Supreme Court of Canada
Reference re Agricultural Products Marketing, [1978] 2 S.C.R. 1198
Date: 1978-01-19
In the Matter of an Appeal from the Court of Appeal for the Province of Ontario
And in the Matter of a reference to the Court of Appeal pursuant to The Constitutional Questions Act, R.S.O. 1970, Chapter 79, by Order-in-Council No. 956/76 respecting the Agricultural Products Marketing Act, R.S.C. 1970, c. A-7; the Farm Products Marketing Agencies Act, 19-20-21 Eliz. II, c. 65 and The Farm Products Marketing Act, R.S.O. 1970, c. 162 and certain Regulations and Orders passed thereunder.
1977: June 21, 22, 23, 24; 1978: January 19.
Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Constitutional law—Distribution of legislative authority—Agreement between federal and provincial Ministers of Agriculture regarding a comprehensive egg marketing scheme—Validity of legislation dealing with egg marketing scheme—Agricultural Products Marketing Act, R.S.C. 1970, c. A-7—Farm Products Marketing Agencies Act, 1970-71-72 (Can.), c. 65—The Farm Products Marketing Act, R.S.O. 1970, c. 162—The British North America Act, 1867.
An agreement was entered into between the federal Minister of Agriculture and federal marketing agency and their provincial counterparts in all the provinces whereby the parties agreed to establish a comprehensive egg marketing scheme under the Farm Products Marketing Agencies Act, 1970-71-72 (Can.), c. 65. The programme involved federal and provincial marketing plans establishing quotas for export, interprovincial and intraprovincial trade. The Canadian Egg Marketing Agency was established and set overall quotas for each Province. The Agency could also impose levies or charges on the marketing of eggs by egg producers and these were to be collected on behalf of the Agency by the local egg board. In Ontario the Ontario Farm Products Marketing Board set individual production quotas based on the Province’s quota set by the federal and also prohibited the possession of laying hens by persons without a quota. By Order-in-Council of April 7, 1976, the Executive Council of Ontario referred to
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the Court of Appeal for Ontario under The Constitutional Questions Act, R.S.O. 1970, c. 79, thirteen questions relating variously to the validity of certain provisions of the Agricultural Products Marketing Act, R.S.C. 1970, c. A-7, of the Farm Products Marketing Agencies Act, 1972 (Can.), c. 65, of The Farm Products Marketing Act, R.S.O. 1970, c. 162, and of a number of orders and regulations under these three statutes. The reference concerned the interaction of the federal and provincial legislation and of the agencies established thereunder in the regulation and marketing of eggs, the possession of laying hens and levies collected for various purposes. The Court of Appeal upheld the validity of the challenged provisions with Dubin J.A. dissenting only as to the validity of s. 2(2)(a) of the federal Agricultural Products Marketing Act and of s. 4(a) of the Ontario Egg Order, S.O.R. 72-243, promulgated under that Act. The questions and answers are set forth in the reasons of Laskin C.J.
Held: The appeal should be allowed in part.
The answers by the Court of Appeal to those questions submitted to it as to which this further appeal was taken are varied only as to the answer to question 1, i.e. as to whether ss. 2 and 3 of the Agricultural Products Marketing Act, R.S.C. 1970, c. A-7, are ultra vires, which is answered “No, as to s. 2(1); yes, as to s. 2(2)(a); no, as to s. 2(2)(b); and no, as to s. 3 in respect of s. 2(1) and s. 2(2)(b)”.
Per Laskin C.J. and Judson, Spence and Dickson JJ.: P.E.I. Potato Marketing Board v. H.B. Willis Inc., [1952] 2 S.C.R. 392, gave a constitutional method of escape from the prohibition of the Nova Scotia Inter-Delegation case, [1951] S.C.R. 31, which denied authority for delegation of legislative power between Parliament and a provincial legislature. Willis permits delegation of administrative authority to a provincial board to exercise like regulatory authority in an area of federal competence as it exercises in the provincial area. The challenge to the validity of s. 2(1) of the Agricultural Products Marketing Act accordingly fails.
