26 Const. F. 1 (2017-2018)

handle is hein.journals/consfo26 and id is 1 raw text is: 





The Incremental Evolution of

National Receivership Law and the

Elusive Search for Federal Purpose



Roderick J Wood*


Introduction

There was a period when provincial legislation
that trespassed too deeply into the federal field
of bankruptcy and insolvency law was likely to
be declared to be ultra vires as an invasion of the
exclusive federal power in relation to that field.'
The five-to-four split in the 1978 Supreme Court
of Canada decision in Robinson v Countrywide
Factors Ltd2 was very much  a turning point.
Thereafter, the constitutionality of provincial
legislation was almost invariably determined
through  the application of the paramountcy
principle.3 Pursuant to this principle, a provincial
statute is rendered inoperative to the extent that
it conflicts with the federal statute. The Supreme
Court of Canada has created a two-branched test
for determining the presence of a conflict. Under
the first branch, there is an operational conflict
when  it is impossible to comply with both the
federal and the provincial statute.4 Under the
second branch, there is a conflict when the oper-
ation of the provincial statute frustrates the pur-
pose of the federal statute.' Either type of conflict
will render the provincial statute inoperative.

    In November  2015, the Supreme Court of
Canada  in Saskatchewan (Attorney General) v
Lemare Lake Logging Ltd6 considered a consti-
tutional challenge to provincial farm protec-
tion legislation on the ground that it conflicted
with federal legislation that empowers a court to
appoint a national receiver under the Bankruptcy
and Insolvency Act (BIA).7 The first branch was
not engaged  since the secured creditor could


comply with both federal and provincial laws by
waiting the longer period and satisfying the more
stringent provisions of the provincial statute. The
matter therefore fell to be decided on the basis of
the second branch of the paramountcy principle.

    Determining purpose and objectives has not
proven difficult in the case of the long-standing
and established federal insolvency systems. For
example, the purpose of the bankruptcy  sys-
tem has been described in a series of Supreme
Court of Canada decisions.' However, the federal
receivership provisions are of a different charac-
ter. Justice C6t described the process that has
given rise to these provisions as an incremen-
tal evolution'9 The search for a federal purpose
behind them has proven to be more problematic.
The Supreme  Court of Canada in Lemare Lake
undertook  this search. The majority decision
brings into question the relevance of one of the
fundamental dynamic  elements of receivership
law and  casts doubt on whether it should be
characterized as a federal insolvency system at
all. In this article I will seek to explain how and
why this has come to pass.


The  Background

3L Cattle Company  Ltd. (3L Cattle) had given
a security interest to Lemare Lake Logging Ltd.
(Lemare Lake) in its land and in its goods other
than inventory to secure an obligation. Following
a default, Lemare Lake applied to the Saskatche-
wan Court of Queen's Bench for the appointment


Constitutional Forum constitutionnel


1

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