Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd.

Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd.
Collection
Supreme Court Judgments
Date
2015-11-13
Neutral citation
2015 SCC 53
Report
[2015] 3 SCR 419
Case number
35923
Judges
Abella, Rosalie Silberman; Cromwell, Thomas Albert; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément; Côté, Suzanne
On appeal from
Saskatchewan
Subjects
Constitutional law
Notes
SCC Case Information: 35923
Decision Content
SUPREME COURT OF CANADA
Citation: Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419
Date: 20151113 Docket: 35923
Between:
Attorney General for Saskatchewan
Appellant
and
Lemare Lake Logging Ltd.
Respondent
- and -
Attorney General of Ontario and
Attorney General of British Columbia
Interveners
Coram: Abella, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
Joint Reasons for Judgment: (paras. 1 to 74)
Dissenting Reasons: (paras. 75 to 129)
Abella and Gascon JJ. (Cromwell, Moldaver, Karakatsanis and Wagner JJ. concurring)
Côté J.
Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419
Attorney General for Saskatchewan Appellant
v.
Lemare Lake Logging Ltd. Respondent
and
Attorney General of Ontario and
Attorney General of British Columbia Interveners
Indexed as: Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd.
2015 SCC 53
File No.: 35923.
2015: May 21; 2015: November 13.
Present: Abella, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
on appeal from the court of appeal for saskatchewan
Constitutional law — Cooperative federalism — Division of powers — Bankruptcy and insolvency — Property and Civil Rights — Receiver — Federal paramountcy — Federal legislation authorizes court, upon application of secured creditor, to appoint receiver with power to act nationally — Provincial legislation imposes other procedural and substantive requirements before commencing an action with respect to farm land — Whether provincial legislation constitutionally inoperative when application made to appoint national receiver under federal legislation, by reason of doctrine of federal paramountcy — Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, s. 243 — The Saskatchewan Farm Security Act, S.S. 1988‑89, c. S‑17.1, ss. 9 to 22.
A secured creditor brought an application pursuant to s. 243(1) of the Bankruptcy and Insolvency Act for the appointment of a receiver over substantially all of the assets of its debtor, a “farmer” within the meaning of The Saskatchewan Farm Security Act. The debtor contested the appointment and argued that the creditor had to comply with Part II of The Saskatchewan Farm Security Act, which requires that before commencing an action with respect to farm land, a person must submit a notice of intention, await the expiry of a 150‑day notice period, and engage in a mandatory review and mediation process. The chambers judge found that the provisions in Part II of The Saskatchewan Farm Security Act did not conflict with s. 243(1) of the Bankruptcy and Insolvency Act . The Court of Appeal found that Part II of The Saskatchewan Farm Security Act frustrated the purpose of s. 243(1) of the Bankruptcy and Insolvency Act and was therefore inoperative in circumstances where an application is made to appoint a receiver.
Held (Côté J. dissenting): The Court of Appeal’s conclusion that Part II of The Saskatchewan Farm Security Act is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , is set aside.
Per Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.: The paramountcy analysis requires consideration of whether any overlap between the federal and provincial laws constitutes a conflict sufficient to render the provincial law inoperative. Two kinds of conflict are at play: (1) an operational conflict, where compliance with both the federal and provincial law is impossible; and (2) frustration of purpose, where the provincial law thwarts the purpose of the federal law. The operational conflict branch of the paramountcy doctrine requires that there be “actual conflict” between the federal and provincial legislation. Here, there is no operational conflict because it is possible to comply with both statutes. The issue therefore centres on whether the provincial legislation frustrates the purpose of the federal legislation.
Given the guiding principle of cooperative federalism, which allows for some interplay and overlap between both federal and provincial legislation, paramountcy must be narrowly construed. Courts must take a restrained approach, and harmonious interpretations of federal and provincial legislation should be favoured. If a federal statute can be properly interpreted so as not to interfere with a provincial statute, such an interpretation is to be applied in preference to a construction which would bring about a conflict between the two statutes. Absent clear evidence that Parliament intended a broader statutory purpose, courts should avoid an expansive interpretation of the purpose of federal legislation which will bring it into conflict with provincial legislation. Clear proof of purpose is required. The burden a party faces in successfully invoking paramountcy is accordingly a high one; provincial legislation restricting the scope of permissive federal legislation is insufficient on its own.
