Constitution of Canada

Supreme Court of Canada: Role, History, and Operation

Jay Makarenko — Wed, 16 Jul 2008 12:13:41 -0600

The modern Supreme Court of Canada plays a pivotal role in Canadian politics. As the highest court in the country, the decisions of the Supreme Court touch on a wide range of issues: criminal law, civil law, federalism, and individual rights and freedoms. This article provides an introduction to the Supreme Court of Canada, including its place in Canada’s court system, its history, its modern organization and operation, as well as key issues and debates regarding the Court.

The Supreme Court and Canada’s Judicial System

Introduction to status and role of the Supreme Court

History of the Supreme Court of Canada

Important events in the evolution of the Supreme Court

Operation of the Supreme Court of Canada

Overview of the organization and operation of the Supreme Court

Issues and Debates on the Supreme Court of Canada

Democracy, federalism, representation and the Supreme Court

Sources and Links to More Information

List of article sources and links to more on this topic

The Supreme Court and Canada’s Judicial System

Introduction to status and role of the Supreme Court

The Supreme Court of Canada is the nation’s highest court of appeal. In understanding its role further, it is useful to discuss the Supreme Court within the context of Canada’s judicial system.

Role of the Canadian Court System

The courts are the interpreters and arbitrators of Canadian law. The courts do not actually make law; that is, they do not have the power to pass legislation. The legislative branch of government (that is, the federal Parliament and provincial/territorial legislatures) performs this function. Nor do the courts have the power to enforce laws. The executive branch of government, with its bureaucracies and police forces, performs the role of enforcement. Rather, the courts’ role is to interpret the laws passed by the legislature, arbitrate disputes between parties over the application of law, and direct the executive on the proper enforcement of the law.

The reach of the courts is particularly evident when one considers the vast array of laws which it must interpret and adjudicate. There is, for example, the field of criminal law, which governs conduct deemed “criminal” and subject to forms of state sanction. There is also civil law, which regulates relations between individuals, corporations and governments regarding such things as contracts, tort disputes and property law. The courts are also responsible for interpreting and adjudicating the Canadian Constitution, which touches on a number of key political issues, including federalism (the relationship between different levels of government), Aboriginal rights, and the Canadian Charter of Rights and Freedoms (the relationship between the state and individuals).

Components of the Canadian Court System

In fulfilling its role as interpreters and adjudicators of the law, the Canadian court system encompasses a number of different components.

First, there are the purely provincial courts, which include the provincial and municipal courts of each province. The provinces alone establish and maintain these courts, as well as appoint and pay their judges (hence, the term “purely” provincial courts). These courts are usually divided into functional divisions, which reflect the sort of cases they hear; for example, the criminal division, the civil or small claims division, and the youth and family division.

The second component of the Canadian court system is the provincial superior courts, which includes provincial superior trial courts and provincial courts of appeal. These courts are established and maintained by their respective provincial governments. However, unlike purely provincial courts, their judges are appointed and paid by the federal government.

Lastly, there are the purely federal courts, which include the Supreme Court of Canada and the federal courts. The latter is a special set of courts which deal exclusively with matters specified in federal (as opposed to provincial) statute. This includes the Federal Court of Appeal, the Federal Court Trial Division, the Tax Court of Canada and military courts. The federal government alone establishes and maintains the Supreme Court and federal courts, as well as appoints and pays their judges (hence, the term “purely” federal courts).

Structure of the Canadian Court System

While there exist different components (see above), the Canadian courts are nevertheless organized into a single system. Provincial courts may hear cases dealing with federal laws, and federal courts may hear cases dealing with provincial laws. (The one exception is the federal courts, such as the Federal Court Trial Division, the Tax Court or military courts, which only hear cases dealing with particular federal statutes). As such, cases can begin with provincial level courts and cross over to federal level courts as they make their way through the Canadian court system.

This single system, moreover, is organized hierarchically, with lower and higher courts. This hierarchy allows the decisions of a lower court to be appealed to and reviewed by a higher court. At the top of this hierarchy is the Supreme Court of Canada, which is the nation’s last court of appeal and which has the power to overturn the decisions of any other court in Canada.

Figure 1: The Structure of the Canadian Court System

(Diagram taken from Canada’s Courts, McCormick, 1994)

Note that the arrows in Figure 1 indicate the flow of appeals in the Canadian court system. For a case heard in a provincial court, for example, an appeal would first be heard in a provincial superior trial court, then a provincial court of appeal, and finally, in the Supreme Court of Canada. Under this system, one could not appeal a decision in a provincial court directly to the Supreme Court, skipping the other courts.

The Supreme Court and Canada’s Court System

As the highest court in the land, the Supreme Court plays a central role in the state and evolution of Canadian judicial interpretation and analysis. For example, when rendering a decision, the Supreme Court often makes clear its view about how a particular law should be interpreted and applied by the court system as a whole. Lower courts are subsequently obliged to follow the Supreme Court’s lead; otherwise, they will run the risk of having their decision overturned on appeal. This, in turn, lends itself to uniformity in the Canadian court system across the various courts.

Moreover, the Supreme Court will often use its position to intentionally direct change in the interpretation and application of laws. In a decision, the Supreme Court may explicitly reject a traditional way of interpreting a law or manner of judicial reasoning, and will lay down a new approach. Again, the lower courts are obliged to follow the Supreme Court’s lead and apply the new principles when rendering their own decisions.

History of the Supreme Court of Canada

Important events in the evolution of the Supreme Court

Since its inception, the Supreme Court of Canada has undergone important changes in its role and operation. The following provides a brief summary of key events in the Supreme Court’s evolution.

Establishment of the Supreme Court

The Supreme Court was first created in 1875, with the federal government’s passage of the Supreme Court Act.

Early in its life, the Supreme Court was not truly “supreme” within the Canadian court system. When Parliament first created the Supreme Court, it did not abolish the traditional practice of appeals “to the foot of the throne” in the form of the Judicial Committee of the Privy Council (JCPC). The JCPC was a British body, staffed by respected judges and law lords, which advised the British monarch and served as the final court of appeal for the British Empire. Decisions of the Supreme Court could be appealed to and overturned by the JCPC. Moreover, if the litigants in a case agreed, it was possible for appeals to bypass the Supreme Court altogether, and go directly to the JCPC.

As a proportion of the Supreme Court’s total decisions, there were relatively few appeals to the JCPC, and they did not always result in an overturning of its decisions (McCormick, 1994). Nevertheless, the presence of the JCPC created a “captive court,” in which the Supreme Court was reluctant to display initiative or judicial leadership within the Canadian court system as a whole (McCormick, 1994).

Patriation of Judicial Authority in Canada

In 1949, appeals to the JCPC were abolished. As a result, the Supreme Court became truly “supreme” within the Canadian court system, as it was now the last court of appeal in the nation.

Patriation of judicial authority, however, did not lead to immediate and radical changes in Canadian jurisprudence. Since the amendment was not retroactive, cases already before Canadian courts continued under the traditional system of appeals, with the JCPC deciding its last Canadian case in 1957. Moreover, the legal doctrine of precedence, in which older decisions should be followed in new cases, further constrained the Supreme Court’s ability to effect drastic change (McCormick, 1994).

Nevertheless, there were some early indications that the Supreme Court was willing to take initiative and judicial leadership. This was most evident in a series of cases in which the Supreme Court altered judicial interpretations of Section 91 of the Constitution, which deals with the federal powers and jurisdictions. The JCPC had previously interpreted Section 91 as an emergency clause, which allowed the federal government to take on additional powers temporarily and only in times of national emergency. The Supreme Court, however, re-interpreted Section 91 to give the federal government permanent powers in key areas of national interest, such as aviation and telecommunications.

Entrenchment of the Canadian Charter of Rights and Freedoms

Over time, the Supreme Court has taken on the role of judicial leader to a fuller extent. This is particularly true in a relatively new area of constitutional law – the Canadian Charter of Rights and Freedoms. The Charter was added to the Canadian Constitution in 1982, and sets out the fundamental rights of individuals in Canada in relation to the state. The Charter provides persons with certain fundamental freedoms (such as freedom of religion and consciousness, expression, and association), legal rights, democratic rights, and equality rights.

The entrenchment of the Charter is significant in that it enables the courts to review any government law or action that may run afoul of Charter rights. Moreover, it is up to the courts to interpret the meaning of Charter rights and their application to specific circumstances. In the context of the right to freedom of expression, for example, the courts are responsible for decide the meaning of key concepts, such as “freedom” and “expression,” as well as when it is or is not permissible for the state to violate this right. As such, the courts have become, at least potentially, the final word on a wide range of public policy issues, at both the federal and provincial/territorial levels.

In this context, the Supreme Court plays a critical role. As the highest court in the country, it has the final say on how all courts ought to interpret and apply Charter rights, with all other courts obliged to follow the Supreme Court’s lead. Moreover, the Supreme Court has shown a preparedness to uphold Charter rights in the face of the state. It has struck down or altered federal and provincial legislation in a wide range of areas, such as abortion, retirement rules, voting rights for prisoners, prohibitions on spreading false statements, and spending limits on political advertising during provincial referendum, just to name a few.

