Citizens Insurance Co of Canada v Parsons is a major Canadian constitutional case decided by the Judicial Committee of the Privy Council. It interpreted the property and civil rights clause of section 92(13) in the Constitution Act, 1867 to be read expansively, to include contracts related to insurance to be within the power of the provincial governments, but the countervailing Trade and Commerce clause of section 91(2) was to be read narrowly.
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Background
Parsons was the owner of a hardware store in Orangeville, Ontario, covered by an insurance policy provided by Citizens' Insurance Co. of Canada. At the time the policy was issued, he had a similar policy in effect with the Western Assurance Company. When a fire burnt down the store in August 1877, Citizens' refused to pay on the basis that the nondisclosure of the Western policy violated the terms of its policy and a statutory condition, under Ontario's Fire Insurance Policy Act. Parsons sued to collect on the policy and contended that it did not comply with the presentation requirements of the Act.
Lower courts
The Court of Queen's Bench entered a verdict in favour of Parsons. Citizens' appealed to the Court of Appeal bycontending that the Act was ultra vires because of federal jurisdiction over trade and commerce. The Court of Appeal agreed with the plaintiff and dismissed the appeal with costs.
On appeal to the Supreme Court of Canada, Sir Oliver Mowat, acting in his role as Attorney General for Ontario, intervened to champion Parson's case. The Court decided 3-2:
- The Fire Insurance Policy Act was not ultra vires provincial jurisdiction and applied to all insurance companies that insured property within the province.
- The Act was not a regulation of trade and commerce under s. 91(2) of the BNA Act, 1867.
- Insurers in Ontario had to comply with the statutory conditions imposed under the Fire Insurance Policy Act.
Ritchie CJ asserted that the regulation of insurance contracts fell under the provincial property and civil rights power:
Henri Elzéar Taschereau and John Wellington Gwynne, who dissented in the Supreme Court decision, advised Sir John A. Macdonald to consider intervening if necessary to have the decision appealed to the Judicial Committee of the Privy Council. In particular, Gwynne said:
Citizens' Insurance appealed to the Privy Council, and Mowat asserted his influence on the case by having the province assume Parson's costs and by briefing his lawyers to argue that the provincial legislative jurisdiction should be broadly defined, and the federal government could not encroach upon it.
At the Privy Council
The Supreme Court ruling was affirmed. The Queen's Bench verdict was reversed, however, because of outstanding questions as to the interpretation of certain interim notes and the matter was remitted back to that court for reconsideration.
Sir Montague Smith noted as a general proposition that the British North America Act, 1867 must be interpreted as an ordinary statute.
Trade and Commerce
The case largely turned on the issue of the law overlapping two heads of power. Smith focused on interpreting the Trade and Commerce power; he famously stated:
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In all, Smith established three characteristics of the trade and commerce power:
- The "regulation of trade and commerce" should not be read literally.
- It includes international and interprovincial trade as well as "general regulation of trade affecting the whole dominion."
- It does not extend to regulate contracts between businesses.
Incorporation of federal companies
Taschereau J, in his opinion, had expressed concern that if the Parliament of Canada did not possess the power to regulate companies under the trade and commerce power, it did not have the power to incorporate companies either. Smith declared that the federal incorporation power arose from s. 91's introductory words:
S. 92(11) gave the provincial legislatures power over "The Incorporation of Companies with Provincial Objects" so Smith declared:
However, the power to incorporate does not confer the exclusive right to regulate contracts.
Aftermath
Parsons had constitutional and political consequences:
- It circumscribed the influence of Taschereau and Gwynne JJ's highly centralist views in Canadian constitutional jurisprudence.
- It significantly restricted the federal trade and commerce power for decades in Privy Council jurisprudence, which started to transform only in the 1970s, beginning with Caloil Inc. v. Canada and seeing change in General Motors of Canada Ltd. v. City National Leasing.
- It represented a major victory in Mowat's championing of increased provincial rights, which received further support in forthcoming Privy Council appeals in other cases. They still influence Canadian political and constitutional debate.
Source of the article : Wikipedia
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