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With regard to s. 2(2) of that Act it is time that there was an end to making the validity of intraprovincial marketing schemes turn on fine distinctions between what is truly price fixing and what are adjustment levies when in both situations the thrust of the scheme is to provide for orderly marketing and to equalize the position and the returns of producers or vendors or both, by pooling production and controlling marketing. There are compelling reasons to set aside the doctrine in Crystal Dairy, [1933] A.C. 168, a case which has already been effectively overruled in respect of the validity of provincially authorized expenses or administration levies. Section 2(2)(a) of the Act is therefore invalid as ultra vires the Parliament of Canada. This result is not, however, catastrophic because it is left to the provincial legislatures to deal with price arrangements including provision for adjustment levies in the context of their valid legislation in relation to intraprovincial marketing. The power is where it should be in this respect.
Per Martland, Ritchie, Pigeon, Beetz and de Grandpré JJ.: Section 2(1) of the Agricultural Products Marketing Act (Canada) contemplates the delegation to a provincial marketing board of authority over interprovincial and export trade. It is clearly within the principle of the Willis case, [1952] 2 S.C.R. 392, and therefore intra vires, as is s. 3 in respect thereto. Section 2(2) provides for levies in respect of products in intraprovincial trade (s. 2(2)(a)) and in extraprovincial trade (s. 2(2)(b)). Sub-paragraph 2(2)(a) purports to authorize the granting to a provincial board or agency of the authority to impose and to use levies or charges in relation to the powers granted to such board under the laws of any province with respect to the marketing of any agricultural product locally within the province. Such levies are not taxes when they are not collected for purposes other than defraying expenses or effecting adjustment or redistribution amongst producers. It is proper to overrule what may be left of the judgment in Crystal Dairy. This might well be considered as the logical development of the decision in Crawford and Hillside Farm Dairy, [1960] S.C.R. 346. The net result of the scheme upheld in that case was an equalisation of returns among producers which gave them, in the end, the same monetary returns as adjustment levies would have yielded in a simpler manner. The courts will look through any scheme in order to strike down all attempts to do indirectly what cannot be done directly. If the complex scheme was valid and not just a colourable device this is proof enough that the direct method, the adjustment levies, are not unconstitutional as long as
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they are confined to intraprovincial operations [as they were in A.G. Saskatchewan v. A.G. Canada, [1949] A.C. 110]. As adjustment levies are within provincial jurisdiction the federal legislation on the subject is invalid.
The Farm Products Marketing Agencies Act (Canada) is not invalid. However federal intrusion into local trade would be just as unconstitutional if done by buying and selling as if done by any other method, save in the case of operations by federal agencies acting for proper federal purposes.
As to the validity of the several sections of The Farm Products Marketing Act of Ontario, a legislature may delegate powers to an agency as much as it sees fit. Further as there is no reason to consider this Act as going beyond its professed intent the impugned sections are not invalid.
Questions 8 and 9 concern the validity of the egg producers quota regulations made under the authority of the Ontario Act. The control of production, whether agricultural or industrial, is prima facie a local matter, a matter of provincial jurisdiction. Egg farms, the kind of factories in which feed is converted into eggs and fowl, are local undertakings subject to provincial jurisdiction under s. 92(10) of the B.N.A. Act, unless they are considered “agriculture” in which case by virtue of s. 95 the jurisdiction is provincial subject to the overriding authority of Parliament. The Carnation case, [1968] S.C.R. 238, is however conclusive in favour of provincial jurisdiction over undertakings where primary agricultural products are transformed into other food products. It is a conclusion which cannot be different even if the whole production is going into extraprovincial trade. An operator cannot claim exemption from provincial control by electing to devote his entire output to extraprovincial trade and there is no basis for the view that there must be a division of authority at the stage of production between what will be going into intraprovincial and what will be going into extraprovincial trade. In consequence a workable control scheme has to be effective with respect to all eggs irrespective of intended disposition. Egg farms are, like any other farms, local undertakings subject to provincial authority irrespective of the destination of their output and that legislative authority extends to the control of production as to quantity. This
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does not imply any provincial control of extraprovincial trade. The provincial regulations in question were not aimed at such extraprovincial trade and in so far as it effects this trade it is only complementary to the federal regulations. This is perfectly legitimate, otherwise federal-provincial cooperative action in regulating a commodity in both intraprovincial and extraprovincial trade would be impossible. Provinces may not make use of their control over local undertakings to regulate extraprovincial marketing but this does not prevent the use of provincial control to complement federal regulation of interprovincial trade.
