General Motors of Canada Ltd. v. City National Leasing

General Motors of Canada Ltd. v. City National Leasing
Collection
Supreme Court Judgments
Date
1989-04-20
Report
[1989] 1 SCR 641
Case number
19724
Judges
Dickson, Robert George Brian; Beetz, Jean; McIntyre, William Rogers; Lamer, Antonio; Le Dain, Gerald Eric; La Forest, Gérard V.; L'Heureux-Dubé, Claire
On appeal from
Ontario
Subjects
Constitutional law
Notes
SCC Case Information: 19724
Decision Content
General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641
General Motors of Canada Limited Appellant (Defendant)
v.
City National Leasing Respondent (Plaintiff)
and
The Attorney General of Canada Intervener (Intervener)
and
The Attorney General of Quebec,
the Attorney General of British Columbia,
the Attorney General for Saskatchewan and
the Attorney General for Alberta Interveners
indexed as: general motors of canada ltd. v. city national leasing
File No.: 19724.
1988: May 17, 18; 1989: April 20.
Present: Dickson C.J. and Beetz, McIntyre, Lamer, Le Dain*, La Forest and L'Heureux‑Dubé JJ.
on appeal from the court of appeal for ontario
Constitutional law -- Division of powers -- Trade and Commerce ‑‑ Combines Investigation Act -- Private right action created if loss suffered because of conduct contrary to Part V of Combines Investigation Act or for non-compliance with order of court or commission -- Whether or not Combines Investigation Act intra vires Parliament under s. 91(2) -- Whether or not s. 31.1 creating private cause of action intra vires Parliament -- Combines Investigation Act, R.S.C. 1970, c. C‑23, s. 31.1 -- Constitution Act, 1867, ss. 91(2) , 92(13) .
Respondent (CNL), a company leasing fleets of automobiles and trucks nation‑wide in competition with other national fleet leasing companies, purchases the majority of its vehicles from franchised GM dealers, as opposed to GM itself. CNL's received interest rate support in financing its GM purchases between 1970 and 1980 through a program offered by General Motors Acceptance Corporation. CNL alleged that during that time GM, directly or indirectly, had been paying "preferential" interest rate support to CNL's competitors in respect of their purchases of GM vehicles in addition to the interest rate support available to CNL. This exclusion of CNL from the preferential interest rate support program from 1970 to 1980 was alleged to be a practice of price discrimination contrary to s. 34(1)(a) of the Combines Investigation Act which gave rise to an action by CNL under s. 31.1. This section created a civil cause of action for certain infractions of the Act, notwithstanding the fact that the creation of civil causes of action lies within the domain of the provinces. CNL claimed that it lost profits equivalent to monies saved by its competitors, and that it was entitled to recover from GM damages equivalent to those lost profits with interest compounded. CNL also sued GM for breach of contract for damages arising after March 1980.
The motions court judge, on an application brought by GM, struck certain paragraphs of CNL's statement of claim as disclosing no cause of action as GM had never made an direct sales to CNL or its competitors. He then found s. 31.1 of the Act to be ultra vires Parliament as the right to sue was not truly necessary for the Combines Investigation Act, and finally, that s. 31 was not retroactive or retrospective, and therefore did not affect those transactions occurring before its proclamation in 1976. The Court of Appeal was not persuaded that CNL could not succeed in asserting a claim founded on s. 34(1) if the matter were to go to trial. The Court found s. 31.1 to be intra vires Parliament and held that s. 31(1) had no effect before its date of proclamation.
The constitutional questions stated by this Court queried: (1) whether the Combines Investigation Act, either in whole or in part, was intra vires Parliament under s. 91(2) of the Constitution Act, 1867 , and (2) whether s. 31.1 was within the legislative competence of Parliament.
Held: The appeal should be dismissed. Both constitutional questions should be answered in the affirmative.
The Combines Investigation Act is valid under the federal trade and commerce power, in particular its "second branch" over "general" trade and commerce, and s. 31.1 is constitutionally valid by virtue of its being functionally related to the Act.