Operation of the Supreme Court of Canada

Overview of the organization and operation of the Supreme Court

Jurisdiction of the Supreme Court

As the final court of appeal, the Supreme Court possesses the jurisdiction to hear cases from a wide range of sources, including the civil law of the Province of Quebec, the common law of the other provinces and territories in Canada, and all legislation passed by federal, provincial, territorial and municipal governments.

The bulk of the Supreme Court’s caseload is appeals from the various provincial and territorial courts of appeal (McCormick, 1994). In special circumstances, the Supreme Court may hear appeals from provincial superior trial courts (normally, appeals from these courts go first to the provincial court of appeal). The Supreme Court also hears appeals from the Federal Court of Appeal, the Court Martial Appeal Court (the military court of appeal), and federal boards and tribunals.

Another important source of cases for the Supreme Court is federal government references, which are questions of significant legal consequence that are submitted by the federal government to the Supreme Court (the Court may also hear appeals from provincial/territorial government references which are submitted to provincial courts of appeal). In 2004, for example, the federal government referred a number of legal questions to the Supreme Court concerning the constitutionality of a federal law legalizing gay marriage.

Make-up of the Supreme Court

The Supreme Court consists of nine judges or justices: one Chief Justice of Canada and eight puisne justices (puisne simply means “inferior in rank”). A judge of the Supreme Court holds office until s/he retires or reaches the age of 75, but can be removed earlier for incapacity or misconduct by the Governor General on the direction of the Senate and House of Commons (Supreme Court of Canada, March 2007). During their tenure, judges must devote themselves exclusively to their judicial duties, and may not hold any other remunerative office under the federal or provincial/territorial government, nor engage in any business enterprise (Supreme Court of Canada, March 2007).

The Supreme Court Act sets out several rules concerning who may serve as a judge on the Supreme Court. Judges must either be drawn from among Canada’s superior court justices, or from among barristers with at least 10 years’ standing at the Bar of a province or territory. In addition, the Act requires regional representation in the makeup of the Supreme Court. At least three judges must be appointed from the province of Quebec. This rule is commonly justified on the grounds that Quebec uses civil law instead of common law (as the rest of the country does), and the Supreme Court needs judges familiar with that system. While not required by the Supreme Court Act, it is tradition to divide the remaining six positions on the Supreme Court in the following manner: three from Ontario, two from Western Canada, and one from Atlantic Canada.

For more information on current and former judges of the Supreme Court:

Appointments to the Supreme Court of Canada

Appointments to the Supreme Court fall within the exclusive jurisdiction of the executive branch of the federal government. Theoretically, the Governor General of Canada has the sole power to appoint Supreme Court judges. In practice, however, it is customary for the Prime Minister of Canada to choose the candidate, with the Governor General simply following the Prime Minister’s decision.

In choosing a Supreme Court judge, the Prime Minister has complete discretion, with the sole exceptions being the stipulations regarding professional experience and regional representation under the Supreme Court Act. The rest of Parliament, as well as the provinces and territories, have no formal authority in appointing judges to the Supreme Court. It is, however, open to the Prime Minister to consult with provincial/territorial leaders prior to making a selection, as well as to allow some parliamentary review of that selection, if s/he so chooses. In 2004 and 2006, special parliamentary committees were allowed to review the appointments of justices Rosalie Abella, Louise Charron, and Marshall Rothstein to the Supreme Court. It is important to note, however, that theses committee had very limited review powers and no authority to veto the Prime Minister’s selection.

The Chief Justice of Canada

A central figure on the Supreme Court is the Chief Justice. The Chief Justice is not chosen by the judges themselves, but is appointed to that position by the Prime Minister of Canada and his/her Cabinet.

In the context of deciding cases, the Chief Justice does not have any more power than the other judges on the Supreme Court. The decision of the Chief Justice does not count any more than the other judges. Nor can s/he overrule the decisions of other judges or remove them from their position. Nevertheless, the Chief Justice can attempt to use his/her leadership position to sway a court in one direction over another on key legal issues.

The Chief Justice possesses several formal administrative powers and responsibilities. He/she presides over all sittings of the Supreme Court at which s/he is present, and sits on several key government committees, such as the Canadian Judicial Council and the advisory committee to the Governor General on membership in the Order of Canada. The Chief Justice is also responsible for dividing the work of the Supreme Court by choosing the panels of judges to hear cases and motions brought before the court.

Moreover, should the Governor General die, become incapacitated, or be absent from the country for more than one month, the Chief Justice would become the Administrator of Canada and, under that title, exercise all the powers and duties of the Governor of General.

Appeals to the Supreme Court

The Supreme Court hears two sorts of appeals from lower courts: leaves to appeal and appeals as of right. The former refers to appeals which the Supreme Court has granted a party permission to appeal. In formal terms, this is referred to as “granting leave to appeal,” hence the term “leaves to appeal.” The Supreme Court has considerable discretionary power to grant or reject leaves of appeal, thus giving it control over the sorts of cases it hears. It usually grants leaves of appeal based on its assessment of the public importance of the legal issue raised in a given case and whether or not the issue warrants the consideration of the Court (Supreme Court of Canada, November 2007).

The second sort of appeal, appeals as of right, include those cases where the Supreme Court has no discretion as to whether or not to hear the appeal. Instead, the Court is obliged to hear the appeal and render a decision. In criminal cases, for example, an appeal may be brought as of right where one judge in a provincial or territorial court of appeal dissents on a point of law (Supreme Court of Canada, November 2007).

The Supreme Court holds three sessions, each of which lasts approximately three months. The Court’s hearings are open to the public and are often taped for delayed telecasting in both English and French, Canada’s two official languages. Most appeals are heard by a panel of seven to nine judges, with the Court usually hearing two appeals each day. During a hearing, litigants from each side are given an opportunity to present arguments, usually about one hour each. Interveners (or interested parties) may also be recognized by the Supreme Court and given an opportunity to be heard.

Judgments of the Supreme Court

Once the Supreme Court has heard an appeal, it will render its decision on the case. This is usually done in written form well after the appeal has been heard. Written decisions of the Supreme Court are very important in the Canadian court system, as they outline the particular reasons and principles endorsed by the Court in determining a case or legal issue. This allows lower courts, lawyers, governments, and the public to understand precisely how the Supreme Court is interpreting and applying Canadian law.

Central to any Supreme Court judgment (with the exception of government references) is whether it has allowed or dismissed the appeal. In allowing an appeal, the Supreme Court is recognizing that the lower court has made some error which affects the proper determination of the case. It will overturn the decision of the lower court, and either make its own decision or remit the case back to a lower court to be re-heard. In dismissing an appeal, the Supreme Court is recognizing that the lower court’s determination of the case should stand. It is important to note, however, that the Supreme Court may dismiss an appeal even if it takes issue with certain lines of reasoning of the lower court. This occurs when the Supreme Court adopts a different line of reasoning, but nevertheless comes to the same result as the lower court.

Supreme Court judgments do not need to be unanimous. In other words, there is no requirement that all judges on a panel come to the same determination of a case for exactly the same reasons. Instead, judges may decide the case in very different ways. In this context, the court operates under majority rule. Take the example of a seven-judge panel, where four conclude that an appeal should be allowed, while three conclude that it should be dismissed. The four judges in favour of allowing the appeal are referred to as “the majority,” and their ruling becomes the judgment. The other three judges are referred to as “the minority,” and their ruling becomes the “dissenting opinion.” Dissenting opinions can be important, as subsequent rulings of the Supreme Court can pick up on the lines of reasoning and principles endorsed in those decisions when determining future cases.

Issues and Debates on the Supreme Court of Canada

Democracy, federalism, social representation and the Supreme Court

The Supreme Court in the Context of Democracy

One important debate regarding the Supreme Court is its role in the context of Canadian democracy. On the one hand, it may be argued that the Supreme Court is an inherently undemocratic institution. The Supreme Court is an appointed body, beyond democratic control (although, judges on the Supreme Court are appointed by democratically elected governments). Moreover, the Supreme Court may use its powers to overrule democratically elected legislatures. As such, it is appointed judges, and not elected representatives, which have the final say on important issues of public policy, such as abortion, voter rights, spending on election advertising, etc.

On the other hand, one may argue that the Supreme Court is fundamental to the promotion of an open and fair democratic society. Central here is the concern over the tyranny of the majority, in which a segment of society may use legal or political means to exclude minority groups from political or social participation. In such situations, the Supreme Court can be viewed as a protector of democracy, ensuring that all persons, regardless of their ethnicity, social status or moral/political views, have the necessary rights to fully participate in political and social institutions and processes.

The Supreme Court in the Context of Federalism

Another important debate concerning the Supreme Court centres on its status within the context of Canadian federalism. Here the issue isn’t so much the role of the Court, but its basic institutional framework. As discussed above, the Supreme Court is the highest court in Canada, with a jurisdiction that covers both federal and provincial/territorial laws, as well as interpreting and applying the basic principles of Canadian federalism. In sum, the Supreme Court can have a large impact on all levels of government.