[P.E.I. Potato Marketing Board v. H.B. Willis Inc., [1952] 2 S.C.R. 392; Carnation Co. Ltd. v. Quebec Agricultural Marketing Board, [1968] S.C.R. 238 followed; Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd., [1933] A.C. 168, 1 D.L.R. 82, [1932] 3 W.W.R. 639 overruled; Re: Quebec Magistrates’ Court, [1965] S.C.R. 772; Attorney General for Saskatchewan v. Attorney General for Canada, [1949] A.C. 110; Madden v. Nelson and Fort Shefford Railway Co., [1899] A.C. 626; Shannon et al. v. Lower Mainland Dairy Products Board, [1938] A.C. 708; Reference re Anti-Inflation Act, [1976] 2 S.C.R. 373; The King v. Eastern Terminal Elevator Co., [1925] S.C.R. 434; Jorgenson v. Attorney General of Canada, [1971] S.C.R. 725; C.N.R. v. Nor-Min Supplies Ltd., [1977] 1 S.C.R. 322; Reference re The Farm Products Marketing Act of Ontario, [1957] S.C.R. 198; Attorney General for Manitoba v. Manitoba Egg and Poultry Association et al., [1971] S.C.R. 689; Burns Foods Limited et al. v. Attorney General for Manitoba et al., [1975] 1 S.C.R. 494; Attorney General for Ontario et al. v. Attorney General of Canada et al., [1912] A.C. 571; Reference re Natural Products Marketing Act, [1937] A.C. 377; Coughlin v. Ontario Highway Transport Board, [1968] S.C.R. 569; Brant Dairy Co. v. Milk Marketing Commission of Ontario, [1973] S.C.R. 131; Attorney General of Nova Scotia v. Attorney General of Canada (Nova Scotia Inter-Delegation Case), [1951] S.C.R. 31; Reference re Regulations (Chemicals) under the War Measures Act, [1943] S.C.R. 1; Murphy v. C.P.R. Co. et al, [1958] S.C.R. 626; Caron v. The King, [1924] A.C. 999; Reference re Employment and Social Insurance Act, [1937] A.C. 355; Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, [1931] S.C.R. 357; Ontario Boys’ Wear Ltd. v.
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Advisory Committee, [1944] S.C.R. 349; Lower Mainland Dairy Products Board v. Turner’s Dairy Ltd., [1941] S.C.R. 573; Crawford and Hillside Farm Dairy Ltd. v. Attorney‑General of British Columbia, [1960] S.C.R. 346; Hill v. The Queen, [1977] 1 S.C.R. 827; Paquette v. The Queen, [1977] 2 S.C.R. 189; McNamara Construction (Western) Ltd. v. The Queen, [1977] 2 S.C.R. 654; Gold Seal Ltd. v. Dominion Express Co. (1921), 62 S.C.R. 424 referred to; Attorney-General for Ontario v. Reciprocal Insurers, [1924] A.C. 328 distinguished.]
APPEAL from a judgment of the Court of Appeal for Ontario in the matter of a reference of certain questions under The Constitutional Questions Act, R.S.O. 1970, c. 79. Appeal allowed in part.
Herman Turkstra, Peter Hogg and Joseph Nadel, for Ontario Egg Producers and other interested parties.
R.W. Cosman, for interested Egg Producers.
Marcel Trudeau, Q.C., and Yves Sylvestre, for the Attorney General for Quebec.
