## Facts

- A federal statute created the Canada Assistance Plan (CAP), under which Canada reimbursed provinces for a fixed share of eligible social assistance and welfare expenditures.
- Canada and British Columbia entered a 1967 CAP agreement implementing the cost-sharing arrangement for British Columbia.
- CAP contemplated that agreements would continue while relevant provincial legislation remained in force, subject to termination by consent or by either party on notice.
- In response to federal fiscal restraint, Parliament enacted the Government Expenditures Restraint Act, limiting annual growth of CAP contributions to certain provinces (including British Columbia) for two fiscal years.
- British Columbia challenged the federal cap, asserting it unilaterally altered Canada’s funding obligations under CAP and the 1967 agreement and violated public-law expectations said to arise from the statutory scheme, the agreement, and governmental conduct.
- British Columbia referred questions to its Court of Appeal, which largely accepted British Columbia’s position; Canada appealed.

## Issues

1. Whether the reference questions were justiciable given their connection to fiscal policy and intergovernmental relations.
2. Whether CAP or the 1967 CAP agreement restricted Parliament’s authority to enact legislation limiting CAP contributions (including by “manner and form” constraints or enforceable contractual/vested rights).
3. Whether the doctrine of legitimate expectations could prevent the introduction or enactment of legislation capping CAP payments without provincial consent.

## Decision

- The questions were justiciable because they required interpretation and assessment of the legal effect and validity of legislation and an intergovernmental agreement.
- Parliament had authority to enact legislation capping CAP payments, notwithstanding CAP’s terms and the 1967 agreement.
- CAP and the agreement did not impose binding “manner and form” requirements (such as a consent requirement) for future federal legislation affecting CAP funding.
- The doctrine of legitimate expectations could not be used to restrain Parliament’s legislative process and did not create substantive rights to continued funding on the prior terms.
- The appeal was allowed and the federal capping legislation was upheld as valid.

## Legal Principles

- Reference questions are answerable where they contain sufficient legal content; courts retain discretion to decline only where a complete and accurate legal answer is not possible or legal content is lacking.
- Under parliamentary sovereignty, a legislature may enact, amend, or repeal statutes; ordinary legislation and executive agreements cannot bind future legislative action absent constitutional entrenchment.
- Statutory arrangements for intergovernmental funding remain subject to subsequent legislative change unless legally entrenched.
- “Manner and form” constraints on legislative change are not inferred from funding statutes or agreements without clear and legally effective entrenchment.
- Legitimate expectations operate in administrative law as a procedural fairness doctrine; they do not create substantive rights and cannot fetter legislative functions or prevent the enactment of legislation.

## Conclusion

The Court upheld Parliament’s authority to cap CAP payments and held that neither the CAP agreement nor legitimate expectations could legally require provincial consent or otherwise constrain the federal legislative process.


Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525 (Can. 1991)