Canada Western Bank v. Alberta [2007] 2 S.C.R. 3 is a landmark decision

Landmark decision

Landmark court decisions establish new precedents that establish a significant new legal principle or concept, or otherwise substantially change the interpretation of existing law...

 in Canadian constitutional law by the Supreme Court of Canada

Supreme Court of Canada

The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...

 (SCC) relating to the division of powers between Federal and Provincial legislative bodies.

Background

Alberta

Alberta

Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...

 enacted changes to Insurance Act which was a provincial scheme for promoting insurance products. The bank is seeking a declaration that the promotion of insurance products is under Bank Act (Fed juris §91(15)). The Canadian Western Bank

Canadian Western Bank

The Canadian Western Bank is a bank that is based in Edmonton, and which operates primarily in western Canada. The bank serves personal and commercial clients in Western Canada.-History:...

 says the provincial insurance act is ultra vires

Ultra vires

Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...

 because of interjurisdictional immunity

Interjurisdictional immunity

In Canadian Constitutional law, interjurisdictional immunity is the legal doctrine that prevents a law from being applied to matters outside of the constitutional jurisdiction of the enacting head of power...

 or federal paramountacy.

Trial and Appeal Courts

The trial court

Trial court

A trial court or court of first instance is a court in which trials take place. Such courts are said to have original jurisdiction.- In the United States :...

 dismissed the bank application and said the Insurance Act is valid exercise of provincial powers under §92(13) and that interjurisdictional immunity also fails because insurance

Insurance

In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 is not “at the core” of banking and that there is no application of the federal paramountacy because there is no operational conflict between Fed and Provincial laws.

Supreme Court Decision

The appeal court reaffirmed the trial court decision and the Supreme Court of Canada reaffirmed the appeal court. The SCC majority said the banks promoting insurance is provincial issue and is not furthering the security of their loans. In this case, the banks must comply with the federal and provincial laws because they are not contradictory as directives before the court. As a division of powers question, the pith and substance

Pith and substance

Pith and substance is a legal doctrine in Canadian constitutional interpretation used to determine under which head of power a given piece of legislation falls...

 doctrine controls. The SCC made an inquiry into the nature of the law to identify the matters to which the law relates. The SCC said that law relates to matters within the jurisdiction of the province and is intra vires. It does not relate to matters outside the provincial powers and it is still upheld even with incidental effects on the federal jurisdiction because the dominant purpose is insurance issues that are within the ambit of the provincial power of property and civil rights

Civil rights

Civil and political rights are a class of rights that protect individuals' freedom from unwarranted infringement by governments and private organizations, and ensure one's ability to participate in the civil and political life of the state without discrimination or repression.Civil rights include...

 within the province. Also, the Double Aspect Doctrine upholds the legislation because the province is able to legislate the provincial aspects of insurance.

Interjurisdictional immunity

As for interjurisdictional immunity, it should only apply to situations where vital aspects of the federal undertaking are affected and it is absolutely indispensable that one level of government carry out the entire mandate. This is not the case here because there is an absence of case law

Case law

In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...

 and not much chance that interjurisdictional immunity would apply. Even if interjurisdictional immunity would apply here, there is no level of instrusion on the core power that requires the exemption of the banks from the provincial legislation because there is no adverse impact on the federally regulated banks.

Federal Paramountcy

The provincial laws cannot have a conflicting effect on a federal entity. The party attempting to rely on the federal paramountcy must prove that the provincial law is incompatible, which would be the federal bank

Federal Banking

Federal banking is the term for the way the Federal Reserve distributes its money. The Reserve operates twelve banking districts around the country which oversee money distribution within their respective districts...

 in this case. The bank must prove that it is impossible to comply with both the federal and provincial laws as directives before the court. The SCC says this is not the case here.

Pith and Substance

The SCC says the Insurance Act relates to province §92(13) and is a valid provincial law applying to the federally regulated banks because the banks failed to prove that insurance is part of their unassailable federal banking power. Banking includes securing loans by insurance collateral

Collateral (finance)

In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...

, but it is not essential to banking and the Federal Bank Act recognizes insurance as a separate issue from banking.

Concurrence

In concurrence, the SCC said that the Pith and Substance of insurance is provincial law under (§92(13)) and applies to all entities in the province that are promoting insurance. As for interjurisdictional immunity, insurance is not part of the core of banking and there is no conflict to satisfy federal paramountacy. In actuality, these provincial laws actually help the banks promote their insurance products within the province as oppose to derogate from their federal powers.