Alberta (Attorney General) v. Moloney

Alberta (Attorney General) v. Moloney
Collection
Supreme Court Judgments
Date
2015-11-13
Neutral citation
2015 SCC 51
Report
[2015] 3 SCR 327
Case number
35820
Judges
McLachlin, Beverley; Abella, Rosalie Silberman; Rothstein, Marshall; Cromwell, Thomas Albert; Moldaver, Michael J.; Karakatsanis, Andromache; Wagner, Richard; Gascon, Clément; Côté, Suzanne
On appeal from
Alberta
Subjects
Constitutional law
Notes
SCC Case Information: 35820
Decision Content
SUPREME COURT OF CANADA
Citation: Alberta (Attorney General) v. Moloney, 2015 SCC 51, [2015] 3 S.C.R. 327
Date: 20151113
Docket: 35820
Between:
Attorney General of Alberta
Appellant
and
Joseph William Moloney
Respondent
- and -
Attorney General of Ontario, Attorney General of Quebec,
Attorney General of British Columbia, Attorney General for
Saskatchewan and Superintendent of Bankruptcy
Interveners
Coram: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
Reasons for Judgment:
(paras. 1 to 90)
Reasons Concurring in the Result:
(paras. 91 to 133)
Gascon J. (Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ. concurring)
Côté J. (McLachlin C.J. concurring)
Alberta (Attorney General) v. Moloney, 2015 SCC 51, [2015] 3 S.C.R. 327
Attorney General of Alberta Appellant
v.
Joseph William Moloney Respondent
and
Attorney General of Ontario,
Attorney General of Quebec,
Attorney General of British Columbia,
Attorney General for Saskatchewan and
Superintendent of Bankruptcy Interveners
Indexed as: Alberta (Attorney General) v. Moloney
2015 SCC 51
File No.: 35820.
2015: January 15; 2015: November 13.
Present: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.
on appeal from the court of appeal for alberta
Constitutional law — Division of powers — Federal paramountcy — Bankruptcy and insolvency — Property and civil rights — Judgment debt owed to province constituted claim provable in debtor’s bankruptcy — Debtor obtained absolute discharge in bankruptcy — Federal legislation governing bankruptcy providing for debtor’s release from all claims provable in bankruptcy upon discharge — Whether provincial legislation providing for continuing suspension of debtor’s driver’s licence and motor vehicle permits until payment of judgment debt constitutionally inoperative by reason of doctrine of federal paramountcy — Test for determining whether operational conflict exists — Whether federal and provincial legislation can operate side by side without conflict — Whether operation of provincial law frustrates purpose of federal law — Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, s. 178(2) — Traffic Safety Act, R.S.A. 2000, c. T‑6, s. 102.
M caused a car accident while he was uninsured. The province of Alberta compensated an individual injured in the accident and sought to recover the amount of the compensation from M. Section 102 of Alberta’s Traffic Safety Act (“TSA”) allows the province to suspend M’s licence and permits until he pays the amount of the compensation. M made an assignment in bankruptcy and was eventually discharged. He listed the province’s claim in his Statement of Affairs. The debt was a claim provable in bankruptcy. Section 178(2) of the Bankruptcy and Insolvency Act (“BIA ”) provides that, upon discharge, M is released from all debts that are claims provable in bankruptcy. As a result of his bankruptcy and discharge, M did not pay the amount of the compensation in full; because of this failure to pay, Alberta suspended his vehicle permits and driver’s licence. M contested this suspension. The Court of Queen’s Bench and the Court of Appeal found that there was a conflict between the federal and provincial laws. Relying on the doctrine of federal paramountcy, they declared s. 102 of the TSA to be inoperative to the extent of the conflict.
Held: The appeal should be dismissed. Section 102 of the TSA is constitutionally inoperative to the extent that it is used to enforce a debt discharged in bankruptcy.
