City National Leasing Ltd. v. General Motors of Canada Ltd., (1989) 32 O.A.C. 332 (SCC)

• Judge: Dickson, C.J.C., Beetz, McIntyre, Lamer, Le Dain, La Forest and L'Heureux-Dube, JJ.
• Court: Supreme Court (Canada)
• Case Date: April 20, 1989
• Jurisdiction: Canada (Federal)
• Citations: (1989), 32 O.A.C. 332 (SCC);1989 CanLII 84 (SCC);[1989] RDI 263;[1989] 1 SCR 880

City Nat. Leasing v. General Motors (1989), 32 O.A.C. 332 (SCC)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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General Motors of Canada Limited v. City National Leasing and Attorney General of Canada, Attorney General for Alberta, Attorney General of British Columbia, Attorney General of Quebec and Attorney General for Saskatchewan

(No. 19724)

Indexed As: City National Leasing Ltd. v. General Motors of Canada Ltd.

Supreme Court of Canada

Dickson, C.J.C., Beetz, McIntyre, Lamer, Le Dain, La Forest and L'Heureux-Dube, JJ.

April 20, 1989.

Summary:

City National Leasing leased automobiles and trucks across Canada. City National purchased the majority of its vehicles from General Motors franchise dealers. To finance the purchases of GM vehicles between 1970 and 1980, City National received interest rate support through a program offered by General Motors. City National alleged that during that time General Motors, directly or indirectly, paid "preferential" interest rate support to competitors of City National respecting competitors' purchases of GM vehicles, in addition to the interest rate support available to City National. City National alleged that their exclusion constituted price discrimination contrary to s. 34(1)(a) of the Combines Investigation Act. City National brought a civil action against General Motors under s. 31.1 of the Act, claiming damages for breach of the Act.

General Motors applied under Ontario Practice Rule 126 to strike out certain paragraphs of the statement of claim as disclosing no cause of action. GM also alleged that s. 31.1 was ultra vires the federal Parliament as it infringed upon matters within the exclusive competence of the provinces under ss. 92(13) and (16) of the Constitution Act 1867. Alternatively, GM alleged that if s. 31.1 was valid, it was not retrospective and could not give rise to a cause of action in this case.

The motions court judge, in a decision reported in 12 D.L.R.(4th) 273, allowed the application to strike portions of the statement of claim. The judge also ruled that s. 31.1 was ultra vires the Parliament of Canada, but s. 31.1 was not retroactive and could not affect transactions between 1970 and the date of proclamation of the section on January 1, 1976. City National appealed.

The Ontario Court of Appeal, in a decision reported in 28 D.L.R.(4th) 158, and paragraphs 88 to 95 below, allowed the appeal in part. On the first issue, the court held that the statement of claim should proceed as issued. The Court of Appeal held that s. 31.1 was constitutionally valid, but agreed with the motions court judge that the section was not retroactive so as to allow City National to assert a claim for loss or damage in respect of transactions occurring before January 1, 1976. General Motors appealed.

The Supreme Court of Canada dismissed the appeal. The Supreme Court held that the Combines Investigation Act was intra vires Parliament under s. 91 (2) of the Constitution Act 1867 and that s. 31.1 was also within the legislative competence of Parliament.

Constitutional Law - Topic 2501

Determination of validity of statutes - General - The Supreme Court of Canada stated that the mere inclusion in a valid legislative scheme does not ipso facto confer constitutional validity upon a particular provision - The provision must be sufficiently related to that scheme for it to be constitutionally justified - The degree of relationship that is required is a function of the extent of the provision's intrusion into provincial powers - See paragraph 67.

Constitutional Law - Topic 5660

Federal jurisdiction - Regulation of trade and commerce - General - The Supreme Court of Canada discussed the scope of the trade and commerce power under s. 91(2) of the Constitution Act - The court stated that there are two aspects to this 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 - See paragraphs 19 to 23.

Constitutional Law - Topic 5660

Federal jurisdiction - Regulation of trade and commerce - General - The Supreme Court of Canada referred to the five hallmarks of validity for legislation under the second branch of the trade and commerce power - The court further stated that the five factors were not exhaustive of all general trade and commerce legislation, nor was the presence or absence of these five criteria necessarily determinative - Where the general trade and commerce power was advanced as a ground of constitutional validity, a careful case by case analysis remained appropriate - See paragraphs 32, 34.

