Bidding on Jurisdiction: Can the Federal Government Ban Blind Bidding?
Sterling Mancuso, 2L, Volume 80 Senior Forum Editor
On August 24, 2021, Prime Minister Justin Trudeau promised that a re-elected Liberal government would ban “blind bidding” in Canada’s housing market. “Blind bidding” refers to the practice whereby home sellers solicit bids from prospective buyers without first informing them of how much others are offering. Now that Prime Minister Trudeau has won re-election, his government will presumably pursue this promise. However, the government may run into a constitutional roadblock. In this post, I examine the vires of banning blind bidding in the housing market, and argue that this promise may well be a matter of exclusive provincial jurisdiction.
A Criminal Law Matter?
As with all questions of federalism, the key to this jurisdictional inquiry lies in ss. 91 and 92 of the Constitution Act, 1867. At first glance, the regulation of blind bidding appears to fall squarely within provincial powers over “property and civil rights” under s. 92(13). However, speaking on background to the CBC, Liberal Party campaign officials stated that the federal Parliament could enforce a ban on blind bidding through their s. 91(27) powers over criminal law. If Parliament attempts this creative strategy of criminalization, it will highlight a clear fissure in the jurisprudence on the scope of the s. 91(27) power.
For at least a century, the highest courts in the land have struggled to define the extent of Parliament’s jurisdiction over criminal law. In 1921, Viscount Haldane held for the Judicial Committee of the Privy Council that s. 91(27) only granted jurisdiction over matters “which [by their] very nature belong to the domain of criminal jurisprudence” (Canada (AG) v Alberta (AG), [1922] AC 191, 1921 CanLII 399 at page 518). This narrowly construed definition presumably included theft and murder, but it is not clear that it encompassed even simple drug possession, let alone blind bidding. A decade later, however, the Privy Council swung radically in the other direction, and held that s. 91(27) allowed the federal government to criminalize any act whatsoever (P.A.T.A. v Canada (AG), [1931] AC 310, 1931 CanLII 385 at page 9). This definition obviously would have allowed Parliament to ban blind bidding; however, such a limitless power for Parliament threatened the very concept of federalism, and did not last long before being overridden.
The radical swing in the Privy Council’s early approach to s. 91(27) reflects an inherent difficulty in defining criminal law. An overly narrow conception requires courts to second-guess Parliament’s values-based judgments on what acts deserve denunciation. For example, a court might be reluctant to opine on whether blind bidding is inherently worthy of criminalization. Conversely, a broad definition of criminal law can bestow immense power in the federal government, and so threaten Canada’s federal structure. The Supreme Court attempted to thread the needle between these two extremes in the famous Margarine Reference, [1949] SCR 1, 1948 CanLII 2, with reasons which the Privy Council later affirmed. Rand J, writing for a majority, held that Parliament could only criminalize conduct “with a view to a public purpose which can support it as being in relation to criminal law.” Rand J presented peace, order, security, health, and morality as a non-exhaustive list of such public purposes, and held that trade protectionism for the dairy industry is not a valid criminal law purpose (page 50).
Since the Margarine Reference, the Supreme Court has held that Parliament can criminalize subjects as diverse as the possession of firearms (Reference re Firearms Act, 2000 SCC 31 (CanLII), abortion (Morgentaler v The Queen, [1976] SCR 616, 1975 CanLII 8), and environmental degradation (R v Hydro-Quebec, [1997] 3 SCR 213, 1997 CanLII 318). This wide range of criminalizable acts suggests a broad s. 91(27) power; however the underlying question of how to test whether a law – such as a blind bidding ban – holds a criminal law purpose remains murky. Rand J’s list of valid purposes provides some objective scope to s. 91(27), but its non-exhaustive nature limits its overall utility. In the past decade, the Supreme Court has twice attempted to clarify the scope of s. 91(27). Regrettably, these recent precedents collectively hinder rather than aid our inquiry into whether Parliament can criminalize blind bidding.
