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OP I N ION balanced, trumped Lipson. Reaction to the decision was favourable. The Supreme Court seemed attuned to rea- sonable business practice and gave clear guidance to the financial and tax com- munity. But good feelings about the court lasted less than a week. That was because Reference re Securities Act, another unan- imous nine-judge decision, released a few days after Copthorne, was as bad a deci- sion as Copthorne was good. Nine judges got it right in Copthorne. The same nine got it wrong in the reference. For a long time, those involved in Canada's capital market have yearned for a single national securities regulator to replace the absurd patchwork quilt of 13 sets of rules administered by 13 separate regulators, one for each prov- ince and territory. In 2006, the federal government produced a draft Canadian Securities Act intended to establish a single regulator. The draft act did not unilaterally impose a unified system, but allowed provinces and territories to opt in. The expectation was that, sooner or later, they would all embrace a national system, driven by irresistible logic and by the imperative of an increasingly inter- national capital market. There was, of course, the inevita- ble whingeing from some of the prov- inces, particularly Quebec and Alberta. For political cover, the government of Canada asked the Supreme Court for an advisory opinion on whether the pro- posed act fell within Parliament's general power to regulate trade and commerce. The government argued that the securi- ties market had evolved from a provin- cial matter to a national matter affecting the country as a whole. As a conse- quence, it said, the federal trade and commerce power now gave Parliament legislative authority over all aspects of securities regulation. Alberta, Quebec, Manitoba, and New Brunswick argued that the proposed scheme infringed the provincial power over property and civil rights. Most observers thought the Supreme Court reference was pretty much pro forma. A national securities regulator was obviously an idea whose time had come. Surely a few provincial politicians playing to the gallery couldn't derail a scheme endorsed by everybody who knew something about finance and busi- ness. The Supreme Court, it was widely assumed, would recognize reality. But it didn't. In an awkward unani- mous judgment, the court decided that the draft Securities Act was unconsti- tutional. It agreed that "what the Act seeks is comprehensive national securi- ties regulation, with the aim of fostering fair and efficient capital markets and contributing to the stability of Canada's financial system." But, said the court: "federalism demands that a balance be struck, a balance that allows both the federal Parliament and the provincial legislatures to act effectively in their respective spheres. Accepting Canada's interpretation of the general trade and commerce power would disrupt rather than maintain that balance. Parliament cannot regulate the whole of the securi- ties system simply because aspects of it have a national dimension." To reach this conclusion, the court used an antiquated division-of-powers NEW EDITION THE ART OF THE REAL ESTATE DEAL, 3RD EDITION BARRY D. LIPSON, Q.C. The Art of the Real Estate Deal, 3rd Edition is a clearly and concisely written guide, consolidating the various aspects of commercial real estate transactions in one volume. WHAT'S NEW IN THIS EDITION The third edition has been significantly expanded and updated to include the following: ORDER # 983674 $153 Softcover + CD-ROM approx. 380 pages September 2011 978-0-7798-3674-1 • • • • • • A new section on the use of leverage in Chapter 2 – Property Valuation A new section on break-even ratios in Chapter 3 – Risk Assessment Updated pro forma for both subdivision and condominium development in Chapter 4 – Land or Site Valuation A new section on acting in good faith in Chapter 8 – Preliminary Considerations Substantial updates to Chapter 9 – Choice of Entity, relating to the acquisitions by a partnership and by a corporation, the tax consequences of each, and a new section on Joint Ventures New precedents – partnership agreement and co- ownership agreement, and provisions relating to good faith and arbitrations AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. approach and applied hoary precedent (it cites a case from 1881, the Parsons decision, as a leading relevant author- ity on the scope of the trade and com- merce power). As for the argument that the securities market has been so transformed as to make the day-to-day regulation of all aspects of trading in securities a matter of national concern, the court simply rejected it. What a bad decision! It doesn't reflect modern business and fiscal real- ity. It doesn't deal with crucial policy issues. It used a very traditional form of constitutional analysis when other approaches were available that could have led to a better result. Just when things were looking good, out comes the rug from under our feet. Philip Slayton has been dean of a law school and senior partner of a major Canadian law firm. His latest book is Mighty Judgment: How the Supreme Court of Canada Runs Your Life. Visit him online at philipslayton.com. www.CANADIAN Lawyermag.com M A RCH 2012 17

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