Pierre Paradis and Gérald A. Beaudoin, Q.C., for l’Association des producteurs d’æufs québécois.
opposing the legislation
V.L. Freidin and J. McMurchy, for the Attorney General of Ontario and Ontario Farm Products Marketing Board.
T.B. Smith, Q.C., and D.M. Low, for the Attorney General of Canada.
François Lemieux and Scott McLean, for the Canadian Egg Marketing Agency.
J.J. Robinette, Q.C., and H.E. Harris, Q.C., for the Ontario Egg Producers Marketing Board.
Pierre Blain, Q.C., for la Fédération des producteurs d’æufs de consommation du Québec.
Martin E. Herschorn, for the Attorney General of Nova Scotia.
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N.D. Shende and J.R. MacInnes, for the Attorney General of Manitoba.
Wm. Henkel, Q.C., for the Attorney General of Alberta.
supporting the legislation
The judgment of Laskin C.J. and Judson, Spence and Dickson JJ. was delivered by
THE CHIEF JUSTICE—By Order in Council of April 7, 1976, the Executive Council of Ontario referred to the Ontario Court of Appeal thirteen questions relating variously to the validity of certain provisions of the Agricultural Products Marketing Act, R.S.C. 1970, c. A-7, of the Farm Products Marketing Agencies Act, 1972 (Can.), c. 65, of The Farm Products Marketing Act, R.S.O. 1970, c. 162, as amended, and of a number of orders and regulations under these three statutes. The reference concerned the interaction of the federal and provincial legislation and of the agencies established thereunder in the regulation of the marketing of eggs in the intraprovincial, interprovincial and export trade in that product.
The five Judge Court of Appeal upheld the validity of the challenged provisions, with Dubin J.A. dissenting only as to the validity of s. 2(2)(a) of the federal Agricultural Products Marketing Act and of s. 4(a) of the Ontario Egg Order, S.O.R. 72-243 promulgated under the Act. The majority reasons were delivered by MacKinnon J.A. and concurring reasons, relating particularly to s. 2(2) of the Act, differing from those of the majority were delivered by Wilson J.A. The Court of Appeal found it unnecessary to answer three of the questions referred to it, namely questions 8, 11 (a) and 13.
The order of reference recites the considerations which moved the Government of Ontario to put the various questions to the Court of Appeal and they are as follows:
WHEREAS questions have arisen as to the authority of the Ontario Egg Producers Marketing Board to collect levies imposed on the marketing of eggs;
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AND WHEREAS questions have arisen as to the validity of the imposition of the levies themselves;
AND WHEREAS questions have arisen as to the authority of the Ontario’ Egg Producers Marketing Board to impose quotas for the possession of fowl in Ontario and quotas for the production of eggs in Ontario;
AND WHEREAS it is thought fit to have the authority of the Ontario Egg Producers Marketing Board determined with more precision and as expeditiously as possible in regard to all the above matters by referring certain questions to the Court of Appeal for hearing and consideration.
The Honourable the Attorney General therefore recommends that pursuant to section 1 of the Constitutional Questions Act being Chapter 79 of the Revised Statutes of Ontario, 1970, there be referred to the Court of Appeal for hearing and consideration the questions hereinafter set forth:
…
Preceding these considerations in the order of reference was a narrative of various facts and measures relating to the regulatory schemes arising out of and established pursuant to the challenged legislation. Lengthy as the narrative is, it is relevant material for the consideration of the Court and I reproduce it in full:
…
“The number of eggs produced in Ontario during the period January 1, 1973 to August 31, 1975 which have been marketed intraprovincially, interprovincially and in export trade is as follows:
In 1973—151,688,580 dozen,
In 1974—148,770,120 dozen, and
In the period January 1, 1975—
August 31, 1975—94,700,040 dozen.
Levies have been imposed on the marketing of eggs by Ontario egg producers pursuant to two Acts of the Parliament of Canada, the Agricultural Products Marketing Act, R.S.C. 1970, Chapter A-7, and the Farm Products Marketing Agencies Act, 19-20-21, Eliz. II, Chapter 65.
