TRADE AND COMMERCE SECTION 91(2). Rand J: “The regulation of particular trades confined to the...

TRADE A

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91

( 2)

Rand J:

“The regulation of particular trades confined to the Province lies exclusively with the Legislature subject, it may be, to Dominion general regulation affecting all trade, and to such incidental intrusion by the Dominion as may be necessary to prevent the defeat of Dominion regulation; interprovincial and foreign trade are correspondingly the exclusive concern of Parliament.”

1. Provincial regulation of trade and commerce within the Province

2. Federal regulation of general trade and commerce affecting the nation

3. Incidental effects

4. Federal regulation of interprovincial and international trade and commerce

REFERENCE RE FARM PRODUCTS MARKETING ACT [1957]

TWO MAIN DISTINCTIONS

1. Interprovincial and international trade and commerce

2. General trade and commerce affecting the nation

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FEDERAL JURISDICTION

Parliament can pass laws that are designed or aimed at regulating interprovincial or international trade.

In doing so, however, Parliament cannot regulate local markets. This is so even where the products of those local markets are destined for export (Eastern Terminal Elevator [1925]; Ref Re Natural Products Marketing Act [1934]).

However, Parliament can specifically regulate the treatment of a product imported into a province (Caloil v AG Canada (No 2) [1971]).

PROVINCIAL JURISDICTION

Provincial legislatures can pass laws relating to trade and production within the Province (Citizen’s Insurance v Parsons [1881]; Home Oil [1940]).

This is so even if the provincial laws affect interprovincial trade (Fédération des producteurs v Pelland [2005]).

Provincial legislatures cannot, however, pass laws that are “designed” or “aim” to control or regulate interprovincial trade (AG Manitoba v Manitoba Egg and Poultry Association [1971]). This applies to products whether the goods are coming into the province (Burns Food v AG Manitoba [1975]) or leaving (Canadian Industrial Gas and Oil v Saskatchewan [1978]).

PROVINCECaloil v AG Canada (No 2) [1971]

Eastern Terminal Elevator [1925]Ref Re Natural Products Marketing Act [1934]

Import

Export

FEDERAL REGULATION OF INTERPROVINCIAL AND INTERNATIONAL TRADE AND COMMERCE

PROVINCE

PROVINCIAL REGULATION OF TRADE AND COMMERCE WITHIN THE PROVINCE

The province has broad jurisdiction to regulate transactions within the province providing the regulation is not “designed” or does not “aim” to regulate interprovincial or international trade and commerce; otherwise, it will, in pith and substance, be regulation in relation to s. 91(2) and, therefore, ultra vires the Province.

PROVIN

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CITIZENS INSURANCE V PARSONS (1881)

Facts:

• This was a case involving provincial (Ontario) legislation.

• Ontario law did not permit an exemption clause that was contained within Parson’s contract of insurance (and that would otherwise result in him not having a valid claim).

• The question was: is the Ontario legislation valid?

Sir Montague Smith [for the Court]:

• “[T]he authority to legislate for the regulation of trade and commerce does not comprehend the power to regulate by legislation the contracts of a particular business or trade, such as the business of fire insurance in a single province, and therefore that its legislative authority does not in the present case conflict or compete with the power over property and civil rights assigned to the legislature […].”

Ratio: Provincial legislation that aims to regulate a particular trade within the province is prima facie valid under s. 92(13).

ProvincialLegislation

HOME OIL [1940]

Facts:

• BC wanted to protect its coal and petroleum industries.

• As such, it regulated the “price or prices at which coal or petroleum products may be sold in the Province either at wholesale or retail or otherwise for use in the Province.”

• This affected interprovincial trade and commerce, as those delivering such products into BC were bound to comply with the pricing regulations.

Kerwin J [Rinfret J concurring]:

• Shannon v Lower Mainland Dairy Products Board:• “[T]he legislation in question is confined to regulating transactions that take

place wholly within the Province, and are therefore within the … powers granted to the Legislature … The pith and substance of this Act is that it is an Act to regulate a particular business entirely within the Province and it is therefore intra vires the Province.”

Ratio: Provincial legislation that aims to regulate the price at which goods are to be sold at within the province is valid, despite the fact that it might affect importers who have to sell their goods at those prices.


HOME OIL [1940]

Crocket J:

• The fact that the BC legislation might have been aimed at protecting the local coal mining industry from being undercut by cheaper imports was not material.

• “If [extraprovincial or international companies] desire to carry on their business in the Province of British Columbia, they must comply with provincial laws in common with all provincial and independent dealers in the same commodities.”

Observations:

• If this had been legislation directly imposing a specific price on imported coal or petroleum products, it would have no doubt been invalid.