Per Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.: In Canada, the federal and provincial levels of government must enact laws within the limits of their respective spheres of jurisdiction. It is often impossible however for one level of government to legislate effectively within its jurisdiction without affecting matters that are within the other level’s jurisdiction. In certain circumstances, the powers of one level of government must be protected against intrusions by the other level. To protect against such intrusions, the Court has developed various constitutional doctrines, including the doctrine of federal paramountcy. Under this doctrine, the federal law prevails when there is a genuine inconsistency between federal and provincial legislation, that is, when the operational effects of provincial legislation are incompatible with federal legislation. To determine whether such a conflict exists, first and foremost, it is necessary to ensure that the overlapping laws are independently valid. If so, then the court must determine whether their concurrent operation results in a conflict. In this case, the impugned provisions are independently valid. The only question is whether their concurrent operation results in a conflict.
A conflict will arise in one of two situations, which form the two branches of the paramountcy test: (1) there is an operational conflict because it is impossible to comply with both laws, or (2) although it is possible to comply with both laws, the operation of the provincial law frustrates the purpose of the federal enactment. The first branch of the test has been described in the jurisprudence as actual conflict in operation as where one enactment says “yes” and the other says “no”. The question is whether both laws can operate side by side without conflict or both laws can apply concurrently, and citizens can comply with either of them without violating the other. The assessment under this branch is not limited to the actual words or to the literal meaning of the words of the provisions at issue. Rather, the provisions must be read properly based on the modern approach to statutory interpretation. If there is no conflict under the first branch of the test, one may still be found under the second branch. The question under the second branch is whether operation of the provincial Act is compatible with the federal legislative purpose. The effect of the provincial law may frustrate the purpose of the federal law, even though it does not entail a direct violation of the federal law’s provisions.
Under the first or the second branch of the test, the burden of proof rests on the party alleging the conflict. In keeping with co‑operative federalism, the doctrine of paramountcy is applied with restraint. Absent a genuine inconsistency, courts will favour an interpretation of the federal legislation that allows the concurrent operation of both laws. A provincial intention to interfere with the federal jurisdiction is neither necessary nor sufficient. The focus is instead on the effect of the provincial law. Assessing the effect of the provincial law requires looking at the substance of the law, rather than its form. The province cannot do indirectly what it is precluded from doing directly.
Parliament enacted the BIA pursuant to its jurisdiction over matters of bankruptcy and insolvency. The BIA furthers two purposes: the equitable distribution of the bankrupt’s assets among his or her creditors and the bankrupt’s financial rehabilitation. Equitable distribution of assets is achieved by requiring creditors wishing to enforce a claim provable in bankruptcy participate in one collective proceeding. Financial rehabilitation is achieved through the discharge of the bankrupt from all claims provable in bankruptcy. From the perspective of the creditors, the discharge means they are unable to enforce their provable claims.
Provincial legislatures have the power to legislate with regard to property and civil rights. This power includes traffic regulation and the authority to set conditions for driver’s licences and vehicle permits. The TSA is a comprehensive legislative scheme for traffic regulation. A victim injured in an accident may sue for damages. If successful but the uninsured driver does not pay, the victim may apply to the Administrator under the Motor Vehicle Accident Claims Act (“MVACA”) for compensation in the amount of the unsatisfied judgment and the judgment is then assigned to the Administrator. Section 102 of the TSA, which complements the MVACA program, allows the Registrar of Motor Vehicle Services to suspend the debtor’s driver’s licence and vehicle permits until the judgment debt is paid or periodic payments in satisfaction of the judgment are being made. It is, in substance, a debt collection mechanism. Since the judgment debt in this case is a claim provable in bankruptcy, the purpose and effect of s. 102 are to suspend a debtor’s driving privileges until payment of a provable claim.