Constitutional Law - Topic 5675

Federal jurisdiction - Regulation of trade and commerce - Maintenance of competition - The Supreme Court of Canada set out an approach for determining the constitutional validity of a section of the Combines Investigation Act (e.g., s. 31.1), under the general trade and commerce power - The court stated "First, the court must determine whether the impugned provision can be viewed as intruding on provincial powers, and if so to what extent (if it does not intrude, then the only possible issue is the validity of the Act). Second, the court must establish whether the Act (or a severable part of it) 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 that scheme meets the requirements articulated in Vapour Canada ... and in Canadian National Transportation ... If the scheme is not valid, that is the end of the inquiry. If the scheme of regulation 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)" - See paragraphs 38 to 47.

Constitutional Law - Topic 5675

Federal jurisdiction - Regulation of trade and commerce - Maintenance of competition - The Supreme Court of Canada held that the Combines Investigation Act was intra vires the federal Parliament under its general power over trade and commerce in s. 91(2) of the Constitution Act, 1867 - The court held that the Act as a whole embodied a complex scheme of economic regulation - This regulatory scheme was valid, where (1) the scheme operated under the oversight of an agency; (2) the Act was concerned with trade in general; (3) the provinces would not be constitutionally capable of enacting combines legislation and (4) the failure to include one or more provinces or localities would jeopardize the successful operation of the Act - See paragraphs 55 to 66.

Constitutional Law - Topic 5675

Federal jurisdiction - Regulation of trade and commerce - Maintenance of competition - Civil action - Section 31.1 of the Combines Investigation Act created a civil right of action for loss or damage resulting from breach of or failure to comply with the Act - The section appeared to encroach on provincial power, since the creation of civil actions was generally a matter within provincial jurisdiction under s. 92(13) of the Constitution Act, 1867 - The Supreme Court of Canada considered whether s. 31.1 was functionally related to the general objective of the valid Combines Investigation Act and to the structure and content of the scheme - The court concluded that s. 31.1 was an integral part of the Combines Investigation Act scheme regulating anti-competitive conduct - The court upheld the validity of the section under s. 91(2) of the Constitution Act - The court refused to read down the Act so that s. 31.1 would only apply to interprovincial trade - See paragraphs 48, 67 to 77, 86.

Courts - Topic 103

Stare decisis - Authority of judicial decisions - English and American authorities - American decisions - In determining the constitutional validity of s. 31.1 of the Combines Investigation Act, the Supreme Court of Canada stated that "although there are differences between s. 31.1 and the American civil action provisions, including the award of treble damages under American law, ... the American antitrust experience should not be overlooked" - See paragraph 74.

Trade Regulation - Topic 502

Competition - Purpose of Combines Investigation Act - The Supreme Court of Canada referred to the purpose of the Combines Investigation Act - See paragraph 55.

Trade Regulation - Topic 506

Competition - Civil remedy - Competition Act, s. 31.1 - [See third Constitutional Law - Topic 5675 above].

Cases Noticed:

Canadian National Transportation Limited and Canadian National Railway Company v. Attorney General of Canada et al., [1983] 2 S.C.R. 206; 49 N.R. 241; 49 A.R. 39, appld. [para. 8].

Vapor Canada Ltd. v. MacDonald, [1977] 2 S.C.R. 134; 7 N.R. 477, dist. [para. 8].

Peel, Regional Municipality of v. MacKenzie and Attorney General of Canada et al., [1982] 2 S.C.R. 9; 42 N.R. 572, refd to. [para. 8].

Rocois Construction Inc. v. Quebec Ready Mix Inc. (1989), 93 N.R. 388, refd to. [para. 12].

Proprietary Articles Trade Association v. Attorney General for Canada, [1931] A.C. 310, refd to. [para. 17].

Citizens' Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96, refd to. [para. 20].

Attorney General for Ontario v. Attorney General of Canada (Canada Standards Trade Mark), [1937] A.C. 405, refd to. [para. 24].