The Court has advanced several hallmarks of validity for legislation under the second branch of the trade and commerce power: (1) the impugned legislation must be part of a general regulatory scheme; (2) the scheme must be monitored by the continuing oversight of a regulatory agency; (3) the legislation must be concerned with trade as a whole rather than with a particular industry; (4) the legislation should be of a nature that the provinces jointly or severally would be constitutionally incapable of enacting; and (5) the failure to include one or more provinces or localities in a legislative scheme would jeopardize the successful operation of the scheme in other parts of the country. These indicia do not represent an exhaustive list of traits that will tend to characterize general trade and commerce legislation and the presence or absence of any of them is not necessarily determinative. On any occasion where the general trade and commerce power is advanced as a ground of constitutional validity, a careful case by case analysis remains appropriate.
The analysis to determine constitutionality of provisions such as s. 31.1 under the trade and commerce power involves the following steps. First, the court must determine whether the impugned provision can be viewed as intruding on provincial powers, and if so to what extent. Second, the court must establish whether the act (or a severable part of it) in which the impugned provision is found is valid; in cases under the second branch of s. 91(2) this will normally involve finding the presence of a regulatory scheme and then ascertaining whether the hallmarks articulated by the Court have been met by the scheme. If the scheme is not valid, that is the end of the inquiry. If the regulatory scheme is declared valid, the court must then determine whether the impugned provision is sufficiently integrated with the scheme that it can be upheld by virtue of that relationship. This requires considering the seriousness of the encroachment on provincial powers, in order to decide on the proper standard for such a relationship. If the provision passes this integration test, it is intra vires Parliament as an exercise of the general trade and commerce power. If the provision is not sufficiently integrated into the scheme of regulation, it cannot be sustained under the second branch of s. 91(2) . In certain cases, some of these steps can be dispensed with if a clear answer to one of them resolve the issue.
Section 31.1 creates a civil right of action and, since the creation of civil actions generally lies within provincial jurisdiction under s. 92(13) of the Constitution Act, 1867 , appears to encroach to some extent on an important provincial power. The encroachment, however, is not serious. Section 31.1 is only a remedial provision and such provisions are typically less intrusive vis-à-vis provincial powers. Section 31.1 does not create a general cause of action but rather one limited by the Act. Finally, the federal government is not constitutionally precluded from creating rights of civil action where such measures may be shown to be warranted. The inclusion of a private right of action in a federal enactment is not constitutionally fatal.
The Combines Investigation Act is valid federal legislation under the general trade and commerce power. The hallmarks incidental to this branch of the trade and commerce power have been met.
The Act is geared to eliminating activities that reduce competition in the market-place and embodies a complex, well‑integrated scheme of economic regulation to achieve that end. It identifies and defines anti‑competitive conduct, establishes an investigatory mechanism for revealing prohibited activities, and provides an extensive range of criminal and administrative redress. The Act is clearly concerned with the regulation of trade in general, rather than with the regulation of a particular industry or commodity. The regulatory scheme is subject to the oversight exercised by the Director and the Commission.
The Act is of national scope aimed at the economy as a single integrated national unit rather than as a collection of separate local enterprises. The provinces jointly or severally would be constitutionally incapable of passing this legislation. Finally, the failure to include one or more provinces or localities would jeopardize successful operation of the legislation in other parts of the country.
The regulation of competition falls within federal jurisdiction in its intraprovincial dimension and the Act therefore need not be read down so that s. 31.1 only applies to interprovincial trade. Because the regulation of competition is so clearly of national interest and because competition cannot be successfully regulated by federal legislation restricted to interprovincial trade, the validity of the federal legislation must be determined without heed to the provincial legislation. Competition, however, is not a single matter and the provinces may deal with it in the exercise of their legislative powers in such fields as consumer protection, labour relations and marketing.
Section 31.1 intrudes on a provincial power but is sufficiently related to a valid legislative scheme to have constitutional validity conferred on it. The provision is functionally related to the general objective of the legislation, and to the structure and the content of the scheme. As one of an arsenal of remedies created by the Act, it serves to reinforce other sanctions of the Act and takes on meaning only by reference to them. The section provides a private remedy only for particular violations of the Act and does not create a private right of action at large. The intimate tie between the purpose of the Act and a privately initiated and privately conducted enforcement mechanism is a strong indication that s. 31.1 is enmeshed in the fabric in the Act.
Section 31.1 does not create a general action for damages. Recovery under this section can only be effected if loss or damage has occurred because of (i) conduct contrary to Part V of the Act or (ii) the failure of the defendant to comply with an order of the Commission or a court under the Act. The section is a core provision of the very pith and substance of the Act. Its use does not prevent the operation of the Act's other remedial mechanisms, and indeed, may supplement them.
