulation has always been within the provincial jurisdiction, so to allow the federal government to usurp the provinces constitutional powers, would be unconstitutional. The court acknowledged the federal government’s argument that the securities industry has changed and evolved, however the court felt that those changes did not convert who has constitutional jurisdiction over the matter.
In a split decision released March 31, the Quebec Court of Appeal handed down a similar pronouncement to that of the Alberta Court of Appeal. The court said "The proposed Act does not constitute a valid exercise of the general trade and commerce power." Again, it was an issue of provincial versus federal constitutional jurisdiction. Justice Dalphond however, accepted the federal government's arguments.
The proposed legislation has been the subject of controversy since it was released last May. Supporters of the Act hoped that it would bring about a more efficient and effective regulatory system. Both Alberta and Quebec have been strongly opposed to the Act since the beginning.
So, the plot thickens. With the conservative government now in the midst of a federal election, where does the issue of a national securities regulator stand? Both Alberta and Quebec will be arguing their positions before the Supreme Court of Canada this month, where the question as to the constitutionality of the Act will ultimately be decided.
