Law Times

Law Times • December 14, 2015 Page 7 www.lawtimesnews.com State trials during turbulent times n overhaul of the previous gov- ernment's Anti-terrorism Act will be an important item on Parliament's agenda next year. e balance between safeguarding na- tional security and protecting civil liber- ties is never an easy one, and any amend- ments to the act will no doubt generate passionate debate on both sides. To prepare for this debate, a recent book published by the Osgoode Soci- ety, Security, Dissent, and the Limits of Toleration in War and Peace , 1914- 1939, should be required reading for all members of Parliament as well as Justice Department staff. It is the fourth volume in a series devoted to Canadian "state tri- als," those involving perceived threats to the state or the established order. Previ- ous volumes dealt with everything from a 1608 plot to assassinate Samuel de Cham- plain down to the trial of Louis Riel in 1885 and beyond. With this volume we enter what is probably Canada's most tur- bulent quarter-century since Confedera- tion, when the "limits of toleration" were severely tested. A persistent technique revealed by the authors is the secret manipulation of court process by government actors to defuse challenges to arguably unconstitutional state action or to punish those whom the state wished to condemn in spite of legal barriers to their prosecution. An example of the latter is the egregious manipulation of legal process to punish the leaders of the Winnipeg Gen- eral Strike, dealt with by Rein- hold Kramer and Tom Mitch- ell in a chapter based on their fine book on the subject. ey show how the federal govern- ment funded "private" prose- cutions of the strike leaders for seditious conspiracy when the proper authority (the Manito- ba government) refused to do so, believing that the strikers were not motivated by revolu- tionary intent but by the desire for better living conditions. e authors' story of jury manipulation — oiled by se- cret payments to elite lawyers — makes for disheartening but necessary reading. Manipulation of the first kind is on display in Patricia McMahon's excel- lent study of the wartime case Re Gray (1918), which arose out of the conscrip- tion legislation passed by the Borden gov- ernment in the summer of 1917. George Edwin Gray was a 21-year-old Ontario farmer who acquired an exemption from military service in early 1918. However, as the war took a turn for the worse, Bor- den revoked all exemptions via order- in-council in April 1918. Gray reported for duty but refused to report for basic training. He was court martialled in June, and in August was sentenced to life im- prisonment, later commuted to 10 years. Ultimately, he spent only a few weeks in prison, as he agreed to serve in the armed forces, but the war was over before he could be sent overseas. In July, Gray challenged his detention by filing a ha- beas corpus petition directly with the Supreme Court of Canada. Gray's case was heard a week aer his petition was filed, and the court issued rea- sons less than 24 hours later, upholding the government's action, albeit with two dis- sents. Why the extraordinary rush? e case was propelled by a deci- sion of the Alberta Appellate Division in a case called Lewis in late June of that year, declaring Borden's revocation of the exemptions illegal. Rather than appeal Lewis, the government decided to start over, constructing its own test case using Gray. e argument in Lewis was simple: e War Measures Act gave the govern- ment no power to override the decisions of tribunals duly constituted under the Military Service Act. Parliament would have to amend the law if that power was to be provided. en deputy minister of justice E.L. Newcombe not only selected Gray for his test case but also found and instructed counsel for him, all while preparing the government's response to the habeas corpus petition. Before the hearing, the cabinet passed a secret order in council containing regulations applicable only to the Gray case, expressly prohibiting chal- lenges to the Supreme Court's jurisdiction on the habeas corpus application. And for good measure, it passed an order-in- council overturning Lewis. Gray's coun- sel did put up a good fight, but a major- ity of the court found that the extremely broad wording of the War Measures Act authorized the cabinet to revoke the ex- emptions as they had done. Much about this case leaves a bad taste in one's mouth. Some might think it could not happen again in the age of the Charter, but much depends on the word- ing of the legislation in question. Not only that, but McMahon was met with claims of privilege by the Department of Justice in trying to access the Gray and Lewis case files. Three years after an access to information and privacy request, she has still received only a heavily redacted ver- sion of the Lewis file. If we can't find out what government actors were doing a century ago, how can we ever hope to hold current governments accountable? LT uPhilip Girard is a legal historian and professor at Osgoode Hall Law School. He's also associate editor at the Osgoode Society for Canadian Legal History. His e-mail address is pgirard@osgoode.yorku.ca. COMMENT Ontario plate-denial law clashes with federal insolvency powers BY EUGENE MEEHAN AND DARRYL SINGER For Law Times lmost two years ago the Ontario Court of Appeal released a