A-705-79
Attorney General of Canada (Appellant) (Inter-
venor)
v.
Québec Ready Mix Inc., Lévis Ready Mix Inc.,
Pierre Viger, Dominion Ready Mix Inc., Jean
Desjardins, Marc Crépin, Verreault Frontenac
Ready Mix Inc., Claude Ferland, Michel Bérubé,
Pierre Legault, Pilote Ready Mix Inc., and
Gaston Pilote (Respondents) (Defendants)
and
Rocois Construction Inc. (Mise- en-cause) (Plain-
tiff)
and
Attorney General of the Province of Quebec
(Mis- en- cause) (Intervenor)
Court of Appeal, Pratte, Ryan and MacGuigan
JJ.—Quebec City, October 3; Ottawa, November
21, 1985.
Constitutional law — Distribution of powers — Trade and
commerce — Appeal from Trial judgment holding s. 31.1(1)(a)
of Combines Investigation Act ultra vires — S. 31.1 giving
civil right of action to person suffering damage resulting from
offence in relation to competition — Whether s. 31.1 valid
legislation under trade and commerce power — Appeal
allowed — Regulation of trade and commerce including gen
eral regulation of trade affecting whole dominion: Citizens
Insurance Company of Canada v. Parsons (1881), 7 App. Cas.
96 (P.C.) — Argument civil remedy based on another head of
power subject to limitations on civil remedies within criminal
process, establishing civil remedy given under s. 31.1(1)(a) not
supportable on basis of federal criminal jurisdiction — Princi
ple of paramount authority of s. 91 over s. 92 where federal
jurisdiction strictly relates to subject enumerated in s. 91, or
where matters necessarily incidental to effective legislation
applied — Supreme Court of Canada not upholding legisla
tion under trade and commerce power where not connected
with general regulatory scheme (MacDonald et al. v. Vapor
Canada Ltd., [1977] 2 S.C.R. 134) or for lack of generality of
regulation (Labatt Breweries of Canada Ltd. v. Attorney Gen
eral of Canada, [1980] 1 S.C.R. 914) — Of five indicia under
"general regulation of trade" described in Attorney General of
Canada v. Canadian National Transportation, Ltd. et al.,
[1983] 2 S.C.R. 206, only "oversight of national regulatory
agency" less complete as supplemented by initiatory rights of
private complainants — S. 31.1 relating "strictly" to subject
of legislation expressly enumerated in s. 91 — Even if validity
considered under "necessarily incidental" proposition, necessi
ty well expressed by notion of "rational, functional connec
tion" with overall plan of supervision (Multiple Access Ltd. v.
McCutcheon et al., [1982] 2 S.C.R. 161) — Balance of gov
ernmental regulation and private enforcement policy matter —
S. 31.1 infra vires as having rational functional connection
with overall federal economic plan manifested in Act in rela
tion to competition - Combines Investigation Act, R.S.C.
1970, c. C-23, ss. 31.1 (as enacted by S.C. 1974-75-76, c. 76,
s. 12), 31.2, 31.3, 31.4, 31.5, 31.6, 31.7, 31.8, 31.9, 32(1) (as
am. by S.C. 1974-75-76, c. 76, s. 14), 34(1)(c) (as am. by S.C.
1974-75-76, c. 76, s. 16) - Constitution Act, 1867, 30 & 31
Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am. by
Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1), ss. 91(2),(26),(27), 92(13),(16)
Trade Marks Act, R.S.C. 1970, c. T-10, s. 7(e) - Canada
Corporations Act, R.S.C. 1970, c. C-32, ss. 100.4 (as enacted
by R.S.C. 1970 (1st Supp.), c. 10, s. 7), 100.5.
Combines - Constitutional validity of s. 31.1(1) of Com
bines Investigation Act giving civil remedy for breach of prohi
bition in s. 32(1) - Appeal from Trial judgment finding
impugned legislation ultra vires - Historical examination of
treatment of anti-combines legislation as criminal legislation
- Conflicting case law since Trial judgment re constitutional
validity of s. 31.1 - Examination of case law relating to trade
and commerce power, criminal law power, paramountcy of
authority - S. 31.1 relating strictly to trade and commerce
power - S. 31.1 infra vires as having rational, functional
connection with overall federal economic plan manifested in
Act in relation to competition - Combines Investigation Act,
R.S.C. 1970, c. C-23, s. 31.1 (as enacted by S.C. 1974-75-76,
c. 76, s. 12).
Jurisdiction - Federal Court - Trial Division - Validity
of s. 31.1(3) of Combines Investigation Act giving jurisdiction
to Federal Court over action brought under s. 31.1(1) - Cause
of action provided by s. 31.1(1) existing and applicable federal
law supporting proceedings before Federal Court -
McNamara Construction (Western) Ltd. et al. v. The Queen,
[1977] 2 S.C.R. 654 and Quebec North Shore Paper Co. et al.
v. Canadian Pacific Limited et al., [1977] 2 S.C.R. 1054
applied - No jurisdiction over part of claim relating to art.
1053 of Civil Code - Combines Investigation Act, R.S.C.
1970, c. C-23, s. 31.1(1) (as enacted by S.C. 1974-75-76, c. 76,
s. 12), (3) (as enacted idem) - Civil Code of Lower Canada,
art. 1053.
Appeal from a preliminary ruling of the Trial Division
holding paragraph 31.1(1)(a) and subsection 31.1(3) of the
Combines Investigation Act ultra vires the federal Parliament.
The action was a claim for damages by the plaintiff, Rocois
Construction Inc., resulting from an agreement which the
defendants concluded among themselves in breach of prohibi
tions contained in the Act. Section 31.1 gives any person who
has suffered injury as a result of the commission of an offence
in relation to competition the right to institute, independently
of any criminal proceedings, an action in the Federal Court for
compensation against the perpetrators of any such act. In the
Trial Division, the exercise of federal legislative power was
defended on the basis of the general power in section 91 of the
Constitution Act, 1867, to make laws for the peace, order and
good government of Canada, and also on the basis of the trade
and commerce power (91(2)) and the criminal law power
(91(27)). The claim for federal jurisdiction was resisted on the
basis of the provincial powers over property and civil rights
(92(13)) and matters of a merely local or private nature in the
province (92(16)). Before this Court the appellant relied solely
on the trade and commerce power to support federal
jurisdiction.
Held, the appeal should be allowed.
Per Pratte J.: Since the judgment in BBM Bureau of Meas
urement v. Director of Investigation and Research, [1985] 1
F.C. 173; (1984), 52 N.R. 137 (C.A.), where Dickson J.'s
opinion in Attorney General of Canada v. Canadian National
Transportation, Ltd. et al., [1983] 2 S.C.R. 206 was adopted,
it has been established that the prohibitions established in
subsection 32(1) were validly enacted pursuant to the trade and
commerce power. Thus, the only question is whether section
31.1 was validly enacted. When the Constitution gives Parlia
ment the power to enact a prohibition it impliedly also gives it
the power to determine the consequences of that prohibition,
whether those consequences be of a civil or penal nature. That
principle does not apply when a legislative power is conferred in
terms such as to exclude its application. The power to legislate
with respect to criminal law does not include the power to
regulate the civil consequences of criminal acts because, by
definition, criminal law does not include that kind of regula
tion. The power to regulate trade and commerce is not subject
to the same limitation. The decisions in R. v. Zelensky, [1978]
2 S.C.R. 940 and MacDonald et al. v. Vapor Canada Ltd.,
[1977] 2 S.C.R. 134 do not apply. Zelensky dealt with the
power of Parliament to determine the civil effects of criminal
offences. As indicated, the limits that circumscribe the criminal
law power do not apply to the "trade and commerce" power.
The Vapor Canada case, which dealt with the constitutionality
of the prohibition in paragraph 7(e) of the Trade Marks Act is
relevant in discussing whether the prohibitions in subsection
32(1) were valid, but not in a discussion on the constitutionality
of subsection 31.1(1).
Per Ryan J.: Urie J. in the BBM Bureau of Measurement
case applied the tests applied by Dickson J. in the Canadian
National Transportation case. His reasons support a holding
that paragraph 32(1)(c) has a constitutional foundation in
subsection 91(2) of the Constitution Act, 1867.
The question whether Parliament can give a civil remedy for
damage caused by conduct in breach of a statutory provision
validly enacted under section 91 was raised in Multiple Access
Ltd. v. McCutcheon et al., [1982] 2 S.C.R. 161. Dickson J.
referred to a submission that Parliament could not constitution
ally enact section 100.4 of the Canada Corporations Act
because it confers a civil cause of action and thus would fall
within exclusive provincial jurisdiction. He held that sections
100.4 and 100.5 were intro vires having a "rational, functional
connection" with company law. The civil remedy provided by
section 31.1 has a "rational, functional connection" with sub
section 32(1). These two statutory provisions are linked by the
express reference in section 31.1 to Part V. The civil remedy
made available by section 31.1 to persons injured by conduct
proscribed by subsection 32(1) would provide a motive for
avoiding the prohibited conduct, and a means of redressing
some of the harmful consequences resulting from the proscribed
conduct. This link is enough to warrant concluding that section
31.1 is at least incidental to the regulation of trade and
commerce. This conclusion is supported by Laskin J.'s state
ment in Papp v. Papp, [1970] 1 O.R. 331 (C.A.) that "where
there is admitted competence ... to legislate to a certain point
the question of limits ... is best answered by asking whether
there is a rational, functional connection between what is
admittedly good and what is challenged". It would be more
appropriate in view of this link to characterize section 31.1 as
legislation coming "squarely under" subsection 91(2), as legis
lation directly related to the regulation of trade and commerce:
Nykorak v. The Attorney General of Canada, [1962] S.C.R.
331. A broader base for the constitutional validity of section
31.1 would be found in the circumstance that section 31.1 fits
comfortably within what is an elaborate legislative scheme
established by the Act, the purpose of which is the general
regulation of trade affecting the whole dominion. The present
case is distinguishable from Vapor Canada where paragraph
7(e) of the Trade Marks Act was held to be an isolated
provision lacking any rational or functional link to provisions of
the Act relating to trade marks or their regulation.
Per MacGuigan J.: Historically Canadian anti-combines
legislation was treated as criminal legislation. However, there
has been increasing support for the decriminalization of anti-
combines legislation. The 1975 amendments to the legislation
were made in the aftermath of a report by the Economic
Council of Canada, recommending that competition policy be
on a civil rather than a criminal base and that a specialized
tribunal be created. Certain features of criminal law and
procedure, such as the onus of proof beyond a reasonable doubt
and the handling of charges by ordinary courts in ways that do
not permit a full exploration of economic facts and analyses,
are ill-suited to the effective treatment of some situations and
practices relevant to competition policy.
