Lecture 4 - Trade & Commerce

Canadian Constitutional – Lecture 4
Federal v Provincial Trade & Commerce Property

TRADE & COMMERCE
 Trade & Commerce = Economic Activity (Broad): production, distribution and
consumption of goods and services.
 Laws recognize property rights and enable people and business to acquire and dispose
of those rights through:
o Contractual relations
 Economic activity also includes
o Regulatory Legislation – positive/negative requirements on activity, licensing,
oversight, fairness and reduction of costs.
PROPERTY & CIVIL RIGHTS
 Has been around prior to confederation
 The framers understood it as private law vs public law
In order for 91(2) and 92(13) need to be read together
CASE EXAMPLE: Citizens’ Insurance v Parsons, (1880) 4 SCR 215 and 1881 UKPC at para 15
 “It could not have been the intention that a conflict should exist; and, in order to prevent
such a result, the two sections must be read together, and the language of one
interpreted, and, where necessary, modified, by that of the other. In this way it may, in
most cases, be found possible to arrive at a reasonable and practical construction of the
language of the sections, so as to reconcile the respective powers they contain, and give
effect to all of them.”
 FACTS: Parsons took out insurance in Ontario, and after a fire, the insurance company
refused to pay, saying Parsons didn't uphold all of the terms. Parsons sued, saying
Citizens' terms didn't comply with provincial insurance legislation. Citizens argued the
provincial law was ultra vires, and that insurance was federal jurisdiction.
 JCPC RULING: if there is overlap between two heads of power under ss 91 and 92, the
federal power will overrule the provincial one. However, overlap can be prevented by
construing federal heads of power narrowly. This dispute is a contract issue. It fits under
s 92(13), Property & Civil Rights
 RATIO: s 91(2) of the Constitution Act should be interpreted narrowly. Trade and
Commerce encompasses:
o 1) International Trade
o 2) Interprovincial trade
o 3) General regulation of trade affecting the whole dominion
 92(13) Property & Civil Rights includes:
o Contract
o Tort
o Property
TRADE & COMMERCE IS LIMITED TO:

 International / Interprovincial T & C; and
 General regulation of trade concerning Canada as a whole
o COURTS WERE RELUCTANT TO RECOGNISE THIS SECOND LIMB UNTIL GENERAL
MOTORS
PRINCIPLES OF PARSONS:
 PITH and SUBSTANCE – Dominant Issue was not regulating a federal company but rather
insurance industry a provincial jurisdiction.
 It was an insurance contract – contact law – relationship and private law.
 Federal Incorporated companies having to follow regulations was an incidental effect not
the dominate purpose.
 “Civil rights” must be given a broad interpretation.
 “Regulation of trade and commerce” must be given limited scope.
 “Incorporation” does not mean exclusive “regulation”.
 2 Branches to Federal Trade and Commerce:
(i) international/interprovincial; and
(ii) general regulation of trade affecting the whole of the dominion.
CASE EXAMPLE: General Motors of Canada LTD v City National Leasing LTD, [1989] 1 SCR 641
FACTS: It was discovered that GM, through GMAC (now Ally Financial), was giving CNL's
competitor a better interest rate than CNL. CNL contended that this was a practice of price
discrimination contrary to s. 34(1)(a) of the Combines Investigation Act, giving it a cause for
action under s. 31.1 of the Act. It sued GM for lost profits, related interest, and breach of
contract for damages arising after March 1980.
GMs DEFENCE: s. 31.1 is ultra vires Parliament, being in pith and substance legislation in relation
to provincial jurisdiction for property and civil rights and matters of a local or private nature.
RULING: The SCC considered whether the act was valid and whether it operated under Trade
and commerce power. They created the General Motors Test to determine Trade & Commerce is
validly exercised. (641 and 644 for the pith and substance)
3-STEP GENERAL MOTORS TEST
1) Consider extent to which impugned section of the statute intrudes into provincial
powers. If no intrusion only issue is validity of the statute.
2) Consider whether act as a whole is valid.

3) Consider whether the impugned provision sufficiently integrated into the Act as a whole.
5 INDICIA TO DETERMINE IF A LAW IS VALID?
1) Is Law Part of General Regulatory Scheme? Purpose??
2) Is the Scheme monitored by an oversight regulatory agency?
3) Is the Law/Legislation concerned with trade as a whole? Not a particular industry or
trade??
4) Is the Legislation of a nature that the provinces would be incapable of enacting? IE:
National Regulator??
5) Failure to include province(s) would jeopardise the scheme in other parts of Canada.
**3,4, and 5 are the more substantial indicia. 1 and 2 are quite simple**
REFERENCE RE: SECURITIES ACT (main issue if that federal legislation has an opt-out clause)
COOPERATIVE FEDERALISM
 Cooperative federalism facilitates interlocking federal/provincial schemes. It
accommodates overlapping jurisdiction and encourages intergovernmental cooperation
and, therefore, discourages courts from interfering with cooperative regulatory schemes
so long as they are not incompatible with the boundaries dictated by the Constitution
 Cooperative federalism cannot override or modify the division of powers itself; nor can it
impose limits on the otherwise valid exercise of legislative competence.
CRIMINAL HEAD OF POWER V PROPERTY AND CIVIL RIGHTS IN PROVINCE (91(27) V 92(13))
CASE EXAMPLE: Chatterjee v Ontario (Attorney General), [2009] 1 SCR 624
 Man at traffic stop was breaching probation so the police searched his entire car and
found $30,000 in cash and drug paraphernalia
 SCC Held: Provincial confiscation fit within the confines of the Provincial Legislation and
s92(13) because of the Pith and Substance – irrespective of legislation incidentally
affecting the Federal Criminal Law Power

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Canadian Constitutional – Lecture 4

Federal v Provincial Trade & Commerce Property

TRADE & COMMERCE IS LIMITED TO:

2) Consider whether act as a whole is valid.

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