Attorney General for Saskatchewan Appellant v. Lemare Lake Logging Ltd., 2015 SCC 53

SUPREME COURT OF CANADA Citation: Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419 Date: 20151113 Docket: 35923 Between: Attorney General for Saskatchewan Appellant and Lemare Lake Logging Ltd. Respondent - and - Attorney General of Ontario and Attorney General of British Columbia Interveners Coram: Abella, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ. Joint Reasons for Judgment: (paras. 1 to 74) Dissenting Reasons: (paras. 75 to 129) Abella and Gascon JJ. (Cromwell, Moldaver, Karakatsanis and Wagner JJ. concurring) Côté J.

Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd., 2015 SCC 53, [2015] 3 S.C.R. 419 Attorney General for Saskatchewan Appellant v. Lemare Lake Logging Ltd. Respondent and Attorney General of Ontario and

Attorney General of British Columbia Interveners Indexed as: Saskatchewan ( Attorney General) v. Lemare Lake Logging Ltd. 2015 SCC 53 File No.: 35923. 2015: May 21; 2015: November 13.

Present: Abella, Cromwell, Moldaver, Karakatsanis, Wagner, Gascon and Côté JJ. on appeal from the court of appeal for saskatchewan Constitutional law — Cooperative federalism — Division of powers — Bankruptcy and insolvency — Property and Civil Rights — Receiver — Federal paramountcy — Federal legislation authorizes court, upon application of secured creditor, to appoint receiver with power to act nationally — Provincial legislation imposes other procedural and substantive requirements before commencing an action with respect to farm land — Whether provincial legislation constitutionally inoperative when application made to appoint national receiver under federal legislation, by reason of doctrine of federal paramountcy — Bankruptcy and Insolvency Act, R.S.C. 1985, c.

B-3, s. 243 — The Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1, ss. 9 to 22 . A secured creditor brought an application pursuant to s. 243(1) of the Bankruptcy and Insolvency Act for the appointment of a receiver over substantially all of the assets of its debtor, a “farmer” within the meaning of The Saskatchewan Farm Security Act . The debtor contested the appointment and argued that the creditor had to comply with

Part II of The Saskatchewan Farm Security Act , which requires that before commencing an action with respect to farm land, a person must submit a notice of intention, await the expiry of a 150-day notice period, and engage in a mandatory review and mediation process. The chambers judge found that the provisions in

Part II of The Saskatchewan Farm Security Act did not conflict with s. 243(1) of the Bankruptcy and Insolvency Act . The Court of Appeal found that

Part II of The Saskatchewan Farm Security Act frustrated the purpose of s. 243(1) of the Bankruptcy and Insolvency Act and was therefore inoperative in circumstances where an application is made to appoint a receiver. Held (Côté J. dissenting): The Court of Appeal’s conclusion that

Part II of The Saskatchewan Farm Security Act is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , is set aside. Per Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ.: The paramountcy analysis requires consideration of whether any overlap between the federal and provincial laws constitutes a conflict sufficient to render the provincial law inoperative.

Two kinds of conflict are at play: (1) an operational conflict, where compliance with both the federal and provincial law is impossible; and (2) frustration of purpose, where the provincial law thwarts the purpose of the federal law. The operational conflict branch of the paramountcy doctrine requires that there be “actual conflict” between the federal and provincial legislation. Here, there is no operational conflict because it is possible to comply with both statutes. The issue therefore centres on whether the provincial legislation frustrates the purpose of the federal legislation.

Given the guiding principle of cooperative federalism, which allows for some interplay and overlap between both federal and provincial legislation, paramountcy must be narrowly construed. Courts must take a restrained approach, and harmonious

interpretations of federal and provincial legislation should be favoured. If a federal statute can be properly interpreted so as not to interfere with a provincial statute, such an

interpretation is to be applied in preference to a construction which would bring about a conflict between the two statutes. Absent clear evidence that Parliament intended a broader statutory purpose, courts should avoid an expansive

interpretation of the purpose of federal legislation which will bring it into conflict with provincial legislation. Clear proof of purpose is required. The burden a party faces in successfully invoking paramountcy is accordingly a high one; provincial legislation restricting the scope of permissive federal legislation is insufficient on its own.

In this case, what the evidence shows is a simple and narrow purpose for s. 243 of the Bankruptcy and Insolvency Act : the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions. Section 243(1) of the Bankruptcy and Insolvency Act authorizes a court, upon the application of a secured creditor, to appoint a receiver where such appointment is “just or convenient”.

Under s. 244(1), a secured creditor who intends to enforce a security on all or substantially all of the inventory, accounts receivable or other property of an insolvent debtor that was acquired for, or used in relation to, a business carried on by the insolvent person, is generally required to send a notice of that intention to the insolvent person. Section 243(1.1) states that, where notice is to be sent under s. 244(1), the appointment of a national receiver cannot be made before the expiry of 10 days after the day on which the secured creditor sends the notice.

The national receivership regime under s. 243(1) does not oust a secured creditor’s power to have a receiver appointed privately, or by court order under provincial law or any other federal law.

Part II of The Saskatchewan Farm Security Act is aimed at affording protection to farmers against loss of their farm land. Subject to ss. 11 to 21 , s. 9(1) (

d) of The Saskatchewan Farm Security Act prohibits commencement of any “action” with respect to farm land. This includes an application for the appointment of a receiver under s. 243(1) of the Bankruptcy and Insolvency Act . Section 11(1) (a), however, states that, where a mortgagee makes an application with respect to a mortgage on farm land, the court may, on any terms and conditions that it considers just and equitable, order that s. 9(1)(

d) does not apply. Before a mortgagee can bring an application under s. 11, a number of preconditions must be fulfilled, including a compulsory and non-waivable 150-day waiting period during which a mandatory review and mediation process occurs. Once the 150-day waiting period is over, the mortgagee may then make an application for an order granting leave to commence the action. On hearing the application, the court must presume that the farmer has a reasonable possibility of meeting his or her obligations under the mortgage, and that he or she is making a sincere and reasonable effort to meet those obligations.

As a result of the concurrent operation of s. 243(1) of the Bankruptcy and Insolvency Act and

Part II of The Saskatchewan Farm Security Act , a secured creditor wishing to enforce its security interest against farm land must wait 150 days, rather than the 10 days imposed under federal law. The creditor must also comply with the various additional requirements of The Saskatchewan Farm Security Act , such as the statutory presumptions described above. That interference with s. 243(1) , however, does not, in and of itself, constitute a conflict. A conflict will only arise if such interference frustrates the purpose of the federal regime.

Section 243’s purpose is simply the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions. There is insufficient evidence for casting s. 243 ’s purpose more widely. There is nothing in the words of s. 243 suggesting that the 10-day waiting period imposed by the provision should be treated as a ceiling rather than a floor.

The discretionary nature of the s. 243 remedy — as evidenced by the fact that the provision provides that a court “may” appoint a receiver if it is “just or convenient” to do so — lends further support to a narrower reading of the provision’s purpose. A secured creditor is not entitled to appointment of a receiver. Rather, s. 243 is permissive, allowing a court to appoint a receiver where it is just or convenient. Interference with a discretion granted under federal law is not, by itself, sufficient to establish frustration of federal purpose.

Nothing in the text of the provision or the Bankruptcy and Insolvency Act more generally suggests that s. 243 is meant to be a comprehensive remedy exclusive of provincial law. Any uncertainty about whether s. 243 was meant to displace provincial legislation like The Saskatchewan Farm Security Act is further mitigated by s. 72(1) of the Bankruptcy and Insolvency Act , which explicitly recognizes the continued operation of provincial law in the bankruptcy and insolvency context, except to the extent that it is inconsistent with the Bankruptcy and Insolvency Act .

Moreover, other provisions of the Bankruptcy and Insolvency Act further support a more narrow reading of s. 243’s purpose. Notably, s. 47 provides a mechanism for the appointment of an interim receiver where there is an urgent need for the appointment of a receiver. The legislative history of s. 243 of the Bankruptcy and Insolvency Act further supports a narrow construction of the provision’s purpose — i.e., to avoid a multiplicity of proceedings and the inefficiency resulting from them.

Vague and imprecise notions like timeliness or effectiveness cannot amount to an overarching federal purpose that would prevent coexistence with provincial laws. It is notable that Parliament has recognized that the receivership provision under s. 243 can be subordinated to potentially longer delays in other federal legislation (including the federal Farm Debt Mediation Act ). Given the presumption that Parliament does not enact related statutes that are inconsistent with one another, courts should avoid an

interpretation of a federal statute which does not accommodate similar limitations imposed under a provincial statute. It follows that Parliament intended neither to preclude all notice periods longer than the 10-day notice period in the Bankruptcy and Insolvency Act nor to oust legislation which is intended to favour mediation between creditors and farmers. Furthermore, on this record, there is simply no evidence to support the argument that the 150-day delay or the other conditions in The Saskatchewan Farm Security Act frustrate any effectiveness or timeliness concerns.