The laws at issue give inconsistent answers to the question whether there is an enforceable obligation. One law provides for the release of all claims provable in bankruptcy and prohibits creditors from enforcing them, while the other disregards this release and allows for the use of a debt enforcement mechanism on such a claim by precisely excluding a discharge in bankruptcy. This is a true incompatibility. In a case like this one, the test for operational conflict cannot be limited to asking whether the debtor can comply with both laws by renouncing the protection afforded under the federal law or the privilege he or she is otherwise entitled to under the provincial law. In that regard, the debtor’s response to the suspension of his or her driving privileges is not determinative. In analyzing the operational conflict at issue in this case, we cannot disregard the fact that whether the debtor pays or not, the province, as a creditor, is still compelling payment of a provable claim that has been released, which is in direct contradiction with s. 178(2) of the BIA . Neither can the question under the operational conflict branch of the paramountcy test be whether it is possible to refrain from applying the provincial law in order to avoid the alleged conflict with the federal law. Such an approach would render the first branch of the paramountcy test meaningless, since it is virtually always possible to avoid the application of a provincial law so as not to cause a conflict with a federal law. Furthermore, if it is possible to avoid operational conflict simply by declining to apply the provincial law, the same could be done to avoid any frustration of the federal purpose under the second branch of the paramountcy test. In this case, it is impossible for the province to apply s. 102 without contravening s. 178(2) . In effect, s. 102 creates a new class of exempt debts that is not listed in s. 178(1) of the BIA . Hence, the provincial law allows the very same thing that the federal law prohibits. The result is an operational conflict.
Section 102 also frustrates the financial rehabilitation of the bankrupt. The crushing burden of the province’s claim against M was the main reason for his bankruptcy. If s. 102 is allowed to operate despite M’s discharge, he is not offered the opportunity to rehabilitate that Parliament intended to give him. Had Parliament intended judgment debts arising from motor vehicle accidents, or the resulting regulatory charges, to survive bankruptcy, it would have stated so expressly in s. 178(1) of the BIA . It did not. It is beyond the province’s constitutional authority to interfere with Parliament’s discretion in that regard. Nor can M’s driving privileges serve as fresh consideration for a new binding contract for the repayment of the discharged debt. M need not enter into such a contract in order to recover his driving privileges, because the province has no authority to withhold them.
The TSA does not however disrupt the equitable distribution purpose of the BIA . This Court has repeatedly cautioned against giving too broad a scope to paramountcy on the basis of frustration of federal purpose. It is always essential to ascertain the exact purpose of the specific provision of the federal law that is at issue. Although it is clear that the purpose of s. 178(2) is to ensure the debtor’s financial rehabilitation and that s. 102 frustrates that purpose, it cannot be concluded that the operation of the provincial scheme in the context of this case interferes with the equitable distribution of assets.
Per McLachlin C.J. and Côté J.: Section 102 of the TSA frustrates the purpose of financial rehabilitation of the bankrupt that underlies s. 178(2) of the BIA . It is accordingly inoperative to the extent of the conflict by reason of the doctrine of federal paramountcy. As the frustration of one federal purpose is sufficient to trigger the application of the doctrine of federal paramountcy, it is not necessary to address the purpose of equitable distribution.
There is no operational conflict to speak of in this case. The majority’s analysis contrasts with the clear standard that has been adopted for the purpose of determining whether an operational conflict exists in the context of the federal paramountcy test: impossibility of dual compliance as a result of an express conflict. Impossibility of dual compliance is the undisputed standard for determining whether an operational conflict exists and it is one that very few cases will meet. In the jurisprudence, impossibility of dual compliance has become synonymous with operational conflict. The requirement of an express contradiction is inseparable from impossibility of dual compliance. For the two laws to conflict, each one has to say exactly the opposite of what the other says. A less direct conflict is not enough. In the absence of an express conflict, the two laws are deemed to be capable of operating side by side. In light of the modern jurisprudence, this restrained approach to operational conflict is inescapable. Such a high standard is consistent with co‑operative federalism. If, in practice, the wording of the statutes makes it possible to comply with both of them, then co‑operative federalism requires a court to find that the federal and provincial statutes are compatible, at least at the first stage of the analysis.
The two branches of the modern federal paramountcy test relate to two different forms of conflict. A finding of an operational conflict in the first branch will not necessarily entail a finding of frustration of a federal purpose in the second branch. The first branch is concerned with an incompatibility that is evident on the face of the provisions themselves. Even a superficial possibility of dual compliance will suffice for a court to conclude that there is no operational conflict. If the federal law is prohibitive, as in the case at bar, the question becomes what exactly it prohibits. If the provincial law allows the very same thing the federal law prohibits, there is an operational conflict. In many cases, the two branches of the test have been confused. Although this Court’s past decisions are not always helpful when it comes to drawing a distinction between the two branches, they do support three propositions: (1) that the applicable standard for the first branch is impossibility of dual compliance caused by an express conflict, (2) that this is a high standard that should be applied with restraint, and only in very few cases, and (3) that the two branches are distinct and address different forms of conflict.