In this case, what the evidence shows is a simple and narrow purpose for s. 243 of the Bankruptcy and Insolvency Act : the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions.
Section 243(1) of the Bankruptcy and Insolvency Act authorizes a court, upon the application of a secured creditor, to appoint a receiver where such appointment is “just or convenient”. Under s. 244(1), a secured creditor who intends to enforce a security on all or substantially all of the inventory, accounts receivable or other property of an insolvent debtor that was acquired for, or used in relation to, a business carried on by the insolvent person, is generally required to send a notice of that intention to the insolvent person. Section 243(1.1) states that, where notice is to be sent under s. 244(1), the appointment of a national receiver cannot be made before the expiry of 10 days after the day on which the secured creditor sends the notice. The national receivership regime under s. 243(1) does not oust a secured creditor’s power to have a receiver appointed privately, or by court order under provincial law or any other federal law.
Part II of The Saskatchewan Farm Security Act is aimed at affording protection to farmers against loss of their farm land. Subject to ss. 11 to 21, s. 9(1)(d) of The Saskatchewan Farm Security Act prohibits commencement of any “action” with respect to farm land. This includes an application for the appointment of a receiver under s. 243(1) of the Bankruptcy and Insolvency Act . Section 11(1)(a), however, states that, where a mortgagee makes an application with respect to a mortgage on farm land, the court may, on any terms and conditions that it considers just and equitable, order that s. 9(1)(d) does not apply. Before a mortgagee can bring an application under s. 11, a number of preconditions must be fulfilled, including a compulsory and non‑waivable 150‑day waiting period during which a mandatory review and mediation process occurs. Once the 150‑day waiting period is over, the mortgagee may then make an application for an order granting leave to commence the action. On hearing the application, the court must presume that the farmer has a reasonable possibility of meeting his or her obligations under the mortgage, and that he or she is making a sincere and reasonable effort to meet those obligations.
As a result of the concurrent operation of s. 243(1) of the Bankruptcy and Insolvency Act and Part II of The Saskatchewan Farm Security Act, a secured creditor wishing to enforce its security interest against farm land must wait 150 days, rather than the 10 days imposed under federal law. The creditor must also comply with the various additional requirements of The Saskatchewan Farm Security Act, such as the statutory presumptions described above. That interference with s. 243(1), however, does not, in and of itself, constitute a conflict. A conflict will only arise if such interference frustrates the purpose of the federal regime.
Section 243’s purpose is simply the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions. There is insufficient evidence for casting s. 243’s purpose more widely.
There is nothing in the words of s. 243 suggesting that the 10‑day waiting period imposed by the provision should be treated as a ceiling rather than a floor. The discretionary nature of the s. 243 remedy — as evidenced by the fact that the provision provides that a court “may” appoint a receiver if it is “just or convenient” to do so — lends further support to a narrower reading of the provision’s purpose. A secured creditor is not entitled to appointment of a receiver. Rather, s. 243 is permissive, allowing a court to appoint a receiver where it is just or convenient. Interference with a discretion granted under federal law is not, by itself, sufficient to establish frustration of federal purpose. Nothing in the text of the provision or the Bankruptcy and Insolvency Act more generally suggests that s. 243 is meant to be a comprehensive remedy exclusive of provincial law.
Any uncertainty about whether s. 243 was meant to displace provincial legislation like The Saskatchewan Farm Security Act is further mitigated by s. 72(1) of the Bankruptcy and Insolvency Act , which explicitly recognizes the continued operation of provincial law in the bankruptcy and insolvency context, except to the extent that it is inconsistent with the Bankruptcy and Insolvency Act . Moreover, other provisions of the Bankruptcy and Insolvency Act further support a more narrow reading of s. 243’s purpose. Notably, s. 47 provides a mechanism for the appointment of an interim receiver where there is an urgent need for the appointment of a receiver.