Only the federal government, however, has the power to appoint its justices, with little or no input from the provinces and territories. As such, it is open to the federal government, if it so chooses, to fill the Supreme Court with judges that would support the exercise, or even extension, of federal power at the expense of the provinces. Whether or not such a bias does in fact exist in the Supreme Court is a source of controversy within the field of Canadian legal and political scholarship.

The Supreme Court and Social Representation

Another key issue centres on the representation of different social, gender, ethnic and religious groups in the membership of the Supreme Court. Canada is a highly pluralistic, economically stratified, and multicultural society, yet historically the judges of the Supreme Court have predominately been well-educated, affluent, white males of either British or French heritage.

One may argue that the lack of representation implies bias in the Supreme Court’s adjudication of cases. In its more vulgar form, this sort of argument centres on the presence of outright prejudice on the part of Supreme Court judges. While such an argument may have been plausible in the early years of the Court, it would be very hard to make such a case today. In its more subtle form, such an argument can be made in terms of identity politics and the ability of persons to fully understand issues which are beyond their own particular social subjectivity. Under such a view, one might argue that a white male judge cannot adequately comprehend and address racism or gender discrimination, as he has never lived it himself. The issue here is not outright prejudice, but simply an inability to understand the full nature and effects of discrimination due to one’s privileged status in society.

One may further argue that this lack of representation sends a message to society which reinforces inequality. As the Court has been predominately upper class, Christian, white males, the state is somehow creating or reinforcing social views that other social groups are to be valued less in society. By ensuring better social representation on the Court, the state is sending the alternative message that all groups are to be valued and respected equally, regardless of their gender, ethnicity or economic status.

Whether or not these problems do exist is an issue debated in Canadian political and legal scholarship. It is important to note, however, that today’s Supreme Court is much more representative than it has been in the past. At the time of the writing of this article, four of the nine judges on the Court were female, including the Chief Justice of Canada. Many of the judges are from non-British or French heritages, although, none are a visible minority. Moreover, the Supreme Court has rendered many decisions that can be viewed in terms of promoting minority rights and status in Canada. Nevertheless, the issue of inadequate representation cannot be easily dismissed.

Sources and Links to More Information

List of article sources and links to more on this topic

Sources Used for this Article

McCormick, P. Supreme at Last: The Evolution of the Supreme Court of Canada. Toronto, Ontario: James Lorimer & Company Ltd., Publishers., 2000.
McCormick, P. Canada’s Courts. Toronto, Ontario: James Lorimer & Company Ltd., Publishers., 1994.
“About the Judges.” The Supreme Court of Canada. 12 March 2007. 4 March 2008. <http://www.scc-csc.gc.ca/aboutcourt/judges/aboutjudges_e.asp>
“Role of the Court.” The Supreme Court of Canada. 23 November 2007. 4 March 2008. <http://www.scc-csc.gc.ca/aboutcourt/role/index_e.asp>
“Canadian Courts.” The Federal Court. 30 October 2006. 4 March 2008. <http://cas-ncr-nter03.cas-satj.gc.ca/portal/page/portal/fc_cf_en/Courts_System>
Makarenko, J. “Supreme Court of Canada Appointment Process.” Mapleleafweb.com. 31 January 2007. 4 March 2008. <http://www.mapleleafweb.com/features/supreme-court-canada-appointment-process>

Links to More Information

The Indian Act: Historical Overview

Jay Makarenko — Mon, 02 Jun 2008 13:58:44 -0600

The Indian Act is federal legislation that provides the basic legal status and entitlements of Canada’s Aboriginal peoples. The Act deals with such things as the legal definition of who may claim Indian status in Canada, the rights and duties which accompany that status, the structure of Canada’s reserve system and the nature of Aboriginal self-government. This article provides an overview of the history of the Indian Act, including its early legislative foundations, the passage of the first Indian Act in 1876 and subsequent key amendments and revisions of the Act.

Early Foundations of the Indian Act

The Royal Proclamation and early Aboriginal legislation

Civilization and Assimilation: The First Indian Act

Overview of the first Indian Act, passed in 1876

Assimilation Reinforced: The Indian Act from 1876 to 1951

Early amendments and revisions of the Indian Act

Aboriginal Policy in Transition: The Indian Act from 1952 to 2002

Contemporary amendments and revisions of the Indian Act

Sources and Links to More Information

List of article sources and links to more on this topic

Early Foundations of the Indian Act

The Royal Proclamation and early Aboriginal legislation

The Indian Act did not simply appear out of thin air, but was heavily influenced by the legislative foundation established prior to its passage. Central here is the Royal Proclamation, 1763, which recognized Aboriginals as a distinct political unit within the colonial system, as well as legislation passed by Canadian authorities in the mid-1800s.

The Royal Proclamation, 1763

During the process of colonization, Europeans undertook several strategies in dealing with these populations. In some cases, this involved forced-relocation and even genocide. In other cases, Europeans implemented strategies of cohabitation, which were meant to achieve peaceful relations between settlers and indigenous populations.

One of the most important of these cohabitation approaches can be found in the Royal Proclamation of 1763, which was issued by King George III of Britain. The Proclamation established a system of government for former French colonies in North America, which Britain had won following the Seven Years War. Also included was a basic framework for relations with North American Aboriginals. As such, it is often referred to as an “Indian Magna Carta” or an “Indian Bill of Rights.”

Central to the Royal Proclamation was the separation of Aboriginal lands from those forming parts of the North American colonies, with the former being reserved for the exclusive use and possession of Aboriginal peoples. Moreover, the Royal Proclamation implemented a process by which Aboriginal lands could be purchased for British settlement and development. An Aboriginal group could only transfer lands to the British Crown, not to European settlers or other colonial officials. This surrender process was to occur on a formal nation-to-nation basis, from the Indian nation to the Crown, and was to be done in a public process with the consent of the Aboriginal group involved.

By instituting an Aboriginal right to land and a formal nation-to-nation land transfer process, the Royal Proclamation recognized Aboriginal groups in North America as autonomous and self-governing actors (Report of the Royal Commission on Aboriginal Peoples, 1996). Aboriginals were not simply private individuals, akin to other British subjects. Rather, they were distinct peoples and political units within the British imperial system, with the right to negotiate with the Crown as autonomous nations.

This is not to suggest a relationship of complete autonomy and equality between Aboriginals and the Crown. The Royal Proclamation recognized Aboriginals as groups living under Crown protection on lands within British dominions and territories. Nevertheless, the Crown could not simply appropriate Aboriginal lands whenever and however it saw fit. Instead, it was required to engage in a formal process of negotiation and to purchase the lands from Aboriginal nations.

Also central to the Royal Proclamation was the concern that Aboriginals were being exploited in their dealings with European settlers and colonial officials. In this context, the Royal Proclamation recognized a duty on the part of the Crown to act as a protector of Aboriginal peoples in their relations with colonial society. Over time, this has been formally recognized in terms of a fiduciary relationship, in which the Crown is recognized as a “trustee” for Aboriginal peoples, with the duty to act in their interests.

For more information on the Crown-Aboriginal fiduciary relationship:

Parliament of Canada: The Crown’s Fiduciary Relationship with Aboriginal Peoples

Aboriginal Legislation Prior to the Indian Act, 1867

At the time of the Royal Proclamation, 1763, responsibility for Aboriginal affairs in Canada lay with British imperial authorities. By the mid-1800s, however, Britain began to transfer this responsibility to the Canadian colonies themselves. Between 1850 and 1876 (when the first Indian Act was passed), Canadian authorities enacted several key pieces of legislation, which strongly influenced the nature of the Indian Act itself.

The first of these was An Act for the Better Protection of the Lands and Property of Indians in Lower Canada and An Act for the protection of Indians in Upper Canada from imposition, and the property occupied or enjoyed by them from trespass and injury, which were passed by the Province of Canada (then a British colony) in 1850. These statutes are important in that they represented the first attempt to define “Indian” and who would receive the rights and duties of Indian status. Under the acts, the term “Indian” was defined broadly to include the following: 1) any person deemed to be Aboriginal by birth or blood; 2) any person reputed to belong to a particular band or body of Aboriginals; and 3) any person who married an Aboriginal or was adopted by Aboriginals (Indian and Northern Affairs Canada, 1991). While the definition was broadly construed, it is important to note that it assumed for the government the responsibility for deciding who was an Aboriginal. In other words, Aboriginal groups themselves were not given the power to define their own communities. This power, instead, lay in the hands of non-Aboriginal authorities.

Another important statute was An Act to Encourage the Gradual Civilization of Indian Tribes in this Province, and to Amend the Laws Relating to Indians, passed by the Province of Canada in 1857. Commonly referred to as the Gradual Civilization Act, this statute was the first to introduce the concept of enfranchisement or the process by which Aboriginals lost their Indian status and became full British subjects. In introducing the Act, the colonial government viewed enfranchisement as a privilege for Aboriginals, by which they could gain their freedom from the protected Indian status and gain the rights of full colonial citizenship, such as the right to vote. It is at this point that the strategies of civilization and assimilation begin their legislative existence, with colonial authorities encouraging Aboriginals to forgo their Indian status and be drawn into the larger colonial society as regular citizens (and, hence, become “civilized”).

