Canadian federalism

Sir John A. Macdonald

The foundations of Canadian federalism were laid at the Quebec Conference of 1864. The Quebec Resolutions were a compromise between those who wanted sovereignty vested in the federal government and those who wanted it vested in the provinces. The compromise based the federation on the constitution of the British Empire, under which the legal sovereignty of imperial power was modified by the conventions of colonial responsible government, making colonies of settlement (such as those of British North America) self-governing in domestic affairs. A lengthy political process ensued before the Quebec Resolutions became the British North America Act of 1867. This process was dominated by John A. Macdonald, who joined British officials in attempting to make the federation more centralized than that envisaged by the Resolutions.[4]

The resulting constitution was couched in more centralist terms than intended. As prime minister, Macdonald tried to exploit this discrepancy to impose his centralist ideal against chief opponent Oliver Mowat. In a series of political battles and court cases from 1872 to 1896,[lower-alpha 1] Mowat reversed Macdonald's early victories and entrenched the co-ordinated sovereignty which he saw in the Quebec Resolutions.[6] In 1888, Edward Blake summarized that view: "[It is] a federal as distinguished from a legislative union, but a union composed of several existing and continuing entities ... [The provinces are] not fractions of a unit but units of a multiple. The Dominion is the multiple and each province is a unit of that multiple ..."[7] The accession of Wilfrid Laurier as prime minister inaugurated a new phase of constitutional consensus, marked by a more-egalitarian relationship between the jurisdictions. The federal government's quasi-imperial powers of disallowance and reservation, which Macdonald abused in his efforts to impose a centralised government, fell into disuse.

During World War I the federal Crown's power was extended with the introduction of income taxes and passage of the War Measures Act, the scope of which was determined by several court cases.[lower-alpha 2] The constitution's restrictions of parliamentary power were affirmed in 1919 when, in the Initiatives and Referendums Reference, a Manitoba act providing for direct legislation by way of initiatives and referendums was ruled unconstitutional by the Privy Council on the grounds that a provincial viceroy (even one advised by responsible ministers) could not permit "the abrogation of any power which the Crown possesses through a person directly representing it".[nb 11] Social and technological changes also worked their way into constitutional authority; the Radio Reference found that federal jurisdiction extended to broadcasting,[nb 12] and the Aeronautics Reference found the same for aeronautics.[nb 13]

Dominion-Provincial Conference, 1927

In 1926, the King–Byng Affair resulted in a constitutional crisis which was the impetus for changes in the relationship between the governor general and the prime minister. Although its key aspects were political in nature, its constitutional aspects continue to be debated.[8] One result was the Balfour Declaration issued later that year, whose principles were eventually codified in the Statute of Westminster 1931. It, and the repeal of the Colonial Laws Validity Act 1865, gave the federal parliament the ability to make extraterritorial laws and abolish appeals to the Judicial Committee of the Privy Council. Criminal appeals were abolished in 1933,[na 1] but civil appeals continued until 1949.[na 2] The last Privy Council ruling of constitutional significance occurred in 1954, in Winner v. S.M.T. (Eastern) Limited.[nb 14] After that, the Supreme Court of Canada became the final court of appeal.

In 1937, Lieutenant Governor of Alberta John C. Bowen refused to give Royal Assent to three Legislative Assembly of Alberta bills. Two would have put the province's banks under the control of the provincial government; the third, the Accurate News and Information Act, would have forced newspapers to print government rebuttals to stories the provincial cabinet considered "inaccurate". All three bills were later declared unconstitutional by the Supreme Court of Canada in Reference re Alberta Statutes, which was upheld by the Judicial Committee of the Privy Council.[nb 15]

World War II's broader scope required passage of the National Resources Mobilization Act to supplement the powers in the War Measures Act to pursue the national war effort. The extent to which wartime federal power could expand was further clarified in the Chemicals Reference (which held that Orders in Council under the War Measures Act were equivalent to acts of parliament)[nb 16] and the Wartime Leasehold Regulations Reference, which held that wartime regulations could displace provincial jurisdiction for the duration of an emergency.[nb 17] Additional measures were required in order to secure control of the economy during that time. Jurisdiction over unemployment insurance was transferred permanently to the federal sphere;[na 3] the provinces surrendered their power to levy succession duties and personal and corporate income taxes for the duration of the war (and for one year afterwards) under the Wartime Tax Rental Agreement;[9] and labour relations were centralized under federal control with the Wartime Labour Relations Regulations (lasting until 1948), in which the provinces ceded their jurisdiction over all labour issues.[10]

