Citizen's Insurance Co. v. Parsons
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Citizen's Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96 is the first Canadian constitutional case heard by the Judicial Committee of the Privy Council. The Council interpreted the property and civil rights clause of section 92(13) in the Constitution Act, 1867 to be read expansively to include contracts related to insurance to be within the power of the provincial governments, while the countervailing Trade and Commerce clause of section 91(2) was to be read narrowly.
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[edit] Background
Parsons was the owner of warehouse that was covered by an insurance policy provided by Citizen Insurance Co. of Canada. When a fire burnt down the warehouse Parsons tried to collect on the insurance he was denied on account of an exemption clause found in the contract. Parons sued the Insurance Company for not conforming to the Ontario Fire Insurance Policy Act. The Insurance Company argued that the Act was ultra vires of the province, and only the federal government could regulate matters in relation to the trade and commerce power.
[edit] Opinion of the Council
Sir Montegue Smith wrote the opinion of the Council. He notes, as a general proposition, that the British North America Act, 1867 must be interpreted as an ordinary statute.
The case largely turned on the issue of the law overlapping two heads of power. Smith focused on interpreting the Trade and Commerce power to which he famously stated that:
- The words "regulation of trade and commerce," in their unlimited sense are sufficiently wide, if uncontrolled by the context and other parts of the Act, to include every regulation of trade ranging from political arrangements in regard to trade with foreign governments, requiring the sanction of parliament, down to minute rules for regulating particular trades.
As the section was inherently broad it was necessary to read it in a limited fashion.
- Construing therefore the words "regulation of trade and commerce" by the various aids to their interpretation above suggested, they would include political arrangements in regard to trade requiring the sanction of parliament, regulation in matters of inter-provincial concern, and it may be that they would include general regulation of trade affecting the whole dominion.
In all, Smith establishes three characteristics of the trade and commerce power: 1) the "regulation of trade and commerce" should not be read literally 2) it includes international and interprovincial trade as well as "general regulation of trade affecting the whole dominion" 3) it does not extend to regulate contracts between businesses.
[edit] Aftermath
After Parsons the Trade and Commerce power has been separated into two branches, as mentioned in the first two characteristics above.