• Because it applied generally to trade and commerce within the Province, it was a valid exercise of provincial jurisdiction.


REF RE FARM PRODUCTS MARKETING ACT [1957]Facts:

• Section 3(1)(l) of Ontario regulations empowered the [Farm Products Marketing] Board to authorize a marketing agency to conduct pool or pools and distribute proceeds based on amount and grade of product produced within Ontario.

• This applied broadly to “farm products”, including “animals, meats, eggs, poultry, wool, dairy products, grains, seeds, fruit […]” etc.

• An Ontario producer of hogs, who exported his production directly to Québec, complained that the Ontario regulation imposed upon him was ultra vires.

• The question on reference as very narrow: “Assuming that the said Act applies only in the case of intra-provincial transactions, is clause (l) […] ultra vires the Ontario legislature?



Kerwin CJ:

• Regulation of “transaction of sale and purchase in Ontario” with someone who is not from within Ontario is intra vires the province.• “It seems plain that the Province may regulate a transaction of sale and

purchase in Ontario between a resident of the Province and one who resides outside its limits; that is, if an individual in Quebec comes to Ontario and there buys a hog, or vegetables, or peaches, the mere fact that he has the intention to take them from Ontario to Quebec does not deprive the Legislature of its powers to regulate the transaction.”

• However, “[o]nce a statute aims at ‘regulation of trade in matters of inter-provincial concern’, it is beyond the competence of a Provincial Legislature.”

• Here, the statute was not “designed” and did not “aim” to control interprovincial trade. It was, therefore, intra vires the Province.


Ratio: Provincial legislation that aims to regulate sale and purchase transactions within the Province—not interprovincial trade—is intra vires the Province.

Rand J:

• Provincial legislation cannot specifically regulate products bound for external markets:• “A producer is entitled to dispose of his products beyond the Province

without reference to a provincial marketing agency or price, shipping or other trade regulation; and an outside purchaser is entitled to equal freedom to purchase and export.”

• However, when a producer does business within the Province, he or she must accept the general local regulations.• “[L]ocal regulation may affect […] trade: wages, workmen’s compensation,

insurance, taxes and other items that furnish what may be called the local conditions underlying economic activity leading to trade.”

• Parliament may be able to regulate where all product is bound for export:• “If the processing is restricted to external trade, it becomes an

instrumentality of that trade and its single control as to prices, movements, standards, etc by the Dominion follows.”



Fauteux J (dissent):

• “The regulation of the marketing of farm products within the Province exclusively is within the legislative competence of the Provincial Legislature and not Parliament.”



Abbott J:

• The fact that products are bound for export is neither here nor there:• “The power to regulate the sale within a Province of specific products, is not,

in my opinion, affected by reason of the fact that some, or all, of such products may subsequently, in the same or in an altered form, be exported from that Province, unless it be shown, of course, that such regulation is merely a colourable device for assuming control of extraprovincial trade.” (i.e. the provincial legislation is “designed” or “aims” to regulate interprovincial trade.)

• “The place where the resulting product may be consumed, therefore, is not in my opinion conclusive, as a test to determine by what legislative authority a particular transaction involving such farm product may validly be regulated.”

• “[T]he fact that some, or all, of the resulting product, after processing, may subsequently enter into extraprovincial or export trade does not, in my view, alter the fact that the three schemes submitted in this reference, regulate particular businesses carried on entirely within the Provincial legislative jurisdiction, and are therefore intra vires.”



REF RE AGRICULTURAL PRODUCTS MARKETING ACT [1978]Facts:

• In the late 1970s, provincial and federal cooperation resulted in a cooperative scheme for the marketing of agricultural products.

• A series of interlocking provincial and federal statutes:• Established and empowered a national egg marketing agency and

provincial egg marketing agencies• Controlled the supply of eggs by the imposition of quotas on each

province and, within each provincial quota, on each producer• Provided for the disposal of the surplus product• Imposed levies on producers to finance the cost of the scheme and

especially the cost of surplus disposal.

FederalLegislation

REF RE AGRICULTURAL PRODUCTS MARKETING ACT [1978]Facts:

• Quotas dictated by federal authorities covered both eggs destined for intraprovincial consumption and export. 90% of eggs were destined for consumption within the province.

• The excerpt deals with three questions:

Question 1:

• Can Parliament delegate its authority to impose levies to provincial boards or agencies that would apply those levies to local trade?

Question 3:

• Can Parliament delegate its authority to a federal board or agency to buy and sell surplus local trade?

Questions 8 and 9:

• Can provincial regulation regulate both intraprovincial and interprovincial production?