Consequently, at the first stage, the determining question is whether the province’s legislation provides a path on which dual compliance is possible. A high standard at the first stage merely means that in most cases, the purpose and effects of the legislation at issue will need to be analyzed at the second stage. Requiring courts to deal with the issue in the second branch has many advantages. For the frustration of purpose analysis, the federal legislative intent must be established by the party relying on it. The court can proceed with a careful analysis of Parliament’s intent and, if possible, interpret the federal law so as not to interfere with the provincial law. The impossibility standard, if applied strictly, will not render the first branch of the federal paramountcy test meaningless. If the provincial law allows or requires something that the federal law explicitly prohibits, or if the conflict is direct rather than indirect, there will be an operational conflict.
In the case at bar, it is clear from the provisions themselves that dual compliance is not impossible. The provisions at issue do not expressly conflict; they are different in terms of their contents and of the remedies that they provide. One of them does not permit what the other specifically prohibits. Under s. 178 of the BIA , a bankrupt is discharged from claims provable in bankruptcy. That section says nothing more. Section 102 of the TSA does not revive an extinguished claim per se; if a debtor chooses not to drive, the province simply cannot enforce its claim. He can also opt to voluntarily pay the discharged debt. The bankrupt is still discharged in the literal sense of the words of s. 178(2) of the BIA . The two statutes answer different questions. In the end, the literal requirement of the federal statute is, strictly speaking, met. It therefore follows that the two acts can operate side by side without operational conflict, although there is a frustration of purpose.
Cases Cited
By Gascon J.
Distinguished: Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; discussed: Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Husky Oil Operations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241; M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961; referred to: Reference re Secession of Quebec, [1998] 2 S.C.R. 217; Re the Initiative and Referendum Act, [1919] A.C. 935; Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; Canada (Attorney General) v. PHS Community Services Society, 2011 SCC 44, [2011] 3 S.C.R. 134; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53; Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629; Smith v. The Queen, [1960] S.C.R. 776; Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419; Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725; Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC 60, [2011] 3 S.C.R. 635; Clarke v. Clarke, [1990] 2 S.C.R. 795; Attorney General of Canada v. Law Society of British Columbia, [1982] 2 S.C.R. 307; O’Grady v. Sparling, [1960] S.C.R. 804; Deloitte Haskins and Sells Ltd. v. Workers’ Compensation Board, [1985] 1 S.C.R. 785; Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379; R. v. Fitzgibbon, [1990] 1 S.C.R. 1005; Schreyer v. Schreyer, 2011 SCC 35, [2011] 2 S.C.R. 605; Industrial Acceptance Corp. v. Lalonde, [1952] 2 S.C.R. 109; Vachon v. Canada Employment and Immigration Commission, [1985] 2 S.C.R. 417; GMAC Commercial Credit Corp. — Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123; Ross v. Registrar of Motor Vehicles, [1975] 1 S.C.R. 5; Provincial Secretary of Prince Edward Island v. Egan, [1941] S.C.R. 396; Thomson v. Alberta (Transportation and Safety Board), 2003 ABCA 256, 232 D.L.R. (4th) 237; Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443; Ontario (Minister of Finance) v. Clarke, 2013 ONSC 1920, 115 O.R. (3d) 33; R. v. White, [1999] 2 S.C.R. 417; 407 ETR Concession Co. v. Canada (Superintendent of Bankruptcy), 2015 SCC 52, [2015] 3 S.C.R. 397; Gorguis v. Saskatchewan Government Insurance, 2011 SKQB 132, 372 Sask. R. 152, rev’d 2013 SKCA 32, 414 Sask. R. 5; Buchanan v. Superline Fuels Inc., 2007 NSCA 68, 255 N.S.R. (2d) 286; Miller, Re (2001), 27 C.B.R. (4th) 107; Lucar, Re (2001), 32 C.B.R. (4th) 270; Roncarelli v. Duplessis, [1959] S.C.R. 121; British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473; Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, [1997] 3 S.C.R. 3.
