Money matters: COMER v. Canada

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PHOTO: flickr/Evan Bench

The great challenge of our time is wresting control of our lives from Big Money, beginning with the control of our national finance.

Our forefathers did just that 80 years ago during the Great Depression when they established the central bank, The Bank of Canada. The Bank was to be owned by the people of Canada, responsible to Parliament, and generally to promote the economic and financial welfare of Canada.

One of the functions mandated to The Bank of Canada is making loans to the federal and provincial governments (and indirectly, to the municipal) at no or very low interest, interest which is returned to the people of Canada through the Treasury. Another function is to issue and regulate the national currency on behalf of government, fulfilling one of the government's constitutional responsibilities. The Bank carried out these tasks for 40 years, Canada's "golden years."

However, since it joined the Bank for International Settlements (BIS) and, in 1974, its Group of Ten charged with the control of banking on a global scale, the Bank ceased lending to both federal and provincial governments. Instead it forced them to borrow from private banks at compound interest, which resulted  in significantly increased  deficits and debts.

When people are held hostage financially they can be easily controlled. Public programs can be eliminated, services cut, and the economy downgraded while billions are siphoned through the banks to the richest 1% of people. 

Because our central bank is publicly owned we can, by law, hold Government responsible to fulfill its mandate and that of the institution for which it is responsible -- the Bank.  How do we do that? Through Parliament. But when Parliament fails in this as it has for 40 years?  We do it collectively through civil society with an organization that takes it on.

For over three decades the Committee on Monetary and Economic Reform, an NGO known as COMER, has raised awareness of these issues across the land. COMER has now taken the bold step of going to court to challenge the government and the Bank of Canada to fulfill their mandates. 

The claims

COMER, its co-founder William Krehm and longtime COMER member Ann Emmett, are the plaintiffs in this case. They seek a declaration that the defendants -- the Finance Minister, the Minister of National Revenue, the Attorney General of Canada and the Bank -- have failed in their constitutional and statutory responsibilities in implementing the Bank of Canada Act (the Act), which has caused harmful impacts on the plaintiffs. 

The first harmful impact comes from the increase in public debts resulting from the refusal to request and make interest-free loans pursuant to the Act. All Canadians have felt the destructive effects of such debts for 40 years including the compound interest paid to private bankers, the disintegration of our economy, cuts to social services and programs, and growing inequality. 

Another claim of harm derives from Government's falsifying the estimated tax revenues it presents to Parliament by subtracting all tax credits from the total beforehand: taxation without representation.

Most significantly, COMER says that the government, by handing over its monetary, currency and financial policies to international private entities to determine, has abdicated its constitutional duties to govern, and that it is unconstitutional and against the Act for the Governor of the Bank of Canada to keep secret from Parliament the minutes of meetings with central bank governors of other states.

The legal bases for the claims 

The Bank's powers and responsibilities are listed in Section 18 of the Act which states "The Bank may" followed by a list of the various functions mandated to the Bank including  the  making ofloans to the federal and provincial governments.

Section 18(m) of the Act was amended in  1974 to allow the Bank to be AGENT for the BIS, the International Monetary Fund and for any other international financial institution or organization. This cedes control of government’s financial policy and practice to supranational institutions, contrary to Section 24 of the Act which states "The Bank shall act as fiscal agent of the Government of Canada."

Furthermore, Section 91 of the Constitution Act, 1867 states that "the exclusive Legislative Authority of the Government of Canada extends to all Matters," matters listed thereafter, including public debt, the borrowing of money on  the Public Credit, banking, currency and coinage. Ceding these  powers to any other institution requires amending the constitution which has not occurred.

The plaintiffs claim too that taxes imposed by the government to pay for the (compound) interest on its debts to private banks are, consequently, illegal.

The legal process

Faced with such challenges, Government inevitably responds by contesting the justiciability of the claims, the standing of the plaintiffs to bring the action to court and the jurisdiction of the court to decide the case. So it did in this case. 

A first hearing was held in December 2012 before a prothonotary of the Federal Court -- a judge who hears a challenge of the legitimacy of the claim prior to a hearing on its substance or merits.

His decision was to disallow the claim on justiciability grounds. He did not deny COMER's standing to proceed. Nor did he deny that the Federal Court has jurisdiction to hear this case. 

COMER appealed, leading to another hearing before the Federal Court in December 2013. 

Something unique in Canadian history occurred at that time. The lawyer in this case, Rocco Galati, had challenged, on his own, the legality of Harper's appointment of a Quebec judge to the Supreme Court of Canada. Galati won at the Supreme Court, and hit national headlines. Shortly after this momentous event, the result of the COMER appeal was announced. It, too, hit alternative media, locally and internationally, but not the mainstream media.

COMER won the right to proceed to court on the merits of the main claims: to win a declaration of the failure of the government to fulfill its constitutional responsibilities and the Bank its statutory ones.

A secondary claim relating  to the harm done to the individual plaintiffs was disallowed  although it was allowed to be redrafted and resubmitted. The plaintiffs decided to proceed on the main portions only, at this time.

Justice Russell's reasoning on a number of points is instructive for those seeking to challenge government, even outside the courts. The case could turn on the interpretation of the word "may" in s.18 of the Bank of Canada Act which, as stated, sets out the Bank's powers.

Justice Russell commented "even if s.18 of the Bank Act is permissive, this does not dispose of the allegations of improper handing-off to international institutions. 'May' is usually permissive, but it is not invariably so, and full legal argument on a full evidentiary record is required before the Court can decide what the Bank Act requires of the Government and those involved in applying and interpreting that statute."

The Government of Canada appealed the judge's decision.

In January 2015 Rocco Galati argued this cause before the Federal Court of Appeal. On the right to proceed for declaratory relief on the several claims, COMER won a unanimous decision.  Government did not apply for permission to appeal this decision to the Supreme Court of Canada within the allotted time period. So COMER has again filed its statement of claim at the first level of the Federal Court, this time to proceed on the merits of the case. Government will undoubtedly contest this action on the merits.

Should we put faith in our judicial system or, as John Ralston Saul asks, are we now facing "the collapse of the last meaningful  edges of democracy" as we await the outcome?

The case has garnered widespread attention partly because of the growing interest in the reach of international institutions into national affairs. Furthermore the BIS meetings of its 60 member states are held in secret with no accounting to their governments, and no representation nor votes for their citizens.

Given the fiscal, economic, social and democratic deterioration that Canadians -- and others -- have experienced beginning in the mid-70s we ask was it grounded in the exponential increase in government debt that resulted from "commitments" of the BIS member states?  What other orders have come from such international organizations? Regardless, governments' ceding of their critical powers and responsibilities to foreign entities, in fiscal, monetary or trade matters must be challenged.  

What is next for COMER

On May 13 an update to this case by Rocco Galati was published on the COMER website. In brief, Government has indicated it will again move to strike the claim, challenging Justice Russell's finding of justiciability, upheld by the Federal Court of Appeal, and on other grounds already removed from the original claim.

Galati has requested that any such motion be placed before Justice Russell, and is seeking leave to the Supreme Court of Canada on behalf of his clients "from the Federal Court of Appeal, for not having simply ordered the matter to proceed to trial, on the main justiciable issues, rather than maintain the striking of the claim (the secondary claim referred to above) and order an amended statement of claim" -- given that the order had already been complied with in the filing of the amended statement of claim. Galati terms Government's latest action as “abusive.”


Judy Kennedy is a retired lawyer, former member of the Canadian Centre for Policy Alternatives-Nova Scotia Steering Committee, and supporter of COMER's action.

Further Reading

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