Attorney General of Alberta Appellant v. Joseph William Moloney, 2015 SCC 51

SUPREME COURT OF CANADA Citation: Alberta (Attorney General) v. Moloney, 2015 SCC 51, [2015] 3 S.C.R. 327 Date: 20151113 Docket: 35820 Between: Attorney General of Alberta Appellant and Joseph William Moloney Respondent - and - Attorney General of Ontario, Attorney General of Quebec, Attorney General of British Columbia, Attorney General for Saskatchewan and Superintendent of Bankruptcy Interveners Coram: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ.

Reasons for Judgment: (paras. 1 to 90) Reasons Concurring in the Result: (paras. 91 to 133) Gascon J. (Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner JJ. concurring) Côté J. (McLachlin C.J. concurring) Alberta (Attorney General) v. Moloney, 2015 SCC 51, [2015] 3 S.C.R. 327 Attorney General of Alberta Appellant v. Joseph William Moloney Respondent and

Attorney General of Ontario, Attorney General of Quebec, Attorney General of British Columbia, Attorney General for Saskatchewan and Superintendent of Bankruptcy Interveners Indexed as: Alberta ( Attorney General) v. Moloney 2015 SCC 51 File No.: 35820. 2015: January 15; 2015: November 13.

Present: McLachlin C.J. and Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ. on appeal from the court of appeal for alberta Constitutional law — Division of powers — Federal paramountcy — Bankruptcy and insolvency — Property and civil rights — Judgment debt owed to province constituted claim provable in debtor’s bankruptcy — Debtor obtained absolute discharge in bankruptcy — Federal legislation governing bankruptcy providing for debtor’s release from all claims provable in bankruptcy upon discharge — Whether provincial legislation providing for continuing suspension of debtor’s driver’s licence and motor vehicle permits until payment of judgment debt constitutionally inoperative by reason of doctrine of federal paramountcy — Test for determining whether operational conflict exists — Whether federal and provincial legislation can operate side by side without conflict — Whether operation of provincial law frustrates purpose of federal law — Bankruptcy and Insolvency Act, R.S.C. 1985, c.

B-3, s. 178(2) — Traffic Safety Act, R.S.A. 2000, c. T-6, s. 102 . M caused a car accident while he was uninsured. The province of Alberta compensated an individual injured in the accident and sought to recover the amount of the compensation from M.

Section 102 of Alberta’s Traffic Safety Act (“ TSA ”) allows the province to suspend M’s licence and permits until he pays the amount of the compensation. M made an assignment in bankruptcy and was eventually discharged. He listed the province’s claim in his Statement of Affairs. The debt was a claim provable in bankruptcy. Section 178(2) of the Bankruptcy and Insolvency Act (“ BIA ”) provides that, upon discharge, M is released from all debts that are claims provable in bankruptcy.

As a result of his bankruptcy and discharge, M did not pay the amount of the compensation in full; because of this failure to pay, Alberta suspended his vehicle permits and driver’s licence. M contested this suspension. The Court of Queen’s Bench and the Court of Appeal found that there was a conflict between the federal and provincial laws. Relying on the doctrine of federal paramountcy, they declared s. 102 of the TSA to be inoperative to the extent of the conflict. Held : The appeal should be dismissed.

Section 102 of the TSA is constitutionally inoperative to the extent that it is used to enforce a debt discharged in bankruptcy. Per Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.: In Canada, the federal and provincial levels of government must enact laws within the limits of their respective spheres of jurisdiction. It is often impossible however for one level of government to legislate effectively within its jurisdiction without affecting matters that are within the other level’s jurisdiction.

In certain circumstances, the powers of one level of government must be protected against intrusions by the other level. To protect against such intrusions, the Court has developed various constitutional doctrines, including the doctrine of federal paramountcy. Under this doctrine, the federal law prevails when there is a genuine inconsistency between federal and provincial legislation, that is, when the operational effects of provincial legislation are incompatible with federal legislation.

To determine whether such a conflict exists, first and foremost, it is necessary to ensure that the overlapping laws are independently valid. If so, then the court must determine whether their concurrent operation results in a conflict. In this case, the impugned provisions are independently valid. The only question is whether their concurrent operation results in a conflict.

A conflict will arise in one of two situations, which form the two branches of the paramountcy test: (1) there is an operational conflict because it is impossible to comply with both laws, or (2) although it is possible to comply with both laws, the operation of the provincial law frustrates the purpose of the federal enactment. The first branch of the test has been described in the jurisprudence as actual conflict in operation as where one enactment says “yes” and the other says “no”.

The question is whether both laws can operate side by side without conflict or both laws can apply concurrently, and citizens can comply with either of them without violating the other. T he assessment under this branch is not limited to the actual words or to the literal meaning of the words of the provisions at issue. Rather, the provisions must be read properly based on the modern approach to statutory

interpretation. If there is no conflict under the first branch of the test, one may still be found under the second branch. The question under the second branch is whether operation of the provincial Act is compatible with the federal legislative purpose. The effect of the provincial law may frustrate the purpose of the federal law, even though it does not entail a direct violation of the federal law’s provisions. Under the first or the second branch of the test, the burden of proof rests on the party alleging the conflict. In keeping with co-operative federalism, the doctrine of paramountcy is applied with restraint. Absent a genuine inconsistency, courts will favour an

interpretation of the federal legislation that allows the concurrent operation of both laws. A provincial intention to interfere with the federal jurisdiction is neither necessary nor sufficient. The focus is instead on the effect of the provincial law. Assessing the effect of the provincial law requires looking at the substance of the law, rather than its form. The province cannot do indirectly what it is precluded from doing directly. Parliament enacted the BIA pursuant to its jurisdiction over matters of bankruptcy and insolvency. The BIA furthers two

purposes: the equitable distribution of the bankrupt’s assets among his or her creditors and the bankrupt’s financial rehabilitation. Equitable distribution of assets is achieved by requiring creditors wishing to enforce a claim provable in bankruptcy participate in one collective proceeding. Financial rehabilitation is achieved through the discharge of the bankrupt from all claims provable in bankruptcy. From the perspective of the creditors, the discharge means they are unable to enforce their provable claims. Provincial legislatures have the power to legislate with regard to property and civil rights.

T his power includes traffic regulation and the authority to set conditions for driver’s licences and vehicle permits . The TSA is a comprehensive legislative scheme for traffic regulation. A victim injured in an accident may sue for damages. If successful but the uninsured driver does not pay, the victim may apply to the Administrator under the Motor Vehicle Accident Claims Act (“ MVACA ”) for compensation in the amount of the unsatisfied judgment and the judgment is then assigned to the Administrator .

Section 102 of the TSA , which complements the MVACA program, allows the Registrar of Motor Vehicle Services to suspend the debtor’s driver’s licence and vehicle permits until the judgment debt is paid or periodic payments in satisfaction of the judgment are being made. It is, in substance, a debt collection mechanism. Since the judgment debt in this case is a claim provable in bankruptcy, the purpose and effect of s. 102 are to suspend a debtor’s driving privileges until payment of a provable claim. The laws at issue give inconsistent answers to the question whether there is an enforceable obligation.

One law provides for the release of all claims provable in bankruptcy and prohibits creditors from enforcing them, while the other disregards this release and allows for the use of a debt enforcement mechanism on such a claim by precisely excluding a discharge in bankruptcy. This is a true incompatibility. In a case like this one, the test for operational conflict cannot be limited to asking whether the debtor can comply with both laws by renouncing the protection afforded under the federal law or the privilege he or she is otherwise entitled to under the provincial law.

In that regard, the debtor’s response to the suspension of his or her driving privileges is not determinative. In analyzing the operational conflict at issue in this case, we cannot disregard the fact that whether the debtor pays or not, the province, as a creditor, is still compelling payment of a provable claim that has been released, which is in direct contradiction with s. 178(2) of the BIA . Neither can the question under the operational conflict branch of the paramountcy test be whether it is possible to refrain from applying the provincial law in order to avoid the alleged conflict with the federal law.

Such an approach would render the first branch of the paramountcy test meaningless , since it is virtually always possible to avoid the application of a provincial law so as not to cause a conflict with a federal law . Furthermore, if it is possible to avoid operational conflict simply by declining to apply the provincial law, the same could be done to avoid any frustration of the federal purpose under the second branch of the paramountcy test. In this case, it is impossible for the province to apply s. 102 without contravening s. 178(2) .

In effect, s. 102 creates a new class of exempt debts that is not listed in s. 178(1) of the BIA . Hence, the provincial law allows the very same thing that the federal law prohibits. The result is an operational conflict.