AGRICULTURAL PRODUCTS MARKETING ACT, R.S.C. 1970, c. A-7
Pursuant to the Ontario Egg Order S.O.R./72-243, passed pursuant to the Agricultural Products Marketing Act, the Ontario Egg and Fowl Producers Marketing Board (now the Ontario Egg Producers Marketing Board) was authorized to make Orders fixing, imposing
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and collecting levies or charges from persons engaged in the marketing of eggs.
The Ontario Egg Producers Marketing Board passed Orders imposing such levies as follows:
S.O.R./72-246
S.O.R./72-306
S.O.R./73-228
S.O.R./75-217
These Orders required egg producers to pay to the Ontario Egg Producers Marketing Board the amount of money specified therein for each dozen eggs marketed.
FARM PRODUCTS MARKETING AGENCIES ACT, 19-20-21, ELIZ. II, C. 65
An agreement was entered into on November 20th, 1972 between the Federal Minister of Agriculture, the National Farm Products Marketing Council, the Minister of Agriculture and Food for Ontario, the Ontario Farm Products Marketing Board, the Ontario Egg and Fowl Producers Marketing Board (now the Ontario Egg Producers Marketing Board) and their counterpart in all other provinces. The parties agreed to establish a comprehensive egg marketing programme under the Farm Products Marketing Agencies Act, 19-20-21, Eliz. II, Chapter 65.
The Farm Products Marketing Agencies Act, section 17 empowered the Governor in Council to establish an agency with powers relating to inter alia, eggs marketed in interprovincial and export trade.
The Canadian Egg Marketing Agency (hereinafter referred to as “CEMA”) was established on December 19th, 1972 pursuant to the Farm Products Marketing Agencies Act by the Canadian Egg Marketing Agency Proclamation, S.O.R./73-1.
The Farm Products Marketing Agencies Act, section 18(1)(c) provides:
“A proclamation establishing an agency shall set out the terms of any marketing plan that the agency is empowered to implement.”
The Farm Products Marketing Agencies Act, section 23(1)(b) provides that:
“Subject to the proclamation by which it is established and to any subsequent proclamation altering its
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powers, an agency may implement a marketing plan the terms of which are set out in the proclamation establishing it...”
The Farm Products Marketing Agencies Act, section 2(e)(vi) provides that the marketing plan includes:
“The imposition and collection by the appropriate agency of levies or charges from persons engaged in the growing or production of the regulated product or the marketing thereof…”
Section 10 of the Canadian Egg Marketing Agency Proclamation, S.O.R./73-1 authorized CEMA, by order or regulation, to impose levies or charges upon persons engaged in the production of eggs or the marketing thereof. That section also provides that CEMA may, with the concurrence of a commodity board (which includes the Ontario Egg Producers Marketing Board) appoint that commodity board to collect on its behalf levies or charges imposed by any such order or regulations.
Levies have been imposed by CEMA as follows:
S.O.R./73-284 (Canada Egg Marketing Levies Order)
S.O.R./74-89 (Canada Egg Marketing Levies Order)
S.O.R./74-207 (Canada Interim Egg Levies Order)
S.O.R./75-173 (Canada Interim Egg Levies Order)
In addition, CEMA has imposed levies providing for the fixing and imposing of egg levies for the Agency’s purchasing programme and for the collecting of levies as follows:
S.O.R./74-208 (Canada Egg Purchasing Levies Order)
S.O.R./74-329 (Canada Egg Purchasing Levies Order)
S.O.R./74-393 (Canada Egg Purchasing Levies Order)
S.O.R./74-562 (Canada Egg Purchasing Levies Order)
S.O.R./74-644 (Canada Egg Purchasing Levies Order)
S.O.R./75-89 (Canada Egg Purchasing Levies Order)
S.O.R./75-174 (Canada Egg Purchasing Levies Order)
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Pursuant to S.O.R./73-284 the Ontario Egg Producers Marketing Board was appointed to collect the levies imposed by CEMA.