Since the Trial Division decision, the issue of the constitu
tional validity of section 31.1 has been litigated in two other
cases. In Henuset Bros. Ltd. v. Syncrude Canada Ltd. et al.
(1980), 114 D.L.R. (3d) 300 (Alta. Q.B.), section 31.1 was
found to form an integral part of an overall legislative and
regulatory scheme for the general regulation of trade and
commerce throughout Canada. In City National Leasing Ltd.
v. Genera! Motors of Canada Ltd. (1984), 47 O.R. (2d) 653
(H.C.), it was held that section 31.1 was ultra vires as it was
not really necessary for the Combines Investigation Act to be
effective.
In R. v. Hoffman-LaRoche Ltd. (Nos. I & 2) (1981), 125
D.L.R. (3d) 607 (Ont. C.A.), paragraph 34(1 )(c) of the Com
bines Investigation Act was upheld under the trade and com
merce power. In the Canadian National Transportation case,
Dickson J. upheld paragraph 32(1)(c) under both the criminal
law power and the trade and commerce power. Beets and
Lamer JJ. agreed that the legislation was validly enacted under
the criminal law power. Finally, in BBM Bureau of Measure
ment, section 31.4 was upheld under the trade and commerce
power. Urie J. stated that the federal trade and commerce
power and the provincial power over property and civil rights
do not erode each other, but are complementary.
The starting point for analysis is Citizens Insurance Com
pany of Canada v. Parsons (1881), 7 App. Cas. 96 (P.C.),
where it was held that "regulation of trade and commerce ...
include[s] general regulation of trade affecting the whole
dominion".
The respondents argued that even a civil remedy based on
another head of power must be subject to the limitations on
civil remedies within the criminal process, as defined by the
Supreme Court of Canada in R. v. Zelensky, [1978] 2 S.C.R.
940. It was argued that a similar point of view emerged from
the Vapor Canada case. The effect of the respondents' interpre
tation of the criminal law power does not go further than to
establish that the kind of civil remedy given by paragraph
31.1(1)(a) cannot be supported on the basis of federal criminal
jurisdiction. There is no reason to accept a criminal law inter
pretation of the independent trade and commerce power. The
respondents' interpretation is based on a contention that the
civil remedy authorized by the Act is a civil right which falls
under exclusive provincial competence through subsections
92(13) and 92(16). In other words, this exclusivity is based on
the priority of section 92 over section 91. However, in Attor-
ney-General for Canada v. Attorney-General for British
Columbia, [1930] A.C. 111 (P.C.), it was held that the legisla
tion of the federal Parliament so long as it strictly relates to
subjects of legislation expressly enumerated in section 91, is of
paramount authority, even though it trenches upon matters
assigned to the provincial legislatures by section 92. Further
more, Parliament can provide for matters, which though other
wise within provincial competence are necessarily incidental to
effective legislation upon a subject enumerated in section 91. If
there is a point of difficulty in the Vapor Canada case for the
appellants, it is the Court's unwillingness to ground federal
jurisdiction on subsection 91(2) for reasons other than its lack
of a tie-in to the criminal sentencing process. The impugned
legislation failed because, despite its nation-wide application, it
was a detached provision unconnected with any general regula
tory scheme. Since the result in Vapor Canada was a negative
one and the Court did not reflect generally on justifying a civil
remedy under the trade and commerce power beyond the point
to which it was necessary for a decision in that case, it is
difficult to establish a general theory of the trade and com
merce power based on Vapor Canada.
There was a similar negative result in Labatt Breweries of
Canada Ltd. v. Attorney General of Canada, [1980] 1 S.C.R.
914. That case concerned labelling of alcoholic content of
"light beer". The judgment was based upon the lack of general
ity of the regulation, resulting from the peculiarly local produc
tion for a local market. There is no larger delineation of the law
to serve as a guide for other cases.
Dickson J. in the Canadian National Transportation case
enumerated possible indicia of validity under the "general
regulation of trade" branch of the trade and commerce power.
These were summarized in the BBM case as: 1) the presence of
a national regulatory scheme; 2) the oversight of a regulatory
agency; 3) a concern with trade in general, rather than with an
aspect of a particular business; 4) the provinces jointly and
severally would be constitutionally incapable of passing such an
enactment; and 5) the failure to include one or more provinces
or localities would jeopardize successful operation in other
parts of the country.
With respect to section 31.1, four of the five indicia are
present. The only difference between the legislation upheld in
the Canadian National Transportation and BBM cases, and
that in section 31.1, is with respect to the oversight of the
regulatory agency, which here is less complete in that it is
supplemented by the initiatory rights of private complainants.
Section 31.1 relates "strictly" to a subject of legislation
expressly enumerated in section 91 (as opposed to "necessarily
incidental" to effective legislation). However, even if its validity
had to be assessed on the basis of whether it was "necessarily
incidental" legislation, the necessity of means depends upon the
character of the ends to which they are directed. The domain of
trade and commerce is not fixed. What is necessary in the light
of an interventionist conception of the economy will be different
from what is deemed necessary in relation to a free market
conception. The necessity of the means is relative to the end
sought. The necessity is well expressed as a "rational functional
connection" in Multiple Access Ltd. v. McCutcheon et al.,
[1982] 2 S.C.R. 161.
A civil remedy must be genuinely and bona fide integral with
the overall plan of supervision. The precise balance of govern
mental regulation and private enforcement is a matter of policy
for Parliament. Within the reasonable limits indicated, Parlia
ment must be free to adopt and even to experiment with various
approaches to the regulation of the economy.
Paragraph 31.1(1)(a) is thus within the jurisdiction of the
Parliament of Canada as having a rational, functional connec
tion with the overall federal economic plan manifested in the
Act in relation to competition, which plan also satisfies all the
criteria of validity under the federal trade and commerce
power.
Since the cause of action provided for by section 31.1 consti
tutes existing and applicable federal law which can be invoked
to support proceedings before the Court, subsection 31.1(3) is
valid.
The Court does not have jurisdiction to hear the part of the
plaintiffs claim relating to article 1053 of the Civil Code.
CASES JUDICIALLY CONSIDERED
APPLIED:
Attorney General of Canada v. Canadian National
Transportation, Ltd. et al., [1983] 2 S.C.R. 206; Attor-
ney-General for Canada v. Attorney-General for British
Columbia, [1930] A.C. 111 (P.C.); Multiple Access Ltd.
v. McCutcheon et al., [1982] 2 S.C.R. 161; McNamara
Construction (Western) Ltd. et al. v. The Queen, [1977] 2
S.C.R. 654; Quebec North Shore Paper Co. et al. v.
Canadian Pacific Limited et al., [1977] 2 S.C.R. 1054.
DISTINGUISHED:
MacDonald et al. v. Vapor Canada Ltd., [1977] 2 S.C.R.
134; Labatt Breweries of Canada Ltd. v. Attorney Gener
al of Canada, [ 1980] 1 S.C.R. 914; R. v. Zelensky,
[1978] 2 S.C.R. 940.
CONSIDERED:
Henuset Bros. Ltd. v. Syncrude Canada Ltd. et al.
(1980), 114 D.L.R. (3d) 300 (Alta. Q.B.); City National
Leasing Ltd. v. General Motors of Canada Ltd. (1984),
47 O.R. (2d) 653 (H.C.); R. v. Hoffman- LaRoche Ltd.
(Nos. 1 & 2) (1981), 125 D.L.R. (3d) 607 (Ont. C.A.);
BBM Bureau of Measurement v. Director of Investiga
tion and Research, [1985] 1 F.C. 173; (1984), 52 N.R.
137 (C.A.); Citizens Insurance Company of Canada v.
Parsons (1881), 7 App. Cas. 96 (P.C.); Papp v. Papp,
[1970] 1 O.R. 331 (C.A.).
REFERRED TO:
Proprietary Articles Trade Association v. Attorney-Gen
eral for Canada, [1931] A.C. 310 (P.C.); Goodyear Tire
and Rubber Company of Canada Limited v. The Queen,
[1956] S.C.R. 303; R. v. Campbell (Note) (1966), 58
D.L.R. (2d) 673 (S.C.C.); Re: Anti-Inflation Act, [1976]
2 S.C.R. 373; Attorney-General for Canada v. Attorney-
General for Alberta, [1916] 1 A.C. 588 (P.C.); In re
Board of Commerce Act, 1919, and Combines and Fair
Prices Act, 1919, [1922] I A.C. 191 (P.C.); Nykorak v.
The Attorney General of Canada, [1962] S.C.R. 331.
COUNSEL:
Gaspard Côté, Q.C. for appellant.
Gérald Tremblay and Jean-Pierre Bel -
humeur for respondents Dominion Ready Mix
Inc., Jean Desjardins and Marc Crépin.
Henri-Louis Fortin for respondents Québec
Ready Mix Inc., Lévis Ready Mix Inc., Pierre
Viger, Verreault Frontenac Ready Mix Inc.,
Claude Ferland, Michel Bérubé and Pierre
Legault.
Normand Gagnon for mise-en-cause Rocois
Construction Inc.
Jean-François Jobin for mis -en-cause Attor
ney General of the Province of Quebec.
SOLICITORS:
Deputy Attorney General of Canada for
appellant.
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for respondents Dominion Ready
Mix Inc., Jean Desjardins and Marc Crépin.
Stein, Monast, Pratte & Marseille, Quebec
City, for respondents Québec Ready Mix Inc.,
Lévis Ready Mix Inc., Pierre Viger, Verreault
Frontenac Ready Mix Inc., Claude Ferland,
Michel Bérubé and Pierre Legault.
Gaudreau & St-Cyr, Quebec City, for mise-
en-cause Rocois Construction Inc.
Boissonneault, Roy & Poulin, Montreal, for
mis -en-cause Attorney General of the Prov
ince of Quebec.
The following are the reasons for judgment
rendered in English by
PRATTE J.: I agree with Mr. Justice Mac-
Guigan. I only wish to add a few observations
showing that the same result could, in my opinion,
be reached through a shorter route.