Section 102 also frustrates the financial rehabilitation of the bankrupt. The crushing burden of the province’s claim against M was the main reason for his bankruptcy. If s. 102 is allowed to operate despite M’s discharge, he is not offered the opportunity to rehabilitate that Parliament intended to give him. Had Parliament intended judgment debts arising from motor vehicle accidents, or the resulting regulatory charges, to survive bankruptcy, it would have stated so expressly in s. 178(1) of the BIA . It did not.

It is beyond the province’s constitutional authority to interfere with Parliament’s discretion in that regard. Nor can M’s driving privileges serve as fresh consideration for a new binding contract for the repayment of the discharged debt. M need not enter into such a contract in order to recover his driving privileges, because the province has no authority to withhold them. The TSA does not however disrupt the equitable distribution purpose of the BIA . This Court has repeatedly cautioned against giving too broad a scope to paramountcy on the basis of frustration of federal purpose.

It is always essential to ascertain the exact purpose of the specific provision of the federal law that is at issue. Although it is clear that the purpose of s. 178(2) is to ensure the debtor’s financial rehabilitation and that s. 102 frustrates that purpose, it cannot be concluded that the operation of the provincial scheme in the context of this case interferes with the equitable distribution of assets. Per McLachlin C.J. and Côté J.:

Section 102 of the TSA frustrates the purpose of financial rehabilitation of the bankrupt that underlies s. 178(2) of the BIA . It is accordingly inoperative to the extent of the conflict by reason of the doctrine of federal paramountcy. As the frustration of one federal purpose is sufficient to trigger the application of the doctrine of federal paramountcy, it is not necessary to address the purpose of equitable distribution. There is no operational conflict to speak of in this case.

The majority’s analysis contrasts with the clear standard that has been adopted for the purpose of determining whether an operational conflict exists in the context of the federal paramountcy test: impossibility of dual compliance as a result of an express conflict. Impossibility of dual compliance is the undisputed standard for determining whether an operational conflict exists and it is one that very few cases will meet. In the jurisprudence, impossibility of dual compliance has become synonymous with operational conflict.

The requirement of an express contradiction is inseparable from impossibility of dual compliance. For the two laws to conflict, each one has to say exactly the opposite of what the other says. A less direct conflict is not enough. In the absence of an express conflict, the two laws are deemed to be capable of operating side by side. In light of the modern jurisprudence, this restrained approach to operational conflict is inescapable. Such a high standard is consistent with co-operative federalism.

If, in practice, the wording of the statutes makes it possible to comply with both of them, then co-operative federalism requires a court to find that the federal and provincial statutes are compatible, at least at the first stage of the analysis. The two branches of the modern federal paramountcy test relate to two different forms of conflict. A finding of an operational conflict in the first branch will not necessarily entail a finding of frustration of a federal purpose in the second branch. The first branch is concerned with an incompatibility that is evident on the face of the provisions themselves.

Even a superficial possibility of dual compliance will suffice for a court to conclude that there is no operational conflict. If the federal law is prohibitive, as in the case at bar, the question becomes what exactly it prohibits. If the provincial law allows the very same thing the federal law prohibits, there is an operational conflict. In many cases, the two branches of the test have been confused.

Although this Court’s past decisions are not always helpful when it comes to drawing a distinction between the two branches, they do support three propositions: (1) that the applicable standard for the first branch is impossibility of dual compliance caused by an express conflict, (2) that this is a high standard that should be applied with restraint, and only in very few cases, and (3) that the two branches are distinct and address different forms of conflict. Consequently, at the first stage, the determining question is whether the province’s legislation provides a path on which

dual compliance is possible. A high standard at the first stage merely means that in most cases, the purpose and effects of the legislationat issue will need to be analyzed at the second stage. Requiring courts to deal with the issue in the second branch has many advantages.For the frustration of purpose analysis, the federal legislative intent must be established by the party relying on it. The court can proceedwith a careful analysis of Parliament’s intent and, if possible, interpret the federal law so as not to interfere with the provincial law.

Theimpossibility standard, if applied strictly, will not render the first branch of the federal paramountcy test meaningless. If the provinciallaw allows or requires something that the federal law explicitly prohibits, or if the conflict is direct rather than indirect, there will be anoperational conflict. In the case at bar, it is clear from the provisions themselves that dual compliance is not impossible. The provisions at issuedo not expressly conflict; they are different in terms of their contents and of the remedies that they provide. One of them does not permitwhat the other specifically prohibits.

Under s. 178 of the BIA, a bankrupt is discharged from claims provable in bankruptcy. That sectionsays nothing more.

Section 102 of the TSA does not revive an extinguished claim per se; if a debtor chooses not to drive, the provincesimply cannot enforce its claim. He can also opt to voluntarily pay the discharged debt. The bankrupt is still discharged in the literalsense of the words of s. 178(2) of the BIA. The two statutes answer different questions. In the end, the literal requirement of the federalstatute is, strictly speaking, met. It therefore follows that the two acts can operate side by side without operational conflict, althoughthere is a frustration of purpose. Cases Cited By Gascon J.

Distinguished: Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188; Quebec (AttorneyGeneral) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; discussed: Canadian Western Bank v.Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Husky Oil Operations Ltd. v. Minister of National Revenue, (SCC), [1995] 3S.C.R. 453; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; 114957 Canada Ltée(Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241; M & D Farm Ltd. v.

Manitoba AgriculturalCredit Corp., (SCC), [1999] 2 S.C.R. 961; referred to: Reference re Secession of Quebec, (SCC),[1998] 2 S.C.R. 217; Re the Initiative and Referendum Act, (UK JCPC), [1919] A.C. 935; Multiple Access Ltd. v.McCutcheon, (SCC), [1982] 2 S.C.R. 161; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; Canada(Attorney General) v. PHS Community Services Society, 2011 SCC 44, [2011] 3 S.C.R. 134; Marine Services International Ltd. v. RyanEstate, 2013 SCC 44, [2013] 3 S.C.R. 53; Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783; Law Society of BritishColumbia v.

Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1S.C.R. 271; Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629; Smith v. The Queen, (SCC), [1960]S.C.R. 776; Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419; Bank of Montreal v.Hall, (SCC), [1990] 1 S.C.R. 121; Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725; Irwin Toy Ltd. v.Quebec (Attorney General), (SCC), [1989] 1 S.C.R. 927; Quebec (Attorney General) v.

Canada (Human Resources andSocial Development), 2011 SCC 60, [2011] 3 S.C.R. 635; Clarke v. Clarke, (SCC), [1990] 2 S.C.R. 795; AttorneyGeneral of Canada v. Law Society of British Columbia, (SCC), [1982] 2 S.C.R. 307; O’Grady v. Sparling, (SCC), [1960] S.C.R. 804; Deloitte Haskins and Sells Ltd. v. Workers’ Compensation Board, (SCC), [1985] 1 S.C.R.785; Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379; R. v. Fitzgibbon, (SCC),[1990] 1 S.C.R. 1005; Schreyer v. Schreyer, 2011 SCC 35, [2011] 2 S.C.R. 605; Industrial Acceptance Corp. v.

Lalonde, (SCC), [1952] 2 S.C.R. 109; Vachon v. Canada Employment and Immigration Commission, (SCC), [1985] 2 S.C.R. 417;GMAC Commercial Credit Corp. — Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123; Ross v. Registrar of MotorVehicles, (SCC), [1975] 1 S.C.R. 5; Provincial Secretary of Prince Edward Island v. Egan, (SCC),[1941] S.C.R. 396; Thomson v. Alberta (Transportation and Safety Board), 2003 ABCA 256, 232 D.L.R. (4th) 237; Newfoundland andLabrador v. AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443; Ontario (Minister of Finance) v. Clarke, 2013 ONSC 1920, 115O.R. (3d) 33; R. v.

White, (SCC), [1999] 2 S.C.R. 417; 407 ETR Concession Co. v. Canada (Superintendent ofBankruptcy), 2015 SCC 52, [2015] 3 S.C.R. 397; Gorguis v. Saskatchewan Government Insurance, 2011 SKQB 132, 372 Sask. R. 152,rev’d 2013 SKCA 32, 414 Sask. R. 5; Buchanan v. Superline Fuels Inc., 2007 NSCA 68, 255 N.S.R. (2d) 286; Miller, Re (2001), (ON SC), 27 C.B.R. (4th) 107; Lucar, Re (2001), (ON SC), 32 C.B.R. (4th) 270; Roncarelli v.Duplessis, (SCC), [1959] S.C.R. 121; British Columbia v.

Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2S.C.R. 473; Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, (SCC), [1997] 3S.C.R. 3. By Côté J. Discussed: M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961; BritishColumbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; Canadian Western Bank v. Alberta, 2007 SCC22, [2007] 2 S.C.R. 3; 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R. 241;Husky Oil Operations Ltd. v.

Minister of National Revenue, (SCC), [1995] 3 S.C.R. 453; referred to: Multiple AccessLtd. v. McCutcheon, (SCC), [1982] 2 S.C.R. 161; Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13,[2005] 1 S.C.R. 188; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; RioHotel Ltd. v. New Brunswick (Liquor Licensing Board), (SCC), [1987] 2 S.C.R. 59; NIL/TU,O Child and FamilyServices Society v. B.C. Government and Service Employees’ Union, 2010 SCC 45, [2010] 2 S.C.R. 696; Marine Services InternationalLtd. v.

Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113;Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC 60, [2011] 3 S.C.R. 635; Bank ofMontreal v. Hall, (SCC), [1990] 1 S.C.R. 121; Canada (Superintendent of Bankruptcy) v. 407 ETR ConcessionCompany Ltd., 2013 ONCA 769, 118 O.R. (3d) 161; Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R.271. Statutes and Regulations Cited Act respecting the preservation of agricultural land and agricultural activities, R.S.Q., c. P-41.1.

Aeronautics Act , R.S.C. 1985, c. A-2. Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3, ss. 69.3, 69.4 , 72(1) , 121(1) , 136 , 137(1) , 139 , 140.1 , 141 , 172 , 178 . Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36. Constitution Act, 1867 , ss. 91, 92 . Family Farm Protection Act , C.C.S.M., c. F15. Farm Debt Review Act , R.S.C. 1985, c. 25 (2nd Supp.). Immigration Act , R.S.C. 1985, c. I-2, ss. 30, 69(1). Legal Profession Act , S.B.C. 1987, c. 25, s. 1 “practice of law”. Marine Liability Act , S.C. 2001, c. 6. Motor Vehicle Accident Claims Act , R.S.A. 2000, c. M-22, s. 5(1), (2) , (7) .

Personal Property Security Act , R.S.O. 1990, c. P.10. Tobacco Act , S.C. 1997, c. 13. Tobacco Control Act , S.S. 2001, c. T-14.1. Traffic Safety Act , R.S.A. 2000, c. T-6, ss. 54, 102 , 103 . Authors Cited Alberta. Legislative Assembly. Alberta Hansard , 3rd Sess., 24th Leg., April 12, 1999, p. 927. Black’s Law Dictionary , 10th ed. by Bryan A. Garner, ed. St. Paul, Minn.: Thomson Reuters, 2014, “enforce”, “release”. Brun, Henri, Guy Tremblay et Eugénie Brouillet. Droit constitutionnel , 6 e éd. Cowansville, Que.: Yvon Blais, 2014. Canada. Study Committee on Bankruptcy and Insolvency Legislation.

Bankruptcy and Insolvency: Report of the Study Committee on Bankruptcy and Insolvency Legislation . Ottawa: Information Canada, 1970. Colvin, Eric. “Constitutional Law — Paramountcy — Duplication and Express Contradiction — Multiple Access Ltd. v. McCutcheon” (1983), 17 U.B.C. L. Rev. 347. Hogg, Peter W. Constitutional Law of Canada , 5th ed. Supp. Toronto: Carswell, 2007 (updated 2014, release 1). Hogg, Peter W. “Paramountcy and Tobacco” (2006), 34 S.C.L.R. (2d) 335 . Houlden, L. W., G. B. Morawetz and Janis Sarra. Bankruptcy and Insolvency Law of Canada , 4th ed. (rev.).

Toronto: Carswell, 2013 (updated 2015, release 6). Wood, Roderick J. Bankruptcy and Insolvency Law . Toronto: Irwin Law, 2009. APPEAL from a judgment of the Alberta Court of Appeal (Berger, Watson and Slatter JJ.A.), 2014 ABCA 68 , 91 Alta. L.R. (5th) 221, 569 A.R. 177, 370 D.L.R. (4th) 267, 9 C.B.R. (6th) 278, 64 M.V.R. (6th) 82, [2014] 4 W.W.R. 272, [2014] A.J. No. 155 (QL), 2014 CarswellAlta 225 (WL Can.), affirming a decision of Moen J., 2012 ABQB 644 , 73 Alta. L.R. (5th) 44, 550 A.R. 257, 39 M.V.R. (6th) 21, [2012] A.J. No. 1094 (QL), 2012 CarswellAlta 1757 (WL Can.). Appeal dismissed.

Lillian Riczu , for the appellant. R. Jeremy Newton , for the respondent. Josh Hunter and Daniel Huffaker , for the intervener the Attorney General of Ontario. Alain Gingras , for the intervener the Attorney General of Quebec. Richard M. Butler , for the intervener the Attorney General of British Columbia. Thomson Irvine , for the intervener the Attorney General for Saskatchewan. Peter Southey and Michael Lema , for the intervener the Superintendent of Bankruptcy. The judgment of Abella, Rothstein, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ. was delivered by Gascon J. — I. Overview

[ 1 ] In Canada, the federal and provincial levels of government must enact laws within the limits of their respective spheres of jurisdiction. The Constitution Act, 1867 defines which matters fall within the exclusive legislative authority of each level. Still, even when acting within its own sphere, one level of government will sometimes affect matters within the other’s sphere of jurisdiction. The resulting legislative overlap may, on occasion, lead to a conflict between otherwise valid federal and provincial laws.

In this appeal, the Court must decide whether such a conflict exists, and if so, resolve it. [ 2 ] The alleged conflict in this case concerns, on the one hand, the federal Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (“ BIA ”), and on the other hand, Alberta’s Traffic Safety Act , R.S.A. 2000, c. T-6 (“ TSA ”). It stems from a car accident caused by the respondent while he was uninsured, contrary to s. 54 of the TSA . The province of Alberta compensated the individual injured in the accident and sought to recover the amount of the compensation from the respondent.

The latter, however, made an assignment in bankruptcy and was eventually discharged. The BIA governs bankruptcy and provides that, upon discharge, the respondent is released from all debts that are claims provable in bankruptcy.

The TSA governs the activity of driving, including vehicle permits and driver’s licences, and allows the province to suspend the respondent’s licence and permits until he pays the amount of the compensation. [ 3 ] As a result of his bankruptcy and subsequent discharge, the respondent did not pay the amount of the compensation in full; because of this failure to pay, Alberta suspended his vehicle permits and driver’s licence. The respondent contested this suspension, arguing that the TSA conflicted with the BIA , in that it frustrated the purposes of bankruptcy.

The province replied that there was no conflict since the TSA was regulatory in nature and did not purport to enforce a discharged debt. The Court of Queen’s Bench and the Court of Appeal found that there was a conflict between the federal and provincial laws. Relying on the doctrine of federal paramountcy, they declared the impugned provision of the TSA to be inoperative to the extent of the conflict. I agree with the outcome reached by the lower courts, and I would dismiss the appeal. II. Facts [ 4 ] The car accident caused by the respondent occurred in 1989.

In 1996, the individual injured in the accident obtained judgment against the respondent in the amount of $194,875. The Administrator appointed under the Motor Vehicle Accident Claims Act , R.S.A. 2000, c. M-22 (“ MVACA ”), indemnified the injured party for the amount of the judgment debt and was assigned the debt in accordance with the MVACA . Initially, the respondent made arrangements with the Administrator to pay the debt in instalments. Some years later, however, in January 2008, he made an assignment in bankruptcy. He listed the Administrator’s claim in his Statement of Affairs.

It is not disputed that the judgment debt assigned to the Administrator was a claim provable in bankruptcy. It was, by far, the respondent’s most substantial debt and, in fact, the reason for his financial difficulties. At the time of the assignment, the outstanding amount due to the Administrator stood at $195,823. [ 5 ] In June 2011, the respondent obtained an absolute discharge, which no one opposed.

In October of the same year, he received a letter from the Director, Driver Fitness and Monitoring, notifying him that, by application of s. 102(1) of the TSA , his operator’s licence and vehicle registration privileges would be suspended until payment of the outstanding amount of the judgment debt. Later, in November, his lawyer received another letter, this time from Motor Vehicle Accident Recoveries, advising the respondent that he “remains indebted for the judgment debt obtained against him . . . ‘until the judgment is satisfied or discharged, otherwise than by a discharge in bankruptcy’” (A.R., at p. 49).