Pursuant to Ontario Regulation 595/72, section 10, passed pursuant to The Farm Products Marketing Act of Ontario, R.S.O. 1970, c. 162 the Ontario Egg Producers Marketing Board is required to collect the levies imposed by CEMA.
In addition Regulation S.O.R./73-274 was passed and deals with the obtaining of information by CEMA from egg producers engaged in the production of eggs for, or the marketing of eggs in interprovincial or export trade; and S.O.R./73-286 was passed and dealt with the licensing of persons engaged in the marketing of eggs in interprovincial or export trade.
To date certain Ontario egg producers have not complied with the legislation in regard to levies, the result of which is that $392,124.50 of levies which should have been received by the Ontario Egg Producers Marketing Board have not been received. In addition certain egg producers have commenced legal action challenging the validity of such levies and the Statement of Claim of one such action is appended hereto.
QUOTAS FOR THE POSSESSION OF FOWL AND PRODUCTION OF EGGS
The Ontario Egg and Fowl Producers Marketing Board was continued and renamed the Ontario Egg Producers Marketing Board by Ontario Regulation 593/72 passed pursuant to The Farm Products Marketing Act of Ontario.
By Ontario Regulation 594/72 passed pursuant to The Farm Products Marketing Act of Ontario the Farm Products Marketing Board provided for the Ontario Egg Producers Marketing Board to exercise certain powers.
By S.O. 1975, Chapter 6, the Farm Products Marketing Act of Ontario was amended to provide for quotas for, inter alia, the possession of fowl and the production of eggs within Ontario.
By Ontario Regulation 434/75 the Farm Products Marketing Board of Ontario authorized the Ontario Egg Producers Marketing Board to exercise powers in relation to such quotas.
The Ontario Egg Producers marketing Board has, pursuant to Ontario Regulation 434/75, passed Regulations fixing and allotting quotas for the possession of fowl and the production of eggs as follows:
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Regulation No. 2-75, dated June 5, 1975
Regulation No. 3-75, dated June 5, 1975
Regulation No. 5-75, dated June 11, 1975
Regulation No. 6-75, dated June 11, 1975
Regulation No. 7-75, dated June 25, 1975…”
Those opposing the validity of the legislation, in bringing an appeal to this Court, moved for the usual directions as to service of notice of the constitutional questions on the Attorney‑General of Canada and on the Attorneys-General of the Provinces and as to interventions by them and by other interested persons and as to other related matters. The order for directions made on April 4, 1977 contained a reduced number of questions for the consideration of this Court and it will be useful to contrast these questions with those referred to the Ontario Court of Appeal (and showing the answers given by that Court) in the following parallel columns:
| Questions Referred |
Questions on Appeal Here |
| 1. Are sections 2 and 3 of the Agricultural Products Marketing Act, R.S.C. 1970, Chapter A-7, ultra vires the Parliament of Canada in whole or in part and if so, in what respect and to what extent? Answer 1. No |
1. Are sections 2 and 3 of the Agricultural Products Marketing Act, R.S.C. 1970, Chapter A-7, ultra vires the Parliament of Canada in whole or in part and if so, in what respect and to what extent? |
| 2. Are S.O.R./72-243; (Ontario Egg Order) S.O.R./72-246, S.O.R./72-306, S.O.R./73-228 and S.O.R./75-217 (Ontario Egg Marketing Levies Orders) ultra vires the enabling legislation, the Agricultural Products Marketing Act, R.S.C. 1970, Chapter A-7, in whole or in part and if so, in what respect and to what extent? Answer 2. No |
2. Are S.O.R./72-243; (Ontario Egg Order) S.O.R./72-246, S.O.R./72-306, S.O.R./73-228 and S.O.R./75-217 (Ontario Egg Marketing Levies Orders) ultra vires the enabling legislation, the Agricultural Products Marketing Act, R.S.C. 1970, Chapter A‑7, in whole or in part and if so, in what respect and to what extent? |