It is the burden of the party invoking paramountcy to not only establish that these are, in fact, the purposes of s. 243 , but also that the evidence supports a finding that the provincial law frustrates them in some way. The record is silent in that regard. Parliament’s purpose of providing bankruptcy courts with the power to appoint a national receiver is not frustrated by the procedural and substantive conditions set out in the provincial legislation.

There is, as a result, no evidentiary basis for concluding that s. 243 was meant to circumvent the procedural and substantive requirements of the provincial laws where the appointment is sought. The general goals of bankruptcy or receivership cannot be used to trump the specific purpose of s. 243 and to artificially extend the provision’s purpose to create a conflict with provincial legislation. Construing s. 243’s purpose more broadly in the absence of clear evidence, is inconsistent with the requisite restrained approach to paramountcy. The conclusion that

Part II of The Saskatchewan Farm Security Act is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , is accordingly set aside. Per Côté J. (dissenting): A yearning for a harmonious

interpretation of both federal and provincial legislation cannot lead courts to disregard obvious purposes that are pursued in federal legislation. In the case of s. 243 of the Bankruptcy and Insolvency Act (“ BIA ”), Parliament intended to establish a process for appointing national receivers, and intended that process to be timely, sensitive to the totality of circumstances and capable of responding to emergencies. These federal purposes are plainly evident in s. 243 BIA , understood in light of the realities and demands of real-time insolvency practice, s. 243 ’s statutory context and its legislative history.

To the extent that The Saskatchewan Farm Security Act (“ SFSA ”) is incompatible with these purposes, there is a frustration of purpose. Given the often frenzied rush of insolvency proceedings, secured creditors will frequently have an acute need to have a receiver appointed promptly. Implicit in the 10-day notice period of s. 243 BIA is the very notion of urgency. In addition, Parliament permits secured creditors to apply for receivership before the expiry of the 10-day notice period in certain circumstances.

This is evidence of Parliament’s intention to provide secured creditors with a remedy capable of adapting to the often dramatic circumstances of insolvency. The significant discretion vested in the courts suggests that Parliament wished courts to respond to each application on a case-by-case basis in light of the full factual matrix before them. Moreover, the BIA ’s interim receivership regime confirms the vital importance of timeliness for the national full receivership. This federal purpose of timeliness can also be discerned from the legislative history of the statutory notice provision.

A full purposive analysis must account for the federal objectives that were originally given effect in the statutory scheme. While s. 243 BIA ’s introduction was prompted by a need for a national full receiver, s. 243 is the product of an incremental evolution. The foundational purposes that have animated federal receivership law since 1992 must form part of any credible account of the federal purpose underlying today’s s. 243. If this Court disregards these foundational purposes in its frustration of purpose analysis, the provinces will be left free to mangle the receivership scheme.

On the argument that the special treatment afforded to farmers by the BIA must be included in any purposive analysis ofs. 243 BIA, given that Parliament expressly excluded farmers from involuntary bankruptcy proceedings, one would expect thatParliament would have enacted a similar provision with regard to the appointment of a national receiver under

Part XI of the BIA.However, there is no such provision in

Part XI. In addition, there are stark differences between the federal Farm Debt Mediation Act(“FDMA”) and the SFSA, both in their operation and the policy preferences they embody. As a result, the existence of the former cannotbe taken as evidence that Parliament intended the BIA to coexist with the latter. The scheme of the FDMA is quite compatible with thebalance struck in s. 243 BIA; if the provincial legislation had mirrored the FDMA, the conclusion as to frustration of federal purposewould have been different. Although

Part XI of the BIA contemplates some degree of interaction and overlap with provincial legislation, the essentialquestion remains whether the operation of

Part II of the SFSA undermines to a sufficient extent the federal purpose underlying s. 243BIA. Here, if understood in more general terms, the federal purpose is clearly drawn in broad strokes, namely to establish a process forapplying for a national receiver that is timely, adaptable in case of emergency and sensitive to the totality of circumstances. If a provincewishes to legislate in a way that will affect the federal receivership regime, then it must do so in a manner consistent with that purpose.

In the instant case, the federal purpose has been frustrated by the important obstacles the province has deliberately placed inthe way. The notice period in the SFSA is far longer, and is absolute. The SFSA also establishes a series of evidentiary hurdles that areincompatible with Parliament’s purpose. It is clear that the provincial legislation cannot operate in real time, and is in fact intended tohinder the timely appointment of a receiver, thereby triggering the application of the doctrine of federal paramountcy. Cases Cited By Abella and Gascon JJ. Distinguished: Bank of Montreal v.

Hall, (SCC), [1990] 1 S.C.R. 121; referred to: Borowski v. Canada(Attorney General), (SCC), [1989] 1 S.C.R. 342; Reference re Objection by Quebec to a Resolution to amend theConstitution, (SCC), [1982] 2 S.C.R. 793; R. v. Laba, (SCC), [1994] 3 S.C.R. 965; Rothmans, Benson& Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188; Reference re Remuneration of Judges of the Provincial Court ofPrince Edward Island, (SCC), [1997] 3 S.C.R. 3; Tsilhqot’in Nation v. British Columbia, 2014 SCC 44, [2014] 2S.C.R. 257; Canadian Western Bank v. Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3; Quebec (Attorney General) v.

Canadian Owners andPilots Association, 2010 SCC 39, [2010] 2 S.C.R. 536; Quebec (Attorney General) v. Canada (Human Resources and SocialDevelopment), 2011 SCC 60, [2011] 3 S.C.R. 635; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013] 3 S.C.R. 53;Bank of Montreal v. Marcotte, 2014 SCC 55, [2014] 2 S.C.R. 725; Multiple Access Ltd. v. McCutcheon, (SCC), [1982] 2S.C.R. 161; M & D Farm Ltd. v. Manitoba Agricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961; Law Society ofBritish Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Attorney General of Canada v.

Law Society of British Columbia, (SCC), [1982] 2 S.C.R. 307; Reference re Securities Act, 2011 SCC 66, [2011] 3 S.C.R. 837; OPSEU v. Ontario (AttorneyGeneral), (SCC), [1987] 2 S.C.R. 2; General Motors of Canada Ltd. v. City National Leasing, (SCC),[1989] 1 S.C.R. 641; Westbank First Nation v. British Columbia Hydro and Power Authority, (SCC), [1999] 3 S.C.R.134; Quebec (Attorney General) v. Lacombe, 2010 SCC 38, [2010] 2 S.C.R. 453; Quebec (Attorney General) v. Canada (AttorneyGeneral), 2015 SCC 14, [2015] 1 S.C.R. 693; 114957 Canada Ltée (Spraytech, Société d’arrosage) v.

Hudson (Town), 2001 SCC 40,[2001] 2 S.C.R. 241; Irwin Toy Ltd. v. Quebec (Attorney General), (SCC), [1989] 1 S.C.R. 927; British Columbia(Attorney General) v. Lafarge Canada Inc., 2007 SCC 23, [2007] 2 S.C.R. 86; Century Services Inc. v. Canada (Attorney General), 2010SCC 60, [2010] 3 S.C.R. 379; Cadillac Fairview Inc., Re (1995), (ON SC), 30 C.B.R. (3d) 17; Edgewater Casino Inc.,Re, 2009 BCCA 40, 265 B.C.A.C. 274; Transglobal Communications Group Inc., Re, 2009 ABQB 195, 4 Alta. L.R. (5th) 157; GMACCommercial Credit Corp. — Canada v. T.C.T.

Logistics Inc., 2006 SCC 35, [2006] 2 S.C.R. 123; Gentra Canada Investments Inc. v.Lehndorff United Properties (Canada) (1995), (AB CA), 169 A.R. 138. By Côté J. (dissenting) Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379; Canadian Western Bank v. Alberta,2007 SCC 22, [2007] 2 S.C.R. 3; Quebec (Attorney General) v. Canadian Owners and Pilots Association, 2010 SCC 39, [2010] 2 S.C.R.536; Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113; Reference re Securities Act, 2011 SCC 66, [2011] 3S.C.R. 837; Quebec (Attorney General) v.

Canada (Attorney General), 2015 SCC 14, [2015] 1 S.C.R. 693; Railside Developments Ltd.,Re, 2010 NSSC 13, 62 C.B.R. (5th) 193; GMAC Commercial Credit Corp. — Canada v. T.C.T. Logistics Inc., 2006 SCC 35, [2006] 2S.C.R. 123; Jacob’s Hold Inc. v. Canadian Imperial Bank of Commerce (2000), (ON SC), 52 O.R. (3d) 776; Bank ofMontreal v. Hall, (SCC), [1990] 1 S.C.R. 121; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, [2013]3 S.C.R. 53; Rothmans, Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13, [2005] 1 S.C.R. 188.