Canada emerged from the war with better cooperation between the federal and provincial governments. This led to a welfare state, a government-funded health care system and the adoption of Keynesian economics. In 1951 section 94A was added to the British North America Act, 1867 to allow the Canadian parliament to provide for pensions.[na 4] This was extended in 1964 to allow supplementary benefits, including disability and survivors' benefits.[na 5] The era saw an increase in First Ministers' Conferences to resolve federal-provincial issues. The Supreme Court of Canada became the court of final appeal after the 1949 abolition of appeals to the Judicial Committee of the Privy Council and parliament received the power to amend the constitution, limited to non-provincial matters and subject to other constraints.[na 6]

1961 saw the last instance of a lieutenant governor reserving a bill passed by a provincial legislature. Frank Lindsay Bastedo, Lieutenant Governor of Saskatchewan, withheld Royal Assent and reserved Bill 5, An Act to Provide for the Alteration of Certain Mineral Contracts, to the Governor-in-Council for review. According to Bastedo, "[T]his is a very important bill affecting hundreds of mineral contracts. It raises implications which throw grave doubts of the legislation being in the public interest. There is grave doubt as to its validity". The act was upheld in an Order in Council by the federal government.[11][na 7]

Parliament passed the Canadian Bill of Rights, the first codification of rights by the federal government. Prime Minister Lester Pearson obtained passage of major social programs, including universal health care (a federal-provincial cost-sharing program), the Canada Pension Plan and Canada Student Loans. Quebec's Quiet Revolution encouraged increased administrative decentralization in Canada, with Quebec often opting out of federal initiatives and instituting its own (such as the Quebec Pension Plan). The Quebec sovereignty movement led to the victory of the Parti Québécois in the 1976 Quebec election, prompting consideration of further loosening ties with the rest of Canada; this was rejected in a 1980 referendum.

During the premiership of Pierre Trudeau, the federal government became more centralist. Canada experienced "conflictual federalism" from 1970 to 1984, generating tensions with Quebec and other provinces. The National Energy Program and other petroleum disputes sparked bitterness in Alberta, Saskatchewan and Newfoundland toward the federal government.[12]

Although Canada achieved full status as a sovereign nation in the Statute of Westminster 1931, there was no consensus about how to amend the constitution; attempts such as the 1965 Fulton–Favreau formula and the 1971 Victoria Charter failed to receive unanimous approval from both levels of government. When negotiations with the provinces again stalled in 1982, Trudeau threatened to take the case for patriation to the British parliament "[without] bothering to ask one premier". According to the federal cabinet and Crown counsel, if the British Crown (in council, parliament and on the bench) exercised sovereignty over Canada, it would do so only at the request of the federal ministers.[13]

Pierre Trudeau (left) and Jean Chrétien (right) at a session of the 1981 constitutional talks

Manitoba, Newfoundland and Quebec posed reference questions to their respective courts of appeal, in which five other provinces intervened in support. In his ruling, Justice Joseph O'Sullivan of the Manitoba Court of Appeal held that the federal government's position was incorrect; the constitutionally-entrenched principle of responsible government meant that "Canada had not one responsible government but eleven."[13] Officials in the United Kingdom indicated that the British parliament was under no obligation to fulfill a request for legal changes desired by Trudeau, particularly if Canadian convention was not followed.[14] All rulings were appealed to the Supreme Court of Canada. In a decision later known as the Patriation Reference, the court ruled that such a convention existed but did not prevent the federal parliament from attempting to amend the constitution without provincial consent and it was not the role of the courts to enforce constitutional conventions.

The Canadian parliament asked the British parliament to approve the Constitution Act, 1982, which it did in passage of the Canada Act 1982. This resulted in the introduction of the Canadian Charter of Rights and Freedoms, the transfer of constitutional amendment to a Canadian framework and the addition of section 92A to the Constitution Act, 1867, giving the provinces more jurisdiction over their natural resources.

