You are correct - but from a legal standpoint Galati is on even shakier ground.

Firstly, the statute is permissive. The Bank of Canada act says the Bank "may" make loans interest free. There is a huge leap in statutory interpretation (like several hundred years worth) to read that the law should be interpreted that the Bank now "must" make a loan at zero percent interest. Getting a court to rule that way will be extremely difficult (as shown by the lack of success in the case to date).

Next, Galati suggests that should he be successful in getting a court to order that the Bank/Minister of Finance must review a request for funding at zero percent interest, the Minister could still conceivably turn the request down. This is where (I think it's around the 8:00 min mark) he says that he would seek Judicial Review under a standard of "reasonableness". This is problematic, as there is little guarantee that a judge will agree to use this standard (they could instead use a correctness standard, which would be worse for Galati). Furthermore, if the court decides to use a reasonableness standard, the decision of the Minister of Finance could (quite easily) be seen as a reasonable one, and allowed to stand.

Have I demonstrated yet how high a hill he has to climb to be successful. I'm not optimistic on his chances.

Furthermore, there are a number of issues of a technical matter still to come. How does his clients have standing? He is attempting to sue to benefit the provinces and municipalities - but his clients are private citizens. Law generally doesn't work like that (you have to show personal concern with the issue at hand).

Finally, the premise of his case is a little flawed. The Bank of Canada has chosen to no longer issue interest free loans as part of there cooperating with the Bank of International Settlements. Galati says that this is a transfer of sovereignty and disallowed under the Constitution. Both of these claims are bunk. The Government is free to limit itself by international agreement (hello Kyoto, Landmines Treaty, Law of the Sea, etc, etc, etc). Secondly, the Government could stop cooperating tomorrow if it so chose (again, like Kyoto) - so suggesting that the BIS agreement is unconstitutional is going exactly nowhere.

I hope his clients are paying well and that he isn't doing this on his own accord. It's going to end badly, and I hope, as the advocate in the Baker case, he should be able to see that his chances of success are slim to none.