Statutes and Regulations Cited Act to amend the Bankruptcy Act and to amend the Income Tax Act in consequence thereof, S.C. 1992, c. 27, ss. 89, 92. Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Income Tax Act, S.C. 1997, c. 12,s. 114. Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Actand

chapter 47 of the Statutes of Canada, 2005, Bill C-12, 2nd Sess., 39th Parl., 2007 (assented to December 14, 2007), S.C. 2007, c. 36. Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ CreditorsArrangement Act and to make consequential amendments to other Acts, Bill C-55, 1st Sess., 38th Parl., 2005 (assented to November 25,2005), S.C. 2005, c. 47, ss. 30 to 33, 115, 141. Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, ss. 43 to 46, 47, 48, 72(1),

Part XI, 243, 244.

Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36. Constitution Act, 1867 , ss. 91(21), 92(13) . Farm Debt Mediation Act , S.C. 1997, c. 21, ss. 5 to 14 , 7(1) ( b ), 12 , 13(1) , 14(2) , 16 , 20(1) , 21 . Farm Debt Mediation Regulations , SOR/98-168, s. 3. Saskatchewan Farm Security Act , S.S. 1988-89, c. S-17.1,

Part II, ss. 3, 4, 9 to 22, 11 to 21, 12, 13(a), (b), 18(1), 19, 20. Supreme Court Act , R.S.C. 1985, c. S-26, s. 40. Authors Cited Ben-Ishai, Stephanie, and Anthony Duggan, eds. Canadian Bankruptcy and Insolvency Law: Bill C-55, Statute c.47 and Beyond . Markham, Ont.: LexisNexis, 2007. Bennett, Frank. Bennett on Receiverships , 3rd ed. Toronto: Carswell, 2011. Canada. Advisory Committee on Bankruptcy and Insolvency. Proposed Bankruptcy Act Amendments: Report of the Advisory Committee on Bankruptcy and Insolvency . Ottawa: Minister of Supply and Services Canada, 1986. Canada. House of Commons.

House of Commons Debates , vol. IV, 3rd Sess., 34th Parl., October 29, 1991, pp. 4177-78 and 4180. Canada. House of Commons. House of Commons Debates , vol. 140, No. 128, 1st Sess., 38th Parl., September 29, 2005, p. 8215. Canada. House of Commons. Minutes of Proceedings and Evidence of the Standing Committee on Consumer and Corporate Affairs and Government Operations , No. 7, 3rd Sess., 34th Parl., September 4, 1991, p. 12. Canada. House of Commons. Standing Committee on Industry, Natural Resources, Science and Technology. Evidence , No. 064, 1st Sess., 38th Parl., November 17, 2005, p. 7. Canada.

Industry Canada. Corporate, Insolvency and Competition Law Policy. Bill C-55: clause by clause analysis (online: www.ic.gc.ca). Canada. Industry Canada. Marketplace Framework Policy Branch, Policy Sector. Report on the Operation and Administration of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act . Ottawa: Corporate and Insolvency Law Policy Directorate, 2002. Canada. Industry Canada. Office of the Superintendent of Bankruptcy Canada. Bill C-12: Clause by Clause Analysis (online: www.ic.gc.ca). Canada. Industry Canada. Office of the Superintendent of Bankruptcy Canada.

Summary of Legislative Changes:

Summary of Key Legislative Changes in

Chapter 47 of the Statutes of Canada, 2005, and

Chapter 36 of the Statutes of Canada, 2007 (online: www.ic.gc.ca). Canada. Library of Parliament. Parliamentary Information and Research Service. Bill C-12:

An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and

Chapter 47 of the Statutes of Canada, 2005 , Legislative

Summary LS-584E, by Marcia Jones, Law and Government Division, December 14, 2007. Canada. Senate. Journals of the Senate , No. 12, 2nd Sess., 37th Parl., October 29, 2002, p. 122. Canada. Senate. Journals of the Senate , No. 57, 2nd Sess., 37th Parl., May 15, 2003, p. 841. Canada. Senate. Proceedings of the Standing Senate Committee on Banking, Trade and Commerce , No. 2, 2nd Sess., 39th Parl., November 29, 2007, p. 25. Canada. Senate. Proceedings of the Standing Senate Committee on Banking, Trade and Commerce , No. 19, 1st Sess., 38th Parl., November 23, 2005, p. 55. Canada. Senate.

Standing Senate Committee on Banking, Trade and Commerce. Debtors and Creditors Sharing the Burden: A Review of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act . Ottawa: Senate of Canada, 2003. Farley, J. M. “A Judicial Perspective on International Cooperation in Insolvency Cases” (March 1998), 17 Am. Bankr. Inst. J. 12 (available on WL Can.). Jones, Richard B. “The Evolution of Canadian Restructuring: Challenges for the Rule of Law”, in Janis P. Sarra, ed., Annual Review of Insolvency Law 2005 . Toronto: Thomson Carswell, 2006, 481. Layh, Donald H.

A Legacy of Protection: The Saskatchewan Farm Security Act : History, Commentary & Case Law . Langenburg, Sask.: Twin Valley Books, 2009. Myers, Fred. “Justice Farley in Real Time”, in Janis P. Sarra, ed., Annual Review of Insolvency Law 2006 . Toronto: Thomson Carswell, 2007, 19.

Sarra, Janis P., Geoffrey B. Morawetz and L. W. Houlden. The 2015 Annotated Bankruptcy and Insolvency Act . Toronto: Carswell, 2015. United Nations. Commission on International Trade Law. Legislative Guide on Insolvency Law . New York: United Nations, 2005. Walton, Luanne A. “Paramountcy: A Distinctly Canadian Solution” (2003-2004), 15 N.J.C.L. 335. Wood, Roderick J. Bankruptcy and Insolvency Law . Toronto: Irwin Law, 2009. APPEAL involving a decision of the Saskatchewan Court of Appeal (Richards C.J. and Ottenbreit and Whitmore JJ.A.), 2014 SKCA 35 , 433 Sask.

R. 266, 371 D.L.R. (4th) 663, 11 C.B.R. (6th) 245, [2014] 6 W.W.R. 440, 602 W.A.C. 266, [2014] S.J. No. 164 (QL), 2014 CarswellSask 179 (WL Can.), affirming a decision of Rothery J., 2013 SKQB 278 , [2013] 12 W.W.R. 176, [2013] S.J. No. 477 (QL), 2013 CarswellSask 531 (WL Can.). The Court of Appeal’s conclusion that

Part II of The Saskatchewan Farm Security Act , S.S. 1988-89, c. S-17.1, is constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3, is set aside, Côté J. dissenting. Thomson Irvine and Katherine Roy , for the appellant. No one appeared for the respondent. Michael S. Dunn and Daniel Huffaker , for the intervener the Attorney General of Ontario. Written submissions only by R. Richard M. Butler and Jean M. Walters , for the intervener the Attorney General of British Columbia. Jeffrey M.

Lee , Q.C. , and Kristen MacDonald , for the amicus curiae . The judgment of Abella, Cromwell, Moldaver, Karakatsanis, Wagner and Gascon JJ. was delivered by [ 1 ] Abella and Gascon JJ. — Prior to 2005, receivership proceedings involving assets in more than one province were complicated by the simultaneous appointment of different receivers in different jurisdictions. Because of the inefficiency resulting from this multiplicity of proceedings, the federal government amended its bankruptcy legislation to permit their consolidation through the appointment of a national receiver.

This appeal involves a constitutional challenge to provincial farm legislation on the grounds that it conflicts with this national receivership regime. For the reasons that follow, we see no such conflict. Background [ 2 ] Lemare Lake Logging Ltd., a secured creditor, brought an application pursuant to s. 243(1) of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 ( BIA ), for the appointment of a receiver over substantially all of the assets except livestock of its debtor, 3L Cattle Company Ltd., a “farmer” within the meaning of The Saskatchewan Farm Security Act , S.S. 1988-89, c.

S-17.1 ( SFSA ). 3L Cattle contested the appointment and argued that Lemare Lake had to comply with

Part II of the SFSA before seeking the appointment of a receiver under s. 243(1). [ 3 ]

Part II of the SFSA provides that, before starting an action with respect to farm land, a creditor must serve a “notice of intention”, engage in mandatory mediation, and prove that the debtor has no reasonable possibility of meeting its obligations or is not making a sincere and reasonable effort to meet its obligations.