Since the judgment in BBM Bureau of Meas
urement v. Director of Investigation and
Research,' where this Court adopted the opinion
expressed by Mr. Justice Dickson (as he then was),
Mr. Justice Beetz and Mr. Justice Lamer in
Attorney General of Canada v. Canadian National
Transportation, Ltd. et al., 2 I consider it to be
established, at least in so far as this Court is
concerned, that the prohibitions contained in sub
section 32(1) of the Combines Investigation Act
[R.S.C. 1970, c. C-23 (as am. by S.C. 1974-75-76,
c. 76, s. 14)] were validly enacted by Parliament in
the exercise of its power to regulate trade and
commerce under subsection 91(2) of the Constitu
tion Act, 1867 [30 & 31 Vict., c. 3 (U.K.) [R.S.C.
1970, Appendix II, No. 5] (as am. by Canada Act
1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1)].
Thus, the only real problem raised by this
appeal is whether Parliament had the power to
enact subsection 31.1(1) [as enacted by S.C. 1974-
75-76, c. 76, s. 12] of the Combines Investigation
Act, a provision which obliges persons who violated
the prohibitions contained in subsection 32(1) to
compensate those to whom that violation caused
prejudice. I do not have any difficulty in answering
that question. In my opinion, when the Constitu
tion gives Parliament the power to enact a prohibi
tion it impliedly also gives it, as a rule, the power
to determine the consequences of the violation of
that prohibition, whether those consequences be of
a civil or penal nature. That principle, which
appears to me to have been applied by the
Supreme Court in . Multiple Access Ltd. v.
McCutcheon et al.,' obviously has no application
when a legislative power is conferred in terms such
as to exclude its application. Thus, the power
conferred on Parliament by subsection 91(27) to
legislate with respect to criminal law does not
include the power to regulate the civil conse
quences of criminal acts 4 because, by definition,
criminal law does not include that kind of regula
tions. However, the power to regulate trade and
[1985] 1 F.C. 173; (1984), 52 N.R. 137 (C.A.).
2 [1983] 2 S.C.R. 206.
3 [1982] 2 S.C.R. 161, at pp. 182 and 183.
° Except inasmuch as those consequences are considered as
part of the sentences to be imposed.
commerce granted to Parliament by subsection
91(2) is not subject to the same limitation.
The two decisions of the Supreme Court of
Canada that the respondents most frequently
invoked in argument, namely, R. v. Zelensky, 5 and
MacDonald et al. v. Vapor Canada Ltd., 6 have, in
my view, no application here. What was in ques
tion in Zelensky was the power of Parliament to
determine the civil effects of criminal offences. As
I have already said, the limits that circumscribe
the criminal law power do not apply to the "trade
and commerce" power. In the other case, Mac-
Donald et al. v. Vapor Canada Ltd., the Supreme
Court held that the prohibition contained in para
graph 7(e) of the Trade Marks Act [R.S.C. 1970,
c. T-10] was unconstitutional; that decision is rele
vant in discussing whether or not the prohibitions
contained in subsection 32(1) of the Combine.
Investigation Act were validly enacted; it has no
pertinence in a discussion on the constitutionality
of subsection 31.1(1) of the same Act.
* * *
The following are the reasons for judgment
rendered in English by
RYAN J.: I have had the advantage of reading
the reasons for judgment of Mr. Justice Pratte and
Mr. Justice MacGuigan. I, too, would allow the
appeal and set aside the judgment from which the
appeal was taken. I would also answer the two
questions in the way suggested by Mr. Justice
MacGuigan. I agree there should be no order as to
costs. I will state as concisely as h can my reasons
for concurring.
This action was brought in the Trial Division of
the Federal Court by the plaintiff, Rocois Con
struction Inc., claiming damages allegedly caused
it by an agreement to which the defendants were
parties, an agreement allegedly prohibited by sec
tion 32 of the Combines Investigation Act ("the
Act"), and more particularly by paragraph
32(1)(c). The statement of claim in. the action also
asserts a claim under the Quebec civil law. Two
preliminary questions were set down for argument
in the Trial Division, both of which were answered
5 [1978] 2 S.C.R. 940.
6 [1977] 2 S.C.R. 134.
in the negative. The learned Trial Judge held that
paragraph 31.1(1) (a) of the Act, authorizing the
bringing of a civil action to recover damages
caused by conduct proscribed by Part V of the
Act, and subsection 31.1(3), conferring jurisdic
tion on the Federal Court to entertain such an
action, are unconstitutional, and that, therefore,
the Federal Court lacks jurisdiction to entertain
this action. I agree with Mr. Justice MacGuigan
that the central issue is whether Parliament has
constitutional jurisdiction, under its power to legis
late in relation to the regulation of trade and
commerce, to provide a civil right of action to a
person claiming to have been damaged by conduct
constituting an offence under Part V of the Act,
and more particularly conduct proscribed by sub
section 32(1) of the Act.
Mr. Justice MacGuigan has quoted the relevant
provisions of the Constitution Act, 1867, including
among others subsections 91(2), 92(13) and (16),
and the relevant sections of the Act, including
section 31.1 and subsection 32(1). He has also
analyzed leading cases, particularly more modern
cases, on the trade and commerce clause. I will try
to avoid repetition.
In Attorney General of Canada v. Canadian
National Transportation, Ltd. et al., [1983] 2
S.C.R. 206, the right of the Attorney General of
Canada to prosecute an alleged offence under
subsection 32(1) of the Combines Investigation
Act was challenged. The majority of the Court
held that the Attorney General has power to prose
cute even assuming that the, Act, for constitutional
purposes, rests solely on the criminal law power
conferred by subsection 91(27) of the Constitution
Act, 1867. Mr. Justice Dickson (as he then was)
agreed in the result, but based his agreement on
his holding that the Act also has a constitutional
basis in subsection 91(2) of the Constitution Act,
1867, the power of Parliament to legislate in rela
tion to the regulation of trade and commerce. Mr.
Justice Beetz and Mr. Justice Lamer agreed in
substance with this holding.
This Court, in BBM Bureau of Measurement v.
Director of Investigation and Research, [1985] 1
F.C. 173; (1984), 52 N.R. 137 (C.A.), a case
involving the constitutional validity of section 31.4
(the "tied selling" provision) of the Act, held that
the section is valid by virtue of the power of
Parliament to legislate in relation to the regulation
of trade and commerce. Mr. Justice Urie, speaking
for the Court, applied the tests that were applied
by Mr. Justice Dickson in the Canadian National
Transportation case. As I read Mr. Justice Urie's
reasons, they would not only support the holding
that section 31.4 of the Act is constitutionally
based on subsection 91(2), but would also support
a holding that paragraph 32(1)(c) has a constitu
tional foundation in subsection 91(2) of the Con
stitution Act, 1867. I do not, at any rate, hesitate
so to hold; I would, with respect, follow Mr.
Justice Dickson's reasons in Canadian National
Transportation.
I recognize that subsection 31.1(1) of the Act
was not directly involved in either Canadian Na
tional Transportation or in BBM Bureau of
Measurement. The question whether Parliament
can give a civil remedy for damage caused by
conduct in breach of a statutory provision validly
enacted under section 91 of the Constitution Act,
1867, was, however, raised and resolved in Multi
ple Access Ltd. v. McCutcheon et al., [1982] 2
S.C.R. 161. In that case there was an issue wheth
er sections 100.4 and 100.5 of the Canada Corpo
rations Act [R.S.C. 1970, c. C-32 (as am. by
R.S.C. 1970 (1st Supp.), c. 10, s. 7)] are constitu
tionally valid. These sections have as their purpose
the protection of companies and shareholders
against injurious insider practices. Subsection
100.4(1) makes insiders of a company liable to
compensate a person for direct loss suffered as a
result of a transaction relating to the securities of
the company where the insider makes use of confi
dential information in connection with the transac
tion. The subsection also makes the insider
accountable to the company for any direct benefit
he may have received as a result of the transaction.
Section 100.5 provides a procedure for causing an
action to be brought by the Director of the Corpo
rations Branch where there are reasonable grounds
for believing that a company has a cause of action
under section 100.4, but has refused or failed to
commence an action or has failed to prosecute
diligently an action it has commenced.
Mr. Justice Dickson (as he then was) held, for a
majority of the Court, that sections 100.4 and
100.5 are valid by virtue of the authority of Parlia
ment to legislate, under the opening words of
section 91 of the Constitution Act, 1867, for the
peace, order and good government of Canada. He
examined the sections in their context within Part
I of the statute. He held that the sections are valid
as legislation in relation to companies with other
than provincial objects. He described them as
"company law". He said (at page 176): "They fit
properly and comfortably into Part I of the
Canada Corporations Act.... Their enactment by
Parliament is in the discharge of its company law
power."
Mr. Justice Dickson referred in his reasons to a
submission that Parliament could not constitution
ally enact section 100.4 because it confers a civil
cause of action and thus would fall within exclu
sive provincial jurisdiction. He said at pages 182
and 183:
One reservation with respect to the impugned sections of the
federal act may be in the imposition of civil liability in s.
100.4(1). Does this imposition of civil liability in a federal
statute so invade the provincial domain as to render the sections
imposing liability ultra vires? This, in essence, was the argu
ment of the appellants. But as Professors Anisman and Hogg
point out: "Judicial decisions concerning a number of disparate
matters such as federal elections, railways, federal corporations
and even divorce have upheld Parliament's jurisdiction to pro
vide civil relief in order to effectuate its legislative policies"
("Constitutional Aspects of Federal Securities Legislation" in
Proposals for a Securities Market Law for Canada (1979), vol.
3, chap. III, at p. 192). In my opinion, ss. 100.4 and 100.5 have
a general corporate purpose and a "rational, functional connec
tion" with company law. The sections in my view are intra vires
the Parliament of Canada.
The civil remedy provided by section 31.1 of the
Act has in my view "a rational, functional connec-
tion" with subsection 32(1). These two statutory
provisions are linked by the express reference in
section 31.1 to Part V. And the civil remedy made
available by section 31.1 to persons injured by
conduct proscribed by subsection 32(1) would pro
vide a motive for avoiding the prohibited conduct,
a motive in addition to that provided by the pre
scribed penalty. It would also provide a means of
redressing at least some of the harmful conse
quences resulting from the proscribed conduct.
This link between the remedial section 31.1 and
the substantive subsection 32(1), the subsection
describing the prohibited conduct, is in my opinion
enough to warrant concluding that section 31.1 is
at the very least incidental to the regulation of
trade and commerce. Given the nature of the
remedy provided by section 31.1, problems might,
I suppose, have arisen had constitutionality been
based solely on the criminal law power: see R. v.
Zelensky, [1978] 2 S.C.R. 940. Limitations that
might have resulted from a criminal law base are
not present, however, where, as here, there is a
constitutional base in subsection 91(2).
I would add that in Papp v. Papp, [1970] 1 O.R.