R. v. Dominion Stores Limited and Attorney General of Canada, [1980] 1 S.C.R. 844; 30 N.R. 399, refd to. [para.24].

John Deere Plow v. Wharton, [1915] A.C. 330, refd to. [para. 24].

Attorney General for Canada v. Attorney General for Alberta (Insurance Reference), [1916] 1 A.C. 588, refd to. [para. 25].

In re the Board of Commerce Act, 1919, and the Combines and Fair Prices Act, 1919, [1922] 1 A.C. 191, refd to. [para. 25].

Toronto Electric Commissioners v. Snider, [1925] A.C. 396, refd to. [para. 25].

The King v. Eastern Terminal Elevator Co., [1925] S.C.R. 434, refd to. [para. 25].

Attorney General for British Columbia v. Attorney General for Canada (Natural Products Marketing Reference), [1937] A.C. 377, refd to. [para. 25].

Canadian Federation of Agriculture v. Attorney General for Quebec (The Margarine Reference), [1951] A.C. 179, refd to. [para. 25].

Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626, refd to. [para. 27].

Canadian Wheat Board Act; The Queen v. Klassen (1959), 20 D.L.R.(2d) 406 (Man. C.A.), refd to. [para. 27].

Caloil Inc. v. Attorney General of Canada, [1971] S.C.R. 543, refd to. [para. 27].

Agricultural Products Marketing Act et al., Re, [1978] 2 S.C.R. 1198; 19 N.R. 361, refd to. [para. 27].

R. v. Hoffmann-La Roche Ltd. (Nos. 1 and 2) (1981), 33 O.R.(2d) 694 (C.A.), refd to. [para. 35].

R. v. Miracle Mart Inc. (1982), 68 C.C.C.(2d) 242 (Que. S.C.), refd to. [para. 35].

BBM Bureau of Measurement v. Director of Investigation and Research, [1985] 1 F.C. 173; 52 N.R. 137, refd to. [para. 35].

Seiko Time Canada Ltd. v. Consumers Distributing Co. (1980), 29 O.R.(2d) 221, refd to. [para. 36].

Rocois Construction Inc. v. Quebec Ready Mix Inc., [1980] 1 F.C. 184 (F.C.T.D.), refd to. [para. 36].

Henuset Bros. Ltd. v. Syncrude Canada Ltd. (1980), 33 A.R. 199; 114 D.L.R.(3d) 300, refd to. [para. 36].

Rocois Construction Inc. v. Quebec Ready Mix Inc. et al., [1985] 2 F.C. 40; 64 N.R. 209 (F.C.A.), refd to. [para. 36].

Westfair Foods Ltd. v. Lippens Inc. and 43887 Manitoba Inc., [1987] 6 W.W.R. 629; 49 Man.R.(2d) 220 (Q.B.), refd to. [para. 36].

Ontario Public Service Employees Union v. Ontario (Attorney General), [1987] 2 S.C.R. 2; 77 N.R. 321; 23 O.A.C. 161, refd to. [para. 45].

Papp v. Papp, [1970] 1 O.R. 331, refd to. [para. 46].

R. v. Zelensky, T. Eaton Co. Ltd. and Attorney General of Canada et al., [1978] 2 S.C.R. 940; 21 N.R. 372, refd to. [para. 46].

Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 46].

Northern Telecom Ltd. v. Communications Workers of Canada, [1980] 1 S.C.R. 115; 28 N.R. 107, refd to. [para. 46].

Clark v. Canadian National Railway Company and New Brunswick, [1988] 2 S.C.R. 680; 89 N.R. 81; 89 N.B.R.(2d) 116; 226 A.P.R. 116, refd to. [para. 46].

Foundation Company of Canada Ltd. v. Canada and Thomas Fuller Construction Co. (1958) Ltd., [1980] 1 S.C.R. 695; 30 N.R. 249, refd to. [para. 46].

Nykorak v. Attorney General of Canada, [1962] S.C.R. 331, refd to. [para. 48].

Jackson v. Jackson, [1973] S.C.R. 205, refd to. [para. 48].

Zacks v. Zacks, [1973] S.C.R. 891, refd to. [para. 48].