Cases Cited
Applied: Attorney General of Canada v. Canadian National Transportation, Ltd., [1983] 2 S.C.R. 206; MacDonald v. Vapor Canada Ltd., [1977] 2 S.C.R. 134; considered: Citizens' Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96; distinguished: Labatt Breweries of Canada Ltd. v. Attorney General of Canada, [1980] 1 S.C.R. 914; referred to: Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9; Proprietary Articles Trade Association v. Attorney-General for Canada, [1931] A.C. 310; Attorney-General for Ontario v. Attorney-General of Canada (Canada Standards Trade Mark), [1937] A.C. 405; Dominion Stores Ltd. v. The Queen, [1980] 1 S.C.R. 844; John Deere Plow Co. v. Wharton, [1915] A.C. 330; Attorney-General for Canada v. Attorney-General for Alberta (Insurance Reference), [1916] 1 A.C. 588; In re the Board of Commerce Act, 1919, and the Combines and Fair Prices Act, 1919, [1922] 1 A.C. 191; Toronto Electric Commissioners v. Snider, [1925] A.C. 396; The King v. Eastern Terminal Elevator Co., [1925] S.C.R. 434; Attorney-General for British Columbia v. Attorney-General for Canada (Natural Products Marketing Reference), [1937] A.C. 377; Canadian Federation of Agriculture v. Attorney-General for Quebec (The Margarine Reference), [1951] A.C. 179; Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626; The Queen v. Klassen (1959), 20 D.L.R. (2d) 406; Caloil Inc. v. Attorney General of Canada, [1971] S.C.R. 543; Reference respecting the Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; R. v. Hoffman‑La Roche Ltd. (Nos. 1 and 2) (1981), 33 O.R. (2d) 694, aff'g (1980), 28 O.R. (2d) 164; R. v. Miracle Mart Inc. (1982), 68 C.C.C. (2d) 242; BBM Bureau of Measurement v. Director of Investigation and Research, [1985] 1 F.C. 173; Seiko Time Canada Ltd. v. Consumers Distributing Co. (1981), 34 O.R. (2d) 481, aff'g (1980), 29 O.R. (2d) 221; Attorney General of Canada v. Québec Ready Mix Inc., [1985] 2 F.C. 40, rev'g sub nom. Rocois Construction Inc. v. Quebec Ready Mix Inc., [1980] 1 F.C. 184; Henuset Bros. Ltd. v. Syncrude Canada Ltd. (1980), 114 D.L.R. (3d) 300; Westfair Foods Ltd. v. Lippens Inc., [1987] 6 W.W.R. 629; OPSEU v. Ontario (Attorney General), [1987] 2 S.C.R. 2; Papp v. Papp, [1970] 1 O.R. 331; R. v. Zelensky, [1978] 2 S.C.R. 940; Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; Clark v. Canadian National Railway Co., [1988] 2 S.C.R. 680; R. v. Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695; Nykorak v. Attorney General of Canada, [1962] S.C.R. 331; Jackson v. Jackson, [1973] S.C.R. 205; Zacks v. Zacks, [1973] S.C.R. 891; Cushing v. Dupuy (1880)**, 5 App. Cas. 409; Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 (1967); Re Anti‑Inflation Act, [1976] 2 S.C.R. 373.
Statutes and Regulations Cited
Civil Code, s. 1053.
Combines Investigation Act, R.S.C. 1970, c. C‑23, ss. 28, 29, 29.1, 30, 31.1(1), (2), 32, 32(1)(c), 32.2, 33, 34, 34(1)(a), (b), (c), 36, 36.1, 36.2, 36.3, 37.1.
Constitution Act, 1867, ss. 91(2) , (27) , 92(10) , (13) , (14) , (16) .
Copyright Act, R.S.C. 1970, c. C‑30, ss. 20‑24.
Ontario Rules of Practice, s. 126.
Patent Act, R.S.C. 1970, c. P‑4, ss. 56‑62.
Trade Marks Act, R.S.C. 1970, c. T‑10, s. 7(e).
Authors Cited
Anisman, Philip and Peter W. Hogg. "Constitutional Aspects of Federal Securities Legislation", in Philip Anisman et al., Proposals for a Securities Market Law for Canada, vol. 3. Ottawa: Consumer and Corporate Affairs Canada, 1979.