331 (C.A.), it was held that custody provisions of
the Divorce Act [R.S.C. 1970, c. D-8] were validly
enacted under subsection 91(26) of the Constitu
tion Act, 1867. Mr. Justice Laskin (as he then
was), speaking as a member of the Ontario Court
of Appeal, said at pages 335 and 336:
The Constitution is a working instrument addressed to legisla
tive bodies, and its implementation in legislation must be seen
as a social assessment by the enacting body of the scope of the
power which is invoked in any particular case. Where there is
admitted competence, as there is here, to legislate to a certain
point, the question of limits (where that point is passed) is best
answered by asking whether there is a rational, functional
connection between what is admittedly good and what is
challenged.
I have stated my view (a view in accordance with
the decision of this Court in BBM Bureau of
Measurement) that subsection 32(1) of the Com
bines Investigation Act is constitutionally valid
under subsection 91(2) of the Constitution Act,
1867, and I have also concluded that there is a
rational and functional link between subsection
32(1) and section 31.1. My conclusion that section
31.1 is constitutionally valid thus finds support in
the quotation from Mr. Justice Laskin's judgment,
as I read the quotation.
I would also add this. I have stated that section
31.1 of the Act can be considered as being at the
very least incidental to the regulation of trade and
commerce because of the rational and functional
link between section 31.1 and subsection 32(1). It
would, however, really be more appropriate, in
view of this link, to characterize section 31.1 as
legislation coming "squarely under" subsection
91(2) of the Constitution Act, 1867, as legislation
directly related to the regulation of trade and
commerce: see Mr. Justice Judson in Nykorak v.
The Attorney General of Canada, [1962] S.C.R.
331, at page 335.
I would observe more generally that even were it
necessary to seek a broader base than the link
between section 31.1 and subsection 32(1) of the
Act in support of a holding that section 31.1 is
constitutionally valid, it would seem to me that
such a base could well be found in the circum
stance that, to adopt Mr. Justice Dickson's words
in Multiple Access, section 31.1 fits comfortably
within what is an elaborate legislative scheme
established by the Act, a scheme including penal
sanctions, administrative processes, and civil reme
dies, the purpose of which is "general regulation of
trade affecting the whole dominion": see Citizens
Insurance Company of Canada v. Parsons (1881),
7 App. Cas. 96 (P.C.), at page 113. As I see it,
section 31.1 is an integral part of a "trade regula
tion" statute: the section is federal "trade regula
tion" law in much the same way as sections 100.4
and 100.5 of the Canada Corporations Act
[R.S.C. 1970, c. C-32 (as am. by R.S.C. (1st
Supp.), c. 10, s. 7)] are federal "company law".
I may say that I agree with Mr. Justice Pratte
and Mr. Justice MacGuigan that the present case
is distinguishable from MacDonald et al. v. Vapor
Canada Ltd., [1977] 2 S.C.R. 134. Paragraph 7(e)
of the Trade Marks Act, the statutory provision at
issue in Vapor, was held to be an isolated provision
lacking any rational or functional link to provi
sions of that Act relating to trade marks or their
regulation.
I stated at the outset that I agree that the
"second question", the question concerning the
jurisdiction of the Federal Court under subsection
31.1(3) of the Act, should be answered as Mr.
Justice MacGuigan proposes: I adopt his reasons
for answering the question in this way.
* * *
The following are the reasons for judgment
rendered in English by
MACGUIGAN J.: The principal question for
decision in this case is whether the Parliament of
Canada has the constitutional power under its
jurisdiction respecting the regulation of trade and
commerce to give a civil right of action to a person
who has suffered loss or damage as a result of an
offence in relation to competition.
I
This is a long-delayed appeal from a preliminary
ruling of the Trial Division on December 4, 1979,
holding paragraph 31.1(1)(a) and subsection
31.1(3) of the Combines Investigation Act ("the
Act") ultra vires the federal Parliament: reported
as Rocois Construction Inc. v. Quebec Ready Mix
Inc., [ 1980] 1 F.C. 184. The action brought by the
plaintiff, Rocois Construction Inc., was a claim for
damages resulting from an agreement which the
defendants concluded among themselves in breach
of prohibitions contained in the Act. The exact
terms of the questions before the Trial Division on
the preliminary ruling were as follows (supra, at
page 186):
1. the constitutionality of paragraph 31.1(1)(a) and subsec
tion 31.1(3) of the Combines Investigation Act, (R.S.C.
1970, c. C-23, as amended; and
2. the jurisdiction of the Federal Court to hear the claim of
plaintiff-respondent.
The legislation in question is as follows:
31.1 (I) 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.
(2) In any action under subsection (1) against a person, the
record of proceedings in any court in which that person was
convicted of an offence under Part V or convicted of or
punished for failure to comply with an order of the Commission
or a court under this Act is, in the absence of any evidence to
the contrary, proof that the person against whom the action is
brought engaged in conduct that was contrary to a provision of
Part V or failed to comply with an order of the Commission or
a court under this Act, as the case may be, and any evidence
given in those proceedings as to the effect of such acts or
omissions on the person bringing the action is evidence thereof
in the action.
(3) For the purposes of any action under subsection (1), the
Federal Court of Canada is a court of competent jurisdiction.
(4) No action may be brought under subsection (1),
(a) in the case of an action based on conduct that is contrary
to any provision of Part V, after two years from
(i) a day on which the conduct was engaged in, or
(ii) the day on which any criminal proceedings relating
thereto were finally disposed of,
whichever is the later; and
(b) in the case of an action based on the failure of any person
to comply with an order of the Commission or a court, after
two years from
(i) a day on which the order of the Commission or court
was violated, or
(ii) the day on which any criminal proceedings relating
thereto were finally disposed of,
whichever is the later.
This section gives any person who has suffered
injury as a result of the commission of an act
proscribed by Part V the right to institute,
independently of any criminal proceedings, an
action in the Federal Court for compensation
against the perpetrators of any such act. Part V is
entitled "Offences in Relation to Competition"
and creates as offences such actions as: conspiracy
or combination to lessen unduly competition in
certain respects; bid-rigging; conspiracy relating to
professional sport; the creation of monopolies; dis
criminatory sales; misleading advertising; double
ticketing; pyramid selling; referral selling; selling
at bargain prices without having enough items to
sell; selling above the advertised price; certain
practices in promotional contests. Subsection
32(1) deals specifically with acts of the kind with
which the defendants were charged:
32. (1) Every one who conspires, combines, agrees or
arranges with another person
(a) to limit unduly the facilities for transporting, producing,
manufacturing, supplying, storing or dealing in any product,
(b) to prevent, limit or lessen, unduly, the manufacture or
production of a product, or to enhance unreasonably the
price thereof,
(c) to prevent, or lessen, unduly, competition in the produc
tion, manufacture, purchase, barter, sale, storage, rental,
transportation or supply of a product, or in the price of
insurance upon persons or property,
(d) to otherwise restrain or injure competition unduly,
is guilty of an indictable offence and is liable to imprisonment
for five years or a fine of one million dollars or to both.
The Trial Judge's answers to the questions were as
follows (supra, at page 211):
To the first question, I would answer no. Paragraph
31.1(1)(a) and subsection 31.1(3) of the Combines Investiga
tion Act are not valid because they are ultra vires the powers of
Parliament.
Consequently, I would also answer no to the second question.
Subsection 31.1(3) being devoid of effect, this Court lacks
jurisdiction to hear the claim made by the action instituted.
I do not dispose of the action itself and make no ruling as to
costs, since no request was submitted in that regard.
Before the Trial Division the exercise of federal
legislative power in paragraph 31.1(1)(a) was
defended on the basis of the general power in
section 91 of the Constitution Act, 1867, to make
laws for the peace, order, and good government of
Canada, and also on the basis of the trade and
commerce power (91(2)) and the criminal law
power (91(27)). This claim for federal jurisdiction
was resisted on the basis of the provincial powers
in subsections 92(13) and 92(16). These provisions
of the 1867 Act are as follows:
91. It shall be lawful for the Queen, by and with the Advice
and Consent of the Senate and House of Commons, to make
Laws for the Peace, Order, and good Government of Canada,
in relation to all Matters not coming within the Classes of
Subjects by this Act assigned exclusively to the Legislatures of
the Provinces; and for greater Certainty, but not so as to
restrict the Generality of the foregoing Terms of this Section, it
is hereby declared that (notwithstanding anything in this Act)
the exclusive Legislative Authority of the Parliament of
Canada extends to all Matters coming within the Classes of
Subjects next herein-after enumerated; that is to say,-
2. The Regulation of Trade and Commerce.
27. The Criminal Law, except the Constitution of Courts of
Criminal Jurisdiction, but including the Procedure in Crimi
nal Matters.
And any Matter coming within any of the Classes of Subjects
enumerated in this Section shall not be deemed to come within
the Class of Matters of a local or private Nature comprised in
the Enumeration of the Classes of Subjects by this Act assigned
exclusively to the Legislatures of the Provinces.
92. In each Province the Legislature may exclusively make
Laws in relation to Matters coming within the Classes of
Subjects next herein-after enumerated; that is to say,-
13. Property and Civil Rights in the Province.
16. Generally all Matters of a merely local or private Nature
in the Province.
Before this Court counsel for the appellant, the
Attorney General of Canada, who was an interven-
or before the Trial Division, although not aban
doning his other arguments under section 91,
addressed his oral argument entirely to federal
jurisdiction based on the regulation of trade and
commerce, and it was understood by the parties
that that was the only basis on which the matter
would be decided by this Court.
II
In its origin (1889) [An Act for the Prevention
and Suppression of Combinations formed in
restraint of Trade, 1889 S.C., c. 41] Canadian
anti-combines legislation was criminal law pure
and simple, and in fact in 1892 it was incorporated
into the Criminal Code [The Criminal Code, 1892,
1892 S.C., c. 29], where it wholly remained until
1910. Since 1910 it has existed as distinctive legis
lation in the Combines Investigation Act but it
nevertheless was upheld by the Privy Council as
criminal legislation: Proprietary Articles Trade
Association v. Attorney-General for Canada,
[1931] A.C. 310 (P.C.). Various additions to fed
eral anti-combines law were subsequently upheld
by the Supreme Court of Canada as criminal
legislation: Goodyear Tire and Rubber Company
of Canada Limited v. The Queen, [ 1956] S.C.R.
303; R. v. Campbell (Note) (1966), 58 D.L.R.