By Côté J.
Discussed: M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., [1999] 2 S.C.R. 961; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241; Husky Oil Operations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453; referred to: Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; Rio Hotel Ltd. v. New Brunswick (Liquor Licensing Board), [1987] 2 S.C.R. 59; NIL/TU,O Child and Family Services Society v. B.C. Government and Service Employees’ Union, 2010 SCC 45, [2010] 2 S.C.R. 696; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC 60, [2011] 3 S.C.R. 635; Bank of Montreal v. Hall, [1990] 1 S.C.R. 121; Canada (Superintendent of Bankruptcy) v. 407 ETR Concession Company Ltd., 2013 ONCA 769, 118 O.R. (3d) 161; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271.
Statutes and Regulations Cited
Act respecting the preservation of agricultural land and agricultural activities, R.S.Q., c. P‑41.1.
Aeronautics Act, R.S.C. 1985, c. A‑2 .
Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3, ss. 69.3 , 69.4 , 72(1) , 121(1) , 136 , 137(1) , 139 , 140.1 , 141 , 172 , 178 .
Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C‑36 .
Constitution Act, 1867, ss. 91 , 92 .
Family Farm Protection Act, C.C.S.M., c. F15.
Farm Debt Review Act, R.S.C. 1985, c. 25 (2nd Supp.).
Immigration Act, R.S.C. 1985, c. I‑2, ss. 30, 69(1).
Legal Profession Act, S.B.C. 1987, c. 25, s. 1 “practice of law”.
Marine Liability Act, S.C. 2001, c. 6 .
Motor Vehicle Accident Claims Act, R.S.A. 2000, c. M‑22, s. 5(1), (2), (7).
Personal Property Security Act, R.S.O. 1990, c. P.10.
Tobacco Act, S.C. 1997, c. 13 .
Tobacco Control Act, S.S. 2001, c. T‑14.1.
Traffic Safety Act, R.S.A. 2000, c. T‑6, ss. 54, 102, 103.
Authors Cited
Alberta. Legislative Assembly. Alberta Hansard, 3rd Sess., 24th Leg., April 12, 1999, p. 927.
Black’s Law Dictionary, 10th ed. by Bryan A. Garner, ed. St. Paul, Minn.: Thomson Reuters, 2014, “enforce”, “release”.
Brun, Henri, Guy Tremblay et Eugénie Brouillet. Droit constitutionnel, 6e éd. Cowansville, Que.: Yvon Blais, 2014.
Canada. Study Committee on Bankruptcy and Insolvency Legislation. Bankruptcy and Insolvency: Report of the Study Committee on Bankruptcy and Insolvency Legislation. Ottawa: Information Canada, 1970.
Colvin, Eric. “Constitutional Law — Paramountcy — Duplication and Express Contradiction — Multiple Access Ltd. v. McCutcheon” (1983), 17 U.B.C. L. Rev. 347.
Hogg, Peter W. Constitutional Law of Canada, 5th ed. Supp. Toronto: Carswell, 2007 (updated 2014, release 1).
Hogg, Peter W. “Paramountcy and Tobacco” (2006), 34 S.C.L.R. (2d) 335.
Houlden, L. W., G. B. Morawetz and Janis Sarra. Bankruptcy and Insolvency Law of Canada, 4th ed. (rev.). Toronto: Carswell, 2013 (updated 2015, release 6).
Wood, Roderick J. Bankruptcy and Insolvency Law. Toronto: Irwin Law, 2009.
APPEAL from a judgment of the Alberta Court of Appeal (Berger, Watson and Slatter JJ.A.), 2014 ABCA 68, 91 Alta. L.R. (5th) 221, 569 A.R. 177, 370 D.L.R. (4th) 267, 9 C.B.R. (6th) 278, 64 M.V.R. (6th) 82, [2014] 4 W.W.R. 272, [2014] A.J. No. 155 (QL), 2014 CarswellAlta 225 (WL Can.), affirming a decision of Moen J., 2012 ABQB 644, 73 Alta. L.R. (5th) 44, 550 A.R. 257, 39 M.V.R. (6th) 21, [2012] A.J. No. 1094 (QL), 2012 CarswellAlta 1757 (WL Can.). Appeal dismissed.
