General Motors of Canada Ltd. v. City National Leasing [1989] 1 S.C.R. 641, is a leading Supreme Court of Canada

Supreme Court of Canada

The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...

 decision on the scope of the Trade and Commerce powers

Canadian federalism

Canada is a federation with two distinct jurisdictions of political authority: the country-wide federal government and the ten regionally-based provincial governments. It also has three territorial governments in the far north, though these are subject to the federal government...

 of the Constitution Act, 1867

Constitution Act, 1867

The Constitution Act, 1867 , is a major part of Canada's Constitution. The Act created a federal dominion and defines much of the operation of the Government of Canada, including its federal structure, the House of Commons, the Senate, the justice system, and the taxation system...

 as well as the interpretation of the Ancillary doctrine.

Background

During the 1970s General Motors (GM) sold vehicles to both City National Leasing (CNL) and to CNL's competitors. It was discovered that GM was giving CNL's competitor a better interest rate than CNL, which violated the federal Combines Investigation Act

Combines Investigation Act

The Combines Investigation Act was a Canadian Act of Parliament, implemented in 1910, passed in 1923 by MacKenzie King, which regulated certain corporate business practices that were anti-competitive. It prohibited monopolies, misleading advertising, bid-rigging, price fixing, and other means of...

. In its defence GM argued that the provision in the Act that created the civil cause of action

Cause of action

In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...

 was outside the legislative competence of the federal government.

The motions judge found that the provision was ultra vires

Ultra vires

Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...

the federal government and struck it out. The Court of Appeal overturned the decision.

The issues before the Supreme Court were

1. whether the Combines Investigation Act, either in whole or in part, was intra vires Parliament under s. 91(2) of the Constitution Act, 1867, and
2. whether s. 31.1 was within the legislative competence of Parliament.

Opinion of the Court

The Court found that the Act was valid under the General Trade and Commerce power, and that the provisions were necessarily incidental to the valid subject of the Act thus were valid as well.

Trade and commerce

The Court outlined the analysis for determining the constitutionality of a provision under the "general" branch of the Trade and Commerce power.
First, it must be determined "whether the impugned provision can be viewed as intruding on provincial powers, and if so to what extent". Second, it must be determined "whether the act (or a severable part of it) in which the impugned provision is found is valid". This requires examination of several factors including those listed by the court:

1. the impugned legislation must be part of a general regulatory scheme;
2. the scheme must be monitored by the continuing oversight of a regulatory agency;
3. the legislation must be concerned with trade as a whole rather than with a particular industry;
4. the legislation should be of a nature that the provinces jointly or severally would be constitutionally incapable of enacting; and
5. the failure to include one or more provinces or localities in a legislative scheme would jeopardize the successful operation of the scheme in other parts of the country.

Ancillary doctrine

The Court then considered whether the provision could be found valid under the ancillary doctrine. In examining the test established Papp v. Papp, the Court re-articulated it. First, the law as a whole must be valid. If so, the Court must consider the degree of encroachment outside of the government's jurisdiction. If it is a serious encroachment the provision will only be upheld if it is necessarily incidental" to the function of the entire Act. For minor encroachments the provision need only have a "rational connection" to the entire Act. On the facts the Court found that the provisions were ancillary to the Act and so were upheld.