FederalLegislation

REF RE AGRICULTURAL PRODUCTS MARKETING ACT [1978]Pigeon J [Martland, Ritchie, Beetz, and De Grandpré JJ concurring]:

• Question 1:• Parliament cannot delegate its jurisdiction to impose levies to a board

that would impose those levies on local trade.

• Question 3:• The same was said in the context of the federal board’s activities of

buying and selling surplus eggs in provincial markets. Pigeon J took issue with this activity as not being based on a valid federal power—it was blatant federal intrusion into a local market.

• Question 8 and 9:• There is no doubt that the provinces may regulate production within the

province. The control of agriculture is prima facie a local matter. • Here, the provincial law is not aimed at controlling extraprovincial trade.

FederalLegislation

FÉDÉRATION DES PRODUCTEURS V PELLAND [2005]Facts:

• Provinces and federal government entered into a cooperative agreement for the marketing of chickens.

• Federal marketing agency allocates provincial quotas, then provincial marketing agencies allocate producer quotas.

• The producer quotas allocated are not distinguished by reference to destination (i.e. interprovincial or extraprovincial).

• Pelland argued that while the provincial law was, in pith and substance, in relation to the regulation of trade within the province (consistent with Citizen’s Insurance v Parsons), provincial legislation cannot apply to the production of products destined solely for interprovincial markets.

• In effect, he sought an order “confin[ing] the jurisdiction of provincial marketing boards to production for provincial marketing only.”


FÉDÉRATION DES PRODUCTEURS V PELLAND [2005]Abella J:

• Provincial legislation, in pith and substance, in relation to “controlling agricultural production within the context of a cooperative federal-provincial agreement” is valid, so long as the purpose does not “extend beyond production and trade within the province.”

• The correct analysis is one of pith and substance:• “[I]f the true purpose of the provincial legislation had been to

regulate interprovincial and export trade, it would have been ultra vires.”

• “[I]f the focus of the provincial legislature had been the regulation of extraprovincial interests, it would have been beyond the province’s jurisdiction.”


FÉDÉRATION DES PRODUCTEURS V PELLAND [2005]Abella J:

• However, incidental effects are permissible:• “Laws enacted under the jurisdiction of one level of government

often overflow into or have incidental impact on the jurisdiction of the other governmental level.”

• Here the legislation was valid, on a pith and substance analysis, and its effects on interprovincial trade, hence, were incidental:• “[I]ts purpose is to established rules that allow for the organization

of production and marketing of chicken within Quebec and to control chicken production to fulfill provincial commitments under a cooperative federal-provincial agreement. Any impact of this legislation on extraprovincial trade is incidental.”


Ratio: There is no restriction on provincial legislation having an incidental effect on interprovincial or international trade. Provincial legislation that is, in pith and substance, in relation to controlling production within the Province without distinguishing between product bound for export is intra vires.

AG MANITOBA V MANITOBA EGG & POULTRY ASSOCIATION [1971]Facts:

• Also known as “Manitoba Egg Reference.”

• Manitoba legislation required all out-of-province eggs be channeled through a provincial marketing board, which controlled grading, packaging, level of supply, etc.

• No sale of eggs outside of the board was permitted with the result being “[c]omplete control of the marketing of all eggs in Manitoba is vested in the Board.”

• The question here was whether an “extra-provincial producer [… can] bring his production into a province free of a regulatory scheme applicable to local product.”


AG MANITOBA V MANITOBA EGG & POULTRY ASSOCIATION [1971]Martland J [Fauteux CJ and Abbott, Judson, Ritchie and Spence JJ concurring]:

• In questioning the validity of the provincial regulation, “the issue [is] not […] whether it might affect interprovincial trade [for these would be merely incidental effects], but whether it was made in relation to the regulation of interprovincial trade and commerce.”

• “It is my opinion that the Plan now in issue not only affects interprovincial trade in eggs, but that it aims as the regulation of such trade.” (in other words, it is a law, in pith and substance, relating to the regulation of imports.)

• In this case, the regulation exist to: • “specifically control and regulate the sale in Manitoba of imported

eggs. It is designed to restrict or limit the free flow of trade between Provinces as such. Because of that, it constitutes an invasion of the exclusive legislative authority of Parliament over the matter of the regulation of trade and commerce.”


AG MANITOBA V MANITOBA EGG & POULTRY ASSOCIATION [1971]Laskin J [Hall J concurring]:

• In Carnation Milk v Quebec Agricultural Marketing Board “[t]he fact that the processed products were largely distributed and sold outside the Province did not react upon the validity of the scheme whose purpose was to improve the bargaining position in the Province of provincial producers in their dealings with manufacturers or processors in the Province.”