Canada. Economic Council of Canada. Interim Report on Competition Policy. Ottawa: Queen's Printer, 1969.
Hogg, Peter W. Constitutional Law of Canada, 2nd ed. Toronto: Carswells, 1985.
Hogg, Peter W. and Warren Grover. "The Constitutionality of the Competition Bill" (1976), 1 Can. Bus. L.J. 197.
McDonald, Bruce C. "Constitutional Aspects of Canadian Anti‑Combines Law Enforcement" (1969), 47 Can. Bar Rev. 161.
Safarian, A. E. Canadian Federalism and Economic Integration. Ottawa: Privy Council Office, 1974.
APPEAL from a judgment of the Ontario Court of Appeal (1986), 28 D.L.R. (4th) 158, allowing in part an appeal from a judgment of Rosenberg J. (1984), 12 D.L.R. (4th) 273. Appeal dismissed; both constitutional questions should be answered in the affirmative.
J. Edgar Sexton, Q.C., and Valerie A. E. Dyer, for the appellant.
John Sopinka, Q.C., and Kathryn I. Chalmers, for the respondent City National Leasing.
T. B. Smith, Q.C., Gaspard Côté, Q.C., Arnold Fradkin, and David Lucas, for the intervener the Attorney General of Canada.
Jean-K. Samson and Jean Bouchard, for the intervener the Attorney General of Quebec.
Robert Vick Farley, for the intervener the Attorney General of British Columbia.
Robert G. Richards, for the intervener the Attorney General of Saskatchewan.
Robert Maybank, for the intervener the Attorney General for Alberta.
//The Chief Justice//
The judgment of the Court was delivered by
THE CHIEF JUSTICE -- The principal issue in this appeal is the constitutional validity of s. 31.1 of the Combines Investigation Act, R.S.C. 1970, c. C-23. Section 31.1 creates a civil cause of action for certain infractions of the Combines Investigation Act. It is this fact which makes the section constitutionally suspect: a civil cause of action is within the domain of the provinces to create. The essential question raised by this appeal is whether s. 31.1 can, nevertheless, be upheld as constitutionally valid by virtue of its relationship with the Combines Investigation Act. Answering this question requires addressing two issues: first, is the Act valid under the federal trade and commerce power, expressed in s. 91(2) of the Constitution Act, 1867 ; and second, is s. 31.1 integrated with the Act in such a way that it too is intra vires under s. 91(2) .
For the reasons which follow, I have found s. 31.1 to be intra vires the federal Parliament. In answering the two aforementioned issues, I have decided, first, that the Combines Investigation Act is valid under the federal trade and commerce power, in particular, it is valid under the "second branch" of that power, the power over "general" trade and commerce. Second, I have found that s. 31.1 is constitutionally valid by virtue of being functionally related to the Act.
Legislation
Section 31.1 of the Act reads as follows:
31.1 (1) Any person who has suffered loss or damage as a result of
(a) conduct that is contrary to any provision of Part V, or
(b) the failure of any person to comply with an order of the Commission or a court under this Act,
may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.
Among the offences covered by Part V of the Act, referred to in s. 31.1(1)(a) above, are those set out in s. 34(1) which reads:
34. (1) Every one engaged in a business who
(a) is a party or privy to, or assists in, any sale that discriminates to his knowledge, directly or indirectly, against competitors of a purchaser of articles from him in that any discount, rebate, allowance, price concession or other advantage is granted to the purchaser over and above any discount, rebate, allowance, price concession or other advantage that, at the time the articles are sold to such purchaser, is available to such competitors in respect of a sale of articles of like quality and quantity;
(b) engages in a policy of selling products in any area of Canada at prices lower than those exacted by him elsewhere in Canada, having the effect or tendency of substantially lessening competition or eliminating a competitor in such part of Canada, or designed to have such effect; or
(c) engages in a policy of selling products at prices unreasonably low, having the effect or tendency of substantially lessening competition or eliminating a competitor, or designed to have such effect,
is guilty of an indictable offence and is liable to imprisonment for two years.
The following two constitutional questions were stated by the Court:
(a)Is the Combines Investigation Act, R.S.C. 1970, c. C-23 (the "Act"), as amended, either in whole or in part, within the legislative competence of the Parliament of Canada under s. 91(2) of the Constitution Act, 1867 ?
