Labatt Breweries of Canada Ltd. v. Attorney General of Canada, [1980] 1 SCR 594

Supreme Court of Canada

Labatt Breweries of Canada Ltd. v. Attorney General of Canada, [1980] 1 S.C.R. 594

Date: 1979-06-28

Labatt Breweries of Canada Limited Appellant, Applicant;

and

The Attorney General of Canada Respondent.

1979: June 28.

Present: Laskin C.J. and Martland, Dickson, Estey and McIntyre JJ.

ON A MOTION FOR A STAY OF EXECUTION

Practice—Supreme Court of Canada—Declaratory action—Power of Court to stay proceedings pending final determination of appeal—Supreme Court Act, R.S.C. 1970, c. S‑19, s. 70—Supreme Court Rules, Rule 126—Food and Drugs Act, R.S.C. 1970, c. F-27.

The appellant raised a declaratory action as an agreed way of resolving administrative and constitutional issues concerning the application and validity of certain regulations under the Food and Drugs Act, R.S.C. 1970, c. F-27. The problems arose from the marketing of a new beer product called and labelled “Labatt’s Special Lite”. This beer was introduced to and advertized in British Columbia and Ontario. Inspectors seized the beer in British Columbia and threatened seizure in Ontario. Regulation B.02.134 deals with light beer and prescribes that it shall contain not less than 1.2 per cent and not more than 2.5 per cent alcohol by volume. Labatt’s Special Lite in its labelling and advertising shows its alcohol content to be 4 per cent. Collier J. in the Federal Court concluded that the Labatt’s Special Lite was not exposed in such a manner as to be mistaken for the beverage “light beer” referred to in the regulation. The Court of Appeal reversed this judgment. The appellant then unsuccessfully applied to the Federal Court of Appeal for a stay of further proceedings by the respondent and action by the Department of Consumer and Corporate Affairs pending the appeal to this Court. The appellant thereafter applied to have further proceedings or action against it stayed pending the decision of the Supreme Court of Canada on the merits. The parties had agreed that the issues should be tested by a declaratory action.

Held: The stay of execution should be granted.

Once a matter is before this Court on leave it is, unless there be statutory authority to the contrary, the statute, rules and powers of this Court that govern the

[Page 595]

right to interlocutory relief, by stay or otherwise, pending final disposition of the appeal. The question was therefore whether this Court has the power to make the order suspending the action proposed to be taken by the Department. In this case although the appellant failed in the Federal Court of Appeal it is not under any judicial order to abstain from carrying on business as before. It is however faced with the threat of enforcement by the Department under s. 6 despite the fact that it is appealing the judgment against it. The stay here need not be decided on a balance of convenience. The agreement of the parties to test the issues by declaratory action should be regarded as an agreement that the status quo ante would be maintained until all proceedings to final appeal were exhausted. While s. 70 of the Supreme Court Act does not apply to provide the stay, Rule 126 may properly be relied on to authorize this Court to grant a stay. Further even absent Rule 126 it should not be taken that this Court is otherwise without power to prevent proceedings pending before it from being aborted by unilateral action.

Keable v. Attorney General of Canada et al., [1978] 2 S.C.R. 135; Steinbergs Limitée v. Comité Paritaire de l’Alimentation, [1968] S.C.R. 163; Laboratoire Pentagone Limitée v. Parke, Davis and Co., [1968] S.C.R. referred to.

MOTION for a stay of execution. Stay as sought granted, appeal to be placed at the foot of the current list for hearing in the current term.

D.M.M. Goldie, Q.C., for the appellant, applicant.

W.J. Hobson, Q.C., for the respondent.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—Administrative and constitutional issues are involved in this litigation which originated in a declaratory action by the appellant against the Attorney-General of Canada as an agreed way of resolving them. The issues concern the application and, if applicable, the validity of certain regulations, and especially regulation B.02.134, under the Food and Drugs Act, R.S.C. 1970, c. F-27. They arise from the marketing by the appellant of a new beer product called and labelled “Labatt’s Special Lite”, which was introduced on December 15, 1977 into British

[Page 596]

Columbia and Ontario with attendant advertising. Inspectors under the Act almost immediately seized the beer in British Columbia and threatened seizure of the product in Ontario, with the result that it was withheld from sale in Ontario. The declaratory action followed in the Federal Court in short order.