• “The present Reference raises this question in the context of goods entering the Province and their subjection, in consequence, to the same regulatory scheme that operates upon like goods produced in the Province.”


AG MANITOBA V MANITOBA EGG & POULTRY ASSOCIATION [1971]Laskin CJ:

• “The proposed scheme has as a direct object the regulation of the importation of eggs, and it is not saved by the fact that the local market is under the same regime. Anglin J said in Gold Seal v Dominion Express that “It is common ground that the prohibition of importation is beyond the legislative jurisdiction of the Province.”

• Provinces are not empowered to stop trade:• “[T]he general limitation upon provincial authority to the exercise of

its powers within or in the province precludes it from intercepting either goods moving into the province or moving out, subject to possible exceptions, as in the case of danger to life or health.”

• The regulation is not valid.


BURNS FOODS V AG MANITOBA [1975]

Facts:

• Manitoba law prohibited the slaughter of hogs in Manitoba unless they had been purchased from the Manitoba Hog Producer’s Marketing Board.

• “The effect of the Regulation under attack must, therefore, be taken to be that the Packers are prohibited from slaughtering in Manitoba hogs raised in Saskatchewan or in any other province, unless those hogs are purchased from the producers through the board.”

• The Manitoba Regulation provided “where hogs have been brought into the province, for the purpose of the Act, [that they] be deemed to be hogs produced in Manitoba and shall be subject to the same provisions of the Act and regulation as hogs produced in Manitoba.”


BURNS FOODS V AG MANITOBA [1975]

Pigeon J [Fauteux CJ and Abbott, Martland, Judson and Spence JJ concurring]:

• Here we had direct regulation:• “[D]irect regulation of interprovincial trade is of itself a matter

outside the legislative authority of any province and it cannot be treated as an accessory of the local trade. This is not a case of subjecting all goods of a certain kind within a province to uniform regulations, such as the retail sale price (as in Home Oil).

• This was not a case of subjecting a general category of product to certain standards but a regulation targeted directly at import trade.

• The effect of the Regulation is to regulate interprovincial trade:• “[W]hat the order in question does is really to prescribe the

conditions under which the hogs may be brought in from outside and that is, in itself, interprovincial trade. It is not an incident of the operation of slaughter taking place within the province.”


Ratio: A provincial regulation that, in pith and substance, relates to the regulation of interprovincial trade is ultra vires. This will be manifestly the case where the provincial regulation specifically and directly applies to interprovincial trade.

CANADIAN INDUSTRIAL GAS AND OIL V SASKATCHEWAN [1978]Facts:

• “Provincial legislative authority does not extend to fixing the price to be charged or received in respect of the sale of goods in the export market.”

• As such, Saskatchewan applied a mineral income tax and royalty surcharge:• The mineral income tax is charged on the difference between the

well-head price and price at which the oil is sold (if not reasonable, to be determined by the Minister).

• The royalty surcharge is the difference between the well-head value (determined by the Minister) and the well-head price.

• The vast majority of Saskatchewan oil was exported.

• “[T]he effect of the legislation is to set a floor price for Saskatchewan oil purchased for export by the appropriation of its potential incremental value in interprovincial and international markets, or to ensure that the incremental value is not appropriated by persons outside the province.”


CANADIAN INDUSTRIAL GAS AND OIL V SASKATCHEWAN [1978]Martland J [Laskin CJ and Judson, Ritchie, Spence, Pigeon and Beetz JJ concurring]:

• The legislation is invalid as it “is directly aimed at the production of oil destined for export and has the effect of regulating the export price, since the producer is effectively compelled to obtain that price on the sale of his product.”

Dickson J [de Grandpré J concurring, dissenting]:

• “I can find nothing in the present case to lead me to conclude that the taxation measures imposed by the Province of Saskatchewan were merely a colourable device for assuming control of extra-provincial trade. The language of the impugned statute does not disclose an intention on the part of the Province to regulate, or control, or impede the marketing or export of oil from Saskatchewan. […] There are no impediments to the free movement of goods […].”


CANADIAN INDUSTRIAL GAS AND OIL V SASKATCHEWAN [1978]Dickson J [de Grandpré J concurring, dissenting]:

• The effect of the regulation has not been to impede the flow of interprovincial trade and commerce:• “On the basis of such concurrent findings it is hard to say that the

flow of commerce was in any way impeded, unless it can be said to relate to price.”


The dissentients seem to be of the view that for the provincial legislation to be invalid, it must be designed or aim at controlling or restricting export. Obtaining a better price for local producers is a legitimate provincial aim.