landmark decision that ruled against the 407 toll highway operators and upheld one of the principle tenets of the Bankruptcy and Insolvency Act (BIA). Last month, the Supreme Court in 407 ETR Concession Co. v. Canada (Superintendent of Bankruptcy) upheld the well-reasoned decision of the Ontario appellate court. e case began with a truck driver named Mat- thew David Moore, who had racked up a hey 407 bill. Financial circumstances forced Moore to make an assignment in bankruptcy in 2007, from which he was ultimately discharged in 2011. e effect of the discharge, of course, was to extinguish his unsecured debts, including the debt to the 407. e 407 could no longer take any collection or pursue legal measures against him. is essentially makes it as if the debt nev- er existed. e concept of debts being extinguished is the cornerstone of the "fresh start" principle, which un- derpins the consumer bankruptcy regime in Canada. ere are debts that can survive bankruptcy, notably: child support, criminal and quasi-criminal admin- istrative fines, and debts incurred as a result of fraud. Section 178(1) of the BIA sets out a complete list of such debts. Notably, debts to the 407 are not included on that list. But the 407 had an enforcement mechanism not available to ordinary unsecured creditors. rough the Highway 407 Act, a debtor could be placed in "plate denial." is occurs when the 407 sends a notice of plate denial to the Ontario Ministry of Transportation (MTO) requiring the MTO to deny the renewal or is- suance of a licence plate to someone who is in arrears to the 407. e MTO has no discretion to waive or ig- nore the notice from the 407. Once Moore was discharged, the 407 could not col- lect on his debt. But as Moore was in plate denial, if he wished to renew or obtain licence plates in his name, he would ultimately have to make a deal with the 407 to pay off his debt or some agreed-upon settlement amount. On its face, this runs contrary to the concept of the BIA fresh start principle. It also granted the 407 a super-priority over other unsecured creditors. Unlike, say banks, credit card companies, and the taxman, the 407 still had a way to extract the pre-discharge debt ob- ligation from the bankrupt. e bankruptcy registrar initially ruled in favour of Moore in 2011 and ordered that the 407 had to release the plate denial. e matter then went to the Superior Court of Justice where Justice Frank Newbould set aside the decision. e 407 settled with Moore personally along the way, but the case was of such significance for thou- sands of bankrupts that the bankruptcy superinten- dent stepped in. Aer losing at the Court of Appeal in a decision that restored the registrar's original order and ruled that the section of the Highway 407 Act that permitted plate denial post bankruptcy was unconsti- tutional, the 407 appealed to the Supreme Court. e decision was heard in January and the long-awaited ruling was finally rendered on Nov. 13. e majority of the court determined that the first branch of the constitutional doctrine of federal para- mountcy applied. e Highway 407 Act conflicts with the BIA in this post-bankruptcy context. It can be ar- gued that the court has expanded the scope of the first branch of the paramountcy test, namely that there is an operational conflict between the federal and provin- cial statutes that render it impossible to comply with both. e second branch of the test essentially states that where it is possible to comply with both laws but the effect of the provincial law is to frustrate the inten- tion of Parliament, that section of the provincial statute will be struck down. Specifically, the court held that: • e intent of s. 178 of the BIA was to take away from creditors the ability to enforce a pre-discharge debt. As the provincial statute favouring the 407 al- lowed a post-discharge enforcement mechanism for the 407, the two regimes could not co-exist. e op- eration of the provincial legislation could not work co- operatively with the BIA. (e dissent found that the federal and provincial act could co-exist because the schemes in the BIA and the Highway 407 Act were not about the same collection regime.) e majority deci- sion, in what appears to be an expansion of the test, looks at the net effect of the provincial legislation and not just the wording of the act. • e Highway 407 Act plate-denial scheme frus- trated the legislative and public policy intent of Parlia- ment by trampling on the BIA's "fresh start" principle (which is the second branch of the paramountcy test). As such, the Supreme Court held that once a bank- rupt is discharged, the 407 debt is extinguished in its entirety, and this includes the plate-denial enforce- ment mechanism. This is a most welcome decision for the thousands of bankrupts who have been in plate-denial limbo for years and for those lawyers, accountants, and trustees who assist consumer debtors. They finally have some certainty that a 407 debt will be treated in its entirety equal to any other unsecured debt. LT uEugene Meehan is the founding partner of Supreme Advocacy LLP in Ottawa and focuses on Supreme Court of Canada litigation. Darryl Singer is the principal of SINGER Barristers PC in Toronto and has practised ci- vil and commercial litigation for 23 years. u SPEAKER'S CORNER A A That's History Philip Girard

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