The Progressive Conservative Party under Joe Clark and Brian Mulroney favoured the devolution of power to the provinces, culminating in the failed Meech Lake and Charlottetown accords. After merging in 2003 with the heavily devolutionist Canadian Alliance, the Conservative Party under Stephen Harper has maintained the same stance. When Harper was appointed prime minister in 2006, the frequency of First Ministers' conferences declined significantly; inter-provincial cooperation increased with meetings of the Council of the Federation, established by the provincial premiers, in 2003.

After the 1995 Quebec referendum on sovereignty, Prime Minister Jean Chrétien limited the ability of the federal government to spend money in areas under provincial jurisdiction. In 1999 the federal government and all provincial governments except Quebec's agreed to the Social Union Framework Agreement, which promoted common standards for social programmes across Canada.[15] Former Prime Minister Paul Martin used the phrase "asymmetrical federalism" to describe this arrangement.[16][17] The Supreme Court upholds the concepts of flexible federalism (where jurisdictions overlap) and cooperative federalism (where they can favourably interact),[18] as noted in Reference re Securities Act.

The federal-provincial distribution of legislative powers (also known as the division of powers) defines the scope of the federal and provincial legislatures. These have been identified as exclusive to the federal or provincial jurisdictions or shared by all. Section 91 of the Constitution Act, 1867, lists the major federal parliament powers, based on the concepts of peace, order, and good government; while Section 92 of the Constitution Act, 1867 enumerates those of the provincial governments.

The act puts remedial legislation on education rights, uniform laws relating to property and civil rights (in all provinces other than Quebec), creation of a general court of appeal and other courts "for the better Administration of the Laws of Canada," and implementing obligations arising from foreign treaties, all under the purview of the federal legislature in Section 91. Some aspects of the Supreme Court of Canada were elevated to constitutional status in 1982.[nb 19]

The act lists the powers of the provincial parliaments (subject to the federal parliament's authority to regulate inter-provincial movement) in Section 92. These powers include the exploration, development and export to other provinces of non-renewable natural resources, forestry resources and electrical energy. Education is under provincial jurisdiction, subject to the rights of separate schools.

Old-age pensions, agriculture and immigration are shared within federal and provincial jurisdictions. One prevails over the other, however: for pensions, federal legislation will not displace provincial laws, and for agriculture and immigration it is the reverse.

The Constitution Act, 1871 allowed parliament to govern any territories not forming part of any province, and the Statute of Westminster 1931, gave parliament the ability to pass extraterritorial laws.

To rationalize how each jurisdiction may use its authority, certain doctrines have been devised by the courts: pith and substance, including the nature of any ancillary powers and the colourability of legislation; double aspect; paramountcy; inter-jurisdictional immunity; the living tree; the purposive approach, and charter compliance (most notably through the Oakes test). Additionally, there is the implied Bill of Rights.

Jurisdiction over Crown property is divided between the provincial legislatures and the federal parliament, with the key provisions Sections 108, 109, and 117 of the Constitution Act, 1867. Public works are the property of the federal Crown, and natural resources are within the purview of the provinces.[nb 20] Title to such property is not vested in one jurisdiction or another, however, since the Canadian Crown is indivisible.[24][25] Section 109 has been given a particularly-broad meaning;[26] provincial legislation regulating labour used to harvest and the disposal of natural resources does not interfere with federal trade and commerce power,[nb 21][27][nb 22][27] and royalties have been held to cover the law relating to escheats.[nb 23] Canada cannot unilaterally create Indian reserves, since the transfer of such lands requires federal and provincial approval by Order in Council (although discussion exists about whether this is sound jurisprudence).[26][nb 24]

The provincial power to manage Crown land did not initially extend to Manitoba, Alberta and Saskatchewan when they were created from part of the Northwest Territories, since the land was vested in the federal Crown. It was vacated on some land (the Railway Belt and the Peace River Block) by British Columbia when it entered the confederation. Title to this land was not vested in those provinces until the passage of the Natural Resources Acts in 1930. The power is not absolute, however; provincial Crown land may be regulated or expropriated for federal purposes.[nb 25][nb 26] The administration of crown land is also subject to the rights of First Nations[nb 27] (since they are a relevant interest),[nb 28] and provincial power "is burdened by the Crown obligations toward the Aboriginal people in question".[nb 29] Debate exists about whether such burdens apply in the same manner in the Western provinces under the Natural Resources Acts.[28]