| 3. Do sections 2(e)(vi), 18(1)(c) and 23(1)(b) and 23(1)(g) of the Farm Products Marketing Agencies Act, 19‑20-21, Eliz. II, Chapter 65, authorize the imposition and collection of levies or charges? Answer 3. Yes |
3. Is the Farm Products Marketing Agencies Act, 19-20-21, Eliz. II, Chapter 65, and in particular (a) Sections 2(e)(vi), 18 and 23 and (b) Sections 6, 7, 17 and 32 ultra vires the Parliament of Canada in whole or in part and if so, in what respect and to what extent? |
| 4. Is the Farm Products Marketing Agencies Act, 19-20-21, Eliz. II, Chapter 65, and in particular (a) Sections 2(e)(vi), 18 and 23 and |
4. (a) Is S.O.R./73-1 (Canadian Egg Marketing Agency Proclamation) ultra vires the enabling legislation the Farm Products Marketing Agencies Act, |
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| (b) Sections 6, 7, 17 and 32 ultra vires the Parliament of Canada in whole or in part, and if so, in what respect and to what extent? Answer 4. No |
19-20-21, Eliz. II, Chapter 65, in whole or in part and if so, in what respect and to what extent? (b) Is S.O.R./73-1 section 10 ultra vires the enabling legislation the Farm Products Marketing Agencies Act, 19‑20-21, Eliz. II, Chapter 65, in whole or in part and if so, in what respect and to what extent? |
| 5. (a) Is S.O.R./73-1 (Canadian Egg Marketing Agency Proclamation) ultra vires the enabling legislation the Farm Products Marketing Agencies Act, 19‑20-21, Eliz. II, Chapter 65, in whole or in part and if so, in what respect and to what extent? Answer 5. (a) No |
5. (a) Are S.O.R./73-284 (Canada Egg Marketing Levies Order), S.O.R./74-89 (Canada Egg Marketing Levies Order), S.O.R./74-207 (Canada Interim Egg Levies Order), S.O.R./75-173 (Canada Interim Egg Levies Order) ultra vires the enabling legislation, The Farm Products Marketing Agencies Proclamation, in whole or in part, and if so, in what respect and to what extent? |
| (b) Is S.O.R./73-1 section 10 ultra vires the enabling legislation the Farm Products Marketing Agencies Act, 19‑20-21, Eliz. II, Chapter 65, in whole or in part and if so, in what respect and to what extent? Answer 5. (b) No |
(b) Are S.O.R./74-208 (Canada Egg Purchasing Levies Order), S.O.R./74‑329 (Canada Egg Purchasing Levies Order), S.O.R./-74-393 (Canada Egg Purchasing Levies Order), S.O.R./74-562 (Canada Egg Purchasing Levies Order), S.O.R./74-644 (Canada Egg Purchasing Levies Order), S.O.R./75-89 (Canada Egg Purchasing Levies Order) and S.O.R./75-174 (Canada Egg Purchasing Levies Order) ultra vires the enabling legislation, the Farm Products Marketing Agencies Proclamation, in whole or in part, and if so, in what respect and to what extent? |
| 6. (a) Are S.O.R./73-284 (Canada Egg Marketing Levies Order), S.O.R./74-89 (Canada Egg Marketing Levies Order), S.O.R./74-207 (Canada Interim Egg Levies Order), S.O.R./75-173 (Canada Interim Egg Levies Order) ultra vires the enabling legislation, The Farm Products Marketing Agency Proclamation, in whole or in part, and if so, in what respect and to what extent? Answer 6. (a) No (b) Are S.O.R./74-208 (Canada Egg Purchasing Levies Order), |
6. Is S.O.R./73-286 (Canadian Egg Licensing Regulations) ultra vires the enabling legislation, The Farm Products Marketing Agencies Act and the Canadian Egg Marketing Proclamation, in whole or in part, and if so, in what respect and to what extent? |
[Page 1211]
| S.O.R./74-329 (Canada Egg Purchasing Levies Order), S.O.R./-74-393 (Canada Egg Purchasing Levies Order), S.O.R./74-562 (Canada Egg Purchasing Levies Order), S.O.R./74-644 (Canada Egg Purchasing Levies Order), S.O.R./75-89 (Canada Egg Purchasing Levies Order), and S.O.R./75-174 (Canada Egg Purchasing Levies Order) ultra vires the enabling legislation, The Farm Products Marketing Agency Proclamation, in whole or in part, and if so, in what respect and to what extent? Answer 6. (b) No |