Regulation B.02.134 deals with light beer and prescribes, inter alia, that it shall contain not less than 1.2 per cent and not more than 2.5 per cent alcohol by volume. Labatt’s Special Lite, in its labelling and advertising, shows the alcohol content to be 4 per cent. Collier J. concluded, in a judgment delivered on January 10, 1978, that the appellant’s Special Lite was not labelled, packaged or advertised in such a manner as to be mistaken for the beverage “light beer”, and hence there was no violation of s. 6 of the Act which provides as follows:

6. Where a standard has been prescribed for a food, no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for such food, unless the article complies with the prescribed standard.

The Federal Court of Appeal reversed this judgment on April 11, 1979, holding, after accepting certain findings of fact of the trial judge, that there was a violation of s. 6, and it dismissed the appellant’s action. However, because of the importance of the issues which it considered arose in the case, it gave leave to appeal to this Court.

The Department of Consumer and Corporate Affairs, charged with enforcement of the Food and Drugs Act, proposed to act on the judgment in its favour, giving Labatt notice by letter of April 27, 1979 that it required compliance with s. 6 of the Act and that it had until June 9, 1979 to withdraw Labatt’s Special Lite, as it is presently labelled, packaged and sold, from the market. The appellant applied to the Federal Court of Appeal for a stay of further proceedings by the respondent and action by the Department of Consumer and Corporate Affairs until the appeal to this Court be determined. By judgment of May 10, 1979, the Federal Court of Appeal held that there was noth-

[Page 597]

ing to be stayed and that it had no jurisdiction, in the circumstances, to direct either the respondent or the Department as to what action should or should not be taken.

The appellant, who filed a notice of appeal to this Court on May 8, 1979 in pursuance of the leave given by the Federal Court of Appeal, now applies here for an order to have any further proceedings or action against it stayed pending the decision of this Court on the merits of the appeal. Alternatively, it seeks leave to appeal from the decision of the Federal Court of Appeal of May 10, 1979, with an ancillary order for a stay of further proceedings or action by the respondent or the Department until the appeal on the merits is finally determined.

In my view, unless there be statutory authority to the contrary, once a matter is before this Court on leave given either by this Court or, as in this case, by a properly authorized intermediate Court of Appeal, it is the statute, rules and powers of this Court that govern any right to interlocutory relief, by a stay or otherwise, pending final disposition of the appeal. The question, therefore, is whether this Court has the power to order a suspension of the action proposed to be taken by the Department against the appellant before the appeal which is before this Court is heard and determined.

Keable v. Attorney-General of Canada et al.[1] is not in point and is, in a sense, the reverse of the present case. There, the order of the Quebec Court of Appeal for issue of a writ of evocation involved concurrently a suspension of further proceedings by the Keable Commission, pursuant to art. 846 of the Quebec Code of Civil Procedure. The application of Keable to lift the suspension was refused on that and other grounds. One of those taken is applicable here, namely, that this Court would be disposing of the appeal in part on an interlocutory motion if it were to lift the suspension and allow the Keable Commission to continue its inquiry before the appeal to this Court on the merits was decided.

[Page 598]

Here, it is contended by the appellant that this Court would be permitting the appeal to be aborted if, conversely, it should refuse to intervene to stay the proposed course of action by the Department of Consumer and Corporate Affairs.

In taking this last-mentioned ground in the Keable case, this Court proceeded on the assumption made both in Steinberg’s Limitée v. Comité Paritaire de l’Alimentation[2] and in Laboratoire Pentagone Limitée v. Parke, Davis and Co.[3] that it had power to grant interlocutory relief of the kind sought in Keable and now sought here. Each of those cases involved an application to stay the operation of an injunction against the appellant. In the Steinberg case, it was an injunction to compel compliance with a store closing decree. In the Laboratoire Pentagone case, it was an injunction against infringement of a patent which would expire a year hence. In both cases this Court (in the second, by a majority decision) refused to grant a stay, notwithstanding that it was urged there that the appellant would suffer irrecoverable loss if the stay was refused and its appeal on the merits should succeed. In both cases, the Court was of opinion that the stay would give the appellant an unfair advantage if it should fail in its appeal; and, on a balance of convenience, it was better to let the injunction stand. In the second case, the short period left for the patent was a consideration for the majority in refusing a stay.