Two Possible Tests, Two Possible Answers
The Supreme Court’s two most recent decisions on Parliament’s criminal law jurisdiction are unfortunately not models of judicial clarity. Both decisions feature three sets of opinions, none attracting a majority of justices. In Reference re Assisted Human Reproduction Act, 2011 SCC 61 (CanLII) (AHRA Reference), the Court considered whether Parliament can criminalize conduct such as human cloning and paid surrogacy. The Court split 4:4:1. Both pluralities agreed that a valid criminal law must respond to a reasoned apprehension of harm to an interest such as health or morality. However, the Justices differed sharply in how much deference they afforded to Parliament’s assessment of the likelihood and severity of said harm. Justice Cromwell’s solo opinion deftly avoided the debate (AHRA Reference at paras 282-294), leaving neither approach with a majority. Predictably, the Court split again over the same issue of deference to Parliament – this time 3:2:4 – in last year’s Reference re Genetic Non-Discrimination Act, 2020 SCC 17 (CanLII) (GNDA Reference). These two contesting approaches to defining criminal law reflect the central tension in s. 91(27). Whether Parliament can ban blind bidding or not depends squarely on which approach one follows.
McLachlin CJ in the AHRA Reference advanced an expansive view of criminal law, predicated on strong deference to Parliament. For example, McLachlin CJ held that there is “no constitutional threshold level of harm” before Parliament can criminalize conduct for threatening health. Parliament can criminalize conduct that poses anyharm to health, or which has a greater than de minimis likelihood to do so (AHRA Reference at para 56). With regards to morality, Parliament can criminalize conduct that interacts with “a moral concern of fundamental importance, even if hard evidence is unavailable on some points” (AHRA Reference at para 50). McLachlin CJ emphasized that in conducting a s. 91(27) analysis, courts must defer to Parliament’s conception of “what is good and what is bad” (AHRA Reference at para 76). In the GNDA Reference, Karakatsanis J embraced and extended McLachlin CJ’s deferential posture, holding that “[Parliament] has wide latitude to determine the nature and degree of harm to which it wishes to respond by way of the criminal law power” (GNDA Reference at para 78). In sum, this first view of s. 91(27) allows Parliament to criminalize any conduct which poses a risk of harm, however slight, to a protected interest such as health or morality.
Under this first view of s. 91(27), Parliament can likely criminalize blind bidding. Parliament can argue that artificially high housing prices are immoral, as they contribute to a housing shortage for the sake of profiting the landed class. A housing shortage is felt particularly harshly by the most vulnerable in society, such as young people, the unemployed, and people living in inadequate housing. While a court may be hesitant to conclusively define immorality, making life harder for vulnerable people likely fits within any definition. McLachlin CJ defined the test for engaging morality as whether “there is a consensus in society that the regulated activity engages a moral concern of fundamental importance” (AHRA reference at para 51). Reasonable people can debate whether a blind bidding ban is actually effective in achieving its aims, but this is not relevant under the McLachlin CJ/Karakatsanis J view of s. 91(27). While a litigant could argue that housing affordability is not “a moral concern of fundamental importance,” this argument would run up against the strong posture of deference to Parliament’s superior wisdom on matters of morality.
As a sidenote, the Attorney General of Canada unusually intervened in the GNDA Reference to argue that the impugned legislation was ultra vires to Parliament’s criminal law power. In a curious twist of fate, that same Attorney General will presumably have to rely heavily on Karakatsanis J’s opinion upholding the GNDA to fend off any challenge to the criminalization of blind bidding.