The letter proposed that new payment arrangements be made, failing which the suspension of his driving privileges would continue. [ 6 ] Given this situation, in March 2012, the respondent sought an order from the Court of Queen’s Bench to stay the suspension of his driving privileges. He claimed that he had been discharged in bankruptcy and that s. 178 of the BIA precluded the Administrator from enforcing the judgment debt. III. Judicial History A. Alberta Court of Queen’s Bench, 2012 ABQB 644 , 73 Alta.

L.R. (5th) 44 [ 7 ] Moen J. first found that, as a result of the discharge, there was no longer a liability on the basis of which the judgment could be enforced (para. 21). In her view, the question at issue was whether the discharge precluded the province from suspending the respondent’s driving privileges because of the unpaid judgment debt. This entailed looking at the operation of the TSA and the BIA and determining whether the relevant provisions were in conflict, making the doctrine of paramountcy applicable.

According to Moen J., an “operational conflict” could arise in two situations, namely where (1) “compliance with both acts is rendered inconsistent or impossible by directly conflicting with an express provision of the BIA ” or (2) “the TSA has the intent and/or effect of interfering with the provisions of the BIA or its fundamental objectives” (para. 30). [ 8 ] Moen J. emphasized the rehabilitative purpose of the BIA (para. 31).

She described the purpose of the TSA as being the “protection of public safety via the regulation of traffic and motor vehicles” (para. 33), and the purpose of s. 102 of the TSA as “preventing ‘irresponsible drivers from having the continued privilege of driving . . . without being made to account for the normal consequences of their vast irresponsibilities’” (para. 34). She distinguished situations in which the purpose of licence suspension is the collection of a debt from those in which it is the regulation of conduct (paras. 37-42).

She concluded that the sole purpose of s. 102 is the collection of an unpaid judgment debt. In her view, the provision had nothing to do with the regulation of the respondent’s misconduct (para. 43). She thus held that the province’s actions were not disciplinary, but rather “a method of debt collection, and a colourable attempt to circumvent the provisions of the BIA ” (para. 45). This “improper purpose” of the TSA created an “operational conflict” with the BIA (para. 45).

She therefore stayed both the enforcement of the judgment debt and the suspension of the respondent’s driving privileges (para. 49), and she declared the TSA ineffective to the extent of the conflict with the BIA (para. 48). B. Alberta Court of Appeal, 2014 ABCA 68 , 91 Alta.

L.R. (5th) 221 [ 9 ] Writing for a unanimous court, Slatter J.A. described the two types of conflict that trigger the application of the doctrine of paramountcy as follows: (1) “it is impossible to comply with both the provincial and the federal legislation”, or (2) “even though it is technically possible to comply with both, the application of the provincial statute can fairly be said to frustrate Parliament’s

legislative purpose” (para. 10). He concluded that because the respondent could comply with both laws by not driving, there was noconflict under the first branch of the test (para. 10). [10] Turning to the second branch, Slatter J.A. described the two purposes of the BIA as being, first, equal distribution,and second, rehabilitation. He observed that s. 178 lists the debts that are not discharged by bankruptcy, none of which corresponds tojudgment debts for damages resulting from motor vehicle accidents (paras. 13-15).

According to him, while discharge from bankruptcydoes not extinguish debts, nonetheless, “[w]hatever conceptual distinction there may be, it is somewhat artificial in the present context”,as creditors cease to be able to enforce the discharged debts (para. 19). Slatter J.A. rejected the province’s argument that drivingprivileges can be used as fresh consideration to revive a discharged debt; such consideration is not genuine and it is inconsistent with thepolicy of the BIA (paras. 20-21).

Rejecting another of the province’s arguments, he held that it is irrelevant that driving privileges do notconstitute property of the bankrupt. The province cannot withhold privileges arbitrarily in a way that frustrates the purposes of the BIA(paras. 23-24). [11] Slatter J.A. observed that s. 102 of the TSA specifically provides that it operates notwithstanding a discharge inbankruptcy. In his view, this is a “prima facie signal of a potential operational conflict” (para. 39).

Although s. 102 is not coercive andthe respondent could choose not to drive, Slatter J.A. concluded that it nonetheless frustrates the purposes of the BIA. One of thesepurposes is that the discharged bankrupt “will not have to make any such ‘choices’” and will be “free to make independent andunencumbered personal and economic decisions going forward” (para. 43). Because s. 102 is focused on debt collection and is notconnected to traffic safety considerations (paras. 40 and 45-47), it interferes with a driver’s ability to make a fresh start (paras. 48-49).

Slatter J.A. also concluded that s. 102 disrupts fair and equal distribution to creditors because it permits the province to collect amountsin addition to the dividend ordinarily distributed to creditors (para. 50). He held that s. 102 frustrates both purposes of the BIA and thatthe words “otherwise than by a discharge in bankruptcy” are in “operational conflict” with the BIA (para. 54). IV. Issue [12] The Chief Justice formulated the following constitutional question: Is s. 102(2) of the Alberta Traffic Safety Act, R.S.A. 2000, c. T-6, constitutionally inoperative by reason of the doctrine of federalparamountcy?

Although the constitutional question, as formulated, refers only to s. 102(2), the proceedings below and the parties’ submissions concernthe

section in its entirety. Accordingly, I will examine all of the relevant aspects of s. 102. V. Analysis [13] Various government actors have been involved in this dispute. Unless otherwise specified, I will refer to theprovince of Alberta as encompassing these different actors. I will first review the principles applicable to the doctrine of federalparamountcy and then apply them to the facts of this appeal. A.

The Doctrine of Federal Paramountcy [14] Each level of government — Parliament, on the one hand, and the provincial legislatures, on the other — hasexclusive authority to enact legislation with respect to certain subject matters. Sections 91 and 92 of the Constitution Act, 1867 assigneach power to the level of government best suited to exercise it: Reference re Secession of Quebec, (SCC), [1998] 2S.C.R. 217 (“Secession Reference”), at para. 58.

Broad powers were given to the provincial legislatures with respect to local matters, inrecognition of regional diversity, while powers relating to matters of national importance were given to Parliament, to ensure unity:Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, at para. 22. [15] Legislative powers are exclusive, and one government is not subordinate to the other: Secession Reference, at para.58, citing Re the Initiative and Referendum Act, (UK JCPC), [1919] A.C. 935 (P.C.), at p. 942. However, thelegislative matrix is not as clearly defined as ss. 91 and 92 might suggest.

It is often impossible for one level of government to legislateeffectively within its jurisdiction without affecting matters that are within the other level’s jurisdiction: Western Bank, at para. 29; H.Brun, G. Tremblay and E. Brouillet, Droit constitutionnel (6th ed. 2014), at p. 465. Furthermore, it is often impossible to make a statutefall squarely within a single head of power: Multiple Access Ltd. v. McCutcheon, (SCC), [1982] 2 S.C.R. 161, at pp. 180-81. This leads to overlap in the exercise of provincial and federal powers.

The tendency has been to allow these overlaps to occur aslong as each level of government properly pursues objectives that fall within its jurisdiction: Reference re Securities Act, 2011 SCC 66,[2011] 3 S.C.R. 837, at para. 57; Canada (Attorney General) v. PHS Community Services Society, 2011 SCC 44, [2011] 3 S.C.R. 134, atpara. 62; Western Bank, at paras. 37 and 42. This tendency reflects the theory of co-operative federalism: Western Bank, at para. 24;Husky Oil Operations Ltd. v.

Minister of National Revenue, (SCC), [1995] 3 S.C.R. 453, at para. 162. [16] That said, there comes a point where legislative overlap jeopardizes the balance between unity and diversity. Incertain circumstances, the powers of one level of government must be protected against intrusions, even incidental ones, by the otherlevel: Western Bank, at para. 32. To protect against such intrusions, the Court has developed various constitutional doctrines. For thepurposes of this appeal, I need only refer to one: the doctrine of federal paramountcy.

This doctrine “recognizes that where laws of thefederal and provincial levels come into conflict, there must be a rule to resolve the impasse”: Western Bank, at para. 32. When there is agenuine “inconsistency” between federal and provincial legislation, that is, when “the operational effects of provincial legislation areincompatible with federal legislation”, the federal law prevails: Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013]3 S.C.R. 53, at para. 65, quoting Western Bank, at para. 69; see also Marine Services, at paras. 66-68; Multiple Access, at p. 168.

Thequestion thus becomes how to determine whether such a conflict exists. [17] First and foremost, it is necessary to ensure that the overlapping federal and provincial laws are independently valid:Western Bank, at para. 76; Husky Oil, at para. 87. This means determining the pith and substance of the impugned provisions by lookingat their purpose and effect: Western Bank, at para. 27; Reference re Firearms Act (Can.), 2000 SCC 31, [2000] 1 S.C.R. 783, at para. 16. Once a provision’s true purpose is identified, its validity will depend on whether it falls within the powers of the enacting government:

Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113, at para. 24. If the legislation of one level of governmentis invalid, no conflict can ever arise, which puts an end to the inquiry.