The legislative history of s. 243 of the Bankruptcy and Insolvency Act further supports a narrow construction of the provision’s purpose — i.e., to avoid a multiplicity of proceedings and the inefficiency resulting from them. Vague and imprecise notions like timeliness or effectiveness cannot amount to an overarching federal purpose that would prevent coexistence with provincial laws.
It is notable that Parliament has recognized that the receivership provision under s. 243 can be subordinated to potentially longer delays in other federal legislation (including the federal Farm Debt Mediation Act ). Given the presumption that Parliament does not enact related statutes that are inconsistent with one another, courts should avoid an interpretation of a federal statute which does not accommodate similar limitations imposed under a provincial statute. It follows that Parliament intended neither to preclude all notice periods longer than the 10‑day notice period in the Bankruptcy and Insolvency Act nor to oust legislation which is intended to favour mediation between creditors and farmers.
Furthermore, on this record, there is simply no evidence to support the argument that the 150‑day delay or the other conditions in The Saskatchewan Farm Security Act frustrate any effectiveness or timeliness concerns. It is the burden of the party invoking paramountcy to not only establish that these are, in fact, the purposes of s. 243, but also that the evidence supports a finding that the provincial law frustrates them in some way. The record is silent in that regard. Parliament’s purpose of providing bankruptcy courts with the power to appoint a national receiver is not frustrated by the procedural and substantive conditions set out in the provincial legislation.
There is, as a result, no evidentiary basis for concluding that s. 243 was meant to circumvent the procedural and substantive requirements of the provincial laws where the appointment is sought. The general goals of bankruptcy or receivership cannot be used to trump the specific purpose of s. 243 and to artificially extend the provision’s purpose to create a conflict with provincial legislation. Construing s. 243’s purpose more broadly in the absence of clear evidence, is inconsistent with the requisite restrained approach to paramountcy.
The conclusion that Part II of The Saskatchewan Farm Security Act is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , is accordingly set aside.
Per Côté J. (dissenting): A yearning for a harmonious interpretation of both federal and provincial legislation cannot lead courts to disregard obvious purposes that are pursued in federal legislation. In the case of s. 243 of the Bankruptcy and Insolvency Act (“BIA ”), Parliament intended to establish a process for appointing national receivers, and intended that process to be timely, sensitive to the totality of circumstances and capable of responding to emergencies. These federal purposes are plainly evident in s. 243 BIA , understood in light of the realities and demands of real‑time insolvency practice, s. 243’s statutory context and its legislative history. To the extent that The Saskatchewan Farm Security Act (“SFSA”) is incompatible with these purposes, there is a frustration of purpose.
Given the often frenzied rush of insolvency proceedings, secured creditors will frequently have an acute need to have a receiver appointed promptly. Implicit in the 10‑day notice period of s. 243 BIA is the very notion of urgency.
In addition, Parliament permits secured creditors to apply for receivership before the expiry of the 10‑day notice period in certain circumstances. This is evidence of Parliament’s intention to provide secured creditors with a remedy capable of adapting to the often dramatic circumstances of insolvency. The significant discretion vested in the courts suggests that Parliament wished courts to respond to each application on a case‑by‑case basis in light of the full factual matrix before them. Moreover, the BIA ’s interim receivership regime confirms the vital importance of timeliness for the national full receivership.
This federal purpose of timeliness can also be discerned from the legislative history of the statutory notice provision. A full purposive analysis must account for the federal objectives that were originally given effect in the statutory scheme. While s. 243 BIA ’s introduction was prompted by a need for a national full receiver, s. 243 is the product of an incremental evolution. The foundational purposes that have animated federal receivership law since 1992 must form part of any credible account of the federal purpose underlying today’s s. 243. If this Court disregards these foundational purposes in its frustration of purpose analysis, the provinces will be left free to mangle the receivership scheme.
