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Digest of the Week - Federal Paramountcy in Bankruptcy

Digest of the Week - Federal Paramountcy in Bankruptcy

Narrow construal of the doctrine of federal paramountcy in the context of bankruptcy and provincial farmer protection legislation.



Saskatchewan (Attorney General) v. Lemare Lake Logging Ltd.
2015 SCC 53
Supreme Court of Canada


Bankruptcy and insolvency —Bankruptcy and insolvency jurisdiction —Constitutional jurisdiction of Federal government and provinces

Secured creditor applied pursuant to s. 243(1) of Bankruptcy and Insolvency Act (BIA) for appointment of receiver over substantially all assets of debtor — Debtor was "farmer" within meaning of Saskatchewan Farm Security Act (FSA), and contested appointment — Debtor argued that creditor was required to submit notice of intention, wait 150-day notice period and engage in mandatory review and mediation process under Part II of FSA — Chambers judge held that s. 243(1) BIA and Part II FSA were not in conflict — Court of Appeal held that in circumstances where application was made to appoint receiver, Part II FSA frustrated purpose of s. 243(1) BIA and was therefore inoperative — Attorney General for Saskatchewan appealed — Appeal allowed — Under doctrine of federal paramountcy, federal law prevails when there is genuine inconsistency between federal and provincial legislation — Conflict arises when there is operational conflict or where operation of provincial law frustrates purpose of federal enactment — Paramountcy was to be narrowly construed, favouring harmonious interpretations — No operational conflict existed as it was possible to comply with both statutes — Section 243 of BIA had simple and narrow purpose of establishing regime for appointment of national receiver — Under BIA, appointment of national receiver could not be made before expiry of 10-day notice provision — Part II FSA afforded protection to farmers against loss of farm land by imposing compulsory and non-waivable 150-day waiting period during which mandatory review and mediation process occurs — Conflict only arises if interference frustrates purpose of federal regime — Words and discretionary nature of s. 243 BIA support narrow reading of provision's purpose — Section 243 of BIA did not suggest it was comprehensive remedy exclusive of provincial law — BIA also explicitly recognized continued operation of provincial law, except where inconsistent with BIA — Evidence did not support argument that 150-day delay or other conditions of FSA frustrated effectiveness or timeliness concerns — Part II FSA was not constitutionally inoperative where application was made to appoint receiver pursuant to s. 243(1) BIA.

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