If both laws are independently valid, however, the court mustdetermine whether their concurrent operation results in a conflict. [18] A conflict is said to arise in one of two situations, which form the two branches of the paramountcy test: (1) there isan operational conflict because it is impossible to comply with both laws, or (2) although it is possible to comply with both laws, theoperation of the provincial law frustrates the purpose of the federal enactment. [19] What is considered to be the first branch of the test was described as follows in Multiple Access, the seminal decisionof the Court on this issue: In principle, there would seem to be no good reasons to speak of paramountcy and preclusion except where there is actual conflict inoperation as where one enactment says “yes” and the other says “no”; “the same citizens are being told to do inconsistent things”;compliance with one is defiance of the other. [Emphasis added; p. 191.] In Western Bank, Binnie and LeBel JJ. referred to this passage as “the fundamental test for determining whether there is sufficientincompatibility to trigger the application of the doctrine of federal paramountcy” (para. 71).

Under that test, the question is whether thereis an actual conflict in operation, that is, whether both laws “can operate side by side without conflict” (Marine Services, at para. 76) orwhether both “laws can apply concurrently, and citizens can comply with either of them without violating the other”: Western Bank, atpara. 72; see also Sun Indalex Finance, LLC v. United Steelworkers, 2013 SCC 6, [2013] 1 S.C.R. 271, at para. 60; Marine Services, atpara. 68; British Columbia (Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86, at paras. 77 and 81-82;Garland v.

Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 53; Smith v. The Queen, (SCC), [1960]S.C.R. 776, at p. 800, per Martland J. [20] In her concurring reasons, my colleague Côté J. formulates this first branch of the test as impossibility of dualcompliance as a result of or caused by “an express conflict” (paras. 93 and 122). She cites in support (paras. 102-3) this Court’s use of theterms “express contradiction” in 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40, [2001] 2 S.C.R.241, at para. 34, and M & D Farm Ltd. v.

Manitoba Agricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961, at para. 17,as well as the use by Bastarache J. of the terms “express or ‘operational conflict’” in Western Bank (para. 126) and Lafarge (para. 113). She insists that under this first branch, the express conflict or express contradiction must be found merely on the basis of the “actualwords” of the provisions at issue (paras. 105 and 108) and their “literal” sense or requirement (para. 97).

She considers that prior cases inwhich this Court found that an operational conflict existed either mischaracterized the test (at paras. 116-17, she cites Lafarge) orconflated it with the second branch pertaining to frustration of purpose (at paras. 115 and 118, she cites Husky Oil and M & D Farm). [21] I respectfully disagree with these propositions and with my colleague’s assessment of this Court’s past cases on thefirst branch of the paramountcy test. I would not characterize these as being “not helpful authority” (para. 118) and as having “confused”the two branches (para. 114).

Rather, in my view, this Court’s decisions on operational conflict have been coherent and consistent sinceMultiple Access. [22] First, the expression “express contradiction” used in those cases originated in Multiple Access. Dickson J. initiallyused it — at p. 187, in discussing prior decisions of the Court — to describe the test that he ultimately formulated, in the above-quotedpassage, as that of “actual conflict in operation” or operational conflict (p. 191). An express contradiction is nothing more than a clear,direct or definite conflict in operation, as opposed to an indirect or imprecise one.

It is not an additional condition for a finding of actualconflict in operation. [23] Second, I find no indication in the Court’s decisions pertaining to this first branch that the assessment of an actualconflict in operation is limited to the actual words or to the literal meaning of the words of the provisions at issue; quite the contrary. Inits recent decision in Marine Services for instance, in assessing whether there was an actual conflict in operation under the first branch(paras. 71-83), the Court did not limit itself to a mere literal reading of the provisions at issue.

Rather, it found that a proper reading ofthe provisions based on the modern approach to statutory

interpretation (paras. 77-79) led to the conclusion that the provincial andfederal laws could operate side by side without conflict (para. 76). With respect, my colleague misreads my remarks when she states thatI support in this regard a broad

interpretation of ambiguous federal statutes under this first branch (paras. 111-13). This is not so. MarineServices emphasizes that it is the proper meaning of the provision that remains central to the analysis, not merely its literal sense. As Iexplain below, the provisions at issue in this case are not ambiguous, and I do not give them a broad

interpretation to find their ordinaryand undisputed meaning. The harmonious

interpretation referred to by my colleague is a rule of constitutional

interpretation that appliesto both branches of the paramountcy test, not merely the first one: Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015SCC 53, [2015] 3 S.C.R. 419, at para. 68. It has, however, no bearing on the actual conflict in operation that is, in my view, establishedhere when both laws operate. [24] Finally, I consider that in Husky Oil (para. 87) and M & D Farm (para. 40), Gonthier J. and Binnie J. respectivelyreferred to the “actual conflict in operation” concept drawn from Multiple Access without confusing the two branches of the paramountcytest.

As for the reasons of Binnie and LeBel JJ. in Lafarge, issued on the same day as Western Bank (in which they also penned themajority reasons), I find it hard to suggest that they misstated the test or conflated its two branches, which they in fact analyzedseparately (the first at paras. 81-82 and the second at paras. 83-85).

On operational conflict, their reference to an “impossibility of . . .simultaneous application” (Lafarge, at para. 77) echoed the similar comments made in Western Bank to the effect that the test amounts toassessing whether “the [two] laws can apply concurrently” (Western Bank, at para. 72): see also, on the concept of possible concurrent“application” of both laws, Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188, at para. 23. [25] If there is no conflict under the first branch of the test, one may still be found under the second branch. In Bank ofMontreal v.

Hall, (SCC), [1990] 1 S.C.R. 121, the Court formulated what is now considered to be the second branch ofthe test. It framed the question as being “whether operation of the provincial Act is compatible with the federal legislative purpose” (p.155). In other words, the effect of the provincial law may frustrate the purpose of the federal law, even though it does “not entail a directviolation of the federal law’s provisions”: Western Bank, at para. 73.

[26] That said, the case law assists in identifying typical situations where overlapping legislation will not lead to aconflict. For instance, duplicative federal and provincial provisions will generally not conflict: Bank of Montreal v. Marcotte, 2014 SCC55, [2014] 2 S.C.R. 725, at para. 80; Western Bank, at para. 72; Multiple Access, at p. 190; Hall, at p. 151. Nor will a conflict arise wherea provincial law is more restrictive than a federal law: Lemare Lake, at para. 25; Marine Services, at paras. 76 and 84; Quebec (AttorneyGeneral) v.

Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536 (“COPA”), at paras. 67 and 74; Western Bank,at para. 103; Rothmans, at paras. 18 ff.; Spraytech, at para. 35; Irwin Toy Ltd. v. Quebec (Attorney General), (SCC),[1989] 1 S.C.R. 927, at p. 964. The application of a more restrictive provincial law may, however, frustrate the federal purpose if thefederal law, instead of being merely permissive, provides for a positive entitlement: Quebec (Attorney General) v.

Canada (HumanResources and Social Development), 2011 SCC 60, [2011] 3 S.C.R. 635, at paras. 32-33 and 36; Lafarge, at paras. 84-85; Mangat, atpara. 72; Hall, at p. 153. As will become evident from the discussion below, this appeal involves two laws that directly contradict eachother, rather than a provincial law which does not fully contradict the federal one, but is only more restrictive than it: see M & D Farm;Clarke v. Clarke, (SCC), [1990] 2 S.C.R. 795. [27] Be it under the first or the second branch, the burden of proof rests on the party alleging the conflict.

Dischargingthat burden is not an easy task, and the standard is always high. In keeping with co-operative federalism, the doctrine of paramountcy isapplied with restraint. It is presumed that Parliament intends its laws to co-exist with provincial laws. Absent a genuine inconsistency,courts will favour an

interpretation of the federal legislation that allows the concurrent operation of both laws: Western Bank, at paras.74-75, citing Attorney General of Canada v. Law Society of British Columbia, (SCC), [1982] 2 S.C.R. 307 (“LawSociety of B.C.”), at p. 356; see also Rothmans, at para. 21; O’Grady v. Sparling, (SCC), [1960] S.C.R. 804, at pp. 811and 820.

Conflict must be defined narrowly, so that each level of government may act as freely as possible within its respective sphere ofauthority: Husky Oil, at para. 162, per Iacobucci J. (dissenting, but not on this particular point), referring to Deloitte Haskins and SellsLtd. v. Workers’ Compensation Board, (SCC), [1985] 1 S.C.R. 785, at pp. 807-8, per Wilson J. [28] This is not to say, however, that courts must refrain from applying the doctrine where the two laws are genuinelyinconsistent.