FEDERAL R

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R V EASTERN TERMINAL ELEVATOR [1925]Facts:

• Parliament had enacted Grain Act controlling and regulating grain elevators.

• The legislation was argued to be valid on the basis of s. 91(2).

Duff J:

• Federal legislation aimed at “regulat[ing] elevators and the occupations of those who make it their business to operate elevators” does not fall within s. 91(2). This is the regulation of local production, as such, outside the ambit of s. 91(2).

• The fact that a large majority of grain is destined for export does not make the case.

• The fact that the provinces could not regulate this together does not make the case. • “[I]t may often be that subsidiary legislation by the provinces or by the Dominion is

required to give full effect to some beneficial and necessary scheme of legislation not entirely within the powers of either.”

• Parliament can, however, declare the elevators “for the general advantage of Canada” under s. 92(10)(c) and, thereby, regulate them.

FederalLegislation

Ratio: Parliament cannot, under s. 91(2), regulate local trade even where the product will almost entirely be destined for export.

Obiter dicta: Leaving aside s. 91(2), Parliament can regulate local works declared “for the general advantage of Canada” under s. 92(10)(c).

What is ancillary or

incidental to s. 91(2) is

very limited.

REF RE NATURAL PRODUCTS MARKETING

ACT [1934]Facts:

• Parliament sought to create the “Dominion Marketing Board” with a broad power to regulate prices, quotas, etc for “natural products”

Duff CJ:

• [T]he authority to legislate for the regulation of trade and commerce does not contemplate the power to regulate by legislation the contracts of a particular business or trade in a single province.”

• “[I]t cannot […] be seriously contended that sweeping regulation in respect of local trade […] is, in the proper sense, necessarily incidental to the regulation of external trade or interprovincial trade or both combined.”

FederalLegislation

Ratio: Parliament cannot, under s. 91(2), regulate local production that may enter interprovincial or international trade.

CALOIL INC V AG CAN (NO 2) [1971]

Facts:

• Federal legislation allowed for regulations to be made prohibiting the importation of oil into parts of Canada subject to the condition that the oil permitted to be imported be consumed in specific locations.

• The appellant argued that this was an unconstitutional interference with local trade.

Pigeon J [Fauteux CJ and Abbott, Ritchie, Hall and Spence JJ]:

• It is true that once goods enter into Canada, they generally fall to be regulated by provincial law.

• However, measures incidental to regulating the import market can be adopted, even if this has the effect of regulating imported product within the province.

• “[I]nterference with local trade restricted as it is to an imported commodity, is an integral part of the control of imports in the furtherance of an extraprovincial trade policy and cannot be termed ‘an unwarranted invasion of provincial jurisdiction.’”

FederalLegislation

Ratio: Parliament can, under s. 91(2), regulate imported product after it has entered a province.

CONCLUSIONS

1. Provinces can pass laws in relation to trade and production within the province: Parsons; Home Oil• This is so even if the provincial regulation affects interprovincial or

international trade: Fédération des producteurs v Pelland

2. Provinces cannot pass laws in relation to interprovincial or international trade and commerce. Thus, laws that are “designed” or “aimed” to control or regulate interprovincial or international trade will not be valid: Manitoba Egg Reference• This applies whether or not the products are entering or leaving the

province: • Entering: Burns Food v Attorney General of Manitoba• Leaving: Canadian Industrial Gas and Oil v Saskatchewan

CONCLUSIONS

1. Parliament can pass laws in relation to interprovincial and international trade and commerce.

2. This does not mean that Parliament can regulate, incidentally, production within a province, even where a majority of that production is bound for export: Eastern Terminal Elevator

3. However, Parliament can regulate, incidentally, the treatment of imports after they enter a province: Caloil

GENERAL TRADE A

ND

COMMERCE

OVERVIEW

• The general trade and commerce power, must, like the national concern doctrine, helps us identify when a matter transcends local regulation under ss. 92(13) and (16). Rather than being a means to an end, it helps us consider whether something we are holding out to be an issue of national concern can fall within federal jurisdiction to regulate.

• As such, the indicia outlined in General Motors indicate, when satisfied, indicate that the proposed legislative scheme is necessary and will have an acceptable impact on the distribution of powers in the Canadian constitution.

• In this sense, it is somewhat like the national concern doctrine. Once we decide an issue related to trade and commence is of concern to the nation as a whole, and not just individual provinces collectively, if the indicia of the test set out in General Motors are satisfied, a legislative scheme may be validly enacted.

MACDONALD V VAPOR CANADA [1977]

Facts:

• Trade Marks Act, in s. 7(e) stated that “No person shall do any […] act or adopt any […] business practice contrary to honest industrial or commercial usage in Canada.”