The present case, in my opinion, is different from the two above-mentioned. Although the appellant failed in the Federal Court of Appeal, it is not under any judicial order to abstain from carrying on business as before. It is, however, faced with the threat of enforcement by the Department of s. 6 of the Act, despite the fact that it is appealing the judgment against it. An affidavit by an officer of the appellant in support of its motion was summarized in its material assertions by its counsel in his factum as follows:

[Page 599]

(a) the removal of “Labatt’s Special Lite” from the market will take away the factual basis of the appeal to this Honourable Court;

(b) the removal of “Labatt’s Special Lite” from the market will require Labatt’s to introduce a new brand name and to incur substantial sums in marketing the new brand name;

(c) the removal of “Labatt’s Special Lite” from the market will make it impracticable to re‑introduce “Labatt’s Special Lite” at some later date in the event that the appeal from the decision of the Federal Court of Appeal is successful; and

(d) in any event, Labatt’s will incur substantial expenses for which, in the circumstances, Labatt’s could not be compensated.

Counsel for the respondent produced an affidavit by an officer of the Department in which he deposed that if the appellant was allowed in the meantime to continue with the sale of the challenged product, it would have an unfair advantage over the products of three other companies who produce light beer which complies with the standards under the Act and Regulations. (One of these products, it appears, is marketed in Newfoundland where there is no competition with the appellant.) In my opinion, however, this is not a case where the question of stay is to be decided on a balance of convenience.

The parties had agreed that the issue of compliance with, or the applicability or validity of the relevant statue and regulations would be tested by a declaratory action, and I regard this as an agreement that the status quo ante would be maintained until all judicial proceedings through to ultimate appeal were exhausted. The only question that remains is whether this Court may enforce a stay in favour of the appellant in pursuance of the agreement aforementioned.

I quite agree, for the reasons given in the Keable case, that s. 70 of the Supreme Court Act does not apply here to provide a stay in favour of the appellant. It appears to me, however, that Rule 126 may properly be relied on in proceedings such as those now before us to authorize this Court to

[Page 600]

grant a stay and to impose such terms as we see fit. The Rule is as follows:

RULE 126.—Any party against whom judgment has been given, or an order made, may apply to the Court or a Judge for a stay of execution or other relief against such a judgment or order, and the Court or Judge may give such relief and upon such terms as may be just.

It was contended that the Rule relates to judgments or orders of this Court and not to judgments or orders of the Court appealed from. Its formulation appears to me to be inconsistent with such a limitation. Nor do I think that the position of the respondent that there is no judgment against the appellant to be stayed is a tenable one. Even if it be so, there is certainly an order against the appellant. Moreover, I do not think that the words of Rule 126, authorizing this Court to grant relief against an adverse order, should be read so narrowly as to invite only intervention directly against the order and not against its effect while an appeal against it is pending in this Court. I am of the opinion, therefore, that the appellant is entitled to apply for interlocutory relief against the operation of the order dismissing its declaratory action, and that this Court may grant relief on such terms as may be just.

An obvious term to consider was the expediting of the hearing of the appeal. Counsel for the parties relieved this Court from the need to consider the imposition of such a term by counsel for the appellant agreeing to expedite the appeal and by counsel for the respondent agreeing to a stay of any steps to enforce s. 6 of the Food and Drugs Act and Regulations if the hearing of the appeal be expedited and until it be determined by the Court. This Court, therefore, ordered, at the conclusion of the hearing of appellant’s motion that there be a stay as sought by the appellant and that the appeal be placed at the foot of the current list to be heard this term. Counsel were to attend upon the Chief Justice in Chambers for necessary directions in connection with the appeal.

[Page 601]

Although I am of the opinion that Rule 126 applies to support the making of an order of the kind here agreed to by counsel for the parties, I would not wish it to be taken that this Court is otherwise without power to prevent proceedings pending before it from being aborted by unilateral action by one of the parties pending final determination of an appeal.

Stay of execution granted.

Solicitors for the applicant: Blake, Cassels & Graydon, Toronto.

Solicitor for the respondent: R. Tassé, Ottawa.