This includes an action for a receivership order pursuant to s. 243(1) of the BIA . [ 4 ] Lemare Lake argued that the doctrine of paramountcy rendered certain provisions of the SFSA constitutionally inoperative where an application is made to appoint a receiver pursuant to s. 243(1) of the BIA . [ 5 ] Lemare Lake and 3L Cattle were incorporated by David Dutcyvich in the 1980s. As a result of disagreements beginning in January 2010 between Mr. Dutcyvich and his two sons, the businesses were restructured, with Mr.

Dutcyvich retaining the sole interest in 3L Cattle, and his two sons retaining the sole interest in Lemare Lake. [ 6 ] In connection with the restructuring, 3L Cattle assumed the primary obligation to repay a loan of $10 million to Concentra Financial Services Association. Lemare Lake, however, remained contingently liable for the debt.

By written agreement dated December 21, 2010, 3L Cattle indemnified Lemare Lake from any liability in respect of the Concentra loan. [ 7 ] To secure the payment and performance of its obligations to Lemare Lake, 3L Cattle gave Lemare Lake a mortgage dated January 21, 2011 in respect of its interest in 120 parcels of land in Saskatchewan, and a security interest in all non-inventory goods and equipment of 3L Cattle, including machinery, fixtures and tools, by means of a security agreement dated January 19, 2011. [ 8 ] When 3L Cattle failed to repay the Concentra loan when it became due on January 29, 2013, Concentra sought repayment from both 3L Cattle and Lemare Lake.

In turn, Lemare Lake, which was experiencing its own financial problems and had secured a protection order under the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36, attempted to realize on its security over 3L Cattle’s assets. It accordingly applied to the Saskatchewan Court of Queen’s Bench for the appointment of a national receiver pursuant to s. 243(1) of the BIA over substantially all of the assets of 3L Cattle, except livestock. [ 9 ] 3L Cattle argued that because it was a “farmer” within the meaning of the SFSA , Lemare Lake had to comply with

Part II of the SFSA before applying for the appointment of a national receiver.

Part II requires, in part, that before commencing an action with respect to farm land, a person must submit a notice of intention, await the expiry of a 150-day notice period, and engage in a mandatory review and mediation process. [ 10 ] The chambers judge found that the provisions in

Part II of the SFSA did not conflict with s. 243(1) of the BIA and

dismissed Lemare Lake’s application: 2013 SKQB 278 , [2013] 12 W.W.R. 176. She found no operational conflict between thefederal and provincial legislation, because a secured creditor can comply with both the federal and provincial legislation by obtaining acourt order under the SFSA permitting it to commence an action before applying for the appointment of a receiver under s. 243(1) of theBIA. Nor did she find any conflict in purpose. In her view, the purpose of s. 243(1) was to allow for the appointment of a nationalreceiver, a purpose that was not frustrated by compliance with

Part II of the SFSA. This means that a secured creditor must comply withthe provisions of

Part II of the SFSA before making an application pursuant to s. 243(1) of the BIA, which Lemare Lake had failed to do.The chambers judge’s alternative view was that even if she had found

Part II of the SFSA to be inoperative, she would not have appointeda receiver. [11] The Court of Appeal dismissed Lemare Lake’s appeal, agreeing with the chambers judge that a receiver should notbe appointed: (2014), 2014 SKCA 35 , 433 Sask. R. 266.

Nevertheless, although it was not necessary to do so in view of itsconclusions on the merits of appointing a receiver, the Court of Appeal addressed the constitutional argument, not only because it hadbeen fully argued, but because it would likely arise in the future. [12] The Court of Appeal agreed with the chambers judge that there was no operational conflict between the federal andprovincial statutes: a creditor could comply with both statutes by obtaining an order pursuant to the SFSA before asking to have anational receiver appointed under the BIA. It disagreed, however, about whether

Part II of the SFSA frustrated the purpose of s. 243(1) ofthe BIA, stating: . . .

Part II of the SFSA would undermine or frustrate the purpose of s. 243 of the BIA in at least two significant ways. First,

Part II woulddramatically displace the ten-day delay contemplated by the BIA by obliging a creditor like Lemare Lake to wait at least 150 days beforeapplying for a receivership order. . . . Second,

Part II of the SFSA would effectively layer on new criteria for the granting of a receivership order under the BIA. [Emphasisadded in original; paras. 55-56.] In the Court of Appeal’s view, the purpose of s. 243 was not only to authorize the appointment of national receivers, it was to ensure thatsuch receivers be able to act effectively in the context in which they are appointed — insolvency — where events move quickly andproceedings are time-sensitive.

It accordingly concluded that “Part II of the SFSA is inoperative in circumstances where an application ismade to appoint a receiver pursuant to s. 243(1) of the BIA”: para. 67. [13] The Attorney General for Saskatchewan was granted leave to appeal to this Court. Subsequent to the decision of theCourt of Appeal, however, Lemare Lake and 3L Cattle settled their dispute. The Court appointed former counsel for Lemare Lake asamicus curiae to respond to the submissions of the Attorney General. Amicus was content to have the matter heard by this Court despiteits mootness.

In our view, the ongoing importance of resolving this issue in Saskatchewan supports our deciding this appeal: seeBorowski v. Canada (Attorney General), (SCC), [1989] 1 S.C.R. 342, at pp. 353 and 358-63; Reference re Objection byQuebec to a Resolution to amend the Constitution, (SCC), [1982] 2 S.C.R. 793, at p. 806. Moreover, it is worth notingthat this is an appeal from the reasons, not the disposition, of the Court of Appeal, which is fully authorized by s. 40 of the SupremeCourt Act, R.S.C. 1985, c. S-26: see R. v. Laba, (SCC), [1994] 3 S.C.R. 965.

Neither the Attorney General of Canadanor the Superintendent of Bankruptcy intervened. [14] Before this Court, the submissions were focussed on whether ss. 9 to 22 in

Part II of the SFSA are constitutionallyinoperative when an application is made to appoint a national receiver under s. 243(1) of the BIA by reason of the doctrine ofparamountcy. For the following reasons, we agree with the chambers judge that there is no conflict, and therefore that ss. 9 to 22 of theSFSA are not constitutionally inoperable.

Analysis [15] The guiding mantra of the paramountcy analysis is that “where there is an inconsistency between validly enacted butoverlapping provincial and federal legislation, the provincial legislation is inoperative to the extent of the inconsistency”: Rothmans,Benson & Hedges Inc. v. Saskatchewan, 2005 SCC 13 , [2005] 1 S.C.R. 188, at para. 11; see also Reference re Remuneration ofJudges of the Provincial Court of Prince Edward Island, (SCC), [1997] 3 S.C.R. 3, at para. 98; Luanne A.

Walton,“Paramountcy: A Distinctly Canadian Solution” (2003-2004), 15 N.J.C.L. 335, at p. 335. [16] The first step in the analysis is to determine whether the federal and provincial laws are validly enacted. Thisrequires looking at the pith and substance of the legislation to determine whether the matter comes within the jurisdiction of the enactinglegislature. Assuming both laws are validly enacted, the second step requires consideration of whether any overlap between the two lawsconstitutes a conflict sufficient to render the provincial law inoperative.

A provincial law will be deemed to be inoperative to the extentthat it conflicts with or is inconsistent with the federal law: see Tsilhqot’in Nation v. British Columbia, 2014 SCC 44 , [2014] 2S.C.R. 257, at paras. 128-30; Canadian Western Bank v. Alberta, 2007 SCC 22 , [2007] 2 S.C.R. 3, at paras. 25-26 and 32. [17] Two kinds of conflict are at play: (1) an operational conflict, where compliance with both the federal and provinciallaw is impossible; and (2) frustration of purpose, where the provincial law thwarts the purpose of the federal law (Quebec (AttorneyGeneral) v.

Canadian Owners and Pilots Association, 2010 SCC 39 , [2010] 2 S.C.R. 536 (COPA), at para. 64; Rothmans,Benson & Hedges Inc., at paras. 11-12; Quebec (Attorney General) v. Canada (Human Resources and Social Development), 2011 SCC60 , [2011] 3 S.C.R. 635, at para. 17; Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44 , [2013] 3 S.C.R.53, at paras. 68-69; Bank of Montreal v.

Marcotte, 2014 SCC 55 , [2014] 2 S.C.R. 725, at para. 80). [18] The operational conflict branch of the paramountcy doctrine requires that there be “actual conflict” between thefederal and provincial legislation, that is, “the same citizens are being told to do inconsistent things”: Multiple Access Ltd. v.McCutcheon, (SCC), [1982] 2 S.C.R. 161, at p. 191. Stated otherwise, operational conflict arises “where one enactmentsays ‘yes’ and the other says ‘no’, such that ‘compliance with one is defiance of the other’”: COPA, at para. 64, citing Multiple Access

Ltd., at p. 191; see also Ryan Estate, at para. 68; Rothmans, Benson & Hedges Inc., at para. 11. In M & D Farm Ltd. v.