(2d) 673 (S.C.C.). Over the years, however, there
has been increasing support for a decriminalization
of anti-combines legislation so as to permit more
selective prohibition of undesirable business activi
ties. This led the Government to request a study by
the Economic Council of Canada, which in its
1969 Interim Report on Competition Policy
(Ottawa, The Queen's Printer) recommended a
competition policy supportive of competitive
market forces. Its view of the fundamental purpose
of competition policy was set out in a passage that
I read as both descriptive and prescriptive (at
pages 8-9):
The institution and maintenance of a competition policy such as
presently exists in Canada may be taken to reflect a belief that,
over the greater part of the economy, competitive market forces
are potentially capable of allocating resources better and more
cheaply, with a less cumbersome administrative overhead, than
any alternative arrangement such as wholesale public owner
ship and control, detailed governmental regulation of enter
prise, or self-regulation by large industrial units within a
corporate state.. ..Thus the market does the job, and the
government's main responsibility, so far as efficiency in
resource allocation is concerned, is to see that the market is free
to do the best job of which it is capable. Competition is relied
on as the prime mechanism of social control ....
On this basis the Council recommended (at pages
195-196):
To put at least some flesh on the bones of these principles, we
have recommended that an important part of Canada's compe
tition policy legislation be on a civil rather than a criminal base,
and that a specialized tribunal be created. Uppermost in our
minds in suggesting these changes is the view that certain
features of criminal law and procedure, such as the onus of
proof beyond a reasonable doubt and the handling of charges
by ordinary courts in ways that do not permit a full exploration
of economic facts and analyses, are ill-suited to the effective
treatment of some situations and practices relevant for competi
tion policy. For this reason, it is suggested that only five
business practices should continue to be regarded as criminal
offences, and that the language of the statute invest the defini
tion of these offences with a greater degree of certainty and fair
warning than is now the case. For the rest, we have made the
assumption that it would prove constitutionally possible for the
federal government to establish a civil tribunal, perhaps under
the power to regulate trade and commerce. This tribunal would
address itself to mergers, business practices and export and
specialization agreements. Unlike the five instances where
criminal law still appears to be a valid approach, most of the
practices to be referred to the tribunal are capable in some
circumstances of working to the public advantage, but the
distinction between likely good and bad effects may require a
difficult weighing of relevant economic circumstances and
probabilities, and therefore a kind of expertise that only a body
of mixed professional disciplines could provide. The tribunal
would be armed with injunctive remedies, with the power to
recommend other remedies, and with a power of general
inquiry.
It is somewhat unfortunate that, despite an invi
tation to him to do so, counsel for the appellant
took no pains, on the model of the extrinsic ma
terial accepted in Re: Anti-Inflation Act, [1976] 2
S.C.R. 373, to bring to the Court's attention the
"evil" to which the extensive 1975 amendments to
the Combines Investigation Act were directed, but
we can take judicial notice of the fact that the
1975 amendments were made in the general after
math of the Economic Council report. These
amendments added to the statute a new civil juris
diction, making use principally of the existing
Restrictive Trade Practices Commission ("RTPC"
or "the Commission") equipped with a new quasi-
judicial function. Moreover, by section 31.1 the
civil remedy newly available to an injured person is
not limited to cases where there has been a convic
tion for an offence under Part V of the Act. By
subsection (2) a conviction is prima facie proof
that conduct contrary to the provisions of Part V
has taken place, but civil actions under subsection
(1) are not limited to situations of proved liability
under Part V. The civil remedy under subsection
31.1(1) does not depend upon the previous invoca
tion of Part V or on any action by the RTPC. It is
a power of self-help, which is argued by the
respondents to exist independently of the federal
regulatory scheme—and by the appellant that
such self-help is itself an integral part of the
federal regulatory plan.
In the six years since the decision by the Trial
Division there has been a considerable develop
ment of the law. First of all, the identical issue has
been litigated in two other cases. In Henuset Bros.
Ltd. v. Syncrude Canada Ltd. et al. (1980), 114
D.L.R. (3d) 300 (Alta. Q.B.), at page 308, Row-
botham J. held as follows: 7
When s. 31.1 is read in context with the other provisions of
the Combines Investigation Act, as amended, it forms an
integral part of an overall legislative and regulatory scheme or
tapestry for the general regulation of trade and commerce
throughout Canada, and, although it affects to some degree
property and civil rights in the Provinces, it is within the
legislative competence of the Parliament of Canada pursuant to
s. 91(2) of the British North America Act, 1867.
In City National Leasing Ltd. v. General Motors
of Canada Ltd. (1984), 47 O.R. (2d) 653 (H.C.),
at page 662, however, Rosenberg J. in Ontario
held the contrary:
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 oper
ated without such a provision. It cannot be justified as a
necessary part of an administrative scheme set up by the Act.
7 The hearing in Henuset took place September 4-7, 1979, a
month before that in the Trial Division in this case, but the
decision was not given for six months after the decision in the
present case. Apparently, the Alberta Court did not have the
Federal Court decision drawn to its attention during this
lengthy period.
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.
In Regional Municipality of Peel v. MacKenzie et al.,
[1982] 2 S.C.R. 9, 139 D.L.R. (3d) 14, 42 N.R. 572 (S.C.C.),
Mr. Justice Martland was dealing with s. 20(2) of the Juvenile
Delinquents Act. The section provided that upon finding that
the child was a juvenile delinquent, the judge can order the
child to be placed in a particular situation or foster home and
the section provided that the judge could determine who is to
pay for support. The statute itself had been held valid many
years before and it was argued that s. 20(2) was necessarily
incidental because the judge hearing the case had to be sure
that if he ordered the juvenile delinquent into a group home the
costs would be paid. Mr. Justice Martland said at p. 22 S.C.R.,
pp. 24-5 D.L.R., p. 585 N.R.:
This is not legislation in relation to criminal law or criminal
procedure, and it was not truly necessary for the effective
exercise of Parliament's legislative authority in these fields
. It could not be justified in the absence of a direct link
with federal legislative power under s. 91(27). There is no
direct link between the municipality "to which the child
belongs" and the issue of the child's criminality. The obliga
tion sought to be imposed on the municipality arises only
after the criminal proceedings have been completed and
sentence has been imposed. (Emphasis added.)
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 effec
tive. Section 31.1 is accordingly ultra vires the Parliament of
Canada.
We were informed that this case is presently under
appeal to the Ontario Court of Appeal.
In R. v. Hoffman-LaRoche Ltd. (Nos. I & 2)
(1981), 125 D.L.R. (3d) 607, at page 649 the
Ontario Court of Appeal upheld a conviction for
substantially lessening competition under para
graph 34(1)(c) of the Combines Investigation Act.
In the words of Martin J.A. for the Court:
... it is not material to the constitutional question here raised
that a particular offence created by the enactment may proper
ly be characterized as criminal law, or could have been enacted
under the criminal law power. The learned trial Judge conclud
ed, rightly in my view, that the Combines Investigation Act
could also be supported under the trade and commerce power
as well as under s. 91(27). He said (at pp. 191-2 O.R., pp. 28-9
C.C.C., pp. 32-3 D.L.R., p. 175 C.P.R.):
... I am of the view that s. 34(1)(c) can also be constitution
ally supported on the basis of s. 91(2). It is part of a
legislative scheme aimed at deterring a wide range of unfair
competitive practices that affect trade and commerce gener
ally across Canada, and is not limited to a single industry,
commodity or area. The conduct being prohibited is general
ly of national and of international scope. The presence or
absence of healthy competition may affect the welfare of the
economy of the entire nation. It is, therefore, within the
sphere of the federal Parliament to seek to regulate such
competition in the interest of all Canadians. (It would likely
be otherwise, however, if the competition being regulated was
merely of a local nature, in which case, the matter might not
fall within the federal trade and commerce power.)
In Attorney General of Canada v. Canadian
National Transportation, Ltd. et al., [1983] 2
S.C.R. 206, at pages 277-278, Dickson J. (as he
then was) in a concurring judgment upheld para
graph 32(1)(c) of the Combines Investigation Act
as valid federal legislation under both the criminal
law power and the trade and commerce power, and
in the course of his reasons for judgment reflected
adversely on the concern of the Trial Judge in the
present case that this kind of interpretation of the
trade and commerce power might erode the local
autonomy in economic regulation contemplated by
the Constitution. (This is a point to which I shall
return). Beetz and Lamer JJ. agreed with
Dickson J. that the legislation was validly enacted
under subsection 91(2) of the Constitution Act,
1867.
Finally, in BBM Bureau of Measurement v.
Director of Investigation and Research, [1985] 1
F.C. 173; (1984), 52 N.R. 137 (C.A.), this Court
upheld section 31.4 of the Act dealing with tied
selling. Urie J. wrote for the Court (at pages
188-189 F.C.; at page 147 N.R.):
I am of the opinion that section 31.4 meets all of the criteria
above referred to and is, without more, valid federal legislation
under subsection 91(2) of the Constitution Act, 1867. Read in
context with the other provisions of the Act, it is clearly part of
a complex regulatory scheme, not aimed at a particular busi
ness or industry but at the general regulation of trade and
commerce throughout Canada for the benefit of Canadians in
general. Inevitably individual businesses will be affected and
touched by its application. But, if that were to be determinative
of its validity and meant that it was invalid the obvious
necessity for its existence for the betterment of Canadians
generally would be meaningless—it would be a toothless tiger.
By the same token, its valid existence does not encroach upon
the authority of the provinces to enact legislation (as many
have done) to regulate the business practices of those very
businesses, for the protection of the citizens of those provinces
as matters of property and civil rights. The authority provided
by subsection 91(2) and by subsection 92(13) are, as I see them
in this context, complementary. One does not erode the other.
Resort may be had to each for the purpose of ensuring that (a)
competition remains fair and keeps open for buyers throughout
the county adequate, real options, on the one hand, and (b) on
the other, that those buyers are protected from sharp, unethical
business practices in their dealings with individual businesses or
industries.
In all of the recent decisions by the Supreme
Court of Canada on the trade and commerce
power it appears to be common ground that the
starting point for analysis is Citizens Insurance
Company of Canada v. Parsons (1881), 7 App.