Cushing v. Dupuy (1880), 5 App. Cas. 409, refd to. [para. 49].

Labatt Breweries of Canada Ltd. v. Attorney General of Canada, [1980] 1 S.C.R. 914; 30 N.R. 496, refd to. [para. 58].

Perma Life Mufflers Inc. v. International Parts Corp. (1967), 392 U.S. 134, refd to. [para. 74].

Anti-Inflation Act, Re, [1976] 2 S.C.R. 373; 9 N.R. 541, refd to. [para. 78].

Statutes Noticed:

Civil Code of Lower Canada, art. 1053 [para. 62].

Combines Investigation Act, R.S.C. 1970, c. C-23, Part I [para. 51]; Part II, Part III [para. 52]; Part IV [paras. 53, 70]; Part IV.1 [paras. 53, 70, 75]; Part V [paras. 54, 70]; Part VI [para. 54]; sect. 28, sect. 29, sect. 29.1, sect. 30, sect. 32, sect. 32.2, sect. 33, sect. 34, sect. 36, sect. 36.1, sect. 36.2, sect. 36.3 [para. 54]; sect. 31.1 [paras. 1-3, 5-8, 10-11, 14-17, 23, 35-36, 40, 48, 50, 53, 61-62, 67-74, 76-83, 86-87, 89-90, 92-94]; sect. 34(1) [paras. 4, 6-7, 10, 72, 89-91, 93-94].

Constitution Act, 1867, sect. 91(2) [paras. 1, 5, 14, 17-20, 23-24, 26, 28, 30, 42, 47, 67]; sect. 92(10) [para. 46]; sect. 92(13) [paras. 14, 30, 48].

Copyright Act, R.S.C. 1970, c. C-30, sect. 20, sect. 21, sect. 22, sect. 23, sect. 24 [para. 84].

Patent Act, R.S.C. 1970, c. P-4, sect. 56, sect. 57, sect. 58, sect. 59, sect. 60, sect. 61, sect. 62 [para. 84].

Trade Marks Act, R.S.C. 1970, c. T-10, sect. 7(e) [paras. 31-32, 39, 79-84].

Authors and Works Noticed:

Anisman and Hogg, "Constitutional Aspects of Federal Securities Legislation" in Proposals for a Securities Market Law for Canada (1979), vol. 3, p. 190 [para. 73].

Canadian Economic Council, Interim Report on Competition Policy (July, 1969), pp. 108 [para. 61]; 109 [para. 73].

Hogg and Grover, The Constitutionality of the Competition Bill (1976), 1 Can. Bus. L.J. 197, pp. 199-200 [para. 59].

Hogg, Constitutional Law of Canada (2nd Ed. 1985), pp. 334, 336 [para. 45]; 447-448 [para. 25].

McDonald, Constitutional Aspects of Canadian Anti-Combines Law Enforcement (1969), 47 Can. Bar Rev. 161, p. 189 [para. 26].

Safarian, A.E., Canadian Federalism and Economic Integration (1974), p. 58 [para. 59].

Counsel:

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 Cote, 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 of Alberta.

Solicitors of Record:

Osler, Hoskin & Harcourt, Toronto, Ontario, for the appellant;

Stikeman, Elliott, Toronto, Ontario, for the respondent;

Frank Iacobucci, Ottawa, Ontario, for the intervener, the Attorney General of Canada;

Attorney General of Quebec, Ste-Foy, Quebec, for the intervener, the Attorney General of Quebec;

Attorney General of British Columbia, Victoria, British Columbia, for the intervener, the Attorney General of British Columbia;

Brian Barrington-Foote, Regina, Saskatchewan, for the intervener, the Attorney General for Saskatchewan;

Attorney General for Alberta, Edmonton, Alberta, for the intervener, the Attorney General for Alberta.

This appeal was heard before Dickson, C.J.C., Beetz, McIntyre, Lamer, Le Dain, La Forest and L'Heureux-Dubé, JJ., of the Supreme Court of Canada, on May 17 and 18, 1988. The decision of the Supreme Court was delivered by Dickson, C.J.C., in both official languages on April 20, 1989.

Le Dain, J., took no part in the judgment.