ManitobaAgricultural Credit Corp., (SCC), [1999] 2 S.C.R. 961, for example, an order granting leave to commence foreclosureproceedings under provincial legislation in circumstances where a stay had been granted under a federal statute, was found to beoperationally inconsistent because the order made under the provincial statute purported to authorize the very litigation that the federalstay prohibited: paras. 39-42. [19] Under the second branch of the paramountcy analysis, provincial legislation will be found to be inoperative when itfrustrates the purpose of a federal law: Canadian Western Bank, at para. 73.

In Law Society of British Columbia v. Mangat, 2001 SCC 67, [2001] 3 S.C.R. 113, for example, this Court held that provincial legislation prohibiting non-lawyers from practising law for afee before a tribunal, conflicted with federal legislation providing that a non-lawyer could represent a party before the Immigration andRefugee Board, even for a fee.

Acknowledging that dual compliance was not strictly impossible because a person could either join theLaw Society or not charge a fee, the Court nonetheless found the provincial law to be “contrary to Parliament’s purpose”: para. 72. [20] Significantly, against the background of the two paramountcy paradigms of operational conflict and frustration ofpurpose, this Court cautioned in Canadian Western Bank that “[t]he fact that Parliament has legislated in respect of a matter does not leadto the presumption that in so doing it intended to rule out any possible provincial action in respect of that subject”: para. 74.

Thefundamental rule of constitutional

interpretation is, instead, that “[w]hen a federal statute can be properly interpreted so as not to interferewith a provincial statute, such an

interpretation is to be applied in preference to another applicable construction which would bring abouta conflict between the two statutes”: Canadian Western Bank, at para. 75, citing Attorney General of Canada v. Law Society of BritishColumbia, (SCC), [1982] 2 S.C.R. 307, at p. 356; see also Ryan Estate, at para. 69. [21] Given the guiding principle of cooperative federalism, paramountcy must be narrowly construed. Whether under theoperational conflict or the frustration of federal purpose branches of the paramountcy analysis, courts must take a “restrained approach”,and harmonious

interpretations of federal and provincial legislation should be favoured over

interpretations that result in incompatibility:Reference re Securities Act, 2011 SCC 66 , [2011] 3 S.C.R. 837, at paras. 59-60, citing OPSEU v. Ontario (Attorney General), (SCC), [1987] 2 S.C.R. 2, at p. 18, per Dickson C.J. (concurring); see also Canadian Western Bank, at paras. 37 and 75. [22] Constitutional doctrine should give due weight to the principle of cooperative federalism: Canadian Western Bank,at para. 24. This principle allows for some interplay, and indeed overlap, between both federal and provincial legislation: see OPSEU, atp. 18; see also General Motors of Canada Ltd. v.

City National Leasing, (SCC), [1989] 1 S.C.R. 641, at p. 669;Westbank First Nation v. British Columbia Hydro and Power Authority, (SCC), [1999] 3 S.C.R. 134, at para. 18.Cooperative federalism accordingly “normally favours — except where there is an actual conflict — the application of valid rulesadopted by governments at both levels as opposed to favouring a principle of relative inapplicability designed to protect powers assignedexclusively to the federal government or to the provinces”: Quebec (Attorney General) v.

Lacombe, 2010 SCC 38 , [2010] 2S.C.R. 453, at para. 118, per Deschamps J. (dissenting). [23] While the principle of cooperative federalism cannot be seen as imposing limits on the otherwise valid exercise oflegislative competence, it may be invoked to “facilitate interlocking federal and provincial legislative schemes and to avoid unnecessaryconstraints on provincial legislative action”: Quebec (Attorney General) v. Canada (Attorney General), 2015 SCC 14 , [2015] 1S.C.R. 693, at paras. 17-19.

In line with this principle, absent clear evidence that Parliament intended a broader statutory purpose, courtsshould avoid an expansive

interpretation of the purpose of federal legislation which will bring it into conflict with provincial legislation.As this Court said in Marcotte, “care must be taken not to give too broad a scope to paramountcy on the basis of frustration of federalpurpose”: para. 72; see also Canadian Western Bank, at para. 74. This means that the purpose of federal legislation should not beartificially broadened beyond its intended scope. To improperly broaden the intended purpose of a federal enactment is inconsistent withthe principle of cooperative federalism.

At some point in the future, it may be argued that the two branches of the paramountcy test areno longer analytically necessary or useful, but that is a question for another day. [24] The litigation in this case proceeded on the assumption that s. 243 of the BIA and

Part II of the SFSA were validlyenacted.

Section 243 of the BIA falls within Parliament’s exclusive power to enact laws in relation to bankruptcy and insolvency, whilePart II of the SFSA falls within Saskatchewan’s power to enact laws in relation to property and civil rights: Constitution Act, 1867, ss.91(21) and 92(13). [25] The parties essentially accepted the conclusion of the chambers judge and the Court of Appeal about the absence ofoperational conflict because it is possible to comply with both statutes by obtaining an order under the SFSA before seeking theappointment of a receiver under s. 243 of the BIA.

The creditor can comply with both laws by observing the longer periods required byprovincial law. In that regard, the federal law is permissive and the provincial law, more restrictive. This has been regularly considerednot to constitute an operational conflict: Ryan Estate, at para. 76; COPA, at para. 65; Canadian Western Bank, at para. 100; Rothmans,Benson & Hedges Inc., at paras. 22-24; 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), 2001 SCC 40 ,[2001] 2 S.C.R. 241, at para. 35; Irwin Toy Ltd. v. Quebec (Attorney General), (SCC), [1989] 1 S.C.R. 927, at p. 964.

The issue before this Court therefore centres on whether the Court of Appeal was right to conclude that the provincial legislationfrustrates the purpose of the federal legislation. [26] To prove that provincial legislation frustrates the purpose of a federal enactment, the party relying on the doctrine“must first establish the purpose of the relevant federal statute, and then prove that the provincial legislation is incompatible with thispurpose”: COPA, at para. 66; Marcotte, at para. 73; see also Canadian Western Bank, at para. 75; British Columbia (Attorney General)v.

Lafarge Canada Inc., 2007 SCC 23 , [2007] 2 S.C.R. 86, at para. 77. Clear proof of purpose is required: COPA, at para. 68.The burden a party faces in successfully invoking paramountcy is accordingly a high one; provincial legislation restricting the scope ofpermissive federal legislation is insufficient on its own: COPA, at para. 66; see also Ryan Estate, at para. 69. [27] And, as previously noted, paramountcy must be applied with restraint.

In the absence of “very clear” statutorylanguage to the contrary, courts should not presume that Parliament intended to “occupy the field” and render inoperative provinciallegislation in relation to the subject: Canadian Western Bank, at para. 74, citing Rothmans, Benson & Hedges Inc., at para. 21. As thisCourt explained in advocating a similar restrained approach to interjurisdictional immunity in Canadian Western Bank, at para. 37:

The “dominant tide” [of allowing for a fair amount of interplay and indeed overlap between federal and provincial powers] finds its principled underpinning in the concern that a court should favour, where possible, the ordinary operation of statutes enacted by both levels of government. In the absence of conflicting enactments of the other level of government, the Court should avoid blocking the application of measures which are taken to be enacted in furtherance of the public interest.

Professor Paul Weiler wrote over 30 years ago that the court should refuse to try to protect alleged, but as yet unoccupied, enclaves of governmental power against the intrusions of another representative legislature which has ventured into the area.

Instead, the court should try to restrict itself to the lesser but still important role of interpreting statutes of different jurisdictions in the same area, in order to avoid conflict, and applying a doctrine of paramountcy in the few situations which are left. (“The Supreme Court and the Law of Canadian Federalism” (1973), 23 U.T.L.J. 307, at p. 308) [Emphasis in original.] [ 28 ] It is in light of the above principles that we turn to the federal and provincial provisions at issue. [ 29 ] Section 243(1) is found in

Part XI of the BIA , dealing with secured creditors and receivers. It authorizes a court, upon the application of a secured creditor, to appoint a receiver where such appointment is “just or convenient”: 243.

(1) Subject to subsection (1.1), on application by a secured creditor, a court may appoint a receiver to do any or all of the following if it considers it to be just or convenient to do so : (

a) take possession of all or substantially all of the inventory, accounts receivable or other property of an insolvent person or bankrupt that was acquired for or used in relation to a business carried on by the insolvent person or bankrupt; (

b) exercise any control that the court considers advisable over that property and over the insolvent person’s or bankrupt’s business; or (

c) take any other action that the court considers advisable. [ 30 ] In s. 243, courts are given the authority to appoint a receiver with the power to act nationally, thereby eliminating the need to apply to courts in multiple jurisdictions for the appointment of a receiver. [ 31 ] Under s. 244(1), a secured creditor who intends to enforce a security on all or substantially all of the inventory, accounts receivable or other property of an insolvent debtor that was acquired for, or used in relation to, a business carried on by the insolvent person, is generally required to send a notice of that intention to the insolvent person.