Cas. 96 (P.C.) and that the authority of such Privy
Council decisions written by Viscount Haldane as
the Insurance Reference case of 1916, Attorney-
General for Canada v. Attorney-General for
Alberta, [ 1916] 1 A.C. 588 (P.C.), and In re
Board of Commerce Act, 1919, and Combines and
Fair Prices Act, 1919, [1922] 1 A.C. 191 (P.C.)
has been greatly diminished. Laskin C.J. says
plainly in MacDonald et al. v. Vapor Canada Ltd.,
[1977] 2 S.C.R. 134, at page 163 that the trunca
tion of the federal trade and commerce power
"was arrested" in Proprietary Articles Trade
Association v. Attorney-General for Canada,
supra, and Estey J. in Labatt Breweries of Canada
Ltd. v. Attorney General of Canada, [ 1980] 1
S.C.R. 914, at page 942 says that "the trade and
commerce power has been rescued from near
oblivion". I propose generally to rely, therefore, on
the recent decisions of the Supreme Court in the
belief that what remains relevant of the Haldane
approach is incorporated in them. Nevertheless,
the words of Sir Montague Smith in the Citizens
Insurance case (supra, at page 113) provide what
Laskin C.J. referred to in Vapor Canada (supra,
at page 164) as "the guide or lead to the issue of
validity". For this reason those words remain
important:
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 of
trade in matters of inter-provincial concern, and it may be that
they would include general regulation of trade affecting the
whole dominion. Their Lordships abstain on the present occa
sion from any attempt to define the limits of the authority of
the dominion parliament in this direction. It is enough for the
decision of the present case to say that, in their view, its
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 of Ontario by No. 13 of sect. 92. [Emphasis
added.]
The emphasized words are often referred to as the
"second branch" of the Citizens Insurance descrip
tion of trade and commerce.
III
Parliament possesses no explicit power to establish
civil remedies like its jurisdiction to create crimi
nal offences under subsection 91(27). If not
assimilated in some way to the general power over
peace, order and good government, such a legisla
tive exercise as that under consideration is defen
sible only on the basis of another head of federal
power. In this instance the appellant urges subsec
tion 91(2), the trade and commerce power, as the
source of constitutional jurisdiction.
All of the respondents nevertheless strongly
pressed on us a criminal law analogy, that is, that
even a civil remedy based on another head of
power must be subject to the limitations on civil
remedies within the criminal process, as defined by
the Supreme Court of Canada in R. v. Zelensky,
[1978] 2 S.C.R. 940 in particular. In the Zelensky
case a compensation order in favour of the
accused's employer under section 653 of the
Criminal Code [R.S.C. 1970, c. C-34] was upheld
on a 6-3 division of the Court.
It was contended before us that the reasons for
judgment of the majority in Zelensky, as
expressed by Laskin C.J., restricted valid civil
remedies to those which are "part of the sen
tencing process" (at page 960) and that the Chief
Justice specifically warned that "It would be
wrong ... to relax in any way the requirement that
the application for compensation be directly
associated with the sentence imposed as the public
reprobation of the offence" (ibid.).
It was argued before us that a similar point of
view emerges from the Supreme Court decision in
the Vapor Canada case, unanimously rejecting a
civil remedy provided for by the Trade Marks Act
[R.S.C. 1970, c. T-10], as most clearly expressed
by Laskin C.J. (at pages 145-146):
Assuming that s. 7(e) (as, indeed, the other subparagraphs of
s. 7) proscribe anti-social business practices, and are thus
enforceable under the general criminal sanction of s. 115 of the
Criminal Code respecting disobedience of a federal statute, the
attempt to mount the civil remedy of s. 53 of the Trade Marks
Act on the back of the Criminal Code proves too much,
certainly in this case. The principle which would arise from
such a result would provide an easy passage to valid federal
legislation to provide and govern civil relief in respect of
numerous sections of the Criminal Code and would, in the light
of the wide scope of the federal criminal law power, debilitate
provincial legislative authority and the jurisdiction of provincial
Courts so as to transform our constitutional arrangements on
legislative power beyond recognition. It is surely unnecessary to
go into detail on such an extravagant posture. This Court's
judgment in Goodyear Tire and Rubber Co. of Canada Ltd. v.
The Queen, upholding the validity of federal legislation author
izing the issue of prohibitory order in connection with a convic
tion of a combines offence, illustrates the preventive side of the
federal criminal law power to make a conviction effective. It
introduced a supporting sanction in connection with the pros
ecution of an offence. It does not, in any way, give any
encouragement to federal legislation which, in a situation
unrelated to any criminal proceedings, would authorize
independent civil proceedings for damages and an injunction.
I point out also that s. 115 of the Criminal Code is, so to
speak, a "default" provision, coming alive when no "penalty or
punishment" is expressly provided, and I cannot subscribe to
the proposition that s. 115 can be a base upon which to support
the validity, under the federal criminal law power, of a com
pletely independent civil remedy, which lies only at the behest
of private parties claiming some private injury.
Even if I accept the interpretation of the crimi
nal law power urged by the respondents, I cannot
see that its effect goes further than to establish
that the kind of civil remedy given by paragraph
31.1(1)(a) of the Act could not be supported on
the basis of federal criminal jurisdiction. There is
no reason to accept a criminal law interpretation
of the independent trade and commerce power.
Such an interpretation is, I believe, based on the
primary contention of all the respondents in their
memoranda, viz., that the civil remedy authorized
by the Act is a civil right which falls under exclu
sive provincial competence through subsections
92(13) and 92(16). The contention is, in other
words, that this exclusivity is based on the priority
of section 92 of the 1867 Act over section 91.
That this is the wrong way around when it is a
question of an enumerated power in section 91 was
established by the Privy Council even in its period
of restrictive interpretation of federal powers, as
the classic words of Lord Tomlin in the Fish
Canneries case, Attorney-General for Canada v.
Attorney-General for British Columbia, [1930]
A.C. 111 (P.C.), at page 118, make clear:
Questions of conflict between the jurisdiction of the Parlia
ment of the Dominion and provincial jurisdiction have fre
quently come before their Lordships' Board, and as the result of
the decisions of the Board the following propositions may be
stated:—
(1.) The legislation of the Parliament of the Dominion, so
long as it strictly relates to subjects of legislation expressly
enumerated in s. 91, is of paramount authority, even though it
trenches upon matters assigned to the provincial legislatures by
s. 92: see Tennant v. Union Bank of Canada ([1894] A.C. 31).
(2.) The general power of legislation conferred upon the
Parliament of the Dominion by s. 91 of the Act in supplement
of the power to legislate upon the subjects expressly enumer
ated must be strictly confined to such matters as are unques
tionably of national interest and importance, and must not
trench on any of the subjects enumerated in s. 92 as within the
scope of provincial legislation, unless these matters have
attained such dimensions as to affect the body politic of the
Dominion: see Attorney-General for Ontario v. Attorney-Gen
eral for the Dominion ([1896] A.C. 348).
(3.) It is within the competence of the Dominion Parliament
to provide for matters which, though otherwise within the
legislative competence of the provincial legislature, are neces
sarily incidental to effective legislation by the Parliament of the
Dominion upon a subject of legislation expressly enumerated in
s. 91: see Attorney-General of Ontario v. Attorney-General for
the Dominion ([1894] A.C. 189); and Attorney-General for
Ontario v. Attorney-General for the Dominion ([1896] A.C.
348).
(4.) There can be a domain in which provincial and Domin
ion legislation may overlap, in which case neither legislation
will be ultra vires if the field is clear, but if the field is not clear
and the two legislations meet the Dominion legislation must
prevail: see Grand Trunk Ry. of Canada v. Attorney-General
of Canada ([1907] A.C. 65).
Of course, the question of what is "necessarily
incidental" has been a fertile ground of litigation,
as is indicated by the dissenting judgment of
Pigeon J. in the Zelensky case (at pages 979-984):
As to the nature of the enactment, it obviously deals with a
matter that is prima facie within provincial jurisdiction "satis-
faction or compensation for loss of or damage to property".
"Property and Civil Rights" is one of the most important heads
of provincial jurisdiction enumerated in s. 92 of the B.N.A.
Act....
Unlike practically every other procedural provision of the
Criminal Code, the remedy contemplated in s. 653 has the
characteristics of a civil remedy. It is available only "upon the
application of a person aggrieved". It is not sanctioned by a
penalty but it is "enforceable ... as ... a judgment rendered
... in civil proceedings". In short the substance of s. 653 is that
it enables a person who has suffered loss of or damage to
property by the commission of an indictable offence, to obtain
from the court of criminal jurisdiction a civil judgment against
the offender ....
I cannot find anything which would make it possible for me
to consider subss. (1) and (2) of s. 653 of the Criminal Code as
necessarily incidental to the full exercise by Parliament of its
authority over criminal law and criminal procedure.
However, not only did this approach not commend
itself to the majority of the Court, but Laskin C.J.
expressly rejected the notion of the fixed domain
of criminal jurisprudence, which could accommo
date a fixed field of provincial competence (at
page 951):
We cannot ... approach the validity of s. 653 as if the fields of
criminal law and criminal procedure and the modes of sentenc
ing have been frozen as of some particular time. New apprecia
tions thrown up by new social conditions, or re-assessments of
old appreciations which new or altered social conditions induce
make it appropriate for this Court to re-examine courses of
decision on the scope of legislative power when fresh issues are
presented to it, always remembering, of course, that it is
entrusted with a very delicate role in maintaining the integrity
of the constitutional limits imposed by the British North
America Act.
It is also clear from the reasons for judgment of
Dickson J. in the Canadian National Transporta
tion case (supra), which I shall shortly turn to,
that the trade and commerce power is not to be
interpreted through the federal criminal law
jurisdiction.
If there is a point of difficulty for the appellant
in the Vapor Canada case, it is not the rejection of
the federal argument under subsection 91(27) but
rather the Court's unwillingness to ground federal
jurisdiction on subsection 91(2) for reasons other
than its lack of a tie-in to the criminal sentencing
process. Laskin C.J. expressed his views on the
application of the trade and commerce power this
way (at pages 156, 164-165):
Overall, whether s. 7(e) be taken alone or, more properly, as
part of a limited scheme reflected by s. 7 as a whole, the net
result is that the Parliament of Canada has, by statute, either
overlaid or extended known civil causes of action, cognizable in
the provincial courts and reflecting issues falling within provin
cial legislative competence. In the absence of any regulatory
administration to oversee the prescriptions of s. 7 (and without
coming to any conclusion on whether such an administration
would in itself be either sufficient or necessary to effect a
change in constitutional result), I cannot find any basis in
federal power to sustain the unqualified validity of s. 7 as a
whole or s. 7(e) taken alone. It is not a sufficient peg on which
to support the legislation that it applies throughout Canada
when there is nothing more to give it validity.