Under the Act, only Aboriginal men could seek enfranchisement. In order to do so, they had to be over the age of 21, able to read and write in either English or French, be reasonably well educated, free of debt, and of good moral character as determined by a commission of non-Aboriginal examiners (Report of the Royal Commission on Aboriginal Peoples, 1996). Once enfranchised, the person was entitled to receive up to 50 acres of land from the reserve on which they lived and a per capita share of treaty annuities and other band monies. Enfranchisement was to be fully voluntary by the man seeking it. However, an enfranchised man’s wife and children automatically lost their Indian status, regardless of whether or not they so desired.

In 1860, the Province of Canada passed the Indian Lands Act. An important element of this Act was the centralization of control over Aboriginal affairs for the colony. The Act created the office of the Chief Superintendent of Indian Affairs, and transferred all authority for Aboriginals and their lands in the Province of Canada to this single official. Moreover, the Chief Superintendent was given very broad discretionary powers over reserve Aboriginals. This centralization continued in 1867, when the Province of Canada was united with Nova Scotia and New Brunswick to create the new nation of the Dominion of Canada. Section 91(24) of the Constitution Act, 1867, gave legislative authority over Aboriginals and their lands to the federal Parliament, removing it from the provincial legislatures.

In 1869, the Government of Canada passed An Act for the gradual enfranchisement of Indians, the better management of Indian affairs, and to extend the provisions of the Act 31st Victoria. This Act is significant in that it was the first to introduce the notion of self-government for Aboriginals on reserves. Under the Act, Aboriginal tribes or bands were permitted to elect chiefs and band councils for the purpose of general administration on reserves. These elected officials were granted limited bylaw powers, and were elected to terms of three years. It is important to note many Aboriginal groups did not engage in democratic practices at the time. Consequently, the Act granted the government the power to impose democratic institutions on them, regardless of what Aboriginal groups desired. Furthermore, Aboriginal women were excluded from voting for band chiefs and councils (women in general were excluded from voting at this time, as women’s suffrage was not achieved in Canada until the early 1900s).

In addition to a mechanism for Aboriginal self-government, the 1869 Act included other key provisions. It prohibited the sale of alcohol to Aboriginals, on the paternalistic grounds of protecting Aboriginals from themselves. Furthermore, the Act instituted a compulsory enfranchisement provision. Under the Gradual Civilization Act (see above), enfranchisement was a completely voluntary process, by which Indian status could only be lost at an individual’s choosing. Under the 1869 Act, however, Aboriginal women who married non-Aboriginal men automatically lost their Indian status, regardless of whether or not they so desired it. Moreover, any children resulting from the marriage would also be denied Indian status. This provision continued with the strategy of assimilation, as many Aboriginal women, and their children, forcefully lost their Indian status and gained Canadian citizenship.

Civilization and Assimilation: The First Indian Act

Overview of the first Indian Act, passed in 1876

The Government of Canada, now an independent nation, introduced the first Indian Act in 1876, with the purpose of consolidating all prior federal legislation regarding Aboriginals into one single piece of legislation. The following provides an overview of the underlying philosophy and key provisions of the Indian Act, 1876.

Philosophy of the Indian Act, 1876

The first Indian Act adopted an explicit vision of assimilation, in which Aboriginals would be encouraged to leave behind their Indian status and traditional cultures and become full members of the broader Canadian society. In this context, Aboriginals were viewed as children or wards of the state, to which the government had a paternalistic duty to protect and civilize. This underlying philosophy was clearly expressed by the Canadian Department of the Interior in its 1876 annual report:

“Our Indian legislation generally rests on the principle, that the aborigines are to be kept in a condition of tutelage and treated as wards or children of the State. …the true interests of the aborigines and of the State alike require that every effort should be made to aid the Red man in lifting himself out of his condition of tutelage and dependence, and that is clearly our wisdom and our duty, through education and every other means, to prepare him for a higher civilization by encouraging him to assume the privileges and responsibilities of full citizenship.” (Report of the Royal Commission on Aboriginal Peoples, 1996)

It is important to note the change in Aboriginal policy from the Royal Proclamation, 1763 to the first Indian Act. The first Indian Act maintained the Crown’s role as trustee of Aboriginal interests, but had a very different view of that relationship. No longer were Aboriginal groups viewed as autonomous quasi-nations within the broader Canadian political system, to which the Crown had an obligation to protect from abuse and encroachment from European colonial society.

Key Provisions of the Indian Act, 1876

The Indian Act, 1876 adopted much of the basic framework established in previous Aboriginal legislation, with some minor alterations.

First, the Act maintained the centralized administration of Aboriginal affairs, with a Superintendent General of Indian Affairs, which was a cabinet position, who had broad discretionary powers in dealing with Aboriginals and their lands.

The Act also continued the practice of imposing a definition of Indian status on Aboriginal groups, thus ensuring that it was the Canadian government, and not Aboriginal groups themselves, that had the power to decide who was, and who was not, Aboriginal. However, the Act did place a stronger emphasis on male lineage in its definition of Indian status. Under the Act, the term “Indian” now referred to 1) any male of Indian blood reputed to belong to a particular band; 2) any child of such person; and 3) any woman who is or who was married to such a person. Moreover, the Act explicitly denied Indian status to the Métis of Manitoba, which were persons of mixed Aboriginal and European decent.

The Act also maintained and broadened the system of enfranchisement, by which Aboriginals could lose their Indian status and gain full citizenship. Previously, Aboriginals could voluntarily apply for enfranchisement if they met certain criteria. Moreover, compulsory enfranchisement occurred for Aboriginal women when they married non-Aboriginal men. In addition to maintaining these provisions, the Act allowed for the compulsory enfranchisement of any Aboriginal who received a university degree or who became a doctor, lawyer or clergyman, regardless of whether they desired to lose their Indian status and gain full citizenship.

Regarding self-government, the Act continued the system of elected chiefs and band councils, who served for three years, and had limited bylaw powers. As before, the Act granted the Superintendent General the power to impose democratic systems on Aboriginal groups, regardless of whether they were desired.

Moreover, the Act allowed the Superintendent General to order a reserve to be surveyed and divided into lots, and then require band members to obtain tickets for individual plots of land. The allowed the government to promote individualism amongst Aboriginals, by breaking up communal use of reserve lands, and encouraging practices of individual ownership of property.

Finally, the Act also included many protective features. No one other than an “Indian of the Band” could live on or use reserve lands without licence from the Superintendent General. Moreover, no federal or provincial taxation on real estate or personal property was permitted on a reserve; no liens under provincial law could be placed on Aboriginal property; and no Aboriginal property could be seized for debt.

Assimilation Reinforced: The Indian Act from 1876 to 1951

Early amendments and revisions of the Indian Act

Since its introduction in 1876, the Indian Act has undergone several amendments and reforms. The following provides a summary of key changes to the Indian Act during the period 1876 to 1951.

Amendments to the Indian Act 1876-1950

Between 1876 and 1950, the purpose of the amendments to the Indian Act was to strengthen the philosophy of civilization and assimilation underlying the first Act. Moreover, many of the changes to the Act granted the government greater powers to move Aboriginals and expropriate their lands for the purpose of non-Aboriginal use.

Key amendments to the Indian Act during this period include:

1885: Prohibition of several traditional Aboriginal ceremonies, such as potlaches.
1894: Removal of band control over non-Aboriginals living on reserves. This power was transferred to the Superintendent General of Indian Affairs.
1905: Power to remove Aboriginal peoples from reserves near towns with more than 8,000 people.
1911: Power to expropriate portions of reserves for roads, railways and other public works, as well as to move an entire reserve away from a municipality if it was deemed expedient.
1914: Requirement that western Aboriginals seek official permission before appearing in Aboriginal “costume” in any public dance, show, exhibition, stampede or pageant.
1918: Power to lease out uncultivated reserve lands to non-Aboriginals if the new leaseholder would use it for farming or pasture.
1927: Prohibition of anyone (Aboriginal or otherwise) from soliciting funds for Aboriginal legal claims without special licence from the Superintendent General. This amendment granted the government control over the ability of Aboriginals to pursue land claims.
1930: Prohibition of pool hall owners from allowing entrance of an Aboriginal who “by inordinate frequenting of a pool room either on or off an Indian reserve misspends or wastes his time or means to the detriment of himself, his family or household.”

1951 Revision of the Indian Act

In the late 1940s, the federal government established a Joint Committee of the Senate and House of Commons to examine Aboriginal policy. While recommending broad changes to the Indian Act, the Joint Committee nevertheless continued with the previous philosophy of transitioning Aboriginals from wardship to citizenship.

In response to the Joint Committee’s report, the federal government instituted some changes to the Indian Act in 1951 (although, overall, the new Act continued with many of the practices under the previous legislation).

