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General Motors of Canada v City National Leasing, [1989] 1 SCR 641

Facts:

Civil case brought by CNL against GM for anti-competitive pricing behaviour against Combines Investigation Act.

s.31.1 creates a civil cause of action, which is w/in the domain of the provinces to create. GM manufactures cars and CNL leases fleets of cars across Canada. Majority of CNL cars were bought from franchised GM dealers but not from GM directly. To finance car purchases between 1970 and 1980, CNL received interest rate support – a program offered by GM Acceptance Corp. CNL alleges that GM – directly or indirectly – had been paying preferential interest rate support to competitors of CNL on their car purchases

Issue(s):

Although s. 31.1 of the Combines Investigation Act creates a civil cause of action, may the section be upheld as constitutionally valid by virtue of its relationship with the Act itself?
1. Is the act valid under the federal trade and commerce power; and
2. Is s. 31.1 integrated in the act in such a way that it is also intra vires?

Ratio:

Test when challenging a provision of an act (not the entire act):
1. Court must determine whether the impugned provision can be viewed as intruding on provincial powers, and if so to what extent (if no intrusion inquiry ends):
**a. Do a pith and substance analysis of the provision – what does it do, why, etc.
2. Court must establish whether the act is valid (go through analysis of classification of the act – do pith and substance of entire act):
**a.If not valid, end of inquiry;
**b.If valid move on to 3.
3. Court must determine whether the impugned provision is sufficiently integrated w/ the scheme that it can be upheld by virtue of that relationship (this step is quite subjective):
**a. Requires considering the seriousness of the encroachment on prov powers, in order to decide proper standard for such relationship:
***i. If deeply instructive provisions only saved if it is necessarily incidental (act cannot function w/o that provision);
***ii.If it is a lower level of intrusion the provision can be saved it is has a rational, functional connection – further the operation of the act in some way (ensuring the provision is not just tacked on or colourable)

Test for General Trade and Commerce Power aka Parsons 2 (if provision is challenged, this corresponds to step 2 of necessarily incidental doctrine):
**1. Impugned legislation must be part of a general regulatory scheme (reqmt of form)
**2. The scheme must be monitored by continuing oversight of a regulatory agency (reqmt of form)
**3. Legislation must be concerned with trade as a whole rather than with a particular industry
**4. Legislation should be of a nature that the provinces jointly or severally would be constitutionally incapable of enacting (like Crown Zellerbach)
**5. 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
*List is NOT exhaustive – absence of one of these aspects is not fatal (apparently)
*The overriding consideration is whether what is being addressed in a federal enactment is genuinely a national economic concern and not just a collection of local ones

Analysis:

Validity of Section?
* Provision must be sufficiently related to that scheme for it to be constitutionally justified
* Section intrudes on an important provincial power in a limited way – provision is minimally intrusive – applied functional standard
* Correct approach is to ask whether the provision is functionally related to the general objective of the leg, and to the structure and content of the scheme

Holding:

It is a valid exercise of fed authority – the section of the Combines Investigation Act is valid as an integral part of the Act

s.31.1 is intra vires to the Fed Parl – The Act is valid under the fed trade and commerce power, it is valid under the 2nd branch of that power, the power over general trade and commxerce – also s.31.1 is constitutionally valid by virtue of being functionally related to the Act


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