Section 243(1.1) states that, where notice is to be sent under s. 244(1), the appointment of a national receiver cannot be made before the expiry of 10 days after the day on which the secured creditor sends the notice:

(1.1) In the case of an insolvent person in respect of whose property a notice is to be sent under subsection 244(1), the court may not appoint a receiver under subsection (1) before the expiry of 10 days after the day on which the secured creditor sends the notice unless (

a) the insolvent person consents to an earlier enforcement under subsection 244(2); or (

b) the court considers it appropriate to appoint a receiver before then. [ 32 ] The national receivership regime does not oust a secured creditor’s power to have a receiver appointed privately, or by court order under provincial law or any other federal law. Where, however, that receiver takes possession or control of all or substantially all of the inventory, accounts receivable or other property of the insolvent debtor or bankrupt, he or she is a “receiver” for purposes of

Part XI of the BIA and must comply with the provisions in that part: see s. 243(2). [ 33 ] The provincial scheme at issue, the SFSA , was enacted in 1988, with roots in legislation governing Saskatchewan farm land dating back several decades: see Donald H. Layh, A Legacy of Protection: The Saskatchewan Farm Security Act: History, Commentary & Case Law (2009), at pp. 54-57. [ 34 ]

Part II of the SFSA is entitled “Farm Land Security”. Its purpose is “to afford protection to farmers against loss of their farm land”: s. 4. [ 35 ] Subject to ss. 11 to 21 , s. 9(1) (

d) of the SFSA prohibits commencement of any “action” with respect to farm land. “[A]ction” is defined in s. 3 to include an action in court by a mortgagee with respect to farm land for the sale or possession of mortgaged farm land: s. 3 (a)(ii). It includes an application for the appointment of a receiver under s. 243(1) of the BIA . Section 11(1) (

a) states that, where a mortgagee makes an application with respect to a mortgage on farm land, the court may, on any terms and conditions that it considers just and equitable, order that s. 9(1) (

d) does not apply. Where such an order is made, the mortgagee may then commence or

continue an action with respect to that mortgage: s. 11(2). Failure to seek an order pursuant to s. 11 renders any action commencedwithout an order a nullity: s. 11(3). [36] Before a mortgagee can bring an application under s. 11, however, s. 12 sets out a number of preconditions. Mostnotably, the mortgagee must serve a notice of intention on the Farm Land Security Board and on the farmer: s. 12(1). There is then acompulsory and non-waivable 150-day waiting period required before an application can be made: s. 12(1).

This notice triggers amandatory review and mediation process between the mortgagee and the farmer, conducted with the assistance of the board: s. 12(2) to(5). Prior to the expiry of the 150-day waiting period, the board must prepare a report to consider as part of the mortgagee’s applicationto begin the action: ss. 12(12), (13) and 13(b).

Once the 150-day waiting period is over, the mortgagee may then make an application foran order granting leave to commence the action: see s. 12(1). [37] On hearing the application, the court must presume that the farmer has a reasonable possibility of meeting his or herobligations under the mortgage, and that he or she is making a sincere and reasonable effort to meet those obligations: s. 13(a).

Themortgagee, in turn, has the statutory burden of proving that either the farmer has no reasonable possibility of meeting these obligations orthat he or she is not making a sincere and reasonable effort to do so: s. 18(1). Ultimately, the court must dismiss the application if it issatisfied that it is not “just and equitable” according to the purpose and spirit of the SFSA to make the order: s. 19.

If the application isdismissed, no further application pursuant to s. 11 or notice pursuant to s. 12 may be made with respect to the mortgage on that farm landfor one year: s. 20. [38] As a result of the concurrent operation of s. 243(1) of the BIA and

Part II of the SFSA, a secured creditor wishing toenforce its security interest against farm land must wait 150 days, rather than the 10 days imposed under federal law. The creditor mustalso comply with the various additional requirements of the SFSA, such as the statutory presumptions described above. That interferencewith s. 243(1), however, does not, in and of itself, constitute a conflict. A conflict will only arise if such interference frustrates thepurpose of the federal regime.

This requires inquiring into the purpose of s. 243(1). [39] In this case, the parties disagree about the purpose of s. 243 of the BIA and whether it is frustrated by the SFSA.According to the Attorney General for Saskatchewan, the main purpose of the receivership power under s. 243 is to allow for a nationalreceiver. In its view, the purpose of

Part XI of the BIA is to provide for the appointment of a single receiver with authority to actthroughout the country, rather than requiring a creditor to apply for a receiver in each province, and to provide a uniform set of standardsfor all receivers of an insolvent, regardless of the authority for the appointment. [40] Amicus, on the other hand, submits that the appointment of a national receiver is only part of s. 243’s broaderpurpose. According to amicus, effective insolvency law requires flexibility and prompt and timely access to remedies such as areceivership, without regard to the idiosyncrasies of provincial law.

Section 243 was intended to provide secured creditors with anentitlement to apply for the appointment of a receiver within a certain period of time, and to obtain such appointment exclusively inaccordance with the substantive requirements found in the federal law. [41] Citing no parliamentary debates or reports concerning the amendments to s. 243 which created the nationalreceivership remedy in 2005, amicus relies instead on case law and secondary sources about the importance of timeliness in insolvencyproceedings more generally to support his contention that Parliament must have intended to grant secured creditors the right to apply to acourt for an order appointing a national receiver subject only to a 10-day notice period, a right which provincial legislatures should not beallowed to qualify or restrict: e.g., Century Services Inc. v.

Canada (Attorney General), 2010 SCC 60 , [2010] 3 S.C.R. 379, atpara. 58; Cadillac Fairview Inc., Re (1995), (ON SC), 30 C.B.R. (3d) 17 (Ont. Ct. (Gen. Div.)), at para. 7; Hon.Justice J. M. Farley, “A Judicial Perspective on International Cooperation in Insolvency Cases” (March 1998), 17 Am. Bankr. Inst. J. 12;Fred Myers, “Justice Farley in Real Time”, in Janis P. Sarra, ed., Annual Review of Insolvency Law 2006 (2007), 19; United NationsCommission on International Trade Law, Legislative Guide on Insolvency Law (2005), at p. 12.

We note that these cases and sources forthe most part relate to restructurings conducted under the Companies’ Creditors Arrangement Act. The restructuring proceedings underthis Act, not proceedings under Canadian bankruptcy and insolvency law in general, have been referred to as the “hothouse of real-timelitigation”: see Richard B. Jones, “The Evolution of Canadian Restructuring: Challenges for the Rule of Law”, in Janis P.

Sarra,ed., Annual Review of Insolvency Law 2005 (2006), 481, at p. 484. “Real-time litigation” is a judicially developed phrase used primarilyin restructuring cases: Edgewater Casino Inc., Re (2009), 2009 BCCA 40 , 265 B.C.A.C. 274, at para. 21; TransglobalCommunications Group Inc., Re (2009), 2009 ABQB 195 , 4 Alta. L.R. (5th) 157 (Q.B.), at para. 48.

A judicially coinedexpression, however magnetically phrased, that describes judicial practices in the context of restructurings, can hardly be said to beevidence of the legislative purpose of a national receivership regime. [42] Amicus also relies on a 1986 report from the Advisory Committee on Bankruptcy and Insolvency which emphasizedthe need for prompt access to courts as part of its analysis of specific recommendations stemming from a more general proposal toamend Canada’s bankruptcy legislation at that time for the purpose of controlling the appointment and conduct of a receiver of aninsolvent debtor: Proposed Bankruptcy Act Amendments: Report of the Advisory Committee on Bankruptcy and Insolvency (1986), at pp.40 and 43-44.

This report was issued some 20 years before the 2005 amendments to s. 243 and did not deal with the national receiver. [43] Finally, amicus asserts that timeliness is critical to achieving the particular objectives of receivership in general,which include not only enforcement of the secured party’s security interest, but also replacing inefficient management and facilitating thesale of the business as a going concern: see Roderick J. Wood, Bankruptcy and Insolvency Law (2009), at pp. 467-69.

In his book,however, Professor Wood does not mention timeliness as one of the purposes of s. 243, either in his discussion of the foundations ofreceivership law generally (c. 17) or in his specific comments on the 2005 and 2007 legislative reforms that led to the amendments to s.243: pp. 466-67. [44] It is against this backdrop that amicus submits that s. 243 must be read.

