Supreme Court Revisits Test For Federal Paramountcy

The principle of federal paramountcy provides that valid provincial legislation will be rendered inoperative to the extent it conflicts with valid federal legislation where: (1) there is an operational conflict such that it is impossible to comply with both laws; or (2) operation of the provincial law frustrates the purpose of the federal law.1

Like many constitutional principles, the paramountcy test is easy to state yet more difficult to apply. According to the minority of the Supreme Court in Alberta (Attorney General) v. Moloney,2 decided together with the companion case of 407 ETR Concession Co. v. Canada (Superintendent of Bankruptcy),3 the "two branches have been confused" in the jurisprudence.4 One of the potential sources of the confusion may stem from differences in how the provincial and federal laws are characterized by the Court and what it means for a citizen to be "compelled" to act by either level of government.

Background

Mr. Moloney caused a car accident while he was uninsured. The province of Alberta compensated a person who was injured in the accident and sought to recover the amount of the compensation from Mr. Moloney. Section 102 of Alberta's Traffic Safety Act (the "TSA") allows the province to suspend an individual's driver's license until the amount of the compensation owed to the injured party has been paid. Mr. Moloney made an assignment in bankruptcy under the federal Bankruptcy and Insolvency Act (the "BIA") and was discharged from bankruptcy. Section 178(2) of the BIA provides that upon discharge, the debtor is released from all debts that are claims provable in bankruptcy. The province's claim against Mr. Moloney was a claim provable in bankruptcy. Mr. Moloney did not pay the claim, relying on s. 178(2) of the BIA. Alberta suspended his driver's license, and he challenged the suspension.

Operational Conflict, Purpose Conflict or Both?

The Supreme Court unanimously agreed that s. 102 of the TSA and s. 178(2) of the BIA were in conflict and that s. 102 of the TSA was therefore inoperative. The majority (per Abella, Rothstein, Cromwell, Karakatsanis, Wagner and Gascon JJ.) held that there was operational and purpose conflict. The minority (per Coté J. and McLachlin C.J.) held that there was purpose conflict only.

Both the majority and minority returned to Multiple Access Ltd. v. McCutcheon,5 the seminal decision on what is now considered to be the first branch of the paramountcy test. In Multiple Access, Dickson...