In regard to general administration, the 1951 Act assigned responsibility for Aboriginals to the minister of Indian Affairs, with broad discretionary powers over the implementation of the Act as well as the daily lives of Aboriginals on reserves. The Act also maintained the government’s power to expropriate Aboriginal lands, albeit in a significantly reduced manner.

Concerning the definition of Indian status, the 1951 Act instituted some limited reforms. The Act maintained the federal government’s power to define Indian status and band membership, instead of transferring this power to Aboriginals themselves. However, the new Act abandoned the criterion of “Indian blood” in favour of a system of registration with strong biases in favour of descent through the male line.

The 1951 Act continued with the band council system, with some small alterations. Band council authority was still limited. However, under the new Act, bands that reached “an advanced stage of development” could acquire additional powers, such as authority to tax local reserve property. The new Act also allowed the full participation of Aboriginal women in band democracy.

The practice of enfranchisement was kept in the 1951 Indian Act. Voluntary enfranchisement was still permitted, as well as the compulsory enfranchisement of Aboriginal women who married non-Aboriginal men was continued and Aboriginals who received a university degree or who became a doctor, lawyer or clergyman. Moreover, the 1951 Act introduced the double-mother rule, which provided for the compulsory enfranchisement of persons whose mother and grandmother had obtained Indian status only through marriage to a man with status. However, under the new Act, the minister could only enfranchise an individual or band upon the advice of a special committee established for that purpose.

The new Act removed many of the prohibitions on tradition Aboriginal practices and ceremonies, such as potlaches and wearing traditional “costume” at public dances, exhibitions and stampedes. The Act, however, continued many of the paternalistic elements of earlier versions. For example, the Act made it an offence for Aboriginals to be in the possession of intoxicants or to be intoxicated.

One of the more important reforms concerned the application of provincial law to Aboriginals. Previously, the federal government had asserted exclusive jurisdiction to legislate in the context of Aboriginals. Changes made in 1951, however, provided that whenever a provincial law dealt with a subject not covered under the Indian Act, such as child welfare matters, Parliament would allow that provincial law to apply to Aboriginals on reserves. This opened the door to provincial participation in Aboriginal law making.

Aboriginal Policy in Transition: The Indian Act from 1952 to 2002

Contemporary amendments and revisions of the Indian Act

Since the revisions of 1951, the Indian Act has continued to undergo changes, both in terms of its underlying philosophy and its specific provisions. The following provides an overview of the Indian Act during the period 1952 to 2002.

Conflicting Views on Aboriginal Policy

From the 1950s onward, Aboriginal policy in Canada entered into a complex period. On the one hand, there still remained the traditional philosophy of assimilation, which encouraged Aboriginals to leave behind their Indian status and integrate into the broader Canadian society. Contrasted to this, however, were new approaches to Aboriginal policy, based on the desire of Aboriginal groups to assume control over their own communities, as well as new ideas derived from the international indigenous movements of the time. Central to this approach was the view of Aboriginal groups as distinct nations, which were entitled to political, social and economic self-determination.

This period of complexity is evident in the range of actual and proposed amendments that occurred to the Indian Act between 1952 and 1985. For example, in 1960, Aboriginals received the right to vote federally without having to give up their Indian status. Furthermore, in 1961, the compulsory enfranchisement provisions were removed from the Indian Act, meaning that Aboriginals could no longer be forced to give up their Indian status. This eliminated some of the key assimilation provisions of the Indian Act, which had been in existence since the late 1800s.

In 1969, however, the federal government introduced the 1969 White Paper on Aboriginal affairs. This strategy paper proposed the abolition of the Indian Act altogether, the rejection of land claims, and the assimilation of Aboriginals into Canadian society (with the status of an ethnic minority, as opposed to being a distinct national-cultural group). Strong Aboriginal and non-Aboriginal criticism of the 1969 White Paper eventually led the federal government to back away from this position.

The 1985 Revision of the Indian Act

One of the more significant changes to the Indian Act came in 1985, when the federal government introduced Bill C-31. This amendment was in response to changes in Canada’s constitutional framework; in particular, the introduction of the Canadian Charter of Rights and Freedoms in 1982. Section 15 of the Charter prohibited discrimination based on certain characteristics, such as race, ethnicity, religion, sex, age, or mental or physical disability. This right to equality had important implications for sections of the Indian Act, particularly in regard to the historical practice of compulsory enfranchisement for Aboriginal women who married non-Aboriginal men (while Aboriginal men marrying non-Aboriginal women could retain their Indian status).

The Indian Act, 1985 removed this discrimination by asserting that women could no longer gain or lose Indian status as a result of marriage. Moreover, the new Act permitted the restoration of Indian status to several groups that had been forcefully enfranchised in the past. This included Aboriginal women who had lost status due to marrying non-Aboriginals; children enfranchised as a result of their mothers’ marriage to non-Aboriginals; persons enfranchised as a result of the double-mother provision; and illegitimate children of Aboriginal women who lost their Indian status because of non-Aboriginal paternity.

In addition to removing elements of discrimination from the Act, the 1985 revision also granted Aboriginal bands the right to determine their own membership. Under the Act, bands were allowed to administer and update their band lists, which was a record of all persons who were recognized as formally belonging to the band. Moreover, bands were allowed to establish their own rules of membership in administering their band lists. This reform enabled greater Aboriginal control over who was to be considered an Aboriginal for the purpose of the Indian Act.

Recent Amendments to the Indian Act

The last major revision of the Indian Act occurred in 1985. Since that time, however, there have been further amendments to the legislation.

In 1988, the Act was changed to allow bands greater powers to tax land interests on their reserves, as well as permitted individuals to mortgage these leaseholds on reserves. The purpose of these reforms was to provide bands with access to revenues and financing in order to promote economic development on reserves.

The 1990s and early 2000s saw renewed efforts on the part of the federal government to significantly revise the Indian Act. In the early 1990s, the federal government announced its intention to eventually abolish the Indian Act. As part of this policy, the government introduced the Indian Act Optional Modification Act in 1996. The proposed legislation included modifications to the Indian Act in several areas, such as the system of the band governance, bylaw authority, and the regulation of reserve land and resources. The Act faced strong opposition from Aboriginal groups, and was never passed by Parliament.

In 2002, the federal government again initiated a major overhaul of the Indian Act with the introduction of The First Nations Governance Act. Central to the new Act was the requirement that Aboriginal bands develop a system by which to choose their leaders, as well as clear rules regarding how band money is spent. Furthermore, under the Act, the actions of Aboriginal bands would no longer be exempt from the Canadian Charter of Rights and Freedoms. Again, however, the new Act faced opposition from Aboriginal groups and was never passed by Parliament.

For more information on The First Nations Governance Act:

Parliament of Canada: Bill C-7: The First Nations Governance Act

While these large overhaul packages were never passed, the federal government did implement more narrow revisions of the Indian Act during this period. In 1999, it enacted The First Nations Land Management Act (FNLMA). Previously, reserve land management, such as environmental standards and land use policies, was governed by provisions of the Indian Act. Under the FNLMA, however, bands can apply to the federal government to assume control over land management on their reserves. The purpose of the legislation is to improve band capacities and opportunities for economic development.

For more information on The First Nations Land Management Act:

Government of Canada: First Nations Land Management Act

Furthermore, in 2000, the Indian Act was amended to allow band members living off-reserve to vote in band elections and referenda. This amendment was in response to a 1999 Supreme Court of Canada decision which concluded that the denial of voting rights for off-reserve band members violated their right to equality under Section 15 of the Canadian Charter of Rights and Freedoms.

For more information on this amendment of the Indian Act:

Government of Canada: Amendments to the Indian Band Election Regulations and the Indian Referendum Regulations

Sources and Links to More Information

List of article sources and links to more on this topic

Sources Used for this Article

“An Act for the gradual enfranchisement of Indians, the better management of Indian affairs, and to extend the provisions of the Act 31st Victoria, Chapter 42.” Indian and Northern Affairs Canada. 14 April 2008. <http://www.ainc-inac.gc.ca/pr/lib/phi/histlws/hln/a69c6_e.html>
“Historical Legislation: 1850-1970.” Indian and Northern Affairs Canada. 14 April 2008. <http://www.ainc-inac.gc.ca/qc/csi/hist1_e.pdf>
“Current Legislation: 1985.” Indian and Northern Affairs Canada. 14 April 2008. <http://www.ainc-inac.gc.ca/qc/csi/present1_e.pdf>
“First Nations Land Management Act.” Indian and Northern Affairs Canada. 23 April 2004. 14 April 2008. <http://www.ainc-inac.gc.ca/pr/pub/matr/fnl_e.html>
“Amendments to the Indian Band Election Regulations and the Indian Referendum Regulations.” Indian and Northern Affairs Canada. 232 April 2004. 14 April 2008. <http://www.ainc-inac.gc.ca/nr/prs/s-d2000/00168bkd_e.html>
Hurley, M. “Bill C-7: The First Nations Governance Act.” Library of Parliament. 18 December 2003. 14 April 2008. <http://www.parl.gc.ca/common/bills_ls.asp?Parl=37&Ses=2&ls=c7>
Hurley, M. “The Indian Act.” Government of Canada. 04 October 1999. 14 April 2008. <http://dsp-psd.pwgsc.gc.ca/Collection-R/LoPBdP/EB/prb9923-e.htm>
Hurley, M. “The Crown’s Fiduciary Relationship with Aboriginal Peoples.” Library of the Parliament.” 18 December 2002. 14 April 2008. <http://www.parl.gc.ca/information/library/PRBpubs/prb0009-e.htm>
“Report of the Royal Commission on Aboriginal People.” Indian and Northern Affairs Canada. October 1996. 14 April 2008. <http://www.ainc-inac.gc.ca/ch/rcap/sg/sgmm_e.html>
Henderson, W. “Indian Act.” The Canadian Encyclopedia. 14 April 2008. <http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=A1SEC876967>