In the assessment of such inconsistency for the purposes of paramountcy, a provincial intention to interfere with the federaljurisdiction is neither necessary nor sufficient. In fact, an intention to intrude may call into question the independent validity of theprovincial law: Husky Oil, at paras. 44-45. The focus of the paramountcy analysis is instead on the effect of the provincial law, ratherthan its purpose: . . . there need not be any provincial intention to intrude into the exclusive federal sphere of bankruptcy . . . in order to render theprovincial law inapplicable.

It is sufficient that the effect of provincial legislation is to do so. [Emphasis added.] (Husky Oil, at para. 39) Assessing the effect of the provincial law requires looking at the substance of the law, rather than its form.

The province cannot doindirectly what it is precluded from doing directly: Husky Oil, at para. 39. [29] In sum, if the operation of the provincial law has the effect of making it impossible to comply with the federal law,or if it is technically possible to comply with both laws, but the operation of the provincial law still has the effect of frustratingParliament’s purpose, there is a conflict. Such a conflict results in the provincial law being inoperative, but only to the extent of theconflict with the federal law: Western Bank, at para. 69; Rothmans, at para. 11; Mangat, at para. 74.

In practice, this means that theprovincial law remains valid, but will be read down so as to not conflict with the federal law, though only for as long as the conflictexists: Husky Oil, at para. 81; E. Colvin, “Constitutional Law — Paramountcy — Duplication and Express Contradiction — MultipleAccess Ltd. v. McCutcheon” (1983), 17 U.B.C. L. Rev. 347, at p. 348. [30] I now turn to the application of the doctrine to the facts of this appeal. B. Application

(1) The Legislative Schemes at Issue [31] The first step of the analysis is to ensure that the impugned federal and provincial provisions are independentlyvalid. Early in the proceedings, the parties recognized the validity of the relevant provisions of the BIA and the TSA. Before this Court,they again conceded the validity of both laws. The only question is whether their concurrent operation results in a conflict. This requiresanalyzing the legislative schemes at issue at the outset so as to reach a proper understanding of the provisions that are allegedly inconflict. (

a) The Bankruptcy and Insolvency Act [32] Parliament enacted the BIA pursuant to its jurisdiction over matters of bankruptcy and insolvency under s. 91(21) ofthe Constitution Act, 1867. The BIA, notably through the specific provisions discussed below, furthers two purposes: the equitabledistribution of the bankrupt’s assets among his or her creditors and the bankrupt’s financial rehabilitation (Husky Oil, at para. 7). [33] The first purpose of bankruptcy, the equitable distribution of assets, is achieved through a single proceeding model.

Under this model, creditors of the bankrupt wishing to enforce a claim provable in bankruptcy must participate in one collectiveproceeding. This ensures that the assets of the bankrupt are distributed fairly amongst the creditors. As a general rule, all creditors rankequally and share rateably in the bankrupt’s assets: s. 141 of the BIA; Husky Oil, at para. 9. In Century Services Inc. v. Canada (AttorneyGeneral), 2010 SCC 60, [2010] 3 S.C.R. 379, at para. 22, the majority of the Court, per Deschamps J., explained the underlying rationalefor this model:

The single proceeding model avoids the inefficiency and chaos that would attend insolvency if each creditor initiated proceedings torecover its debt. Grouping all possible actions against the debtor into a single proceeding controlled in a single forum facilitatesnegotiation with creditors because it places them all on an equal footing, rather than exposing them to the risk that a more aggressivecreditor will realize its claims against the debtor’s limited assets while the other creditors attempt a compromise.

Avoiding inefficiencies and chaos, and favouring an orderly collective process, maximizes global recovery for all creditors: Husky Oil, atpara. 7; R. J. Wood, Bankruptcy and Insolvency Law (2009), at p. 3. [34] For this model to be viable, creditors must not be allowed to enforce their provable claims individually, that is,outside the collective proceeding.

Section 69.3 of the BIA thus provides for an automatic stay of proceedings, which is effective as of thefirst day of bankruptcy: 69.3

(1) Subject to subsections (1.1) and (2) and sections 69.4 and 69.5, on the bankruptcy of any debtor, no creditor has any remedyagainst the debtor or the debtor’s property, or shall commence or continue any action, execution or other proceedings, for the recovery ofa claim provable in bankruptcy. (See R. v. Fitzgibbon, (SCC), [1990] 1 S.C.R. 1005, at pp. 1015-16.) [35] Yet there are exceptions to the principle of equitable distribution.

Section 136 of the BIA provides that somecreditors will be paid in priority. These creditors are referred to as “preferred creditors”. There are also creditors that are paid only afterall ordinary creditors have been satisfied: ss. 137(1), 139 and 140.1 of the BIA. Furthermore, the automatic stay of proceedings does notprevent secured creditors from realizing their security interest: s. 69.3(2) of the BIA; Husky Oil, at para. 9. A court may also grant leavepermitting a creditor to begin separate proceedings and enforce a claim: s. 69.4 of the BIA.

These exceptions reflect the policy choicesmade by Parliament in furthering this purpose of bankruptcy. [36] The second purpose of the BIA, the financial rehabilitation of the debtor, is achieved through the discharge of thedebtor’s outstanding debts at the end of the bankruptcy: Husky Oil, at para. 7. Section 178(2) of the BIA provides:

(2) Subject to subsection (1), an order of discharge releases the bankrupt from all claims provable in bankruptcy. From the perspective of the creditors, the discharge means they are unable to enforce their provable claims: Schreyer v. Schreyer, 2011SCC 35, [2011] 2 S.C.R. 605, at para. 21. This, in effect, gives the insolvent person a “fresh start”, in that he or she is “freed from theburdens of pre-existing indebtedness”: Wood, at p. 273; see also Industrial Acceptance Corp. v. Lalonde, (SCC), [1952] 2S.C.R. 109, at p. 120.

This fresh start is not only designed for the well-being of the bankrupt debtor and his or her family; rehabilitationhelps the discharged bankrupt to reintegrate into economic life so he or she can become a productive member of society: Wood, at pp.274-75; L. W. Houlden, G. B. Morawetz and J. Sarra, Bankruptcy and Insolvency Law of Canada (4th ed. rev. (loose-leaf)), at p. 6-283. In many cases of consumer bankruptcy, the debtor has very few or no assets to distribute to his or her creditors.

In those cases,rehabilitation becomes the primary objective of bankruptcy: Wood, at p. 37. [37] Although it is an important purpose of the BIA, financial rehabilitation also has its limits. Section 178(1) of the BIAlists debts that are not released by discharge and that survive bankruptcy. Furthermore, s. 172 provides that an order of discharge may bedenied, suspended, or granted subject to conditions.

These provisions demonstrate Parliament’s attempt to balance financialrehabilitation with other policy objectives, such as confidence in the credit system, that require certain debts to survive bankruptcy:Wood, at pp. 273 and 289. [38] Discharge is the main rehabilitative tool contained in the BIA, but it is not the only one. As Professor Wood, at p.273, observes: The bankruptcy discharge is one of the primary mechanisms through which bankruptcy law attempts to provide for the economicrehabilitation of the debtor. However, it is not the only means by which bankruptcy law seeks to meet this objective.

The exclusion ofexempt property from distribution to creditors, the surplus income provisions, and mandatory credit counselling also are directed towardsthis goal. [39] Another means of rehabilitation is the automatic stay of proceedings contained in s. 69.3 of the BIA. The stay notonly ensures that creditors are redirected into the collective proceeding described above, it also ensures that creditors are precluded fromseizing property that is exempt from distribution to creditors.

This is an important part of the bankrupt’s financial rehabilitation: The rehabilitation of the bankrupt is not the result only of his discharge. It begins when he is put into bankruptcy with measures designedto give him the minimum needed for subsistence. (Vachon v. Canada Employment and Immigration Commission, (SCC), [1985] 2 S.C.R. 417, at p. 430) [40] In many aspects, the BIA is a complete code governing bankruptcy. It sets out which claims are treated as provableclaims and which assets are distributed to creditors, and how.

It then sets out which claims are released on discharge and which claimssurvive bankruptcy. That said, the fact remains that the operation of the BIA depends upon the survival of various provincial rights:Husky Oil, at para. 85; Hall, at p. 155. In this regard, s. 72(1) of the BIA provides: 72.