The plain fact is that s. 7(e) is not a regulation, nor is it
concerned with trade as a whole nor with general trade and
commerce. In a loose sense every legal prescription is regulato
ry, even the prescriptions of the Criminal Code, but I do not
read s. 91(2) as in itself authorizing federal legislation that
merely creates a statutory tort, enforceable by private action,
and applicable, as here, to the entire range of business relation
ships in any activity, whether the activity be itself within or
beyond federal legislative authority. If there have been cases
which appeared to go too far in diminution of the federal trade
and commerce power, an affirmative conclusion here would, in
my opinion, go even farther in the opposite direction.
What is evident here is that the Parliament of Canada has
simply extended or intensified existing common and civil law
delictual liability by statute which at the same time has pre-
scribed the usual civil remedies open to an aggrieved person.
The Parliament of Canada can no more acquire legislative
jurisdiction by supplementing existing tort liability, cognizable
in provincial Courts as reflective of provincial competence, than
the provincial legislatures can acquire legislative jurisdiction by
supplementing the federal criminal law: see Johnson v. Attor-
ney-General of Alberta.
One looks in vain for any regulatory scheme in s. 7, let alone
s. 7(e). Its enforcement is left to the chance of private redress
without public monitoring by the continuing oversight of a
regulatory agency which would at least lend some colour to the
alleged national or Canada-wide sweep of s. 7(e). The provision
is not directed to trade but to the ethical conduct of persons
engaged in trade or in business, and, in my view, such a
detached provision cannot survive alone unconnected to a gen
eral regulatory scheme to govern trading relations going beyond
merely local concern. Even on the footing of being concerned
with practices in the conduct of trade, its private enforcement
by civil action gives it a local cast because it is as applicable in
its terms to local or intraprovincial competitors as it is to
competitors in interprovincial trade.
Evidently, the impugned legislation failed because,
despite its nation-wide application, it was a
detached provision unconnected with any general
regulatory scheme, and was considered to be
directed not to trade at all but to the ethical
conduct of persons engaged in trade or in business.
Since the result Vapor Canada was a negative
one, and the Court did not find it necessary to
reflect generally on justifying a civil remedy under
the trade and commerce power beyond the point to
which it was necessary for decision in that case, it
would be hard to establish a general theory of the
trade and commerce power based on Vapor
Canada. There was a similar negative result in
Labbatt Breweries of Canada Ltd. v. Attorney
General of Canada, [1980] 1 S.C.R. 914, pub
lished just after Trial judgment here, where a
divided Court found ultra vires federal labelling
provisions as to the alcoholic contents of "light
beer". The principal judgment may fairly be said
to be that of Estey J., who put the trade and
commerce issue in the case this way (at pages 939,
943-944):
The impugned regulations in and under the Food and Drugs
Act are not concerned with the control and guidance of the flow
of articles of commerce through the distribution channels, but
rather with the production and local sale of the specified
products of the brewing industry. There is no demonstration by
the proponent of these isolated provisions in the Food and
Drugs Act and its regulations of any interprovincial aspect of
this industry. The labels in the record reveal that the appellant
produces these beverages in all provinces but Quebec and
Prince Edward Island. From the nature of the beverage, it is
apparent, without demonstration, that transportation to distant
markets would be expensive, and hence the local nature of the
production operation. This distinction between the flow of
commerce, and production and local sale, if I may say so with
respect, is pointedly made by Pigeon J. in Reference Re
Agricultural Products Marketing Act, at p. 1293:
In my view, the control of production, whether agricultural
or industrial, is prima facie a local matter, a matter of
provincial jurisdiction. Egg farms, if I may use this expres
sion to designate the kind of factories in which feed is
converted into eggs and fowl, are local undertakings subject
to provincial jurisdiction under section 92(10) B.N.A. Act...
and at p. 1296
"Marketing" does not include production and, therefore,
provincial control of production is prima facie valid.
In the end, the effort of the respondent here is simply to
build into these regulations a validity essentially founded upon
the embryonic definition of the application of the trade and
commerce heading in the Citizens Insurance case, supra. That
observation and the subsequent references thereto are all predi
cated upon the requirement that the purported trade and
commerce legislation affected industry and commerce at large
or in a sweeping, general sense. In the context of the Food and
Drugs Acts, it follows that even if this statute were to cover a
substantial portion of Canadian economic activity, one industry
or trade at a time, by a varying array of regulations or trade
codes applicable to each individual sector, there would not, in
the result, be at law a regulation of trade and commerce in the
sweeping general sense contemplated in the Citizens Insurance
case, supra. That, in my view, is the heart and core of the
problem confronting the respondent in this appeal. Thus the
provisions regulating malt liquors relate either to a single
industry or a sector thereof, while other regulations appear to
concern themselves in a similar way with other individual
industries; the former being condemned by the Citizens Insur
ance case, supra, and the latter does not rescue the malt liquor
regulations by reason of the Board of Commerce case, supra.
I conclude, therefore, in this part, that the impugned sections
as they relate to malt liquors cannot be founded in the trade
and commerce head of jurisdiction.
Clearly it was the lack of generality of the regula
tion, resulting from the peculiarly local production
for a local market, that determined the result for
Estey J. and the three judges concurring with him.
But, again, there is no larger delineation of the law
which could serve as a sure guide in other cases.
Fortunately, we now have in the reasons for
judgment of Dickson J. in the Canadian National
Transportation case (supra), a fuller analysis than
was hitherto available. This Court has already in
the BBM case (supra) endorsed and applied the
reasoning of Dickson J. in upholding the tied-sell
ing provisions in section 31.4 of the Combines
Investigation Act.
In the Canadian National Transportation case
(supra) the Supreme Court upheld, inter alia,
charges of unlawful conspiracy to lessen competi
tion in interprovincial transport under paragraph
32(1)(c) of the Combines Investigation Act. The
majority of the Court did so on the basis of
subsection 91(27), but Dickson J. upheld the legis
lation under both subsection 91(27) and subsection
91(2). Beetz and Lamer JJ., while rejecting validi
ty on the basis of the criminal law, concurred with
Dickson J. with respect to validity based on the
trade and commerce power. Given that the stated
questions for the Court referred in terms only to
subsection 91(27), the Chief Justice in the princi
pal judgment found it unnecessary to deal with
validity under the trade and commerce power.
Dickson J. concluded his extensive survey of the
law with an enumeration of possible indicia of
validity under the "general regulation of trade"
branch of the trade and commerce power (at pages
266-268):
Every general enactment will necessarily have some local
impact, and if it is true that an overly literal conception of
"general interest" will endanger the very idea of the local, there
are equal dangers in swinging the telescope the other way
around. The forest is no less a forest for being made up of
individual trees. Whatever the constitutional flaws in The
Board of Commerce Act and The Combines and Fair Prices
Act, 1919, they cannot be attributed, as Duff J. seems to
contend, to the fact that any individual order made by the
Board would have its effect on a business or trade in the
province. Were that the test then no economic legislation could
ever qualify under the general trade and commerce power.
Such a conception is merely the obverse of the equally unac
ceptable proposition that economic legislation qualifies under
the general trade and commerce rubric merely because it
applies equally and uniformly throughout the country.
The reason why the regulation of a single trade or business in
the province cannot be a question of general interest through
out the Dominion, is that it lies at the very heart of the local
autonomy envisaged in the Constitution Act, 1867. That a
federal enactment purports to carry out such regulation in the
same way in all the provinces or in association with other
regulatory codes dealing with other trades or businesses does
not change the fact that what is being created is an exact
overlapping and hence a nullification of a jurisdiction conceded
to the provinces by the Constitution. A different situation
obtains, however, when what is at issue is general legislation
aimed at the economy as a single integrated national unit
rather than as a collection of separate local enterprises. Such
legislation is qualitatively different from anything that could
practically or constitutionally be enacted by the individual
provinces either separately or in combination. The focus of such
legislation is on the general, though its results will obviously be
manifested in particular local effects any one of which may
touch upon "Property and Civil Rights in the Province". Never
theless, in pith and substance such legislation will be addressed
to questions of general interest throughout the Dominion. The
line of demarcation is clear between measures validly directed
at a general regulation of the national economy and those
merely aimed at centralized control over a large number of
local economic entities. The regulations in the Labatt's case
were probably close to the line. It may also well be that, given
the state of the economy in 1920 and the actual mechanics of
the legislation, The Board of Commerce Act and The Combines
and Fair Prices Act, 1919, amounted simply to an attempt to
authorize the issuance of an uncoordinated series of local orders
and prohibitions.
In approaching this difficult problem of characterization it is
useful to note the remarks of the Chief Justice in MacDonald v.
Vapor Canada Ltd., supra, at p. 165, in which he cites as
possible indicia for a valid exercise of the general trade and
commerce power the presence of a national regulatory scheme,
the oversight of a regulatory agency and a concern with trade
in general rather than with an aspect of a particular business.
To this list I would add what to my mind would be even
stronger indications of valid general regulation of trade and
commerce, namely (i) that the provinces jointly or severally
would be constitutionally incapable of passing such an enact
ment and (ii) that failure to include one or more provinces or
localities would jeopardize successful operation in other parts of
the country.
The above does not purport to be an exhaustive list, nor is the
presence of any or all of these indicia necessarily decisive. The
proper approach to the characterization is still the one suggest
ed in Parsons, a careful case by case assessment. Nevertheless,
the presence of such 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.
These indicia of validity were summarized as fol
lows by Urie J. for this Court in the BBM case (at
pages 187-188 F.C.; at page 147 N.R.):
(a) The presence of a national regulatory scheme;
(b) the oversight of a regulatory agency;
(c) a concern with trade in general rather than with an
aspect of a particular business;
(d) the provinces jointly and severally would be constitution
ally incapable of passing such an enactment; and
(e) the failure to include one or more provinces or localities
would jeopardize successful operation in other parts of
the country.
I do not read Dickson J. as intending to add the
additional factor of constitutional balance as a
final test of validity when he says (at pages
277-279):
... it is still necessary even in the face of all these factors to
consider the issue of constitutional balance, and whether a
finding of validity under the trade and commerce power might
not erode the local autonomy in economic regulation contem
plated by the Constitution. This was the fear voiced by Mar-
ceau J. in Rocois Construction Inc. v. Quebec Ready Mix Inc.,
[1980] 1 F.C. 184 (T.D.), at p. 203:
It is because a general statute on competition as such, that
is a statute regulating competition beyond the detection,
prevention and penalization of disapproved and proscribed
acts, may make such an encroachment [on provincial
powers] possible that I do not think that it can be based on
the power of Parliament over trade and commerce. As the
prime mover in our system of production and exchange of
goods and services, competition depends on so many factors
and takes on so many aspects that it may give rise to
legislation as far reaching as it is diversified. To admit that,
as such, it is covered by Parliament's power pursuant to
subsection (2) of section 91, would be to open the door to a
potential trenching on the powers of the provinces which, in
my view, the courts have definitively rejected, despite their
persistent hesitation.