Links to More Information

Auto Insurance in Canada: Overview and Issues

Jay Makarenko — Fri, 02 May 2008 11:24:47 -0600

Auto insurance is a central issue in provincial and territorial politics, and a highly complex area of public policy. In Canada, the industry reflects a collection of provincial and territorial systems, each differing significantly in how auto insurance is delivered and regulated. This article offers an introduction into auto insurance policy in Canada, and includes a look at auto insurance in the context of federalism, alternative models of auto insurance, provincial/territorial auto insurance systems, and key issues and debates in this public policy area.

Auto Insurance and Canadian Federalism

Federal and provincial jurisdictions in auto insurance

Alternative Models of Auto Insurance

Overview of different possible auto insurance systems

Auto Insurance Systems Across Canada

Comparison of provincial/territorial auto insurance systems

Issues in Auto Insurance in Canada

Key public policy debates on auto insurance

Sources and Links to More Information

List of article sources and links to more on this topic

Auto Insurance and Canadian Federalism

Federal and provincial jurisdictions in auto insurance

Canada does not have a national auto insurance system, but instead a collection of different provincial and territorial regimes. This is due, in large part, to Canada’s system of federalism, and its division of powers and responsibilities between the different levels of government.

Provincial/Territorial Jurisdiction in Auto Insurance

Under the Canadian Constitution, jurisdiction over auto insurance falls predominantly to the provincial level of government. Only provincial governments have the constitutional power to create auto insurance schemes and regulate auto insurance practices. As such, provincial governments have the power to establish public or private auto insurance schemes, to regulate the conduct of auto insurers (providers of auto insurance policies), and regulate the rights and obligations of the insured (holders of auto insurance policies). In sum, the various auto insurance options that are available to Canadians are the direct result of decisions and policies chosen by their respective provincial governments.

As territories, the Northwest Territories, Yukon, and Nunavut do not have any autonomous powers under the Canadian Constitution, but are instead entities of federal legislation. Nevertheless, the federal government tends to provide the territories with similar powers and jurisdictions as the Canadian provinces. This is also the case in the area of auto insurance; the territories enjoy the same powers as the provinces – both to create their own auto insurance schemes and to regulate general auto insurance practices.

Federal Jurisdiction in Auto Insurance

Under the Canadian Constitution, the federal government does not have jurisdiction over the establishment and regulation of auto insurance regimes. Nevertheless, it does have a significant role to play in the industry as a whole.

The federal government is responsible for the prudential supervision of auto insurance providers that are incorporated under federal legislation. This includes Canadian insurers that operate in more than one province, as well as foreign insurers that have branch operations in Canada. In its role as “prudential” supervisor, the federal government is responsible for ensuring these insurers exercise caution and good judgment in the management of their business matters. Of primary concern is protecting the solvency of insurers and reducing the risk of a general collapse of the insurance industry, which would be highly detrimental to the national economy.

For more information on the federal prudential supervision of auto insurers:

Government of Canada: Office of the Superintendent of Financial Institutions Canada

Federal responsibility in this area does not extend to regulating the general market conduct of insurers (such as the terms and conditions of their insurance policies). This falls strictly under provincial jurisdiction. Moreover, Canadian insurers that operate in only one province may incorporate under provincial legislation, with the respective provincial government being responsible for the prudential supervision of these insurers.

In addition to its role as prudential supervisor, the federal government also has an indirect influence on the basic terms and conditions of auto insurance policies. Many auto insurers, for example, deny insurance coverage in cases where a motor vehicle is operated in a prohibited manner, or is used in the commission of an illegal act (such as a robbery). What counts as an illegal act depends largely on federal legislation, such as the Canadian Criminal Code.

Another important aspect of federal influence is the Canadian Charter of Rights and Freedoms and the judicial branch of government. The Charter is legislation, entrenched in the Canadian Constitution, which sets out the basic citizen rights and freedoms. All government laws and regulations, including those regarding provincial and territorial auto insurance systems, must be consistent with the Charter. In Canada, the judicial system also plays a central role in relation to auto insurance in that it settles auto insurance-related legal disputes, in addition to reviewing provincial and territorial systems from a Charter perspective. At the pinnacle of the Canadian judicial system is the Supreme Court of Canada, a federally appointed and administered court.

Several examples illustrate the significance of these federal institutions on provincial and territorial auto insurance systems. In 2008, a provincial court struck down an Alberta law which capped insurance claims on soft-tissue injuries, concluding that the law violated the Canadian Charter (at the time of this article, the Government of Alberta had stated that it would appeal the decision). Additionally, during the 1970s, the Supreme Court of Canada rendered several decisions that effectively placed an upper limit on what persons could claim in financial compensation for non-pecuniary damages due to a motor vehicle accident. (These include damages such as a loss of future earnings, cost of future care, and awards for pain and suffering.)

Implications for Auto Insurance in Canada

The structure of federalism in Canada has an important impact on the auto insurance industry. As jurisdiction over the creation and general regulation of auto insurance falls exclusively under provincial and territorial authority, there is an absence of national institutions and legislation to create uniformity across the country. Instead, auto insurance in Canada is made up of a set of separate provincial/territorial auto insurance schemes based on rules and practices that differ greatly from one province/territory to another.

See the Auto Insurance Systems Across Canada section of this article for a comparison of auto insurance regimes by province and territory.

This, however, is not to suggest that national standards are impossible. Provinces and territories can voluntarily agree to uniform rules and practices. Moreover, the federal government also does enjoy some leverage in creating national standards through the use of other constitutional powers, such the federal spending power. In employing such as strategy, the federal government can offer financial enticements to persuade provincial and territorial governments to implement federal policies in auto insurance, much in the same way the federal government influences provincial/territorial health care insurance regimes. At the time of writing, however, no such cooperation has ever been pursued in any robust manner by either level of government.

Alternative Models of Auto Insurance

Overview of different possible auto insurance systems

Concept of Auto Insurance

Auto insurance is simply a system by which the owners/operators of motor vehicles may obtain financial protection against losses associated with that vehicle. This may include financial protection against the loss or damage of the vehicle, as well as personal injury or property damage caused in the vehicle’s operation.

Under most auto insurance schemes there is an insurer, which is the party (usually a private insurance company or government agency) that issues the insurance policy and provides the financial protection. Additionally, there is the insured, which is the party (either the operator or owner of the motor vehicle) that purchases the insurance policy and receives the financial protection.

In most cases, the insured purchases the insurance policy by paying an annual or monthly fee (or premium) to the insurer. In return, the insurer provides some guarantee of payment for any losses associated with the insured’s motor vehicle. If, for example, John (the insured) has his car stolen, then his auto insurance company (the insurer) will financially compensate John for the loss, usually by paying him the monetary value of the vehicle at the time it was stolen. The same is true in cases of personal injury. If John gets into an accident where the driver of the other vehicle is injured, then John’s insurance company will cover any financial liability incurred by John as a result of the accident (or up to the maximum compensation as set out in the insurance policy)..

Auto insurance, therefore, operates as a sort of financial safety net for persons in relation to the operation of their vehicles. On the one hand, it protects the insured from large financial losses stemming from the operation of his/her motor vehicle. Instead of having to pay for a new car, or pay for injuries incurred by others as the result of an accident, the insured only has to pay a regular and smaller insurance fee.

On the other hand, auto insurance provides financial protection to other persons besides the insured by guaranteeing financial compensation in cases of property damage or personal injury. If John didn’t have auto insurance, then the other driver may not have been able to receive compensation for his/her injuries, as John simply may not have had enough money on his own to pay. By having insurance, however, the other driver is guaranteed compensation – regardless of whether John personally has enough money, as the insurer should always have the capability to pay.

Within this basic framework, however, auto insurance schemes can operate in a number of very different ways. The following provides an overview of some key characteristics of different auto insurance systems.

Public versus Private Insurance Systems

One key distinction, especially in Canada, is private versus public systems of auto insurance. Public insurance systems are characterized by a single auto insurer which is publicly administered in some manner. The insurer may be a crown corporation or some other agency which is controlled by the government. Under pure public systems, then, persons seeking auto insurance only have the option of purchasing policies from the public insurer. Moreover, the public insurer is solely responsible for covering all financial liabilities incurred by insured owners and/or operators of motor vehicles in their jurisdiction.