(1) The provisions of this Act shall not be deemed to abrogate or supersede the substantive provisions of any other law or statuterelating to property and civil rights that are not in conflict with this Act, and the trustee is entitled to avail himself of all rights andremedies provided by that law or statute as supplementary to and in addition to the rights and remedies provided by this Act. On the one hand, given the procedural nature of the BIA, the bankruptcy regime relies heavily on the continued existence of provincial

substantive rights, and thus the continued operation of provincial laws: Wood, at pp. 7-8; Husky Oil, at para. 30. The ownership ofcertain assets and the existence of particular liabilities depend upon provincial law: P. W. Hogg, Constitutional Law of Canada (5th ed.Supp.), at p. 25-8. On the other hand, the BIA cannot operate without affecting property and civil rights. Section 72(1) confirms this bystating that, where there is a genuine inconsistency between provincial laws regarding property and civil rights and federal bankruptcylegislation, the BIA prevails: see GMAC Commercial Credit Corp. — Canada v.

T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R.123, at para. 47. [41] In the context of this appeal, we are specifically concerned with an alleged conflict between, on the one hand, oneprovision of the BIA, namely s. 178, the purpose of which is to ensure the financial rehabilitation of the debtor, and, on the other hand,one provision (s. 102) of the provincial scheme, to which I will now turn. (

b) The Alberta Traffic Safety Act [42] The TSA is the provincial scheme with which the BIA is alleged to conflict. Pursuant to s. 92(13) of the ConstitutionAct, 1867, provincial legislatures have the power to legislate with regard to property and civil rights. The Court has long recognized thatthis power includes traffic regulation and the authority to set conditions for driver’s licences and vehicle permits: Ross v. Registrar ofMotor Vehicles, (SCC), [1975] 1 S.C.R. 5, at pp. 13-14; O’Grady, at p. 810; Provincial Secretary of Prince EdwardIsland v.

Egan, (SCC), [1941] S.C.R. 396, at pp. 402 and 415; see also Thomson v. Alberta (Transportation and SafetyBoard), 2003 ABCA 256, 232 D.L.R. (4th) 237, at para. 25. The TSA is a comprehensive legislative scheme for traffic regulation,“covering virtually all aspects of the regulation of highways and motor vehicles in Alberta”, with the aim of ensuring road safety:Thomson, at para. 5; Alberta Legislative Assembly, Alberta Hansard, 3rd Sess., 24th Leg., April 12, 1999, at p. 927. [43] Under s. 54(1) of the TSA, no one is allowed to drive or have a motor vehicle on a public road unless the vehicle isinsured.

Under s. 54(4), a person who contravenes s. 54(1) is liable to a fine or imprisonment. The Registrar of Motor Vehicle Servicesmay also disqualify a person from driving and cancel his or her vehicle registration until that person shows proof of insurance: s. 54(5)and (7). [44] In the event that an uninsured driver causes an accident, Alberta has implemented a compensation program governedby the MVACA. A victim injured in the accident may sue the uninsured driver for damages.

If the victim is successful but the uninsureddriver does not pay, the victim may then apply to the Administrator under the MVACA for compensation in the amount of the unsatisfiedjudgment: s. 5(1). If authorized, the payment is drawn from the General Revenue Fund of the province: s. 5(2). The judgment is thenassigned to the Administrator, who can take steps to enforce it against the judgment debtor. The Administrator is thus deemed to be thejudgment creditor: s. 5(7). [45]

Section 102 of the TSA, the provision at issue in this appeal, complements the MVACA program. It allows theRegistrar to suspend the debtor’s driver’s licence and vehicle permits until the judgment debt is paid, up to a maximum amount of$200,000: 102(1) If (

a) a judgment for damages arising out of a motor vehicle accident is rendered against a person by a court in Alberta or in any otherprovince or territory in Canada, and (

b) that person fails, within 15 days from the day on which the judgment becomes final, to satisfy the judgment, the Registrar, subject to sections 103 and 104 and the regulations, may do one or both of the following: (

c) disqualify the person from driving a motor vehicle in Alberta; (

d) suspend the registration of any motor vehicle registered in that person’s name.

(2) When, under subsection (1), a person is disqualified from driving a motor vehicle in Alberta or the certificate of registration of thatperson’s motor vehicle is suspended, (

a) the disqualification or the suspension, as the case may be, remains in effect and shall not be removed, and (

b) no motor vehicle shall be registered in that person’s name,

until the judgment is satisfied or discharged, otherwise than by a discharge in bankruptcy , to the extent of . . . (

f) at least $200 000, exclusive of interest and costs, if the judgment arises out of a motor vehicle accident occurring on or after January 1, 1986. [ 46 ]

Section 103 is also a relevant part of this scheme. It allows the judgment debtor to apply for the “privilege” of paying the outstanding judgment debt in instalments. The debtor may recover his or her driving privileges as long as the payments are being made: 103(1) A judgment debtor to whom this Part applies may on notice to the judgment creditor apply to the court in which the trial judgment was obtained for the privilege of paying the judgment in instalments , and the court may, in its discretion, so order, fixing the amounts and times of payment of the instalments.

(2) If the Minister responsible for the administration of the Motor Vehicle Accident Claims Act has made a payment with respect to a judgment pursuant to the Motor Vehicle Accident Claims Act , the judgment debtor (

a) may apply to the Minister responsible for the administration of the Motor Vehicle Accident Claims Act for the privilege of paying the judgment in instalments , in which case that Minister may cause an agreement to be entered into with the debtor for payment by instalments, or (

b) may apply to the court pursuant to subsection (1) for the privilege of paying the judgment to the Minister responsible for the administration of the Motor Vehicle Accident Claims Act in instalments , in which case the debtor must give notice of the application to the Administrator of the Motor Vehicle Accident Claims Act , who may appear personally or by counsel and be heard on the application.

(3) Except in a case to which subsection (2) applies, a judgment debtor and the judgment creditor may enter into an agreement for the payment of the judgment in instalments.

(4) While the judgment debtor is not in default in payment of the instalments, the judgment debtor is deemed not to be in default for the purposes of this

Part in payment of the judgment , and the Minister in the Minister’s absolute discretion may restore the operator’s licence and the certificate of registration of the judgment debtor.

(5) Notwithstanding subsection (4), if the Minister is satisfied that the judgment debtor has defaulted with respect to complying with the terms of the court order or of the agreement, the judgment debtor’s operator’s licence and registration shall again be suspended and remain suspended as provided in

section 102. It is worth mentioning that, in theory, ss. 102 and 103 of the TSA do not operate solely in favour of the province. They could also operate in favour of a third party.

For instance, the Registrar could suspend the driver’s privileges solely for the benefit of a victim of an accident who holds an unsatisfied judgment. [ 47 ] The purpose and effect of s. 102 are obvious when it is read in its context: it is meant to deprive the judgment debtor of driving privileges until the judgment arising from a motor vehicle accident is paid in full, or periodic payments in satisfaction of the judgment are being made under s. 103. It is, in substance, a debt collection mechanism.

Since the parties conceded that the judgment debt in this appeal is a claim provable in bankruptcy, I would add that the purpose and effect of s. 102 , in the context of this appeal, are to suspend a debtor’s driving privileges until payment of a provable claim. [ 48 ] Alberta disputes this. It submits that s. 102 is not, in substance, a debt enforcement scheme. It contends that the provision merely imposes an additional monetary condition to obtain the privilege of driving.

In the appellant’s view, this condition mirrors the amount of the judgment debt because it reflects the actual regulatory cost of the driver’s failure to comply with the insurance requirement. Alberta maintains that the “payment obligation is inherently regulatory in nature” and that repayment of the judgment debt “is merely incidental to the satisfaction of the regulatory requirement” (A.F., at para. 31). It insists that the purpose of the provision is to discourage people from driving without insurance. [ 49 ] I disagree.

While it is plausible that s. 102 might discourage drivers from driving uninsured, this is neither its main purpose nor its main effect. For one, the deterrent effect of s. 102 , if any, is not tied to the failure to maintain proper insurance. The deterrent effect materializes only if the uninsured driver causes an accident. The accident must also cause injury to a third party. In

addition, the victim must seek damages and obtain a judgment. Yet this is still not sufficient. The uninsured driver must also beincapable of satisfying the judgment in question or refuse to do so. Clearly, it is the failure to pay the judgment debt that triggers s. 102,not the failure to be insured. Furthermore, failure to comply with the insurance requirement is already subject to a penalty under s. 54 ofthe TSA.

In sharp contrast to s. 102, s. 54 imposes a monetary penalty (and, in case of default, imprisonment) for the mere failure tocomply with the insurance requirement, without more. [50] The distinction Alberta attempts to make between a judgment debt and a regulatory charge is also irrelevant for tworeasons. First, s. 102 is clearly aimed at the repayment of a judgment debt.