According to amicus, this evidence provesthat the purpose of s. 243 is to establish an effective national receivership remedy, one which is timely and flexible, and appliesuniformly across the country. [45] This is, in our respectful view, insufficient evidence for casting s. 243’s purpose so widely. As the Court explained

in COPA, at para. 68, “clear proof of purpose” is required to successfully invoke federal paramountcy on the basis of frustration offederal purpose. The totality of the evidence presented by amicus does not meet this high burden. While cases and secondary sources canobviously be helpful in identifying a provision’s purpose, the sources cited by amicus merely establish promptness and timeliness asgeneral considerations in bankruptcy and receivership processes. The absence of sufficient evidence supporting amicus’s claim about thebroad purpose of s. 243 is fatal to his claim.

What the evidence shows instead is a simple and narrow purpose: the establishment of aregime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver inmultiple jurisdictions. [46] Section 243(1.1) states that, in the case of an insolvent person in respect of whose property a notice is to be sentunder s. 244(1), the court may not appoint a receiver under s. 243(1) before the expiry of 10 days after the day on which the securedcreditor sends the notice, unless the insolvent person consents or the court considers it appropriate to appoint a receiver sooner.

Theeffect of the provision is to set a minimum waiting period. This does not preclude longer waiting periods under provincial law. There isnothing in the words of the provision suggesting that this waiting period should be treated as a ceiling, rather than a floor, nor is there anyauthority that supports treating the waiting period as a maximum. [47] In fact, the discretionary nature of the s. 243 remedy — as evidenced by the fact that the provision provides that acourt “may” appoint a receiver if it is “just or convenient” to do so — lends further support to a narrower reading of the provision’spurpose.

A secured creditor is not entitled to appointment of a receiver. Rather, s. 243 is permissive, allowing a court to appoint areceiver where it is just or convenient. Provincial interference with a discretion granted under federal law is not, by itself, sufficient toestablish frustration of federal purpose: COPA, at para. 66; see also 114957 Canada Ltée. [48] This case is thus easily distinguishable from Bank of Montreal v.

Hall, (SCC), [1990] 1 S.C.R.121, where the Court held that a security interest created pursuant to federal law could not, constitutionally, be subjected to theprocedures for enforcement of security interests prescribed by provincial legislation. Unlike the self-executing remedy at issue in thatcase, where the bank could seize the chattel upon default without the need to go to court, the appointment of a s. 243 receiver is notmandatory.

More importantly, in contrast with Hall, the s. 243 receivership remedy cannot be said to create a “complete code”: p. 155.Nothing in the text of the provision or the BIA more generally suggests that s. 243 is meant to be a comprehensive remedy, exclusive ofprovincial law. The provision itself recognizes that a receiver may still be appointed under a security agreement or other provincial orfederal laws, and creates no right to the appointment of a national receiver: s. 243(2)(b).

As this Court observed in COPA, at para. 66,“permissive federal legislation, without more, will not establish that a federal purpose is frustrated when provincial legislation restrictsthe scope of the federal permission”. [49] Any uncertainty about whether s. 243 was meant to displace provincial legislation like the SFSA is further mitigatedby s. 72(1) of the BIA, which states: 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.

This too demonstrates that Parliament has explicitly recognized the continued operation of provincial law in the bankruptcy andinsolvency context, except to the extent that it is inconsistent with the BIA: see GMAC Commercial Credit Corp. — Canada v. T.C.T.Logistics Inc., 2006 SCC 35 , [2006] 2 S.C.R. 123, at paras. 46-47. [50] Other provisions of the BIA further support a more narrow reading of s. 243’s purpose. Notably, s. 47 of the BIAempowers a court to appoint an interim receiver where a notice of intention to enforce a security was sent or is about to be sent under s.244(1).

Where there is an urgent need for the appointment of a receiver, the BIA thus provides a mechanism for the appointment of aninterim receiver.

As Bennett has observed: In practice, a secured creditor may apply for an interim receiver under subsection 47(1) for a short term, and then apply under section243 for a full receivership and, before the appointment of the interim receiver expires or, alternatively, apply for an extension undersubsection 47(1)(c). (Frank Bennett, Bennett on Receiverships (3rd ed. 2011), at p. 883) While s. 48 of the BIA provides that ss. 43 to 46 do not apply to individuals whose principal occupation is farming, the provision does notexempt farmers from the operation of s. 47.

This shows that Parliament thinks farmers generally warrant special consideration, but not incases where an interim receiver under s. 47 is found to be warranted. Promptness and timeliness is a concern that Parliament appears tohave addressed precisely through the interim receivership regime. The potential conflict, if any, between s. 47 of the BIA and

Part II ofthe SFSA is not, however, at issue in this appeal. [51] The legislative history of s. 243 of the BIA further supports a narrow construction of the provision’s purposefocussed on the establishment of a national receivership regime. The purpose of a court-appointed receiver, generally, “is to preserve andprotect the property in question pending resolution of the issues between the parties”: Bennett, at p. 6, citing Gentra Canada InvestmentsInc. v. Lehndorff United Properties (Canada) (1995), (AB CA), 169 A.R. 138 (C.A.).

While historically receivershiplaw was primarily a remedy for secured creditors, the legislative regulation of receiverships has resulted in many significant rights alsobeing given to the debtor and other interested parties as well: Wood, at p. 459. [52]

Part XI of the BIA was added to the Act in 1992, bringing under federal law various aspects of receivership law thathad previously applied to insolvent debtors at common law or under provincial legislation: S.C. 1992, c. 27, s. 89. In discussing therationale for

Part XI’s adoption, Pierre Blais, the then-Minister of Consumer and Corporate Affairs and Minister of State (Agriculture),suggested that

Part XI was enacted “to impose duties of disclosure and good faith on secured creditors and receivers and to require that asecured creditor give a debtor notice before enforcing its security”: House of Commons Debates, vol. IV, 3rd Sess., 34th Parl., October

29, 1991, at pp. 4177-78. He further noted, in the context of a discussion about the legislation more generally, that he had “made a point of consulting closely with [his] provincial counterparts to ensure [the federal] regime meshes smoothly with existing or planned provincial ones”: p. 4180. [ 53 ] Although the 1992 legislation did not create a national receivership remedy, it amended the BIA in two ways that are particularly relevant to this appeal.

First, it codified a 10-day notice period under s. 244 for secured creditors seeking to enforce a security on all or substantially all of the inventory, accounts receivable or other property of a business debtor. As Professor Wood explains, the requirement of a notice period developed initially at common law as a way to protect against the potential abuse of power by secured creditors: p. 474. The introduction in 1992 of a statutory notice period largely eliminated uncertainty associated with the common law rule: Wood, at p. 476.

The purpose of the s. 244 notice requirement is “to provide an insolvent person with an opportunity to negotiate and reorganize financial affairs”: Janis P. Sarra, Geoffrey B. Morawetz and L. W. Houlden, The 2015 Annotated Bankruptcy and Insolvency Act (2015), at p. 1054; see also House of Commons, Minutes of Proceedings and Evidence of the Standing Committee on Consumer and Corporate Affairs and Government Operations , No. 7, 3rd Sess., 34th Parl., September 4, 1991, at p. 12, Ron MacDonald (Vice-chairman of the Committee).

Second, the 1992 amendments gave the courts expanded authority when appointing interim receivers under the BIA : Wood, at pp. 461-62; Bennett, at pp. 841-42. This new regime was intended “to prevent the prejudice that might otherwise be caused by the imposition of [the] new statutory notice period”: Wood, at p. 461. [ 54 ] The 1992 legislation provided for parliamentary review of the BIA in three years’ time: s. 92.

In 1993, an advisory committee was established to identify further necessary amendments: Stephanie Ben-Ishai and Anthony Duggan, eds., Canadian Bankruptcy and Insolvency Law: Bill C-55, Statute c.47 and Beyond (2007), at p. 3.

Although s. 243 remained unchanged when Parliament enacted legislation amending the BIA in 1997, the 1997 amendments called for further parliamentary review in five years’ time: S.C. 1997, c. 12, s. 114. [ 55 ] In anticipation of this review, Industry Canada engaged in a consultation process with stakeholders, culminating in a report published in 2002 summarizing many issues that stakeholders identified as concerns with regard to the operation and administration of the BIA : Marketplace Framework Policy Branch, Policy Sector, Report on the Operation and Administration of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act .

In its report, Industry Canada noted that

Part XI of the BIA had not been effective and had not been used as intended in many areas of the country: p. 20. [ 56 ] For its part, the Standing Senate Committee on Banking, Trade and Commerce, which was ultimately charged with examining and reporting to Parliament on the administration and operation of the BIA , [1] identified problems with the operation of the interim receivership regime in the legislation: Debtors and Creditors Sharing the Burden: A Review of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (2003), at pp. 144-45.

The Committee observed that in many jurisdictions, courts had extended the powers of interim receivers to such an extent that they closely resembled those of court-appointed receivers. The problem was that, while exercising similar powers, interim receivers were not bound by the duties and responsibilities of court-appointed receivers.