Private insurance schemes, by contrast, are characterized by a plurality of private auto insurers. In a purely private system, auto insurers are non-governmental financial companies or institutions (such as banks or insurance corporations) which provide insurance policies to customers for profit. As such, persons seeking auto insurance may choose from a variety of different auto insurance products offered by a number of competing insurance providers.

It addition to purely public or private schemes, there can also be hybrid insurance systems, which incorporate both public and private characteristics. It may be the case that basic insurance products are provided through a single public insurer, while additional insurance products can be obtained through private auto insurance providers. Under such a system, all insured persons would have the same basic public coverage, but have the option of purchasing additional or secondary coverage from a variety of private, for-profit insurers.

Mandatory versus Voluntary Insurance Systems

Another key distinction is mandatory versus voluntary insurance system. Mandatory systems are characterized by government laws which require all persons whom own and/or operate a motor vehicle to purchase some level of auto insurance. As such, it is illegal, punishable under the law, to own and/or operate a motor vehicle without proper insurance. The purpose of this type of system is to ensure financial protection in the case of all losses associated with the operation of motor vehicles. As all persons or vehicles have (or should have) insurance attached to them, cases should not arise in which an injured party is unable to receive financial compensation because the driver does not have enough money to pay damages.

Voluntary insurance schemes, by contrast, are characterized by an absence of laws that require all persons whom own and/or operate a motor vehicle to obtain auto insurance. Persons are, instead, free to decide themselves whether or not to purchase insurance, and may own or operate a vehicle without coverage if they so choose. Under such a system, those without insurance are directly responsible themselves to cover any financial liabilities associated with operation of a motor vehicle.

Again, there can be hybrid systems, which blend characteristics of both a mandatory and voluntary system. It may be the case, for example, that persons are required to purchase insurance for certain kinds of financial liabilities (such as those arising from the injury of another party), but are free to purchase or decline insurance for other losses (such as theft, damage to one’s vehicle, or injury to one’s self).

Theoretically, public and private systems can involve either mandatory or voluntary insurance stipulations. In practice, however, it is generally the case that public systems involve some level of mandatory insurance. This can be due to a number of different factors. For example, public insurance systems are often viewed as “public goods,” in which the benefits and costs are to be shared by all in the community. It may also be the case that the government wishes to ensure the financial stability of its public insurance scheme by requiring all owner and/or operators to pay into the system.

Fixed versus Flexible Compensation Systems

Another key difference centres on the level of financial compensation that persons can receive when incurring property damage or personal injuries from automobile accidents.

Under a fixed system (also commonly referred to as a “cap system”), the level of compensation for specific damages or injuries is established by government legislation. In other words, the government explicitly sets out how much money persons can receive for particular sorts of property damage and/or personal injury. Persons are thus prohibited from negotiating or litigating for monetary settlements above the thresholds set out in the government legislation.

In a flexible system, by contrast, there is no fixed level of financial compensation – at least, not through government legislation. Under this sort of system, persons are free to negotiate or litigate whatever monetary settlement they desire. As such, compensation can range widely from case to case, as well as over time. What a person receives depends on what s/he can negotiate with the other party (be it an individual or insurance institution), or what is deemed proper by a court of law if the parties proceed to court.

Again, public and private schemes can have either a fixed or flexible system of compensation. Generally speaking, fixed systems are implemented as a means of reducing costs for the insurer, not only in terms of what they must pay for damages or injuries, but also in terms of the cost of litigating cases in the courts. Under a fixed system there is no opportunity to litigate the level of compensation; this is dictated by government legislation. Such savings can be beneficial in both a public or private context as a means of reducing or stabilizing insurance premiums.

At-Fault vs. No-fault Insurance

Another important distinction is between at-fault and no-fault insurance schemes. The key distinction here is which insurer is responsible for paying compensation for the damages or injury resulting from a motor vehicle accident.

Under an at-fault system, responsibility for paying compensation falls to the insurance institution that insured the person responsible for causing the accident and associated damages or injuries. Consider the example that follows: John and Jane are involved in an accident in which John ran a red light and side swipes Jane, causing damage to her car and minor injuries. As such, John is completely at fault for the accident. Under a fault-based system, John’s insurer is responsible for paying for the damages and injuries incurred by Jane. Moreover, in order to receive her compensation, Jane must either negotiate with John’s insurer or take her case to court.

Under a no-fault system, responsibility for paying compensation falls, at least initially, to the insurance institution of the person who experienced the damages or injury. In John and Jane’s accident, then, Jane would receive compensation for her loss from her own insurance company, even though it was John that caused the accident. Jane’s insurer would then be entitled to sue John’s insurer in order to recover the monies they paid out to Jane.

The commonly cited benefit of no-fault insurance is that it allows persons quicker access to financial compensation in addition to other insurance benefits (such as health care benefits). Under an at-fault system, responsibility for the accident often has to be established first before persons can access the benefits of their insurance. This can take some time, especially if the parties decide to litigate the case in court. Under a no-fault system, the issue of fault has no bearing on access to compensation or benefits. It is simply an issue for the insurers to figure out later on.

Regulation of Insurance Premiums

Auto insurance systems can also differ in their regulation of auto insurance premiums. Under a completely unregulated scheme, insurance institutions are free to charge any level of premiums to their clients they wish. Under a regulated scheme, the government establishes rules which restrict what insurers can charge their clients for insurance.

The level of regulation can differ substantially. It may be the case, for example, that a government simply wishes to protect consumers from large annual increases in insurance premiums. As such, it will enact legislation that limits the amount by which insurers can raise their premiums from one year to another. In may also be the case that a government wishes to deter profiling by insurance institutions when determining insurance. In this way, the government will pass legislation that prohibits insurers from charging higher premiums to particular individuals or groups because of their age, gender, or ethnicity. In the most extreme case, a government may wish to control insurance premiums completely, and will institute a government board or agency which has the power to set insurance premiums.

Auto Insurance Systems Across Canada

Comparison of provincial/territorial auto insurance systems

As already discussed, Canada’s auto insurance system is made up of a set of separate and different provincial and territorial regimes. The following section provides an overview of these provincial and territorial systems.

Mandatory Auto Insurance Regimes

All provinces and territories in Canada have mandatory auto insurance regimes which require motorists to purchase basic auto insurance. While this mandatory basic insurance always includes some level of coverage for property damage, personal injury, and third person liability, the precise level of this coverage can differ significantly from one jurisdiction to another. Above this mandatory basic insurance, motorists in all provinces and territories have the choice of whether to purchase additional coverage.

Public and Private Auto Insurance

All provinces and territories in Canada allow private institutions to offer insurance products to motorists. The level of this private participation, however, ranges greatly from one jurisdiction to another.

Nine provinces and territories have purely private auto insurance systems: Ontario, Alberta, Newfoundland and Labrador, Nova Scotia, New Brunswick, Prince Edward Island, Northwest Territories, Yukon, and Nunavut. In these jurisdictions, residents purchase their auto insurance strictly from private insurance institutions.

The four remaining provinces have hybrid auto insurance systems, which combine both public and private insurers. The hybrid systems of British Columbia, Saskatchewan and Manitoba are divided along “basic” and “additional” coverage. The mandatory basic insurance must be purchased through the provincial government insurer. If, however, residents desire additional insurance coverage, they have a choice of purchasing it either through the government insurer or through private insurance institutions.

Quebec’s hybrid system is divided along different lines. There, the government insures against injuries to people resulting from the operation of motor vehicles, while private institutions insure against damage to property. As such, residents have two auto insurance policies – one from the government and another from a private insurer.

Fixed versus Flexible Compensation Systems

All provinces and territories in Canada operate a fixed system in at least one respect. In a series of decisions during the 1970s, the Supreme Court of Canada established an “upper limit” or “cap” for non-pecuniary general damages resulting from motor vehicle accidents, which is applicable to all provincial and territorial auto insurance systems. As noted earlier, “non-pecuniary damages” include, for example, a loss of future earnings, the costs associated with future care, and awards for pain and suffering. “Pecuniary damages,” by contrast, include damages incurred during the accident. In 1978, the upper limit was set by the Court at $100,000, to be adjusted annually for inflation.

Generally speaking, most provinces and territories operate under a flexible compensation system within this general upper limit on non-pecuniary damages. Persons are entitled to claim any amount of financial compensation for pecuniary damages, and any amount up to the judicially established limit for non-pecuniary damages. The level of compensation persons receive depends on what they can negotiate with the insurer or successfully litigate in court.

Between 2000 and 2005, however, several provinces instituted elements of a fixed compensation system in order to curb rising auto insurance costs. New Brunswick, Nova Scotia, Prince Edward Island, and Alberta all introduced caps on compensation for minor injuries, ranging from $2,500 to $4,000.