• Section 53 provided a civil right of recourse for violations under the act.


Laskin CJ:

• The regulation of trademarks falls within the jurisdiction of Parliament: Canada Standard Trademark case [1937]

• Merely putting a provision within an otherwise valid act, however, does not result in that provisions validity.

• If, however, the provision was incidental to the valid exercise of federal power, it too would be valid.

• Here, the validity of the regulations turned on the general trade and commerce power. Whether or not a law is validly enacted under this power turns on:• The existence of a general regulatory scheme.• The existence of a general regulator.• The concern with industry as a whole rather than a particular

industry.


Laskin CJ:

• In this case, section 7 could not be said to be part of a broader regulatory scheme. There was no federal regulator—oversight was not exercised by a federal regulatory authority.

• Section 7(e) and the civil action found in s 53 could not be upheld as valid.

LABATT’S BREWERY V AG CANADA

Facts:

• The Federal Food and Drug Regulations had imposed quality and compositional standard on anything marketed as “light beer”

• The regulation could not be upheld based on interprovincial trade—beer is generally consumed in the province in which it is brewed.

• Optional labelling had been upheld as a valid exercise of general trade and commerce in the past. Here, however, the labelling could not really be said to be optional as “light beer” was a label already being widely used by the brewing industry.

LABATT’S BREWERY V AG CANADA

Estey J [Martland, Dickson, Beetz, and Pratte JJ concurring]:

• The regulation could not be sustained on the basis of general trade and commerce as it applied to a specific industry.

• In other words, it did not seek to regulate “in the sweeping general sense contemplated in Citizen’s Insurance v Parsons.”

Laskin CJ [dissent]:

• “Parliament should be able to fix standards that are common to all manufacturers of food, including beer, drugs, cosmetics and therapeutic devices, at least to equalize competitive advantages in the carrying on of businesses concerned with such products.”

• Consistent with s. 121 of the Constitution that relates to reducing trade barriers.

AG CANADA V CN AND CP TRANSPORT [1983]Facts:

• Attorney General of Canada prosecuted both CN and CP for violations of the Combines Investigation Act for unlawfully conspiring “to prevent or lessen unduly competition.”

• While there is no doubt these provisions could be sustained on the basis of Parliament’s power to make laws in relation to the substantive criminal law, in Dickson J’s view, in order to permit the AG of Canada to prosecute, another head of jurisdiction had to be found (see Hauser).

AG CANADA V CN AND CP TRANSPORT [1983]Dickson J:

• General trade and commerce must in some way be confined, or it would run roughshod over provincial jurisdiction to regulate local matters.

• Indicia:• the regulation must be concerned with trade and commerce “generally”

rather than specific industries or businesses;• there ought to be a national regulatory scheme;• there ought to be a national regulator;• the provinces, jointly or severally, must be unable to pass the legislation in

question (This, presumably, would result in the fact that they do not have the federal jurisdiction necessary to deal entirely with the general regulation);

• the failure to include one of the provinces would jeopardize the success of the regulation in other parts of the country.

AG CANADA V CN AND CP TRANSPORT [1983]Dickson J:

• Indicia are non-exhaustive nor conditions precedent to the second branch.• The proper approach [to determining whether a law is valid under the second

branch] is still the one suggested in Parsons: a careful case by case assessment. Nevertheless, the presence of [the] factors does at least make it far more probable that what is being addressed in a federal enactment is genuinely a national economic concern and not just a collection of local ones.

• In this case:• The regulation is general, as applying to competition (not a specific industry)• There is a regulatory scheme: the Combines Investigation Act• There is a national regulator: Director of Investigation and Research• Provinces could not enact it together because of interprovincial trade and

commerce aspects and national industries• Failure of one province to participate would significantly weaken the scheme.

MOTORS OF CANADA V CITY NATIONAL LEASING [1989]Facts:

• Section 31.1 of the Combines Investigation Act provided a civil cause of action for infractions under the Act.

• This was different from AG Canada v CN and CP Transports because there a provision giving a civil cause of action had not been challenged. In Macdonald v Vapor, while there had been a similar clause in the form of s. 53 of the Trademarks Act, the section prohibiting conduct itself, s, 7(e) had not been upheld as valid, therefore no issue of the validity of a civil remedy stemming there from had arisen.

