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Trade and Commerce Power
By section 91(2) of
the Constitution Act, 1867 the
federal Parliament was given the power to make laws in relation to the
“regulation of trade and commerce”.
Regulatory
Schemes and the Trade & Commerce Power
It is
well-established that there are several indicia for characterizing a matter
as a valid exercise of the general trade and commerce power. As
Dickson J. noted in A.G. Canada v. CN
Transport Ltd. (A.G. Ca. v. C.P.
Transport Co.), [1983] 2 S.C.R. 206, the indicia are:
1. The
presence of a national “regulatory scheme”
2. The oversight of a regulatory agency
3. The concern with trade in general, not a particular aspect of a business
4. Whether the provinces jointly or severally would be constitutionally
incapable of passing the enactment
5. Whether the failure to include one or more provinces would jeopardize
successful operation in other parts of Canada.
The
constitutional concept of a “valid regulatory scheme” is part of the
arsenal of techniques constitutional law utilizes to overcome the
difficulties of divided jurisdiction in a federal state. That being
said, there has been surprisingly little pronouncement on what “constitutes
a regulatory scheme”. This is even more surprising when one considers
that a “regulatory scheme” is also required in the context of indirect
tax. However, by examining the factual context of all of the trade
and commerce and taxation cases, it may be seen that certain characteristics
are present whenever a regulatory scheme exists.
First, the
party being regulated has caused the need for the regulation and receives
some benefit from the regulation. In the Reference Re Agricultural Products Marketing Act, [1978] 2
S.C.R. 1198 and Shannon v. Lower
Mainland Dairy Products Board, [1938] A.C. 708 cases, it was the
appellants’ economic activities that caused chaotic markets. It was
also the appellants who benefited from the introduction of order into these
markets. In the tax cases, the appellants do some activity which
causes the need for regulation. For example, in Allard Contractors v. Coquitlam (District), [1993] 4 S.C.R.
371, gravel truck operators caused damage to the municipal roads which
required levying a tax on those truck operators.
Second, the challenged statute delineates certain
required or prohibited conduct, creates an investigatory procedure
supervised by public regulators, and establishes remedial or punitive
mechanisms. In General
Motors v. City National Leasing, [1989] 1. S.C.R. 641, the orders at
issue prohibited conduct - activities which tended to reduce
competition in the marketplace. In the tax cases, businesses are
prohibited from operating without a licence, and to obtain a licence one
must pay a tax. Where there is a prohibited conduct in a regulatory
scheme, there must also be a punitive sanction either a fine or other
sanction. In Macdonald v.
Vapour Canada Ltd., [1977] 2 S.C.R. 134, Chief Justice Laskin stated
that:
One looks in vain for any regulatory scheme in s.7 let
alone s. 7(e) [of the challenged legislation]. 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 business, and, in my view, such a detached provision
cannot survive alone unconnected to a general regulatory scheme to govern
trading relations going beyond merely local concern. Even on the
footing of being concerned with practices in the context 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.
Third, the
major elements of the regulatory scheme should be statutory. A
totally discretionary ability to regulate, coupled with an absence of any
specific legislation on how to regulate, should not be upheld as a
regulatory scheme. There is no reason to believe that the regulatory
scheme must be found within one
statute: in the tax case Ontario Home
Builders, the regulatory scheme was found in any provincial legislation
from the Planning Act to the Fire Marshalls Act. Laskin C.J.C.s
comment above, such a detached provision cannot survive alone unconnected
to a general regulatory scheme is also indicative of the courts attention
to this element.
Finally, as
is obvious, the scheme must be a national regulatory scheme. In
either its design or effect the regulatory scheme should not be limited to
one local area. Moreover, the effect of the legislation should be
regulating interprovincial trade more than it does intraprovincial trade
(see Laskin C.J.C.s comments above). Presumably ancillary effects on
intraprovincial trade would be acceptable.
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