Management of offshore resources is complex; although management of the beds of internal waters is vested in the provincial Crowns, management of beds of territorial seas is vested in the federal Crown (with management of the continental shelf and the exclusive economic zone).[nb 30][nb 31][29] The beds and islands of the waters between Vancouver Island and mainland British Columbia have been declared the property of the Crown in right of British Columbia.[nb 32] Federal-provincial management agreements have been implemented concerning offshore petroleum resources in the areas around Newfoundland and Labrador and Nova Scotia.[na 8][na 9]

Taxation is a power of the federal and provincial legislatures; provincial taxation is more restricted, in accordance with sections 92(2) and 92(9) of the Constitution Act, 1867. In Allard Contractors Ltd. v. Coquitlam (District), provincial legislatures may levy an indirect fee as part of a valid regulatory scheme.[nb 33] Gérard La Forest observed obiter dicta that section 92(9) (with provincial powers over property and civil rights and matters of a local or private nature) allows for the levying of license fees even if they constitute indirect taxation.[30]

Parliament has the power to spend money on public debt and property. Although the Supreme Court of Canada has not ruled directly about constitutional limits on federal spending power,[nb 34][31] parliament can transfer payments to the provinces.[lower-alpha 3] This arises from the 1937 decision of the Judicial Committee of the Privy Council on the Unemployment Insurance Reference, where Lord Atkin observed: "Assuming the Dominion has collected by means of taxation a fund, it by no means follows that any legislation which disposes of it is necessarily within Dominion competence ... If on the true view of the legislation it is found that in reality in pith and substance the legislation invades civil rights within the Province, or in respect of other classes of subjects otherwise encroaches upon the provincial field, the legislation will be invalid".[nb 36] In Re Canada Assistance Plan, Justice Sopinka held that the withholding of federal money previously granted to fund a matter within provincial jurisdiction does not amount to the regulation of that matter.[nb 37]

The preamble of Section 91 of the Constitution Act, 1867 states: "It shall be lawful for the Queen ... to make laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces". In addition to assigning powers not stated elsewhere (which has been narrowly interpreted), this has led to the creation of the national-emergency and national-concern doctrines.

The national-emergency doctrine was described by Mr Justice Beetz in Reference re Anti-Inflation Act.[nb 39][lower-alpha 4][lower-alpha 5] The national-concern doctrine is governed by the principles stated by Mr Justice Le Dain in R. v. Crown Zellerbach Canada Ltd..[nb 41][lower-alpha 6]

The federal government is partially limited by powers assigned to the provincial legislatures; for example, the Canadian constitution created broad provincial jurisdiction over direct taxation and property and civil rights. Many disputes between the two levels of government revolve around conflicting interpretations of the meaning of these powers.

By 1896, the Judicial Committee of the Privy Council arrived at a method of interpretation, known as the "four-departments doctrine", in which jurisdiction over a matter is determined in the following order:

1. Does it fall under Section 92, ss. 1–15?
2. Can it be characterized as falling under Section 91, ss. 1–29?
3. Is it of a general nature, bringing it within Section 91's residuary clause
4. If not, it falls under Section 92, ss. 16.[32]

Lord Sankey

By the 1930s, as noted in the Fish Canneries Reference and Aeronautics Reference, the division of responsibilities between federal and provincial jurisdictions was summarized by Lord Sankey.[lower-alpha 7]

Although the Statute of Westminster 1931 declared that the Parliament of Canada had extraterritorial jurisdiction, the provincial legislatures did not achieve similar status. According to s. 92, "In each Province the Legislature may exclusively make Laws ...".