Lillian Riczu, for the appellant.
R. Jeremy Newton, for the respondent.
Josh Hunter and Daniel Huffaker, for the intervener the Attorney General of Ontario.
Alain Gingras, for the intervener the Attorney General of Quebec.
Richard M. Butler, for the intervener the Attorney General of British Columbia.
Thomson Irvine, for the intervener the Attorney General for Saskatchewan.
Peter Southey and Michael Lema, for the intervener the Superintendent of Bankruptcy.
The judgment of Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ. was delivered by
Gascon J. —
I. Overview
[1] In Canada, the federal and provincial levels of government must enact laws within the limits of their respective spheres of jurisdiction. The Constitution Act, 1867 defines which matters fall within the exclusive legislative authority of each level. Still, even when acting within its own sphere, one level of government will sometimes affect matters within the other’s sphere of jurisdiction. The resulting legislative overlap may, on occasion, lead to a conflict between otherwise valid federal and provincial laws. In this appeal, the Court must decide whether such a conflict exists, and if so, resolve it.
[2] The alleged conflict in this case concerns, on the one hand, the federal Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA ”), and on the other hand, Alberta’s Traffic Safety Act, R.S.A. 2000, c. T-6 (“TSA”). It stems from a car accident caused by the respondent while he was uninsured, contrary to s. 54 of the TSA. The province of Alberta compensated the individual injured in the accident and sought to recover the amount of the compensation from the respondent. The latter, however, made an assignment in bankruptcy and was eventually discharged. The BIA governs bankruptcy and provides that, upon discharge, the respondent is released from all debts that are claims provable in bankruptcy. The TSA governs the activity of driving, including vehicle permits and driver’s licences, and allows the province to suspend the respondent’s licence and permits until he pays the amount of the compensation.
[3] As a result of his bankruptcy and subsequent discharge, the respondent did not pay the amount of the compensation in full; because of this failure to pay, Alberta suspended his vehicle permits and driver’s licence. The respondent contested this suspension, arguing that the TSA conflicted with the BIA , in that it frustrated the purposes of bankruptcy. The province replied that there was no conflict since the TSA was regulatory in nature and did not purport to enforce a discharged debt. The Court of Queen’s Bench and the Court of Appeal found that there was a conflict between the federal and provincial laws. Relying on the doctrine of federal paramountcy, they declared the impugned provision of the TSA to be inoperative to the extent of the conflict. I agree with the outcome reached by the lower courts, and I would dismiss the appeal.
II. Facts
[4] The car accident caused by the respondent occurred in 1989. In 1996, the individual injured in the accident obtained judgment against the respondent in the amount of $194,875. The Administrator appointed under the Motor Vehicle Accident Claims Act, R.S.A. 2000, c. M-22 (“MVACA”), indemnified the injured party for the amount of the judgment debt and was assigned the debt in accordance with the MVACA. Initially, the respondent made arrangements with the Administrator to pay the debt in instalments. Some years later, however, in January 2008, he made an assignment in bankruptcy. He listed the Administrator’s claim in his Statement of Affairs. It is not disputed that the judgment debt assigned to the Administrator was a claim provable in bankruptcy. It was, by far, the respondent’s most substantial debt and, in fact, the reason for his financial difficulties. At the time of the assignment, the outstanding amount due to the Administrator stood at $195,823.
[5] In June 2011, the respondent obtained an absolute discharge, which no one opposed. In October of the same year, he received a letter from the Director, Driver Fitness and Monitoring, notifying him that, by application of s. 102(1) of the TSA, his operator’s licence and vehicle registration privileges would be suspended until payment of the outstanding amount of the judgment debt. Later, in November, his lawyer received another letter, this time from Motor Vehicle Accident Recoveries, advising the respondent that he “remains indebted for the judgment debt obtained against him . . . ‘until the judgment is satisfied or discharged, otherwise than by a discharge in bankruptcy’” (A.R., at p. 49). The letter proposed that new payment arrangements be made, failing which the suspension of his driving privileges would continue.