On the argument that the special treatment afforded to farmers by the BIA must be included in any purposive analysis of s. 243 BIA , given that Parliament expressly excluded farmers from involuntary bankruptcy proceedings, one would expect that Parliament would have enacted a similar provision with regard to the appointment of a national receiver under Part XI of the BIA. However, there is no such provision in Part XI. In addition, there are stark differences between the federal Farm Debt Mediation Act (“FDMA ”) and the SFSA, both in their operation and the policy preferences they embody. As a result, the existence of the former cannot be taken as evidence that Parliament intended the BIA to coexist with the latter. The scheme of the FDMA is quite compatible with the balance struck in s. 243 BIA ; if the provincial legislation had mirrored the FDMA , the conclusion as to frustration of federal purpose would have been different.
Although Part XI of the BIA contemplates some degree of interaction and overlap with provincial legislation, the essential question remains whether the operation of Part II of the SFSA undermines to a sufficient extent the federal purpose underlying s. 243 BIA . Here, if understood in more general terms, the federal purpose is clearly drawn in broad strokes, namely to establish a process for applying for a national receiver that is timely, adaptable in case of emergency and sensitive to the totality of circumstances. If a province wishes to legislate in a way that will affect the federal receivership regime, then it must do so in a manner consistent with that purpose.
In the instant case, the federal purpose has been frustrated by the important obstacles the province has deliberately placed in the way. The notice period in the SFSA is far longer, and is absolute. The SFSA also establishes a series of evidentiary hurdles that are incompatible with Parliament’s purpose. It is clear that the provincial legislation cannot operate in real time, and is in fact intended to hinder the timely appointment of a receiver, thereby triggering the application of the doctrine of federal paramountcy.
Cases Cited
By Abella and Gascon JJ.
Distinguished: Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; referred to: Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342; Reference re Objection by Quebec to a Resolution to amend the Constitution, [1982] 2 S.C.R. 793; R. v. Laba, [1994] 3 S.C.R. 965; Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188; Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, [1997] 3 S.C.R. 3; Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, [2014] 2 S.C.R. 257; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC 60, [2011] 3 S.C.R. 635; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53; Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725; Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Attorney General of Canada v. Law Society of British Columbia, [1982] 2 S.C.R. 307; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; OPSEU v. Ontario (Attorney General), [1987] 2 S.C.R. 2; General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641; Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134; Quebec (Attorney General) v. Lacombe, 2010 SCC 38, [2010] 2 S.C.R. 453; Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, [2015] 1 S.C.R. 693; 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241; Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379; Cadillac Fairview Inc., Re (1995), 30 C.B.R. (3d) 17; Edgewater Casino Inc., Re, 2009 BCCA 40, 265 B.C.A.C. 274; Transglobal Communications Group Inc., Re, 2009 ABQB 195, 4 Alta. L.R. (5th) 157; GMAC Commercial Credit Corp. — Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123; Gentra Canada Investments Inc. v. Lehndorff United Properties (Canada) (1995), 169 A.R. 138.
By Côté J. (dissenting)
Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14, [2015] 1 S.C.R. 693; Railside Developments Ltd., Re, 2010 NSSC 13, 62 C.B.R. (5th) 193; GMAC Commercial Credit Corp. — Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123; Jacob’s Hold Inc. v. Canadian Imperial Bank of Commerce (2000), 52 O.R. (3d) 776; Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53; Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188.
Statutes and Regulations Cited
Act to amend the Bankruptcy Act and to amend the Income Tax Act in consequence thereof, S.C. 1992, c. 27, ss. 89, 92.
Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Income Tax Act, S.C. 1997, c. 12, s. 114.
Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and chapter 47 of the Statutes of Canada, 2005, Bill C-12, 2nd Sess., 39th Parl., 2007 (assented to December 14, 2007), S.C. 2007, c. 36.
Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts, Bill C-55, 1st Sess., 38th Parl., 2005 (assented to November 25, 2005), S.C. 2005, c. 47, ss. 30 to 33, 115, 141.
Bankruptcy and Insolvency Act , R.S.C. 1985, c. B‑3, ss. 43 to 46 , 47 , 48 , 72(1) , Part XI, 243, 244.
Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C‑36 .
Constitution Act, 1867 , ss. 91(21) , 92(13) .
Farm Debt Mediation Act , S.C. 1997, c. 21, ss. 5 to 14 , 7(1) (b), 12 , 13(1) , 14(2) , 16 , 20(1) , 21 .