(b)Is section 31.1 of the Act within the legislative competence of the Parliament of Canada?
I
Facts
General Motors of Canada Ltd. ("GM") manufactures automobiles and trucks. City National Leasing ("CNL") leases across Canada fleets of automobiles and trucks in competition with other national fleet leasing companies. CNL purchases the majority of its vehicles from franchised GM dealers, but does not purchase from GM directly. To finance purchases of GM vehicles between 1970 and 1980, CNL received interest rate support through a program offered by General Motors Acceptance Corporation ("GMAC"). CNL alleges that during that time GM, directly or indirectly, had been paying "preferential" interest rate support to competitors of CNL in respect of competitors' purchases of GM manufactured automobiles and trucks, in addition to the interest rate support available to CNL. It is further alleged that the exclusion of CNL from the preferential interest rate support program from 1970 to 1980 was a practice of price discrimination contrary to s. 34(1)(a) of the Act, giving CNL an action under s. 31.1. CNL claims that it lost profits equivalent to monies saved by its competitors, and that it is entitled to recover from GM damages equivalent to the lost profits and compound interest thereon. CNL also sued GM for breach of contract for damages arising after March 1980.
II
Judicial History
These proceedings originated in an application by GM before the motions court judge pursuant to r. 126 of the Ontario Rules of Practice. GM advanced three arguments before Rosenberg J., viz.: (i) that certain paragraphs of the statement of claim should be struck out as disclosing no cause of action because GM had never made any sales directly to CNL or to its competitors and thus s. 34(1)(a) of the Act did not apply; (ii) that s. 31.1 is ultra vires Parliament, being in pith and substance legislation in relation to matters within the exclusive legislative competence of the provinces under s. 92(13) and (16) of the Constitution Act, 1867 ; (iii) alternatively, if s. 31.1 is valid, it is not retrospective and therefore gives a cause of action only after its proclamation on January 1, 1976.
Rosenberg J. (reasons reported (1984), 12 D.L.R. (4th) 273) accepted GM's first argument and then advised counsel that in view of this finding there was no need to direct argument toward the ultra vires point, the constitutional issue being academic. He added, however, that, as much of the time at the hearing had been spent on this aspect, he would deal with some of the arguments regarding s. 31.1. After reviewing several authorities, in particular Attorney General of Canada v. Canadian National Transportation, Ltd., [1983] 2 S.C.R. 206; MacDonald v. Vapor Canada Ltd., [1977] 2. S.C.R. 134; and Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9, the judge concluded that the right of a private individual to sue is not truly necessary for the Combines Investigation Act to be effective and accordingly s. 31.1 of that Act is ultra vires the Parliament of Canada. At pages 281-82 he said that:
It is clear that s. 31.1 is not part of the complex scheme set up by the Act. It is not dependent on any finding by the Director or the Commission. For some 75 years the Act operated without such a provision. It cannot be justified as a necessary part of an administrative scheme set up by the Act.
The only possible justification for s. 31.1 is as legislation "necessarily incidental" or "truly ancillary" to other provisions in the Act or the regulation of trade and commerce.
. . .
I am of the view that the Peel v. MacKenzie case applies to the case at bar. The right of a private individual to sue is not truly necessary for the Combines Investigation Act to be effective. Section 31.1 is accordingly ultra vires the Parliament of Canada.
On the third point of argument Rosenberg J. agreed with GM that s. 31.1 did not purport to be retroactive or retrospective and therefore could not affect transactions between 1970 and the date of proclamation of the section in 1976.