Second, even if it were aimed at recovering the resultingregulatory charge, such a charge would nonetheless be a claim provable in bankruptcy, and as such, it would remain a debt subject to thebankruptcy process. [51] On the first point, the language of the provision is clear: its objective is the satisfaction of the judgment debt.

Section 102 is triggered when the judgment debtor “fails . . . to satisfy the judgment”: s. 102(1). It provides that driving privileges willbe suspended “until the judgment is satisfied or discharged”: s. 102(2).

Section 103 is also informative; the suspension of drivingprivileges stops as soon as payments are being made. The suspension resumes, however, when the debtor defaults. [52] The letters received by the respondent are telling in this regard. On October 27, 2011, the Director, Driver Fitnessand Monitoring, wrote this: This letter will serve as notification that due to your unsatisfied motor vehicle accident claim, your operator’s licence and vehicleregistration privileges will be suspended indefinitely . . . . . . . the suspension will remain in effect until the following condition(

s) are met: - satisfy any outstanding Motor Vehicle Accident Claims Fund claim. [Emphasis added; A.R., at p. 48.] On November 15, 2011, Motor Vehicle Accident Recoveries added this: . . . I advise that your client, Joseph William Moloney, remains indebted for the judgment debt obtained against him. Section 102(2) ofthe Traffic Safety Act (copy attached) states that he remains indebted “until the judgment is satisfied or discharged, otherwise than by adischarge in bankruptcy”. Accordingly, we would request that your client contact our office to make payment arrangements suitable to his circumstances.

Failure todo so will result in the continued suspension of his driving privileges. [Emphasis added; A.R., at p. 49.] These letters make no mention of the respondent’s failure to comply with the insurance requirement, or of the accident for which he isresponsible. [53] In addition, as I mentioned, s. 102 could be used in favour of a third party victim who obtains a judgment butchooses not to seek compensation from the Administrator under the MVACA. In such a case, there is no “regulatory cost”, since nopublic funds are being spent.

The only effect of s. 102 is to deprive the debtor of driving privileges until he or she pays the judgmentcreditor. [54] With respect to the second point, even if we were to accept the distinction advocated by Alberta between thejudgment debt and the resulting regulatory charge, it has no practical implication. A regulatory charge remains a debt owed to theprovince, which s. 102 is meant to collect.

Not only is it a debt, but it is, like the underlying judgment debt, a provable claim. [55] According to s. 121(1) of the BIA, a provable claim must meet three criteria: (1) there must be a debt, liability orobligation owed to a creditor, (2) which was incurred before the debtor became bankrupt, and (3) it must be possible to attach a monetaryvalue to the debt, liability or obligation (Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, [2012] 3 S.C.R. 443, at para.26). Even if the judgment debt were characterized as a regulatory charge, it would meet these criteria.

The regulatory charge wouldarise from a payment made to the victim of an accident caused by the respondent. The respondent’s liability to the province arose priorto his assignment in bankruptcy, and it is clearly monetary in nature. As a result, the province’s claim for the regulatory charge wouldbe provable in bankruptcy and must be treated as part of the bankruptcy process: AbitibiBowater, at para. 40; Vachon, at p. 426; Ontario(Minister of Finance) v.

Clarke, 2013 ONSC 1920, 115 O.R. (3d) 33, at para. 52. [56] Therefore, whether one considers the province’s claim as a judgment debt or as the resulting regulatory charge, it isstill provable in bankruptcy. It follows that the effect of s. 102 is to allow a judgment creditor to deprive the debtor of his or her drivingprivileges until the debt is paid. In the end, the provision thus compels the payment of a provable claim. Driving is unlike otheractivities. For many, it is necessary to function meaningfully in society. As such, driving often cannot be seen as a genuine “choice”: R.v.

White, (SCC), [1999] 2 S.C.R. 417, at para. 55. The effect of the provincial scheme undoubtedly amounts tocoercion in that regard. [57] Before leaving this provincial scheme to consider whether the enforcement mechanism conflicts with the BIA, Ibriefly discuss an argument raised solely by the intervener Superintendent of Bankruptcy on the validity of one component of s. 102(2)of the TSA. The impugned provision states that the suspension of driving privileges continues “until the judgment is satisfied ordischarged, otherwise than by a discharge in bankruptcy”.

While the parties have conceded the validity of the provision, theSuperintendent of Bankruptcy, who is also the appellant in the companion appeal, 407 ETR Concession Co. v. Canada (Superintendent

of Bankruptcy) , 2015 SCC 52 , [2015] 3 S.C.R. 397, argued before us that the words “otherwise than by a discharge in bankruptcy” are ultra vires the province and, as a result, severable. In his view, this “phrase is invalid since the Province attempts to explicitly render a discharge in bankruptcy ineffective as against a provincial debt that Parliament has not exempted from the effects of bankruptcy” (factum, at para. 11). [ 58 ] As stated previously, neither the parties nor the courts below disputed that s. 102, as a whole, is intra vires the province.

The dominant purpose and effect of s. 102 are to suspend driving privileges until payment of a judgment debt. This enforcement scheme is part of the provincial regulation of driving privileges in Alberta. There is no doubt that assuring the financial responsibility of drivers and regulating driving privileges fall within the province’s jurisdiction regarding property and civil rights under s. 92(13) of the Constitution Act, 1867 .

Given this and the way the case has been argued and decided, this appeal is, in my view, properly disposed of by applying the doctrine of paramountcy and ascertaining whether a conflict exists between the BIA and the TSA . [ 59 ] Whether the provincial scheme has the effect of rendering a discharge in bankruptcy “ineffective as against a provincial debt” or negating the operability of a federal law as the Superintendent of Bankruptcy argues (factum, at paras. 11-12) is better resolved as a question of paramountcy.

I would add that the words “otherwise than by a discharge in bankruptcy” are necessary only because the province lists the discharge in general, in addition to the satisfaction of the debt, as an event ending the suspension of the privilege. Had the legislation defined the satisfaction of the debt as the sole event capable of ending the suspension, the dominant feature of the provision would remain the same, although the issue of conflict with a discharge in bankruptcy would still arise.

(2) The Conflict Between the BIA and the TSA (

a) Operational Conflict [ 60 ] The Court of Appeal concluded that there was no operational conflict, although it used that term throughout its judgment in reference to conflict generally. It explained that the respondent could resist the payment by foregoing his driving privileges and choosing not to drive (para. 10). The reasons of the Court of Appeal, as well as the submissions of the parties, save for those of the Superintendent of Bankruptcy, relate almost exclusively to the second branch of the applicable test. I believe the Court of Appeal and the parties are mistaken on this point.

I therefore respectfully disagree with my colleague Côté J., who holds in her concurring reasons that there is no operational conflict, since a bankrupt “can either opt not to drive or voluntarily pay the discharged debt” (para. 123). In a case like this one, the test for operational conflict cannot be limited to asking whether the respondent can comply with both laws by renouncing the protection afforded to him or her under the federal law or the privilege he or she is otherwise entitled to under the provincial law.

In that regard, the debtor’s response to the suspension of his or her driving privileges is not determinative. In analyzing the operational conflict at issue in this case, we cannot disregard the fact that whether the debtor pays or not, the province, as a creditor, is still compelling payment of a provable claim that has been released, which is in direct contradiction with s. 178(2) of the BIA : If [the respondent] pays the debt, then the provincial law will have required him to pay a debt that has been released by the federal law.

If [he] does not pay the debt, then the provincial law will have punished him — by withholding his driver’s licence — for failing to pay a debt that has been released by the federal law. ( Gorguis v. Saskatchewan Government Insurance , 2011 SKQB 132 , 372 Sask. R. 152, at para. 25 ; sent back for rehearing by the Saskatchewan Court of Appeal, which did not address the court’s comments on this point ( 2013 SKCA 32 , 414 Sask.

R. 5).) Thus, the laws at issue give inconsistent answers to the question whether there is an enforceable obligation: one law says yes and the other says no. [ 61 ] On the one hand, s. 178(2) of the BIA provides that “an order of discharge releases the bankrupt from all claims provable in bankruptcy”. In my view, it is undisputed that a discharge under s. 178 of the BIA releases a debtor, thus preventing creditors from enforcing claims that are provable in bankruptcy. My colleague appears to suggest (at para. 96) that, since the actual words of the

section say “nothing more” than that the bankrupt is discharged, or since the discharge merely releases provable claims, an

interpretation to the effect that the release of such claims means that they cannot be enforced would “add words to the pr

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