The Lawyers Weekly - April 15, 2011

Securities
Continued From Page 1

regulatory regime to become subject to the new regime. Provinces and territories, however, can opt out of the federal securities regulatory regime in which case their provincial securities legislation would continue in full force.

In a ruling that weighed the federal government’s to regulate trade and commerce under s. 91( 2) of the Constitution Act, 1867 and the provinces’ power to regulate property and civil rights under s. 92( 13), the majority in a 4-1 split decision were not swayed by federal arguments that there is a need to reduce “systemic risk to Canada’s financial system” and increase investor protection. Nor were they convinced that since the proposed legislation will apply to a capital market that is “ fundamentally interprovincial and international,” trade and commerce powers apply. The federal argument that the proposed legislation was a “classic application” of the “double aspect” doctrine and that the cases that have upheld provincial jurisdiction over securities regulation “in no way justify the conclusion” that provincial jurisdiction is exclusive in an area of “such critical importance to the economy as a whole” also did not persuade the appellate court.

In the 188-page ruling, Chief
Justice Michel Robert notes that
“for a very long period of time, the
regulation of trading in securities
has been subject to the provincial
jurisdiction in respect to property
and civil rights in the province,”
something that has been repeat-
edly recognized by various courts
over the past 80 years.

to charge tax on one’ bagel

Miller
Continued From Page 5
“The argument that the provinces have not been
able to demonstrate an expertise in regulating
the industry does not hold water…

the Quebec government. A constitutional law professor at the University of Ottawa, Pelletier points out that in the Supreme Court of Canada (SCC) ruling in General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.J. No. 28, advanced several hallmarks of validity for legislation under the second branch of the trade and commerce power, including the need for a national regime because the provinces are unable to efficiently oversee this sector of activity.

“The argument that the prov-
inces have not been able to dem-
onstrate an expertise in regulating
the industry does not hold water
inefficiency argument is not per-
suasive in this case because the
provinces and territories have
been able to conceive an efficient
pan-Canadian system.”
Pelletier also believes that the
federal government made a stra-
tegic error when it included in the
proposed Act an opt-in mechan-
ism. The majority note that the
proposed law appears to be con-
tradictory because it allows prov-
inces to opt out. “It is difficult to
view this mechanism as something
other than an avowal that the
regime could function” without all
of the provinces taking part in the
single national securities system,
said the court.

Or as Pelletier puts it, “it also
demonstrates that the federal gov-
ernment doesn’t necessarily see
the need to have a pan-Canadian
structure to oversee the securities
market.”
According to Doug Mitchell, a
well-known Montreal commercial
litigation lawyer with an expertise
in constitutional law, though he
has seen “some increase in the
evolution and use of the trade and
commerce power” over the years,
he believes that the proposed Act
would be “pushing the limits of
what valid trade and commerce
power could be.”
Gaudreault-DesBiens asserts
that no matter how the SCC
rules, it will be at a constitu-
tional crossroad.

“Either it will give a broad and lenient interpretation to the framework it has elaborated in the General Motors ruling at the risk of, especially in Quebec, being characterized as always leaning in the same direction as the federal government or if it adopts a more stringent test, it could help the court sustain its legitimacy a bit more at the political level. It will be very interesting to see how it will rule,” said Gaudreault-DesBiens. n

Reasons: Québec (Procureure générale) c.
Canada (Procureure générale), [2011] J.Q.
no 2940.
Quotes by Benoit Pelletier and the court
decision were translated from French by
the author.
Desire to purchase varies inversely with price

Selick
Continued From Page 5

choice between seeking justice with an expensive sidekick or seeking justice for free, a significant proportion of them (those who are greater risk-takers, those who have little at stake, or those who are just as smart as the average lawyer) will make the perfectly rational decision to select the cheaper route— especially if they’re convinced that getting justice from our courts is a crapshoot anyhow.

But let’s accept, for the sake of argument, that the cost of lawyers is “too high.” Economics 101 tells us that one or both of these things must be true: either the supply of lawyers is too small or the demand for lawyers is too large.

We could increase the supply of practitioners by expanding the law schools or even abolishing lawyers’ monopoly on practising law. But, oh no — this is not what you hear lawyers recommending. Instead, they generally advocate subsidizing litigants.

For instance, the Doust com-
mission in B.C. recently recom-
mended that legal services be con-
sidered an essential public service
and that government supply more
funding. This echoes retired
Supreme Court of Canada Justice
Claire L’Heureux-Dubé who told
a legal conference back in 2005:
“Legal services, like health care,
should be free in an ideal society.”
But even the dullest store-
keeper knows that if you mark
down the price of a product,
people will buy more of it. If you
give it away for free, they’ll
snatch up every last morsel and
ask for a rain-check. This is not a
sign that the product was over-
priced or “inaccessible” origin-
ally. It just means that econo-
mists have correctly described
demand curves as downward-
sloping; in other words, people’s
desire to purchase things varies
inversely with the price.

a spokesman for the state’s
Department of Taxation and
Finance told CNN, “any handling
or preparation at the
shop”—slicing, making it into a
sandwich—“turns it into a tax-
able event.”
Canadian VAT law assesses a
minimum of five per cent GST on
similar purchases, plus anything
arbitrarily defined as a snack
item—such as a doughnut or
individual bagel, sliced or
not—instead of as a real Can-
adian meal. (Long gone are the
days when the law defined French
fries as meat, so that those who
couldn’t afford roast beef or pork
chops could still eat Sunday din-
ner in a restaurant.) In Ontario,
New Brunswick, Nova Scotia and
Newfoundland, the Harmonized
Sales Tax dings you another eight
per cent— 13 per cent total. B.C.
is marginally more beautiful at
one per cent less. So, never mind
the sliced bagel tax, New Yorkers
are doing at least four per cent
better at the bakery.

Word-and-phrase dictionaries claim “windfall” derives from “medieval English law” that said commoners could collect fallen limbs but couldn’t fell trees. Yet the direct antecedent comes from 1723, in the infamous Waltham Black Act ( 9 Geo. 1 c. 22). A blunderbuss attempt to crush organized crime, particularly poaching and insurrection by masked gangs in southeast England, the Act protected trees on both public and private land.

Blackstone says the criminals who inspired this 18th-century version of the Patriot Act “seem to have resembled the Roberds-men, or followers of Robert [a.k.a. Robin] Hood, that…com-mitted great outrages on the borders of England and Scotland.” And so does the revolutionary spirit persist in the land of the Tea Party. The cashier at Murray’s Bagels in Chelsea told the New York Post, “I’ll tax if someone’s getting like six or more sliced bagels, but I’m not going to charge tax on one.” n