The Ontario Court of Appeal (Thorson, Robins and Tarnopolsky JJ.A.) (reasons reported (1986), 28 D.L.R. (4th) 158) allowed the appeal in part. On the first issue, whether certain paragraphs of the statement of claim should be struck out as disclosing no cause of action capable of being founded on s. 34(1)(a) of the Act, the Court was not persuaded that CNL could not hope to succeed in asserting a claim founded on s. 34(1) if the matter were to go to trial. With regard to the constitutional issue, the Court held that the motions court judge had erred in proceeding to make a finding after having indicated to counsel that he need not hear argument on the matter. The Court felt it had no choice but to disregard the reasons of the motions court judge for that finding. At the request of all counsel, however, the Appeal Court dealt with the issue of the validity of s. 31.1 of the Act and said at p. 159:
. . . we think it is sufficient to say that we find ourselves in agreement with the conclusion reached by the Federal Court of Appeal in Pilote Ready Mix Inc. et al. v. Rocois Construction Inc., released November 21, 1985 (since reported 8 C.P.R. (3d) 145, 24 C.C.C. (3d) 158 sub nom. A.-G. Can. v. Quebec Ready Mix Inc. et al. and Rocois Construction Inc. et al. mise-en-cause [since reported also at (1985) 2 F.C. 40]; leave to appeal to S.C.C. granted C.P.R. and C.C.C. loc. cit.) There the Court held that s. 31.1 of the Combines Investigation Act is constitutionally valid legislation of the Parliament of Canada, and with this conclusion we respectfully concur.
On the third and final issue, the Court agreed with the motions court judge that s. 31.1 could not be given operation so as to allow CNL to assert a claim for loss or damage, as a result of conduct contrary to s. 31(1)(a), in respect of transactions that occurred before January 1, 1976.
This Court granted leave to appeal from the order of the Court of Appeal. The panel granting leave ordered that the appeal should be heard together with the appeal in Québec Ready Mix Inc. v. Rocois Construction Inc. Reasons in the latter appeal are being delivered concurrently herewith.
The Attorney General of Canada and the Attorneys General of Quebec, British Columbia, Saskatchewan and Alberta intervened in the appeal. The Attorney General for New Brunswick filed a notice of intention to intervene but later withdrew.
III
Arguments
In this Court the parties focussed their submissions on the constitutional validity of s. 31.1 under s. 91(2) of the Constitution Act, 1867 , the trade and commerce power. The appellant GM, supported by the provincial Attorneys General, argued that the creation of a civil cause of action was a matter of provincial jurisdiction over property and civil rights granted to the provinces by s. 92(13) of the Constitution Act, 1867 . GM argued vigorously against finding s. 31.1 valid under the trade and commerce power; s. 31.1 , it was urged, did not satisfy any of the necessary indicia of valid trade and commerce legislation, nor could the civil action in s. 31.1 be characterized as necessarily incidental to a valid scheme regulating trade and commerce. The provision might be desirable to increase the effectiveness of the Combines Investigation Act, but its removal, GM argued, would not defeat the legislative purpose underlying the Act.
CNL and the Attorney General of Canada submitted that s. 31.1 was indeed within the constitutional competence of the federal government; properly characterized, s. 31.1 was clearly sustainable under the "general" branch of the federal trade and commerce power as economic legislation affecting the nation as a whole.
Quebec took a different approach from the other provinces. It concedes that the trade and commerce power does give the federal government power to regulate competition in the national economy and to create civil actions such as s. 31.1 to meet this goal, but contends that only international or interprovincial aspects of competition should be within the federal jurisdiction, while intraprovincial or local aspects of competition should fall under provincial jurisdiction. In effect, Quebec argues that s. 31.1 should be read down. In the two cases before the Court, this would probably mean that Québec Ready Mix would be non-suited, as that case seems to involve only contracts in Quebec City between local construction groups, while the present case, that of GM, would go ahead, as both GM and CNL operated across the country.
The central issue before this Court, as indicated, is whether s. 31.1 of the Combines Investigation Act may be sustained under the "general" trade and commerce power of s. 91(2) of the Constitution Act, 1867 . The overall validity of the Combines Investigation Act as a federal enactment has not been challenged. In numerous cases federal combines legislation has been upheld as valid under the federal power over criminal law. However, in claiming that s. 31.1 is valid legislation, CNL and the Attorney General of Canada argue in this appeal that in addition to being valid under the criminal law power, the Combines Investigation Act is also valid under the federal power over trade and commerce. This possibility was recognized by the Privy Council in the first case to uphold combines investigation legislation under the federal criminal power, Proprietary Articles Trade Association v. Attorney-General for Canada, [1931] A.C. 310, at p. 326:
The view that their Lordships have expressed makes it unnecessary to discuss the further ground upon which the legislation has been supported by reference to the power to legislate under s. 91, head 2, for "The regulation of trade and commerce." Their Lordships merely propose to disassociate themselves from the construction suggested in argument of a passage in the judgment in the Board of Commerce Case [[1922] 1 A.C. 191, 198] under which it was contended that the power to regulate trade and commerce could be invoked only in furtherance of a general power which Parliament possessed independently of it. No such restriction is properly to be inferred from that judgment. The words of the statute must receive their proper construction where they stand as giving an independent authority to Parliament over the particular subject-matter. But following the second principle noticed in the beginning of this judgment their Lordships in the present case forbear from defining the extent of that authority. They desire, however, to guard themselves from being supposed to lay down that the present legislation could not be supported on that ground.