Parliament will struggle to criminalize blind bidding under the test championed by LeBel and Deschamps JJ in the AHRA Reference, and Kasirer J in the GNDA Reference. These Justices were alive to the risk of Parliament using an expansive criminal law power to break the fetters of federalism (AHRA Reference at para 240; GNDA Reference at para 256). To combat this concern, they imposed a severity of harm threshold, and adopted a less deferential stature in assessing the risk of harm. LeBel and Deschamps JJ quoted the Margarine Reference to hold that criminal laws must, as a threshold, involve “suppressing an evil or safeguarding a threatened interest” (AHRA Reference at para 232, emphasis added). Notably, Karakatsanis J rejected “evil” as too high a bar, and argued that LeBel and Deschamps JJ selectively misquoted Rand J (GNDA Reference at para 76). Karakatsanis J is correct that Rand J simply used supressing an evil as one example of valid criminal law, alongside supressing an “undesirable effect” (Margarine Reference at page 49). Nevertheless, Kasirer J argued that “evil” is an appropriately weighty threshold “to preserve the balance of federal and provincial powers” (GNDA Reference at para 257). Further, Kasirer J adopted LeBel and Deschamps JJ’s opinion that Parliament must have a concrete basis that their proposed law will actually prevent the harm in question (GNDA Reference at para 262). Without this evidentiary requirement, LeBel and Deschamps JJ worried that “the federal criminal law power would in reality have no limits” (AHRA Reference at para 240).
Under this second view of s. 91(27), Parliament must point to concrete evidence that a ban on blind bidding will suppress a moral evil. This could prove difficult. LeBel and Deschamps JJ expressly warned against viewing every social or economic issue as a moral problem. Otherwise, the Justices worried that the federal government could use s. 91(27) “to make laws in respect of any matter” (AHRA Reference at para 240, emphasis added). Further, Parliament will have to present actual evidence that a ban on blind bidding will in fact prevent harm to the relevant moral value. Kasirer J left the evidentiary burden a little vague (“a concrete basis” that the harm is “rationally connected to [the] harm:GNDA Reference at paras 262, 267), which complicates predicting an outcome. I am no expert, so I make no comment on how easy or difficult it would be for Parliament to prove that a blind bidding ban will achieve its aims. Regardless, given LeBel, Deschamps, and Kasirer JJ’s clear reticence to let the federal government use criminal law to intrude on provincial jurisdiction, their view of s. 91(27) would likely doom a national ban on blind bidding.
Of course, nobody can predict with certainty which view of s. 91(27) will win out in the long-term. Neither has yet attracted a majority at the Supreme Court, and so the courts are bound only by the older, more nebulous definitions of criminal law. The Wagner Court has generally favoured the federal government in federalism disputes, such as in Reference re Pan-Canadian Securities Regulation, 2018 SCC 48 (CanLII) and Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11 (CanLII). At the same time, the Court has repeatedly emphasized the concept of “cooperative federalism” (see R v Comeau, 2018 SCC 15 (CanLII), para 87), which seems incompatible with treating s. 91(27) as a means for Parliament, shielded with heavy deference, to regulate what would otherwise be matters of provincial jurisdiction. Whether or not Parliament can criminalize blind bidding therefore depends on how the Supreme Court finally reconciles deference to Parliament’s conception of morality with the need to preserve provincial autonomy within our federation.
Conclusion – Does Crime Defy Federalism?
Justin Trudeau’s proposed ban on blind bidding illustrates that there is no easy answer to the question “what is criminal law?” While it has had plenty of chances, the Supreme Court has not provided a single, clear test for the scope of s. 91(27). This situation must be frustrating for federal civil servants and political strategists, who are left to guess whether any particular panel of justices will favour a narrow or expansive view of the criminal law power.
For what it is worth, I do not believe that the federal government should have jurisdiction to criminalize blind bidding. I can think of few matters which fall more squarely within the concept of “property and civil rights” than the regulation of the housing market;[1] a blind bidding ban is a literal regulation of civil rights over property. Allowing Parliament to regulate property through criminalization would, in my view, turn s. 91(27) into a veritable federalism override. Nevertheless, I would be happy for the Supreme Court to disagree with me; my overriding concern is that a majority of justices provide an answer which settles the core debate on the meaning of criminal law. Decision-makers and voters deserve such clarity when crafting government policies and evaluating political platforms.
[1] The British Columbia Court of Appeal recently re-affirmed that the provincial s. 92(13) power over property and civil rights confers a broad jurisdiction to regulate the real estate market: Li v British Columbia, 2021 BCCA 256 (CanLII).