Farm Debt Mediation Regulations, SOR/98‑168, s. 3.
Saskatchewan Farm Security Act, S.S. 1988‑89, c. S‑17.1, Part II, ss. 3, 4, 9 to 22, 11 to 21, 12, 13(a), (b), 18(1), 19, 20.
Supreme Court Act , R.S.C. 1985, c. S‑26, s. 40 .
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APPEAL involving a decision of the Saskatchewan Court of Appeal (Richards C.J. and Ottenbreit and Whitmore JJ.A.), 2014 SKCA 35, 433 Sask. R. 266, 371 D.L.R. (4th) 663, 11 C.B.R. (6th) 245, [2014] 6 W.W.R. 440, 602 W.A.C. 266, [2014] S.J. No. 164 (QL), 2014 CarswellSask 179 (WL Can.), affirming a decision of Rothery J., 2013 SKQB 278, [2013] 12 W.W.R. 176, [2013] S.J. No. 477 (QL), 2013 CarswellSask 531 (WL Can.). The Court of Appeal’s conclusion that Part II of The Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1, is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 , is set aside, Côté J. dissenting.
Thomson Irvine and Katherine Roy, for the appellant.
No one appeared for the respondent.
Michael S. Dunn and Daniel Huffaker, for the intervener the Attorney General of Ontario.
Written submissions only by R. Richard M. Butler and Jean M. Walters, for the intervener the Attorney General of British Columbia.
Jeffrey M. Lee, Q.C., and Kristen MacDonald, for the amicus curiae.
The judgment of Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ. was delivered by
[1] Abella and Gascon JJ. — Prior to 2005, receivership proceedings involving assets in more than one province were complicated by the simultaneous appointment of different receivers in different jurisdictions. Because of the inefficiency resulting from this multiplicity of proceedings, the federal government amended its bankruptcy legislation to permit their consolidation through the appointment of a national receiver. This appeal involves a constitutional challenge to provincial farm legislation on the grounds that it conflicts with this national receivership regime. For the reasons that follow, we see no such conflict.
Background
[2] Lemare Lake Logging Ltd., a secured creditor, brought an application pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (BIA ), for the appointment of a receiver over substantially all of the assets except livestock of its debtor, 3L Cattle Company Ltd., a “farmer” within the meaning of The Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1 (SFSA). 3L Cattle contested the appointment and argued that Lemare Lake had to comply with Part II of the SFSA before seeking the appointment of a receiver under s. 243(1).
[3] Part II of the SFSA provides that, before starting an action with respect to farm land, a creditor must serve a “notice of intention”, engage in mandatory mediation, and prove that the debtor has no reasonable possibility of meeting its obligations or is not making a sincere and reasonable effort to meet its obligations. This includes an action for a receivership order pursuant to s. 243(1) of the BIA .
[4] Lemare Lake argued that the doctrine of paramountcy rendered certain provisions of the SFSA constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the BIA .
[5] Lemare Lake and 3L Cattle were incorporated by David Dutcyvich in the 1980s. As a result of disagreements beginning in January 2010 between Mr. Dutcyvich and his two sons, the businesses were restructured, with Mr. Dutcyvich retaining the sole interest in 3L Cattle, and his two sons retaining the sole interest in Lemare Lake.
[6] In connection with the restructuring, 3L Cattle assumed the primary obligation to repay a loan of $10 million to Concentra Financial Services Association. Lemare Lake, however, remained contingently liable for the debt. By written agreement dated December 21, 2010, 3L Cattle indemnified Lemare Lake from any liability in respect of the Concentra loan.
[7] To secure the payment and performance of its obligations to Lemare Lake, 3L Cattle gave Lemare Lake a mortgage dated January 21, 2011 in respect of its interest in 120 parcels of land in Saskatchewan, and a security interest in all non-inventory goods and equipment of 3L Cattle, including machinery, fixtures and tools, by means of a security agreement dated January 19, 2011.