To assess the claims made in this appeal it is necessary to begin by exploring the scope of s. 91(2) of the Constitution Act, 1867 .
IV
The General Trade and Commerce Power
In Canadian National Transportation, supra, I had occasion to trace the history of s. 91(2) in the courts. It would be otiose to repeat that discussion here. For the purposes of this appeal it is sufficient to summarize the general principles that, in my view, have emerged from judicial consideration of s. 91(2) and which are relevant to the present appeal.
The leading case of Citizens' Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96, sets out the most frequently quoted statement of the scope of s. 91(2) . Speaking for the Privy Council, Sir Montague Smith noted at p. 112 that if the words trade and commerce were given their ordinary meaning, s. 91(2) conceivably granted very wide-ranging powers to the federal government:
The words "regulation of trade and commerce," in their unlimited sense are sufficiently wide, if uncontrolled by the context and other parts of the Act, to include every regulation of trade ranging from political arrangements in regard to trade with foreign governments, requiring the sanction of parliament, down to minute rules for regulating particular trades.
To limit the breadth of a literal interpretation of s. 91(2) , Sir Montague Smith settled upon the following construction, at p. 113:
Construing therefore the words "regulation of trade and commerce" by the various aids to their interpretation above suggested, they would include political arrangements in regard to trade requiring the sanction of parliament, regulation in matters of inter-provincial concern, and it may be that they would include general regulation of trade affecting the whole dominion.
Sir Montague Smith continued, on the same page:
Having taken this view of the present case, it becomes unnecessary to consider the question how far the general power to make regulations of trade and commerce, when competently exercised by the dominion parliament, might legally modify or affect property and civil rights in the provinces, or the legislative power of the provincial legislatures in relation to those subjects . . . .
In Canadian National Transportation, supra, at p. 258, I suggested that Parsons had established three important propositions with regard to the federal trade and commerce power:
. . . (i) it does not correspond to the literal meaning of the words "regulation of trade and commerce"; (ii) it includes not only arrangements with regard to international and interprovincial trade but "it may be that . . . (it) would include general regulation of trade affecting the whole dominion"; (iii) it does not extend to regulating the contracts of a particular business or trade.
Since Parsons, the jurisprudence on s. 91(2) has largely been an elaboration on the boundaries of the two aspects or "branches" of federal power: (1) the power over international and interprovincial trade and commerce; and (2) the power over general trade and commerce affecting Canada as a whole. The first branch has been the subject of considerable constitutional challenge and judicial scrutiny. The second branch, in contrast, has remained largely unexplored, terra incognita. In this appeal, however, it is under this second branch of s. 91(2) that CNL and the Attorney General of Canada seek to uphold s. 31.1.
So far as I can gather, legislation has been upheld under the second branch by a final appellate court on only two occasions. In 1937 the Privy Council upheld a federal scheme creating a national trade mark to be used in conjunction with federally established commodity standards under the general trade and commerce power: Attorney-General for Ontario v. Attorney-General of Canada (Canada Standards Trade Mark), [1937] A.C. 405. (But compare: Dominion Stores Ltd. v. The Queen, [1980] 1 S.C.R. 844, where this Court struck down federal products standards legislation.) The second occasion was in John Deere Plow Co. v. Wharton, [1915] A.C. 330, where the Privy Council located the regulation of federally incorporated companies within the general branch of s. 91(2) , although they also upheld the legislation under the "peace, order and good government" power.