MOTORS OF CANADA V CITY NATIONAL LEASING [1989]Dickson CJ:

• determine whether, in pith and substance, the provision itself falls within the jurisdiction of the body that enacted;• if it does, the provision is valid;• if it does not, determine whether, in pith and substance, the Act, of

which the provision constitutes a part, falls within the jurisdiction of the body that enacted it;• if it does not, the provision and Act are both invalid;• if it does, does the provision constitute a major or minor

encroachment into the jurisdiction of the other level of government?• if the provision constitutes a minor encroachment, it must just

be rationally or functionally connected to the objective of the Act in question;

• if the provision constitutes a major encroachment, it must be “truly necessary” or “integral” to the Act in question.

GENERAL REGULATION OF TRADE AND COMMERCE AFFECTING THE WHOLE COUNTRY• The “General Regulation” limb of the trade and commerce power,

first mentioned in Citizens Insurance v Parsons, did not rise to true prominence until City National Leasing.

• In City National Leasing, Dickson CJ laid out the test for determining the validity of federal legislation under this limb of the trade and commerce power.

• A federal regulatory scheme will be valid where:1. it is part of a regulatory scheme;2. it includes “oversight” by a “regulatory agency”;3. it is directed to “trade as a whole rather than [that of] a particular industry”;4. acting together “the provinces ... would be constitutionally incapable of

enacting” it;5. “the failure to include one or more of the provinces or localities in a legislative

scheme would jeopardize the successful operation of the scheme in other parts of the country.”

NB: “The above does not purport to be an exhaustive list, nor is the presence of any or all these indicia necessarily decisive.” Canadian National Transportation

MOTORS OF CANADA V CITY NATIONAL LEASING [1989]• The objective is to allow federal regulation in an area of

general trade and commerce concerning the nation as a whole while maintaining the distribution of powers in the Constitution.

• In this case, s. 31.1, in pith and substance, could not be said to be in relation to a federal head of power.

• The Combines Investigation Act, of which it constituted a part, however, was a valid exercise of the second branch of the trade and commerce power:

1.The Act constituted a comprehensive national regulation: “elucidated prohibited conduct, created an investigatory procedure for infractions, and established a remedial mechanism.”

2.There were national regulators: “the Director of Investigation and Research and to a lesser degree by the Restrictive Trade Practices Commission.”

MOTORS OF CANADA V CITY NATIONAL LEASING [1989]Dickson CJ3. The Act concerned trade as a whole and did not focus on specific

industries. 4. Regulation by the provinces, acting jointly or severally, would not

achieve the results: “It is evident that competition cannot be effectively regulated unless it is regulated nationally.”

5. The failure of one of the provinces to participate would jeopardize the successful operation of the regulation.

“In sum, the Combines Investigation Act is a complex scheme of competition regulation aimed at improving the economic welfare of the nation as a whole. It operates under a regulatory agency. It is designed to control an aspect of the economy that must be regulated nationally if it is to be successfully regulated at all.”

MOTORS OF CANADA V CITY NATIONAL LEASING [1989]Dickson CJ:

• The question remains, however, as to whether s. 31.1 is valid.

• Section 31.1 constituted a minor encroachment into provincial jurisdiction:• Limited to infractions under the Combines Investigation Act

• There was, at the very least, a rational connection between s. 31.1 and the Act. • There is a close congruence between the goals of enhancing

healthy competition in the economy in s. 31.1 which creates a private remedy dependent for its effectiveness on individual initiative.

• Both the Combines Investigation Act and, specifically, s. 31.1, which provides for a civil remedy in cases of breach under the Act, are valid.

REF RE SECURITIES ACT [2011]

Facts:

• Canada proposed a national securities act that would regulate:• Registration requirements for security dealers• Prospectus filing requirements• Disclosure requirements• Specific duties for market participants• Regulation of derivatives• Civil remedies, regulatory, and criminal offences relating to

securities

• The system provided an opt-in for Provinces.


• What is a securities market?• It provides a place in which investors can exchange their funds for

securities. • In essence, it connects those who have capital with those who need

capital.

• The validity of the act was submitted for a reference on the sole basis that the act be sustained on the second branch of s. 91(2).

• Canada argued that national securities regulation was needed because “the securities market [had] evolved from a provincial matter to a national matter affecting the country as a whole.”

• As the argument goes, “securities markets have undergone significant transformation in recent decades, evolving from local markets to markets that are increasingly national, indeed international.”


• While the reference asked the Court to consider the Act as a whole, it would be fair to break it down into a few different divisions:• Day-to-day operation of securities trade• Management of systemic risk: ss. 89 and 90 relating to derivatives,

s. 126(1) on short-selling, s. 73 on credit rating, s 228(4)(c) relating to urgent regulations.

• National data collection: ss. 109 and 224 on data collection

• While it was clear that the court regarded the second two as potentially reasonable exercise of the second branch, the regulation of day-to-day operation of the securities trade, • “[T]he Act is chiefly concerned with the day-to-day regulation of all

aspects of contracts for securities within the provinces.”