These provincial caps for minor injuries have been recently challenged in the courts. In February 2008, an Alberta court ruled that Alberta’s $4,000 cap unconstitutionally violated the Canadian Charter of Rights and Freedoms. The decision potentially affects not only that province’s cap system, but also those of New Brunswick, Nova Scotia, and Prince Edward Island. At the time of this article, the Government of Alberta had announced its intention to appeal the decision.

No-fault Insurance Regimes

All provinces and territories in Canada have instituted some form of no-fault insurance, which provides motorists with some access to compensation and/or benefits through their own insurers, rather than having to deal strictly with the insurer of the at-fault party. The precise operation of no-fault insurance, however, ranges across jurisdictions.

On the one hand, Alberta motorists are only entitled to access very modest accident benefits through their own insurer, and must deal with the at-fault party’s insurer to recover additional damages. On the other hand, Quebec motorist have access to very substantial accident benefits through their own insurers, and are disallowed from suing the at-fault party’s insurer for additional damages. The other provinces and territories fall somewhere in between the Alberta and Quebec examples.

Regulation of Insurance Premiums

Each province and territory in Canada has its own system of regulating insurance premiums. Most jurisdictions have some government body which oversees the market conduct of insurers (private or public), including the amount of money they charge for their insurance policies. The power of these regulatory bodies, however, can range from jurisdiction to jurisdiction.

In Alberta, for example, the Automobile Insurance Rate Board (AIRB) has very robust powers to control premium levels for basic insurance coverage, including the authority to set the maximum chargeable premium for basic coverage. Private insurers (Alberta has a private insurance system) are prohibited from charging premiums above this government-set threshold; although, they are free to charge any amount less than the maximum allowable level. In Ontario (also a private system), the provincial government’s Financial Services Commission is responsible for overseeing auto insurance premiums. Unlike its Albertan counterpart, the Commission does not have the authority to set maximum chargeable premiums. That said, all insurers are required to submit applications to the Commission before changing their premiums. The Commission has the power to deny an application if it deems an increase to be unreasonable.

Additionally, all provinces and territories prohibit insurers from using certain profiling techniques when determining premiums for particular motorists. Again, this differs from jurisdiction to jurisdiction. Some provinces/territories place fairly severe restrictions on insurers, denying them from considering such things as age, ethnicity, marital status, and not-at-fault accident history. Other jurisdictions are more lenient in what insurers may and may not consider.

It’s also important to note that some jurisdictions have acted directly to regulate auto insurance premiums. During the early years of the new millennium, for example, several governments introduced legislation to temporarily freeze or reduce auto insurance premiums. This included the governments of Ontario, Alberta, Nova Scotia, New Brunswick, and Newfoundland and Labrador.

Issues in Auto Insurance in Canada

Key public policy debates on auto insurance

Auto insurance in Canada is often a highly political issue. The following section offers an overview of some of the key issues and debates that dominate this policy area.

Private versus Public Auto Insurance

One of the more contentious debates has been over basic framework of auto insurance; in particular, whether it should be a public or private system. The precise nature of this debate differs from jurisdiction to jurisdiction. In the Atlantic Provinces, for example, the debate is centred on whether or not to scrap current private auto insurance systems in favour of public systems. In British Columbia, by contrast, the debate revolves around whether to introduce more private participation in a predominately public industry.

The “private versus public” debate comes in many different shapes and sizes. Supporters of private auto insurance tend to emphasize the potential benefits of a free market system, such as greater choice for consumers and reduced premium cost due to competition by insurers. On the other side, supporters of public auto insurance tend to focus on the potential benefits of a universal, not-for-profit, and publicly administered insurance regime. This includes lower premiums overall (stemming from a larger economy of scale), reduced discrimination against certain groups of motorists (private insurers often charge higher premiums for certain demographic groups), and the ability to funnel any profits into other public goods, such as transportation infrastructure.

For an argument in favour of public insurance:

Canadian Centre for Policy Alternatives: Down the Road: The Implications of “Full Competition” for Public Auto Insurance in British Columbia (PDF)

For an argument in favour of private auto insurance:

Fraser Institute: The False Promise of Government Auto Insurance (PDF)

In assessing arguments in the private versus public debate, it’s important to remember the reality of auto insurance in Canada. There are no purely public or private systems. Instead, there are predominately public systems that have some level of private participation or predominately private systems that have high levels of government regulation. As such, the question is not necessarily which is better, a government system or a free market system? Instead, the issue is to what extent, and in what form, public and private actors should participate in the auto insurance industry?

Escalating Costs of Auto Insurance

Another key issue in auto insurance has been escalating premium costs. This issue was particularly resonant during the 2000-2005 period when many jurisdictions in Canada experienced substantial increases in insurance premiums from year to year.

One Year Change in Auto Insurance Premiums (2002-2003)

Jurisdiction	Type of System	Percent Increase

National Average		26.3
Alberta	Private	50.1
New Brunswick	Private	41.2
Newfoundland and Labrador	Private	40.0
Nova Scotia	Private	39.8
Quebec	Public/Private	30.9
Ontario	Private	27.7
Prince Edward Island	Private	24.8
Yukon	Private	18.1
Northwest Territories	Private	12.3
Saskatchewan	Public	9.5
British Columbia	Public	7.3
Manitoba	Public	0.1

(Source: CBC, February 18, 2005)

As the above table shows, jurisdictions with private insurance systems experienced the highest increases during this period. This resulted in public demands for governments to intervene in order to address the issue. As a result, several provincial governments took measures to curb auto insurance costs, ranging from instituting caps on damages for certain injuries, to enacting legislation which temporarily froze or reduced auto insurance premiums. New Brunswick even explored replacing its private insurance system with a fully public one, although the reform was never instituted.

One the more robust sets of reforms were implemented in 2004 by the Government of Alberta. Under new legislation, the government put into a place a Premium Grid which set out maximum thresholds private insurers could charge customers for basic coverage, in addition to placing a temporary freeze on auto insurance rates. Also, in an effort to control costs for insurers, the government instituted a $4,000 cap for minor injuries, such as minor sprains, strains, and minor whiplash. The limit did not extend to other damages, such as loss of income or medical expenses, or to serious injuries. (This limit was successfully challenged in court in 2008. See remaining paragraphs.)

Government Limits on Compensation

In 2003 and 2004, three provincial governments implemented caps on damages for minor injuries: New Brunswick, Nova Scotia, and Alberta. The purpose of these caps was to reduce auto insurance premiums for motorists by controlling costs for their insurers. With lower payouts for minor injuries, insurers could offer insurance policies at cheaper prices.

The government-instituted caps, however, were contested in court, and the first major ruling delivered in February 2008. An Alberta court found that province’s cap on minor injury damages to be in violation of the Canadian Charter of Rights and Freedoms on the grounds that it was discriminatory. At the time of this article, the Government of Alberta had stated its intent to appeal the court’s decision. If upheld, the decision could have important consequences for Nova Scotia and New Brunswick, whom have also instituted caps for damages in cases of minor injuries.

The issue highlights a difficult problem in auto insurance for both private and public systems: how precisely does one balance the rights of injured persons to receive fair compensation, while ensuring that persons have to access affordable auto insurance?

In this context, it’s worthwhile to note that other jurisdictions in Canada have attempted to address escalating auto insurance costs through other non-cap means. Newfoundland and Labrador has implemented a $2,500 deductible for all minor injury claims. While this is not a cap, it does reduce the sum that persons may receive for minor injuries. Other provinces, such as Ontario, have instituted special thresholds for minor injury claims. This threshold reduced the number of people eligible to make claims for minor injuries.

Sources and Links to More Information

List of article sources and links to more on this topic

Sources used for this Article

“Property and Casualty Insurance in Canada.” Department of Finance Canada. 11 December 2007. 17 March 2008. <http://www.fin.gc.ca/toce/2003/property_e.html>
Todd, R. “Alberta Cap Decision May Impact Ontario.” Law Times. 25 February 2008. 17 March 2008. <http://www.lawtimesnews.com/index.php?option=com_content&task=view&id=3900>
Parker, N. “Damages in Personal Injury Cases.” The Accident Report. Spring 2002, Vol. 2, No. 1. <http://www.rmrf.com/files/resourcesmodule/@random4293f2f916ea0/1117053062_accid.pdf>
Miller, S. “Recent Automobile Insurance Reforms in Canada (Special Report on Insurance).” From LawNow in Ecyclopedia.com. 04 January 2005. 17 March 2008. <http://www.encyclopedia.com/doc/1G1-130568768.html>
“What is No-Fault Auto Insurance?” Kanetix.ca. 17 March 2008. <http://www.kanetix.ca/what-is-no-fault-auto-insurance>
“Auto Insurance Grid Rate Calculator: background and Consumer Disclaimers.” Automobile Insurance Rate Board. 17 March 2008. <http://www.airb.gov.ab.ca/gridrate/>
“The Insurance Company You Choose.” Financial Services Commission of Ontario. 17 March 2008. <http://www.fsco.gov.on.ca/english/insurance/auto/undautoins.asp#InsCoYouChoose>
“Insurance…at a Premium.” CBC News. 18 February 2005. 17 March 2008. <http://www.cbc.ca/news/background/insurance/>