Aside from these two cases, at least until of late, the general trade and commerce power met with consistent rejection by the courts. Professor Hogg in the second edition of his work Constitutional Law of Canada, at pp. 447-48, notes that the courts refused to accept it as the basis for regulation of the insurance industry in the Attorney-General for Canada v. Attorney-General for Alberta (Insurance Reference), [1916] 1 A.C. 588; prices and profits in In re the Board of Commerce Act, 1919, and the Combines and Fair Prices Act, 1919 (the Board of Commerce case), [1922] 1 A.C. 191; labour relations in Toronto Electric Commissioners v. Snider, [1925] A.C. 396; marketing in The King v. Eastern Terminal Elevator Co., [1925] S.C.R. 434, and Attorney-General for British Columbia v. Attorney-General for Canada (Natural Products Marketing Reference), [1937] A.C. 377; and the prohibition of margarine in Canadian Federation of Agriculture v. Attorney-General for Quebec (The Margarine Reference), [1951] A.C. 179.
The treatment of the general trade and commerce power in the cases just mentioned was no doubt strongly influenced by earlier Privy Council decisions on s. 91(2) and in particular what Anglin C.J. referred to in The King v. Eastern Terminal Elevator Co., supra, at p. 441, as ". . . their Lordships' emphatic and reiterated allocation of `the regulation of trade and commerce' to . . . [a] subordinate and wholly auxiliary function . . . ." As Professor McDonald observed in his article "Constitutional Aspects of Canadian Anti-Combines Law Enforcement" (1969), 47 Can. Bar Rev. 161, at p. 189:
The British North America Act was framed with a greater interest in central control than motivated the constitutional fathers to the south. Reaction in the founding provinces to the consequences of decentralized control in the United States has been well documented. The broad and unqualified language of section 91(2) reflected the basic interest that strength from economic unity replace the floundering provincial economies. Yet, as the American courts broadened their commerce clause until it meant essentially what the Fathers of Confederation had sought for Canada, so have the Privy Council and the Canadian courts reacted against the hopes of the framers of their constitution and have decentralized commercial control.
At least until relatively recently the history of interpretation of the trade and commerce power has almost uniformly reinforced the federal paralysis which resulted from a series of Privy Council decisions in the years 1881-1896. The predominant view was that section 91(2) did not in any way go to either general commerce, contracts, particular trades or occupations, or commodities so far as those things might be intraprovincial. The test for the local nature of a transaction was abstractly legal, divorced from commercial effect.
Since 1949 and the abolition of appeals to the Privy Council, the trade and commerce power has, I think it fair to say, enjoyed an enhanced importance in such cases as Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626, upholding the validity of the federal Canadian Wheat Board Act ; The Queen v. Klassen (1959), 20 D.L.R. (2d) 406 (Man. C.A.), upholding the application of the Canadian Wheat Board Act to intraprovincial transactions; and Caloil Inc. v. Attorney General of Canada, [1971] S.C.R. 543, upholding a federal scheme regulating the movement of imported gasoline. See also Reference respecting the Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198.
In examining cases which have considered s. 91(2) , it is evident that courts have been sensitive to the need to reconcile the general trade and commerce power of the federal government with the provincial power over property and civil rights. Balancing has not been easy. Following the initial articulation of the scope of the general trade and commerce power in Parsons, supra, the Privy Council briefly adopted what might be regarded as an overly inclusive interpretation of the power in John Deere Plow Co. v. Wharton, supra, before retreating to an overly restrictive stance to its interpretation in the Board of Commerce, supra, case. In Wharton, Viscount Haldane, at p. 340, speaking of federally-incorporated companies, sketched in broad terms the federal power to regulate trade and commerce under the second branch of Parsons:
. . . if it be established that the Dominion Parliament can create such companies, then it becomes a question of general interest throughout the Dominion in what fashion they should be permitted to trade. [Emphasis added.]
In contrast, in the Board of Commerce case, the Privy Council rejected the trade and commerce power (without distinguishing between the two branches) as the basis for anti-combines legislation, holding that the trade and commerce power had no independent content and could only be invoked as ancillary to other federal powers. This view of the trade and commerce power was rejected some nine years later by the Privy Council in Proprietary Articles Trade Association, supra, in the passage quoted earlier.
With respect, in my view, neither the position articulated in Wharton nor that advanced in the Board of Commerce case correctly assesses the balance to be struck between ss. 91(2) and 92(13) . Wharton is clearly overly expansive, sweeping all general economic issues into the grasp of s. 91(2) . On the other hand, the residual interpretation articulated in the Board of Commerce case fails to breathe life into the trade and commerce power and fails to recognize that provincial powers are a substraction from the federal powers. The true balance between property and civil rights and the regulation of trade and commerce