The Court:

• “[T]he general trade and commerce power authorizes laws where the national interest is engaged in a manner that is qualitatively different from provincial concerns. [...] The essence of the general trade and commerce power is its national focus.”

• In order to strike the right balance between accounting for changes in national issues of trade and commerce and maintaining the distribution of powers, Dickson CJ’s test in General Motors applies.


• Legislation enacted under the general branch “must be ‘qualitatively different from anything that could practically or constitutionally be enacted by the individual provinces either separately or in combination.’ The focus of the legislation must be general, although its effects may have local impact.”

• The five indicia provided by Dickson CJ were neither exhaustive nor conditions precedent. The reflect an underlying concern for allowing Parliament to legislate with respect to a matter that is genuinely national in importance and scope while respecting the distribution of powers in the Constitution.

• Thus, is the legislation, in pith and substance, in relation to the general branch of the trade and commerce power of Parliament?


• While the Act discloses a regulatory scheme and national regulator, it fails on the 3rd, 4th, and 5th indicia.

• 3rd: “The third question is whether the proposed Act is directed at trade as a whole rather than at a particular industry.”• While it might be argued the securities industry is not an industry, as such, as it

involves the exchange of capital, the reality is that the Act “reaches beyond such matters and descends into the detailed regulation of all aspects of trading in securities.”

• The fact that the act focused on the regulation of the securities trading industry, in its day-to-day operation was clearly material. It was not an act that applied generally to the market, but had more of the feel of Parsons, such that it was regulating a specific industry—the securities industry—within the province.

• “[T]he day-to-day regulation of securities within the provinces, which represents the main thrust of the Act, remains essentially a matter of property and civil rights within the provinces and therefore subject to provincial power.

• “Viewing the Act as a whole, we conclude that it overreaches the proper scope of the general branch of the trade and commerce power descending well into industry-specific regulation.”


• 4th: “The fourth General Motors consideration addresses the constitutional capacity of the provinces and territories to enact a similar scheme acting in concert.”• Insofar as reduction in risk is concerned, the Act may satisfy the 4th indicia:• “[B]ecause provinces could always withdraw from an interprovincial

scheme, there is not assurance that they could effectively address issues of national systemic risk and competitive national capital markets on a sustained basis.”

• “It follows that the fourth General Motors question must be answered, at least partly, in the negative. The provinces, acting in concert, lack the constitutional capacity to sustain a viable national scheme aimed at genuine national goals such as management of systemic risk or Canada-wide data collection.”

• However, the reach of the act into day-to-day regulation of the securities trade means that “the proposed federal Act overreaches the legislative interest of the federal government.”


• 5th: “The fifth and final General Motors inquiry is whether the absence of a province from the scheme would prevent its effective operation.”• “Viewed as a whole [...], because the main thrust of the proposed

Act is concerned with the day-to-day regulation of securities, the proposed Act would not founder if a particular province declined to participate in the federal scheme.”

• “Incidentally, we note that the opt-in feature of the scheme, on its face, contemplates the possibility that not all provinces will participate. This weighs against Canada’s argument that the success of its proposed legislation requires the participation of all provinces.”


• The Court, therefore, conclude that “the Act, viewed in its entirety, [does not address] a matter of genuine national importance and scope going to trade as a whole in a way that is distinct from provincial concerns” and, it is, therefore, an invalid exercise of federal power under the second branch of s. 91(2)

CONCLUSION

Trade and commerce consists of two branches:

• Interprovincial and international trade and commerce

• General trade and commerce affecting the nation

Under the first branch, Parliament can regulate actual trade passing across borders and, in limited circumstances, imports after entry. It seems, however, that it cannot control production in local markets, even where that production is bound for export.

Under the second branch, Parliament can regulate trade and commerce affecting the nation, providing:1. it is part of a regulatory scheme;2. it includes “oversight” by a “regulatory agency”;3. it is directed to “trade as a whole rather than [that of] a particular industry”;4. acting together “the provinces ... would be constitutionally incapable of

enacting” it;5. “the failure to include one or more of the provinces or localities in a legislative

scheme would jeopardize the successful operation of the scheme in other parts of the country.”

CONCLUSIONS

While the provinces have broad powers to regulate industry within the province, they cannot enact legislation that is designed or aimed at regulating interprovincial or international trade.

This restriction applies where they are seeking to control the price of their products for export, as well as protecting their internal markets from imports.

Where, however, provincial legislation has other genuine aims, such as protecting or supporting industries within the province, rather than excluding exports, it will be valid.

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