For the reasons cited earlier I would in any event be inclined
to reject this contention. To give it heed would amount to a
denial of the possibility of Parliament ever validly exercising its
general trade and commerce power, a power which if properly
understood and properly constrained does not erode local
autonomy but rather complements it. I would also, however,
mention an additional factor. A scheme aimed at the regulation
of competition is in my view an example of the genre of
legislation that could not practically or constitutionally be
enacted by a provincial government. Given the free flow of
trade across provincial borders guaranteed by s. 121 of the
Constitution Act, 1867 Canada is, for economic purposes, a
single huge marketplace. If competition is to be regulated at all
it must be regulated federally. This fact leads to the syllogism
cited by Hogg and Grover, The Constitutionality of the Com
petition Bill (1977), 1 Can. Bus. L.J. 197, at p. 200:
... regulation of the competitive sector of the economy can
be effectively accomplished only by federal action. If there is
no federal power to enact a competition policy, then Canada
cannot have a competition policy. The consequence of a
denial of federal constitutional power is therefore, in practi
cal effect, a gap in the distribution of legislative powers.
It has been suggested that in The King v. Eastern Terminal
Elevator Co., [1925] S.C.R. 434, at p. 448, [1925] 3 D.L.R. 1,
at p. 12, Duff J. endorsed the existence of such a distributive
gap when he identified as a "lurking fallacy" in a federal
argument the proposition "that the Dominion has such power
because no single province, nor, indeed, all the provinces acting
together, could put into effect such a sweeping scheme." I am
of the opinion that Duff J. was in this quote speaking of
logistical or financial obstacles standing in the way of provin
cial action. If he intended to go beyond this and identify an
area in which neither the federal nor the provincial government
could constitutionally legislate then, with great respect, I
believe him to have been in error. The same error would deny
federal constitutional competence to legislate under the general
trade and commerce power.
All these considerations lead to the conclusion that s.
32(1)(c) is valid federal legislation under s. 91(2) of the
Constitution Act, 1867 as well as s. 91(27). The Attorney
General of Canada also contends that s. 32(1)(c) is valid under
the peace, order and good government power, but in view of the
finding of validity under s. 91(2) it is unnecessary to pursue this
contention.
It seems to me that this analysis is either a
statement of the fourth indicium relating to the
inability of the provinces collectively to achieve the
same purpose or perhaps a summation of all the
considerations invoked, rather than constituting an
additional hurdle. In any event, Dickson J.'s treat
ment of the issue indicates that it is resolved by the
same type of considerations as those already con
tained in his five indicia. Of course, as he insists,
the list is neither exhaustive nor is the presence of
any particular sign or indication decisive.
I must therefore do what this Court has already
done in the BBM case (supra) and turn to an
analysis of the statutory provision in question in
the light of these indicia. In doing so it will be
necessary to keep in mind the counsel of Dickson
J. in the Canadian National Transportation case
(supra, at pages 270-271):
It is obvious at the outset that a constitutionally invalid
provision will not be saved by being put into an otherwise valid
statute, even if the statute comprises a regulatory scheme under
the general trade and commerce branch of s. 91(2). The correct
approach, where there is some doubt that the impugned provi
sion has the same constitutional characterization as the Act in
which it is found, is to start with the challenged section rather
than with a demonstration of the validity of the statute as a
whole. I do not think, however, this means that the section in
question must be read in isolation. If the claim to constitutional
validity is based on the contention that the impugned provision
is part of the regulatory scheme it would seem necessary to
read it in its context. If it can in fact be seen as part of such a
scheme, attention will then shift to the constitutionality of the
scheme as a whole. This is essentially the approach suggested
by the Chief Justice in his examination of the constitutionality
of the then s. 7(e) of the Trade Marks Act in MacDonald v.
Vapor Canada Ltd... .
IV
The 1975 amendments to the Act (S.C. 1974-75-
76, c. 76) included not only section 31.1, which
was added to Part IV on Special Remedies, but
also an entirely new Part IV.1 on Matters Review-
able by Commission, comprising sections 31.2,
31.3, 31.4, 31.5, 31.6, 31.7, 31.8 and 31.9, as well
as a new heading (Offences in Relation to Compe
tition) and many other additions to the offences
under Part V. The effect of Part IV.1 is to permit
the Restrictive Trade Practices Commission to
intervene directly to prohibit certain persons from
carrying out activities or practices that contravene
the rules of free competition. The personal remedy
in damages in subsection 31.1(1) was clearly con
ceived as an integral part of the overall plan,
providing aggrieved persons with the possibility of
a self-help remedy where the Commission has not
yet acted or by way of supplement to Commission
action where it has not been followed by compli-
ance by the offender. The legislative aim was
evidently a more complete and more effective
system of enforcement in which public and private
initiative can both operate to motivate and effectu
ate compliance.
The BBM case has already effectively upheld
the whole of Part IV.1 as well as the offences
provided for in section 32. With respect, then, to
section 31.1 in particular, four of the five indicia
set out by Dickson C.J. are clearly present: the
presence of a national regulatory scheme; a con
cern with trade in general rather than with an
aspect of a particular business; the constitutional
incapacity of the provinces taken jointly and sever
ally; the necessity for nation-wide coverage to
ensure successful operation everywhere. In fact, I
would see only one possible difference between the
legislation upheld in the Canadian National
Transportation and the BBM cases and that in
section 31.1, i.e., with respect to the oversight of
the regulatory agency, which here is less complete
in that it is supplemented by the initiatory rights
of private complainants. Is this a sufficient differ
ence to alter the characterization of this part of
the regulatory plan as constituting the general
regulation of trade and commerce?
Following the third proposition in the Fish Can
neries case (supra), the test of validity has often
been sought in whether federal legislation is
"necessarily incidental to effective legislation" by
Parliament under an enumerated head of section
91. In my view, the legislation in question here
falls rather under the first Fish Canneries proposi
tion relating "strictly" to a subject of legislation
expressly enumerated in section 91. But even if its
validity has to be assessed on the basis of the third
proposition, I would observe that in any event the
necessity of means depends on the character of the
ends to which they are directed. There is no more
a fixed domain of trade and commerce than there
is of criminal law. What is thought necessary in
the light of an interventionist conception of the
economy will be different from what is deemed
necessary in relation to a free market conception.
The necessity of the means is relative to the end
sought. Thus understood as a relational concept,
the necessity required for the third Fish Canneries
proposition can be seen to be well expressed by the
notion of a "rational, functional connection"
endorsed by Dickson J. in Multiple Access Ltd. v.
McCutcheon et al., [1982] 2 S.C.R. 161, at page
183. In the Multiple Access case the relevant
question for decision was whether sections 100.4
and 100.5 of the Canada Corporations Act, direct
ed at protecting companies and shareholders
against injurious insider trading, were ultra vires
Parliament. The majority of the Court (the divi
sion on this question was 6-3) held that the imposi
tion of civil liability in section 100.4 has a rational
functional connection with company law, and is
not therefore ultra vires, Dickson J. put it this way
for the majority (at pages 182-183): 8
One reservation with respect to the impugned sections of the
federal act may be in the imposition of civil liability in s.
100.4(1). Does this imposition of civil liability in a federal
statute so invade the provincial domain as to render the sections
imposing liability ultra vires? This, in essence, was the argu
ment of the appellants. But as Professors Anisman and Hogg
point out: "Judicial decisions concerning a number of disparate
matters such as federal elections, railways, federal corporations
and even divorce have upheld Parliament's jurisdiction to pro
vide civil relief in order to effectuate its legislative policies"
("Constitutional Aspects of Federal Securities Legislation" in
Proposals for a Securities Market Law for Canada (1979), vol.
3, chap. III, at p. 192). In my opinion, ss. 100.4 and 100.5 have
a general corporate purpose and a "rational, functional connec
tion" with company law. The sections in my view are infra vires
the Parliament of Canada.
8 Dickson J. also held (at p. 175) that "The validity of the
federal legislation must be determined without heed to the
Ontario legislation.", thus answering the concern of the Trial
Judge in the present case that a civil remedy could not be
properly ancillary to the trade and commerce power if such a
remedy already existed in provincial law.
I believe this is to say that such a civil remedy
must be genuinely and bona fide integral with the
overall plan of supervision. The precise balance of
governmental regulation and private enforcement
is, then, a matter of policy for Parliament. For a
Court to interfere with Parliament's legitimate
discretion would be an unwarranted extension of
judicial control into the political domain. That is
not to say that there might not be cases where a
Court could conclude that there was such a modi
cum of regulation by government or a connection
of so slight a character that it was not a rational,
functional relationship. But that is not the present
case.
Within the reasonable limits indicated, Parlia
ment must be free to adopt and even to experiment
with various approaches to the regulation of the
economy. From their respective perspectives, both
the courts and Parliament must respect those
reasonable limits. That, it seems to me, is of the
essence of the federal framework which defines the
expression of democracy in Canada.
V
In my view paragraph 31.1(1) (a) is thus within the
jurisdiction of the Parliament of Canada as having
a rational functional connection with the overall
federal economic plan manifested in the Act in
relation to competition, which plan also satisfies
all the criteria of validity under the federal trade
and commerce power.
With respect to the exercise of jurisdiction by
the Federal Court of Canada under subsection
31.1(3) the prerequisite is that there be existing
and applicable federal law which can be invoked to
support proceedings before the Court: McNamara
Construction (Western) Ltd. et al. v. The Queen,
[1977] 2 S.C.R. 654; Quebec North Shore Paper
Co. et al. v. Canadian Pacific Limited et al.,
[1977] 2 S.C.R. 1054. Since that prerequisite is
here satisfied by the cause of action provided for
by subsection 31.1(1), the validity of subsection
31.1(3) follows from that of paragraph 31.1(1)(a).
I would therefore allow the appeal and answer
the first question in the affirmative.
The second question relating to the Court's
jurisdiction to hear the plaintiff's claim has to be
answered with a qualification. That claim, as
stated in the statement of claim, is based in part on
article 1053 of the Civil Code of the Province of
Quebec. Since the Federal Court has no jurisdic
tion to decide that part of the claim, I would
therefore answer the second question as follows:
yes, but only with respect to proceedings brought
under existing and applicable federal law.
I would not make any order as to the costs of the
appeal.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.