[8] When 3L Cattle failed to repay the Concentra loan when it became due on January 29, 2013, Concentra sought repayment from both 3L Cattle and Lemare Lake. In turn, Lemare Lake, which was experiencing its own financial problems and had secured a protection order under the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 , attempted to realize on its security over 3L Cattle’s assets. It accordingly applied to the Saskatchewan Court of Queen’s Bench for the appointment of a national receiver pursuant to s. 243(1) of the BIA over substantially all of the assets of 3L Cattle, except livestock.
[9] 3L Cattle argued that because it was a “farmer” within the meaning of the SFSA, Lemare Lake had to comply with Part II of the SFSA before applying for the appointment of a national receiver. Part II requires, in part, that before commencing an action with respect to farm land, a person must submit a notice of intention, await the expiry of a 150-day notice period, and engage in a mandatory review and mediation process.
[10] The chambers judge found that the provisions in Part II of the SFSA did not conflict with s. 243(1) of the BIA and dismissed Lemare Lake’s application: [2013] 12 W.W.R. 176. She found no operational conflict between the federal and provincial legislation, because a secured creditor can comply with both the federal and provincial legislation by obtaining a court order under the SFSA permitting it to commence an action before applying for the appointment of a receiver under s. 243(1) of the BIA . Nor did she find any conflict in purpose. In her view, the purpose of s. 243(1) was to allow for the appointment of a national receiver, a purpose that was not frustrated by compliance with Part II of the SFSA. This means that a secured creditor must comply with the provisions of Part II of the SFSA before making an application pursuant to s. 243(1) of the BIA , which Lemare Lake had failed to do. The chambers judge’s alternative view was that even if she had found Part II of the SFSA to be inoperative, she would not have appointed a receiver.
[11] The Court of Appeal dismissed Lemare Lake’s appeal, agreeing with the chambers judge that a receiver should not be appointed: (2014), 433 Sask. R. 266. Nevertheless, although it was not necessary to do so in view of its conclusions on the merits of appointing a receiver, the Court of Appeal addressed the constitutional argument, not only because it had been fully argued, but because it would likely arise in the future.
[12] The Court of Appeal agreed with the chambers judge that there was no operational conflict between the federal and provincial statutes: a creditor could comply with both statutes by obtaining an order pursuant to the SFSA before asking to have a national receiver appointed under the BIA . It disagreed, however, about whether Part II of the SFSA frustrated the purpose of s. 243(1) of the BIA , stating:
. . . Part II of the SFSA would undermine or frustrate the purpose of s. 243 of the BIA in at least two significant ways. First, Part II would dramatically displace the ten-day delay contemplated by the BIA by obliging a creditor like Lemare Lake to wait at least 150 days before applying for a receivership order. . . .
Second, Part II of the SFSA would effectively layer on new criteria for the granting of a receivership order under the BIA . [Emphasis added in original; paras. 55-56.]
In the Court of Appeal’s view, the purpose of s. 243 was not only to authorize the appointment of national receivers, it was to ensure that such receivers be able to act effectively in the context in which they are appointed — insolvency — where events move quickly and proceedings are time-sensitive. It accordingly concluded that “Part II of the SFSA is inoperative in circumstances where an application is made to appoint a receiver pursuant to s. 243(1) of the BIA ”: para. 67.
[13] The Attorney General for Saskatchewan was granted leave to appeal to this Court. Subsequent to the decision of the Court of Appeal, however, Lemare Lake and 3L Cattle settled their dispute. The Court appointed former counsel for Lemare Lake as amicus curiae to respond to the submissions of the Attorney General. Amicus was content to have the matter heard by this Court despite its mootness. In our view, the ongoing importance of resolving this issue in Saskatchewan supports our deciding this appeal: see Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, at pp. 353 and 358-63; Reference re Objection by Quebec to a Resolution to amend the Constitution, [1982] 2 S.C.R. 793, at p. 806. Moreover, it is worth noting that this is an appeal from the reasons, not the disposition, of the Court of Appeal, which is fully authorized by s. 40 of the Supreme Court Act , R.S.C. 1985, c. S-26 : see R. v. Laba, [1994] 3 S.C.R. 965. Neither the Attorney General of Canada nor the Superintendent of Bankruptcy intervened.
