Check PM. Article 419 of the Criminal code has been interpreted differently by many, however it has been common practice recently what with the 150 dead from the Afghan mission for family members to follow the practice I described earlier. Some have complained about it. Nobody has been convicted under article 419 for wearing a dead relatives medals, there have been about 10 charges laid under 419 from 2004 to 2009, none for family members, and all withdrawn or stayed anyway, and no charges under 419 as of 2009, so draw your own conclusion I guess. I do agree mostly, that it probably shouldn't be done, but it IS legal and common practice in several other commonwealth countries, and again, no family member has been convicted under 419 in recent memory.
In fact, 419 is not considered a blanket prohibition by many, and many vets groups in Canada differ in their opinions. The law specifically says "without lawful excuse", and many on one side say honoring fallen family members is such a lawful excuse, and point to the fact that the law was passed many decades ago in order to stop many scammers trying to get free WW1 vets benefits.
Google gives a large number of examples, but as I said, it has become a more common practice in recent years which is why I even brought it up, and nobody has been convicted for a family members medals, even though some vets groups have made complaints and launched campaigns against the practice.
The Canadian Legion has specifically gone on record to say they don't want to stop people from honoring their family by doing so, they just want a crystal clear law or amendment saying it is 100% legal to do so before supporting it officially.
Royal Canadian Legion, Canada’s largest veterans group, which has more than 500,000 members.
The legion denies this.
"I don’t know where somebody got the idea that we’re against [people wearing their relatives’ war medals] – all we’re doing is obeying the law," says Bob Butt, director of communications for the Dominion Command of the Royal Canadian Legion.
"Until we get a resolution through the [legion’s internal] resolution process that passes dominion convention, the legion is not mandated to do anything about the law. Until we’re mandated, we don’t take any action."
It certainly is done in a different spirit than the goof in the OP, but again, isn't something I would choose to do, or even support for that matter.