If a provincial law affects the rights of individuals outside the province:

• If it is, in pith and substance, provincial, ancillary effects on the rights of individuals outside the province are irrelevant[nb 42] but
• Where it is, in pith and substance, legislation in relation to the rights of individuals outside the province, it will be ultra vires the province[nb 5][nb 43]

In The Queen (Man.) v. Air Canada, it was held that the s. 92(2) power providing for "direct taxation within the province" does not extend to taxing sales on flights passing over (or through) a province, but the question of how far provincial jurisdiction can extend into a province's airspace was left undecided.[nb 44] However, the property and civil rights power does allow for determining rules with respect to conflict of laws in civil matters.[na 10]

Federal jurisdiction arises in several circumstances:

• Under the national-emergency doctrine for temporary legislation (the War Measures Act)
• Under the national-concern doctrine for:
  • Matters not existing at confederation (radio and television)
  • Matters of a local or private nature in a province which have become matters of national concern, such as what can accrue to the regulation of trade and commerce
• Matters where the grant is exclusive under Section 91 (criminal law)
• Matters where authority may be assumed (as with works for the general advantage of Canada)

The gap approach, employed sparingly, identifies areas of jurisdiction arising from oversights by the drafters of the constitution; for example, federal jurisdiction to incorporate companies is inferred from the power provinces have under Section 92 for "The Incorporation of Companies with Provincial Objects".

Section 129 of the Constitution Act, 1867 provided for laws in effect at the time of Confederation to continue until repealed or altered by the appropriate legislative authority. Similar provisions were included in the terms of union of other territories that were subsequently incorporated into Canada.

The uniformity of laws in some areas of federal jurisdiction was significantly delayed. Offences under the Criminal Code were not made uniform until 1892, when common-law criminal offences were abolished.[33] Divorce law was not made uniform until 1968, Canadian maritime law not until 1971 and marriage law not until 2005. Provisions of the Civil Code of Lower Canada, adopted in 1865 by the former Province of Canada, affecting federal jurisdiction continued to be in force in Quebec (if they had not been displaced by other federal Acts) until their repeal on 15 December 2004.[na 11][34]

Supreme Court of Canada

According to the Supreme Court of Canada, "our Constitution is based on an allocation of exclusive powers to both levels of government, not concurrent powers, although these powers are bound to interact in the realities of the life of our Constitution."[nb 45] Chief Justice Dickson observed the complexity of that interaction:

The history of Canadian constitutional law has been to allow for a fair amount of interplay and indeed overlap between federal and provincial powers. It is true that doctrines like interjurisdictional and Crown immunity and concepts like "watertight compartments" qualify the extent of that interplay. But it must be recognized that these doctrines and concepts have not been the dominant tide of constitutional doctrines; rather they have been an undertow against the strong pull of pith and substance, the aspect doctrine and, in recent years, a very restrained approach to concurrency and paramountcy issues.[nb 46]

Notable examples include:

• Although the provinces have the power to create criminal courts, only the federal government has the power to determine criminal procedure. Criminal procedure includes prosecution, and federal law can determine the extent of federal and provincial involvement.[nb 47] The provinces' power under s. 92(14) over the administration of justice includes the organization of courts and police forces, which determines the level of law enforcement. The Royal Canadian Mounted Police, as the federal police, contracts for the provision of many provincial and municipal police forces.
• Although the federal power to regulate fisheries does not override provincial authority to require a permit for catching fish in waters under provincial control,[nb 48] the regulation of recreational fisheries has been partially delegated under the Fisheries Act[na 12] to the provinces for specified species in specific provinces.[na 13]
• Works affecting navigation are subject to federal approval under the Navigable Waters Protection Act[35] and provincial approval, since the beds of navigable waters are generally reserved to the Crown in right of the province.[36][37][38]
• Although federal jurisdiction over broadcasting and most telecommunications is exclusive, the provinces may regulate advertising[nb 49] and cable installation (above or underground).[nb 50][39]
• Although the concept of marriage is under federal jurisdiction, the solemnization of marriages is controlled by the provinces.
• The provincial power to regulate security interests under the property and civil-rights power will be displaced by security interests created under a federal head of power – most notably under the banking power – but only to the extent that federal law has covered the field.[nb 51]
• Laws arising from the property and civil-rights power will be used to complement the interpretation of federal legislation where the federal Act has not provided otherwise, but federal power cannot be used to create rules of private law in areas outside its jurisdiction.[nb 52][na 14]
• In insolvency law, provincial statutes operate by federal incorporation into the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act. However, where a stay under federal law has been lifted in order to allow proceedings to take place, a province can impose a moratorium on proceedings falling under provincial law.[nb 53]