[14] Before this Court, the submissions were focussed on whether ss. 9 to 22 in Part II of the SFSA are constitutionally inoperative when an application is made to appoint a national receiver under s. 243(1) of the BIA by reason of the doctrine of paramountcy. For the following reasons, we agree with the chambers judge that there is no conflict, and therefore that ss. 9 to 22 of the SFSA are not constitutionally inoperable.
Analysis
[15] The guiding mantra of the paramountcy analysis is that “where there is an inconsistency between validly enacted but overlapping provincial and federal legislation, the provincial legislation is inoperative to the extent of the inconsistency”: Rothmans, Benson & Hedges Inc. v. Saskatchewan, [2005] 1 S.C.R. 188, at para. 11; see also Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, [1997] 3 S.C.R. 3, at para. 98; Luanne A. Walton, “Paramountcy: A Distinctly Canadian Solution” (2003-2004), 15 N.J.C.L. 335, at p. 335.
[16] The first step in the analysis is to determine whether the federal and provincial laws are validly enacted. This requires looking at the pith and substance of the legislation to determine whether the matter comes within the jurisdiction of the enacting legislature. Assuming both laws are validly enacted, the second step requires consideration of whether any overlap between the two laws constitutes a conflict sufficient to render the provincial law inoperative. A provincial law will be deemed to be inoperative to the extent that it conflicts with or is inconsistent with the federal law: see Tsilhqot’in Nation v. British Columbia, [2014] 2 S.C.R. 257, at paras. 128-30; Canadian Western Bank v. Alberta, [2007] 2 S.C.R. 3, at paras. 25-26 and 32.
[17] Two kinds of conflict are at play: (1) an operational conflict, where compliance with both the federal and provincial law is impossible; and (2) frustration of purpose, where the provincial law thwarts the purpose of the federal law (Quebec (Attorney General) v. Canadian Owners and Pilots Association, [2010] 2 S.C.R. 536 (COPA), at para. 64; Rothmans, Benson & Hedges Inc., at paras. 11-12; Quebec (Attorney General) v. Canada (Human Resources and Social Development), [2011] 3 S.C.R. 635, at para. 17; Marine Services International Ltd. v. Ryan Estate, [2013] 3 S.C.R. 53, at paras. 68-69; Bank of Montreal v. Marcotte, [2014] 2 S.C.R. 725, at para. 80).
[18] The operational conflict branch of the paramountcy doctrine requires that there be “actual conflict” between the federal and provincial legislation, that is, “the same citizens are being told to do inconsistent things”: Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161, at p. 191. Stated otherwise, operational conflict arises “where one enactment says ‘yes’ and the other says ‘no’, such that ‘compliance with one is defiance of the other’”: COPA, at para. 64, citing Multiple Access Ltd., at p. 191; see also Ryan Estate, at para. 68; Rothmans, Benson & Hedges Inc., at para. 11. In M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961, for example, an order granting leave to commence foreclosure proceedings under provincial legislation in circumstances where a stay had been granted under a federal statute, was found to be operationally inconsistent because the order made under the provincial statute purported to authorize the very litigation that the federal stay prohibited: paras. 39-42.
[19] Under the second branch of the paramountcy analysis, provincial legislation will be found to be inoperative when it frustrates the purpose of a federal law: Canadian Western Bank, at para. 73. In Law Society of British Columbia v. Mangat, [2001] 3 S.C.R. 113, for example, this Court held that provincial legislation prohibiting non-lawyers from practising law for a fee before a tribunal, conflicted with federal legislation providing that a non-lawyer could represent a party before the Immigration and Refugee Board, even for a fee. Acknowledging that dual compliance was not strictly impossible because a person could either join the Law Society or not charge a fee, the Court nonetheless found the provincial law to be “contrary to Parliament’s purpose”: para. 72.
[20] Significantly, against the background of the two paramountcy paradigms of operational conflict and frustration of purpose, this Court cautioned in Canadian Western Bank that “[t]he fact that Parliament has legislated in respect of a matter does not lead to the presumption that in so doing it intended to rule out any possible provincial action in respect of that subject”: para. 74. The fundamen