[6] Given this situation, in March 2012, the respondent sought an order from the Court of Queen’s Bench to stay the suspension of his driving privileges. He claimed that he had been discharged in bankruptcy and that s. 178 of the BIA precluded the Administrator from enforcing the judgment debt.
III. Judicial History
A. Alberta Court of Queen’s Bench, 2012 ABQB 644, 73 Alta. L.R. (5th) 44
[7] Moen J. first found that, as a result of the discharge, there was no longer a liability on the basis of which the judgment could be enforced (para. 21). In her view, the question at issue was whether the discharge precluded the province from suspending the respondent’s driving privileges because of the unpaid judgment debt. This entailed looking at the operation of the TSA and the BIA and determining whether the relevant provisions were in conflict, making the doctrine of paramountcy applicable. According to Moen J., an “operational conflict” could arise in two situations, namely where (1) “compliance with both acts is rendered inconsistent or impossible by directly conflicting with an express provision of the BIA ” or (2) “the TSA has the intent and/or effect of interfering with the provisions of the BIA or its fundamental objectives” (para. 30).
[8] Moen J. emphasized the rehabilitative purpose of the BIA (para. 31). She described the purpose of the TSA as being the “protection of public safety via the regulation of traffic and motor vehicles” (para. 33), and the purpose of s. 102 of the TSA as “preventing ‘irresponsible drivers from having the continued privilege of driving . . . without being made to account for the normal consequences of their vast irresponsibilities’” (para. 34). She distinguished situations in which the purpose of licence suspension is the collection of a debt from those in which it is the regulation of conduct (paras. 37-42). She concluded that the sole purpose of s. 102 is the collection of an unpaid judgment debt. In her view, the provision had nothing to do with the regulation of the respondent’s misconduct (para. 43). She thus held that the province’s actions were not disciplinary, but rather “a method of debt collection, and a colourable attempt to circumvent the provisions of the BIA ” (para. 45). This “improper purpose” of the TSA created an “operational conflict” with the BIA (para. 45). She therefore stayed both the enforcement of the judgment debt and the suspension of the respondent’s driving privileges (para. 49), and she declared the TSA ineffective to the extent of the conflict with the BIA (para. 48).
B. Alberta Court of Appeal, 2014 ABCA 68, 91 Alta. L.R. (5th) 221
[9] Writing for a unanimous court, Slatter J.A. described the two types of conflict that trigger the application of the doctrine of paramountcy as follows: (1) “it is impossible to comply with both the provincial and the federal legislation”, or (2) “even though it is technically possible to comply with both, the application of the provincial statute can fairly be said to frustrate Parliament’s legislative purpose” (para. 10). He concluded that because the respondent could comply with both laws by not driving, there was no conflict under the first branch of the test (para. 10).
[10] Turning to the second branch, Slatter J.A. described the two purposes of the BIA as being, first, equal distribution, and second, rehabilitation. He observed that s. 178 lists the debts that are not discharged by bankruptcy, none of which corresponds to judgment debts for damages resulting from motor vehicle accidents (paras. 13-15). According to him, while discharge from bankruptcy does not extinguish debts, nonetheless, “[w]hatever conceptual distinction there may be, it is somewhat artificial in the present context”, as creditors cease to be able to enforce the discharged debts (para. 19). Slatter J.A. rejected the province’s argument that driving privileges can be used as fresh consideration to revive a discharged debt; such consideration is not genuine and it is inconsistent with the policy of the BIA (paras. 20-21). Rejecting another of the province’s arguments, he held that it is irrelevant that driving privileges do not constitute property of the bankrupt. The province cannot withhold privileges arbitrarily in a way that frustrates the purposes of the BIA (paras. 23-24).
[11] Slatter J.A. observed that s. 102 of the TSA specifically provides that it operates notwithstanding a discharge in bankruptcy. In his view, this is a “prima facie signal of a potential operational conflict” (para. 39). Although s. 102 is not coercive and the respondent could choose not to drive, Slatter J.A. concluded that it nonetheless frustrates the purposes of the BIA . One of these purposes is that the discharged bankrupt “will not have to make any such ‘choices’” and will be “free to make independent and unencumbered personal and economic decisions going forward” (para. 43). Because s. 102 is focused on debt collection and is not connected to traffic safety considerations (paras. 40 and 45-47), it interferes with a driver’s ability to make a fresh start (paras. 48-49). Slatter J.A. also concluded that s. 102 disrupts fair and equal distribution to creditors because it permits the province to collect amounts in addition to the dividend ordinarily distributed to creditors (para. 50). He held that s. 102 frustrates both purposes of the BIA and that the words “otherwise than by a discharge in bankruptcy” are in “operational conflict” with the BIA (para. 54).
