Thomas G. W. Telfer, Western University Faculty of Law, and Virginia Torrie, Affiliated Researcher, Desautels Centre for Private Enterprise and the Law, University of Manitoba Faculty of Law, have posted Debt Postponement, Debtor Protection, and Creditor Interests: The Role of the Saskatchewan Moratorium Act Reference Case in Reinforcing the Bankruptcy and Insolvency Power, which appears in the Saskatchewan Law Review (2023) 86.1 SLR 41-82:
Canada’s prairie provinces have long attempted to secure the economic fortunes of their residents by enacting legislation to restrict the enforcement of debt. Provincial efforts to restrict creditor collection actions date back to the Financial Crisis in 1914 and extended through the Dust Bowl and Great Depression of the 1930s, and into the early 1940s. Saskatchewan enacted its first such statute in 1914, but by 1929 it had followed Alberta’s lead and created a comprehensive scheme of debt relief with its Debt Adjustment Act. In 1941, Alberta’s Debt Adjustment Act was declared ultra vires by the Supreme Court of Canada. The ruling cast doubt on the validity Saskatchewan’s Act by implication. Saskatchewan responded by repealing its Debt Adjustment Act and enacting the Moratorium Act in 1943. However, the province’s constitutional problems did not end there. In 1955 it referred the validity of its newest Moratorium Act to the Saskatchewan Court of Appeal, and on appeal the Supreme Court of Canada declared that the statute ultra vires for trenching on the federal government’s jurisdiction over bankruptcy and insolvency. The decision continued the trend of expanding the bankruptcy power and was influential for clarifying the broad scope of this federal power, articulating clear definitions of bankruptcy and insolvency, and acknowledging the stigma of bankruptcy and the dual policy goals of social and economic rehabilitation. This paper argues that the Moratorium Act Reference case is a landmark decision, for affirming that debt adjustment legislation is exclusively within the scope of federal bankruptcy and insolvency law, and the enduring influence of Justice Rand’s judgment on the further development of the modern Canadian bankruptcy and insolvency system.
--Dan Ernst
