Update: I've had a bit of a look at the majority decision in Canadian Western Bank.The upshot of Canadian Western Bank is sensible: if the feds want to immunize banks selling insurance from provincial insurance regulation, then they can, but if they don't turn their mind to the issue, the local law applies. The scope of "interjurisdictional immunity") is going to be very limited. That's a good thing for those of us worried that provincial autonomy is being crushed by the federal leviathan.
I find the rhetoric celebrating overlap of federal and provincial jurisdiction familiar-but-unsettling. The Constitution is clear that the federal and provincial spheres are exclusive (with the exception of Agriculture and Immigration). In general, federal systems are more accountable and efficient to the extent that jurisdiction is distinct. Totally separate watertight compartments may be an unrealizable ideal, but it ought to be the part of the judiciary to police the lines as best it can. Sadly, since 1949, we have delegated this taks to an institution that is appointed in the sole discretion of the federal Prime Minister and located in Ottawa, and therefore unsuited to the task. So we get statements like this from Justice Dickson, cited by the Court last week:
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.
I prefer the view of a certain notorious decentralist small government extremist, who managed to discuss these issues clearly and without resort to tree or tide metaphors:
A fundamental condition of representative democracy is a clear allocation of responsibilities: a citizen who disapproves of a policy, a law, a municipal by-law, or an educational system must know precisely whose work it is so that he can hold someone responsible for it at the next election.
[...]
In a federal state such as Canada, [t]he exercise of sovereignty is divided between a central government and ten regional governments which, taken together, constitute the Canadian state, and each of which must ensure a certain part of the general welfare. Since the same citizens vote in both federal and provincial elections, they must be able to determine readily which government is responsible for what; otherwise the democratic control of power becomes impossible.... [T]he corollary is that no government has the right to interfere with the administration of other governments in those areas not within its own jurisdiction. -- Trudeau, Pierre E. 1957. Federal Grants to Universities. In Trudeau, P.E. Federalism and the French Canadians. Toronto: MacMillan of Canada 1968. pp. 79-80.
But leaving aside the presence of the familiar "co-operative" rhetoric, the result is a good one for those of us concerned with provincial autonomy from an overweening federal leviathan. The reality is that "interjurisdictional immunity" in the technical sense used in Canadian federalism law has always been used to boost federal power at the expense of the provinces, and usually in ways that create injustices neither level of government really intended. Whatever the merits of consolidating insurance regulation across the country, there is no good reason to give the banks special privileges.
A provincial autonomist can be heartened by the references to subsidiarity at para. 45. Notwithstanding Dickson's comment, "pith and substance" means allowing "incidental" intrusions into the other government's sphere, and there is room for a latter-day autonomist to interpret "incidental" more narrowly.
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