IV. Issue
[12] The Chief Justice formulated the following constitutional question:
Is s. 102(2) of the Alberta Traffic Safety Act, R.S.A. 2000, c. T-6, constitutionally inoperative by reason of the doctrine of federal paramountcy?
Although the constitutional question, as formulated, refers only to s. 102(2), the proceedings below and the parties’ submissions concern the section in its entirety. Accordingly, I will examine all of the relevant aspects of s. 102.
V. Analysis
[13] Various government actors have been involved in this dispute. Unless otherwise specified, I will refer to the province of Alberta as encompassing these different actors. I will first review the principles applicable to the doctrine of federal paramountcy and then apply them to the facts of this appeal.
A. The Doctrine of Federal Paramountcy
[14] Each level of government — Parliament, on the one hand, and the provincial legislatures, on the other — has exclusive authority to enact legislation with respect to certain subject matters. Sections 91 and 92 of the Constitution Act, 1867 assign each power to the level of government best suited to exercise it: Reference re Secession of Quebec, [1998] 2 S.C.R. 217 (“Secession Reference”), at para. 58. Broad powers were given to the provincial legislatures with respect to local matters, in recognition of regional diversity, while powers relating to matters of national importance were given to Parliament, to ensure unity: Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, at para. 22.
[15] Legislative powers are exclusive, and one government is not subordinate to the other: Secession Reference, at para. 58, citing Re the Initiative and Referendum Act, [1919] A.C. 935 (P.C.), at p. 942. However, the legislative matrix is not as clearly defined as ss. 91 and 92 might suggest. It is often impossible for one level of government to legislate effectively within its jurisdiction without affecting matters that are within the other level’s jurisdiction: Western Bank, at para. 29; H. Brun, G. Tremblay and E. Brouillet, Droit constitutionnel (6th ed. 2014), at p. 465. Furthermore, it is often impossible to make a statute fall squarely within a single head of power: Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161, at pp. 180-81. This leads to overlap in the exercise of provincial and federal powers. The tendency has been to allow these overlaps to occur as long as each level of government properly pursues objectives that fall within its jurisdiction: Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837, at para. 57; Canada (Attorney General) v. PHS Community Services Society, 2011 SCC 44, [2011] 3 S.C.R. 134, at para. 62; Western Bank, at paras. 37 and 42. This tendency reflects the theory of co-operative federalism: Western Bank, at para. 24; Husky Oil Operations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453, at para. 162.
[16] That said, there comes a point where legislative overlap jeopardizes the balance between unity and diversity. In certain circumstances, the powers of one level of government must be protected against intrusions, even incidental ones, by the other level: Western Bank, at para. 32. To protect against such intrusions, the Court has developed various constitutional doctrines. For the purposes of this appeal, I need only refer to one: the doctrine of federal paramountcy. This doctrine “recognizes that where laws of the federal and provincial levels come into conflict, there must be a rule to resolve the impasse”: Western Bank, at para. 32. When there is a genuine “inconsistency” between federal and provincial legislation, that is, when “the operational effects of provincial legislation are incompatible with federal legislation”, the federal law prevails: Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53, at para. 65, quoting Western Bank, at para. 69; see also Marine Services, at paras. 66-68; Multiple Access, at p. 168. The question thus becomes how to determine whether such a conflict exists.
[17] First and foremost, it is necessary to ensure that the overlapping federal and provincial laws are independently valid: Western Bank, at para. 76; Husky Oil, at para. 87. This means determining the pith and substance of the impugned provisions by looking at their purpose and effect: Western Bank, at para. 27; Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783, at para. 16. Once a provision’s true purpose is identified, its validity will depend on whether it falls within the powers of the enacting government: Law Society of British Columbia v. Mangat,