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FEATURE
JP: Why did you choose to comment on a
securities law topic when the bulk of your
research has been on private companies and
secured lending?
DM: It is true that most of my research has been in
business law, particularly on private businesses—
that is, businesses that are not listed on the stock
exchange. The proposed Securities Act, which was at
the core of the Securities Reference, is indeed outside
my basic area; however, the argument that the federal
government was making to justify the need for a
single market regulator is such a broad one that I got
interested. The argument was that Canada is really a
single, national market, as opposed to 13 provincial
and territorial ones. Therefore, the argument goes, the
securities industry has been significantly altered since
those provincial laws were passed.
As you mentioned, the law of secured lending is
one of my areas of research. If the Supreme Court
accepted the federal government’s argument in the
Reference, the federal government could then make
this exact same argument for a federal equivalent to
the provincial Personal Property Security Acts – the
main statute used in secured lending – and take a
lot of powers away from the provinces in many areas
related to business.
JP: By attempting to pass a national Securities
Act, was the federal government just trying to
trump 60 years of settled jurisprudence on the
division of powers?
DM: Trying to assign motive to anyone in a
case such as this is always difficult. The federal
government says that it is trying to protect
economic stability in the Canadian market and avoid
catastrophic economic collapse from future events.
But motive is really not the issue.
In my view, the courts should generally not depart
from established precedent simply because there
might be a better way to do things. Stare decisis
is a powerful force for maintaining the status quo.
This does not mean that things can never change.
Rather, the federal government wants the Court to
change its mind on its own previous jurisprudence –
which has clearly put the regulation of the securities
industry under provincial legislative control. Before
the Court would be willing to make this change,
it says that there has to be more than supposition
involved. The most the federal government can say is
that there would likely be a better ability to regulate
the securities industry if it were left to the federal
government. But the Court, while not necessarily
disagreeing with this contention, said that the
evidence was not there to support the idea that the
wholesale change to the federal government would
be either necessary or better for the Canadian public
markets for securities.
JP: Would a decision in favour of the federal
Securities Act open the door for potential further
encroachment of provincial powers?
DM: Certainly it could. Now, the current government
said this is not their plan, but even though that might
be true, this would not stop the next government
from taking a different view and federalizing a lot
of business law. The Constitution creates a balance
between the federal government on one hand and
the provinces on the other. Secured lending (other
than by banks), the protection of consumers, and
the licensing of businesses are generally provincial
responsibilities. If the Reference had been decided in
favour of federal power in securities regulation, there
would, in my view, be absolutely no reason that the
same argument would not be successful in all of these
other areas as well. If Canada really is a single market,
why should prices for any product vary between
provinces? If we push that single-market idea too
far, there could be very little left for the provinces.
Therefore, in my view, the Court was correct in
wanting to maintain the balance between the federal
government and the provinces that existed before
the Securities Reference.
UNIVERSITY OF MANITOBA, FACULTY OF LAW robsonhall.ca 76