The Committee therefore recommended that the role and powers of interim receivers as well as the duration of their appointment be clarified, suggesting that interim receivers be the “temporary watchdog[s]” that they were initially intended to be: pp. 144-45. [ 57 ] Professor Wood, at p. 462, discussed what impelled the expansive approach to interim receivership in some jurisdictions: One of the reasons for conferring such wide powers on interim receivers was that it effectively gave rise to a national receivership.

Prior to this, receivers were appointed pursuant to provincial law and it was necessary to seek the assistance of courts of other provinces to give effect to the order there. The availability of a national receivership [through the interim receivership regime] meant that an order had full force and effect in every Canadian province and territory. [ 58 ] In 2005, Parliament responded by passing Bill C-55: S.C. 2005, c. 47 . Bill C-55 not only clarified the scope and powers of interim receivers, but also amended

Part XI of the BIA and introduced a national receivership remedy: ss. 30 to 33 and 115 . [ 59 ] In describing the rationale for the 2005 amendments, Industry Canada explained that courts in some jurisdictions had undermined the original intention of the interim receivership remedy by granting interim receivers wide-ranging powers for indefinite periods.

The purpose of the reforms to s. 47 was to limit the period of an interim receiver appointment and the powers that may be granted to interim receivers, while s. 243(1) was intended to “allow the bankruptcy court to appoint a receiver with the power to act nationally”, thereby “eliminating the need to apply to the courts in multiple jurisdictions for the appointment of a receiver”: Industry Canada, Bill C-55: clause by clause analysis (online), Bill Clause Nos. 30 and 115. [ 60 ] There is little in the legislative debate surrounding Bill C-55’s adoption.

While not decisive in itself, Don Boudria, a member of Parliament, commented that the national receivership remedy was aimed at “cover[ing] the gap” caused by changes to the interim receivership regime and that a national receiver “would be able to operate in any province”: House of Commons Debates , vol. 140, No. 128, 1st Sess., 38th Parl., September 29, 2005, at p. 8215. Professor Wood echoes this view and explains: Instead of using an interim receiver as a means of appointing a receiver who can operate nationally, the amendments give the bankruptcy courts the power to appoint a national receiver.

The court may give the receiver the power to take possession of the debtor’s property, exercise control over the debtor’s business, and take any other action that the court thinks advisable. This gives the court the ability to make the same wide-ranging orders that it formerly made in respect of interim receivers , including the power to sell the debtor’s property out of the ordinary course of business by way of a going-concern sale or a break-up sale of the assets.

A court is directed not to appoint a receiver in respect of a debtor who has been given a notice of intention to enforce until the ten-day notice period has expired, unless the debtor consents to an earlier appointment or the court considers it appropriate to do so. If the secured creditor is concerned that the debtor may dissipate the assets, the secured creditor may seek the appointment of an interim receiver. [Emphasis added; footnotes omitted; p. 466.] (See also Bennett, at p. 886.)

[ 61 ] Andrew Kent, then a director of the Insolvency Institute of Canada, explained to members of a committee studying the Bill that creation of a national receivership remedy would be “more efficient” given that “many . . . businesses now are on a national scale”: Standing Committee on Industry, Natural Resources, Science and Technology, Evidence , No. 064, 1st Sess., 38th Parl., November 17, 2005, at p. 7.

Similarly, Jerry Pickard, the then-Parliamentary Secretary to the Minister of Industry, emphasized that the “creation of a national receiver, with the power to act across the country”, would “greatly streamline” the bankruptcy process: Proceedings of the Standing Senate Committee on Banking, Trade and Commerce , No. 19, 1st Sess., 38th Parl., November 23, 2005, at p. 55. [ 62 ] Although Bill C-55 received royal assent on November 25, 2005, it was not immediately proclaimed in force: s. 141 ; see also Marcia Jones, Legislative

Summary LS-584E, Bill C-12:

An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, the Wage Earner Protection Program Act and

Chapter 47 of the Statutes of Canada, 2005 (2007), at p. 2.

In the interim, Parliament passed Bill C-12, which further amended the BIA : S.C. 2007, c. 36 . [ 63 ] During the legislative debate on Bill C-12, Colin Carrie, a member of Parliament and then-Parliamentary Secretary to the Minister of Industry, explained that the further amendments to s. 243 were aimed in part at addressing shortfalls identified with the national receivership remedy, whose “goal was to improve efficiency in the insolvency system by allowing one person to deal with all of the debtor’s property, wherever the property is located in Canada”: Proceedings of the Standing Senate Committee on Banking, Trade and Commerce , No. 2, 2nd Sess., 39th Parl., November 29, 2007, at p. 25. [ 64 ] The Legislative

Summary of the Bill states that a receiver appointed under s. 243 has “the authority to act throughout Canada” and confirms that a “court may not appoint a receiver until 10 days after the date the notice is sent — unless the debtor consents to an earlier enforcement of the security, or the court considers it appropriate to appoint a receiver before then”: p. 43. In its analysis of the legislation, Industry Canada further explains that the national receivership remedy is aimed at increasing efficiency while the purpose of the notice period more specifically is to give time to the debtor to repay the liability:

Section 243 sets out the rules related to the appointment of a receiver.

Chapter 47 created the ability to appoint a receiver under the Act. This differs from current practice, in which receivers are appointed under provincial law. The new BIA receiver will be entitled to act across the country, increasing efficiency by removing the need to have a receiver appointed in each jurisdiction in which the debtor’s assets are located . Creditors will still be entitled to have a provincially appointed receiver act on their behalf under the Act. . . . Subsection (1.1) mandates that a notice of an intention to enforce security (a

section 244 notice) must be provided before a receiver may be appointed. The intention of the

section 244 notice is to provide the debtor with an opportunity to repay the liability that underlies the security being enforced . The waiting period is not necessary where the debtor consents or the court determines that it is appropriate to appoint a receiver. [Emphasis added.] ( Bill C-12: Clause by Clause Analysis (online), Bill Clause No. 58) [ 65 ] In its

summary of the key legislative changes under both Bill C-12 and Bill C-55, Industry Canada highlighted s. 243: Judges exercising their powers under the BIA may, on application of a secured creditor, appoint a “national” receiver under

section 243 of the BIA if it is “just or convenient to do so”. A receiver appointed under

section 243 of the BIA will have the authority to act throughout Canada. Such an appointment eliminates the need to obtain separate appointments in every province/territory where the debtor has assets. . . . If a notice to enforce security is to be sent under section 244(1) of the BIA , the court may not appoint a receiver until the 10-day notice period has expired unless the debtor consents to an earlier enforcement or the court considers it appropriate to appoint a receiver before then. [Emphasis added.] (

Summary of Legislative Changes:

Summary of Key Legislative Changes in

Chapter 47 of the Statutes of Canada, 2005, and

Chapter 36 of the Statutes of Canada, 2007 (online), Part B) [ 66 ] Bill C-12 received royal assent on December 14, 2007. The amendments to s. 243 under both Bill C-12 and Bill C- 55 came into force on September 18, 2009: SI/2009-68. There have been no further amendments to s. 243 since that time. [ 67 ] The preceding review confirms that s. 243’s purpose is simply the establishment of a regime allowing for the appointment of a national receiver, thereby eliminating the need to apply for the appointment of a receiver in multiple jurisdictions: see Wood, at pp. 466-67. The 2005 and 2007 amendments to the BIA made clear that interim receivers were to be temporary in nature and

have more limited powers, as originally intended, but gave courts the power to appoint a receiver with authority to act nationally, thereby increasing efficiency and removing the need to seek the appointment of a receiver in each jurisdiction where the debtor has assets. Sarra, Morawetz and Houlden have explained:

Section 243 grants authority to the court, defined in s. 2 to include a judge exercising jurisdiction under the BIA , to appoint a receiver with the power to act nationally, thereby eliminating the need to apply to the courts in multiple jurisdictions for the appointment of a receiver . The national receiver under the BIA is entitled to act across the country, increasing efficiency by removing the need to have a receiver appointed in each jurisdiction in which the debtor’s assets are located. [Emphasis added; p. 1037.] [ 68 ]

Section 243 was thus aimed at the establishment of a national receivership regime. Its purpose was to avoid a multiplicity of proceedings and the inefficiency resulting from them. There is no evidentiary basis for concluding that it was meant to circumvent the procedural and substantive requirements of the provincial laws where the appointment is sought. General considerations of promptness and timeliness, no doubt a valid concern in any bankruptcy or receivership process, cannot be used to trump the specific purpose of s. 243 and to artificially extend the provision’s purpose to create a conflict with provincial legislation. Construing s. 243’s purpose more broadly in the absence of clear e

[…]