In 1899, Lord Watson asserted during the argument in CPR v Bonsecours[nb 54] that neither the federal parliament nor the provincial legislatures could give legislative authority to the other level.[40] Subsequent attempts to dovetail federal and provincial legislation to achieve certain ends met with difficulty, such as an attempt by Saskatchewan to ensure enforcement of a federal statute[na 15] by enacting a complementary Act[na 16] declaring that the federal Act would continue in force under provincial authority if it was ruled ultra vires. The Saskatchewan Court of Appeal ruled a federal and provincial Act ultra vires, voiding both as an attempt by the province to vest powers in parliament unauthorized by the BNA Act.[41][nb 55]

The matter was addressed in 1950 by the Supreme Court,[42] which held ultra vires a proposed Nova Scotia Act which would have authorized the inter-delegation of legislative and taxation authority between Parliament and the Nova Scotia legislature.[nb 56] In that decision, Justice Rand explained the distinction between delegation to a subordinate body and that to a legislative body.[lower-alpha 8]

Later attempts to achieve federal-provincial coordination have succeeded with other types of legislative schemes[43] involving:

• Conditional legislation (such as a federal Act, providing that it will not apply where a provincial Act has been enacted in a given matter). As Justice Rand declared in 1959, "That Parliament can so limit the operation of its own legislation and that it may do so upon any such event or condition is not open to serious debate".[nb 57]
• Incorporation by reference or adoption (for example, a federal regulation prohibiting vehicles from operating on a federal highway except "in accordance with the laws of the province and the municipality in which the highway is situated")[na 17]
• Joint schemes with administrative cooperation, such as the administrative authority granted by federal law to provincial transport boards to license extraprovincial transport[na 18]

To understand how treaties can enter Canadian law, three significant cases must be considered: the Aeronautics Reference, the Radio Reference and the Labour Conventions Reference.[nb 58] Although the reasoning behind the judgments is complex,[44] it is considered to break down as follows:

• Aeronautics were held by the Aeronautics Reference to be within the authority of the Parliament of Canada under s. 132 governing treaties entered into by the British Empire. After that treaty was replaced, it was held in Johannesson v. West St. Paul that in accordance with Ontario v. Canada Temperance Federation the field continued to be within federal jurisdiction under the power relating to peace, order and good government.
• Although an international agreement governing broadcasting was not a treaty of the British Empire, the Radio Reference held that it fell within federal jurisdiction; Canada's obligations under its agreements in this field required it to pass legislation applying to all Canadian residents, and the matter could be seen as analogous to telegraphs (already in the federal sphere).
• The Labour Conventions Reference dealt with labour relations (clearly within provincial jurisdiction); since the conventions were not treaties of the British Empire and no plausible argument could be made for the field attaining a national dimension or becoming of national concern, the Canadian Parliament was unable to exercise new legislative authority.

Although the Statute of Westminster 1931 had made Canada fully independent in governing its foreign affairs, the Judicial Committee of the Privy Council held that s. 132 did not evolve to take that into account. As noted by Lord Atkin at the end of the judgment,

It must not be thought that the result of this decision is that Canada is incompetent to legislate in performance of treaty obligations. In totality of legislative powers, Dominion and Provincial together, she is fully equipped. But the legislative powers remain distributed and if in the exercise of her new functions derived from her new international status she incurs obligations they must, so far as legislation be concerned when they deal with provincial classes of subjects, be dealt with by the totality of powers, in other words by co-operation between the Dominion and the Provinces. While the ship of state now sails on larger ventures and into foreign waters she still retains the watertight compartments which are an essential part of her original structure.

This case left undecided the extent of federal power to negotiate, sign and ratify treaties dealing with areas under provincial jurisdiction, and has generated extensive debate about complications introduced in implementing Canada's subsequent international obligations;[45][46] the Supreme Court of Canada has indicated in several dicta that it might revisit the issue in an appropriate case.[47]