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| 7. Is S.O.R./73-286 (Canadian Egg Licensing Regulations) ultra vires the enabling legislation, The Farm Products Marketing Agencies Act and the Canadian Egg Marketing Proclamation, in whole or in part, and if so, in what respect and to what extent? Answer 7. No |
7. Are sections 4, 5, 6, 8, 9, 10, 15(a) and 22 of The Farm Products Marketing Act of Ontario and amendments thereto ultra vires the Legislature of Ontario in whole or in part, and if so, in what respect and to what extent? |
| 8. Is S.O.R./73-274 (Canadian Egg Information Regulations) ultra vires the enabling legislation, Farm Products Marketing Agencies Act, 19-20-21, Eliz. II, Chapter 65, in whole or in part and if so, in what respect and to what extent? Answer 8. Not answered |
8. Is Ontario Regulation 595/72 ultra vires the legislative power of Ontario in whole or in part and if so, in what respect and to what extent? |
| 9. Are sections 4, 5, 6, 8, 9, 10, 15(a) and 22 of The Farm Products Marketing Act of Ontario and amendments thereto ultra vires the Legislature of Ontario in whole or in part, and if so, in what respect and to what extent? Answer 9. No |
9. Is section 21a of The Farm Products Marketing Act of Ontario ultra vires the Legislature of Ontario in whole or in part and if so, in what respect and to what extent? |
| 10. Is Ontario Regulation 595/72 ultra vires the legislative power of Ontario in whole or in part and if so, in what respect and to what extent? Answer 10. No |
10. Are Regulations 2, 3, 5, 6 and 7 for the year 1975 passed by the Ontario Egg Producers Marketing Board ultra vires the enabling legislation, The Farm Products Marketing Act of Ontario, in whole or in part, and if so, in what respect and to what extent? |
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| 11. (a) Is Ontario Regulation 595/72 ultra vires the enabling legislation, The Farm Products Marketing Act, R.S.O. 1970, Chapter 162 in whole or in part, and if so, in what respect and to what extent? Answer 11. (a) Not answered |
|
| (b) Do Ontario Regulation 315, R.R.O. 1970, Ontario Regulation 316, R.R.O. 1970, Ontario Regulations 46/71, 184/72, 593/72 and 594/72, 239/73, 243/73, 183/74, 184/74, 764/74 or any of them affect the imposition and collection of levies in whole or in part and if so, in what respect and to what extent? Answer 11. (b) No |
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| 12. Is section 21a of The Farm Products Marketing Act of Ontario ultra vires the Legislature of Ontario in whole or in part and if so, in what respect and to what extent? Answer 12. No |
|
| 13. Are Regulations 2, 3, 5, 6 and 7 for the year 1975 passed by the Ontario Egg Producers Marketing Board ultra vires the enabling legislation, The Farm Products Marketing Act of Ontario, in whole or in part, and if so, in what respect and to what extent? Answer 13. Not answered |
|
It will be apparent from the foregoing lists of questions that the present appeal excludes any challenge to the answers given below to questions 3, 8 and 11.
II
Counsel involved in the reference before the Ontario Court of Appeal agreed that the Case on Appeal filed in this Court should include the order of reference, the order for directions respecting the proceedings in this Court and two documents entitled respectively “Background Information Submitted by the Attorney-General of Ontario” (a document of about 15 pages) and “Memorandum of Information Submitted by Persons Opposed to the Validity of the Legislation” (a document of about 125 pages). Supplementary material was filed jointly by the Attorney-General of Ontario and the Ontario Farm Products Marketing Board, and included in this material was a 1972 Report (The Ross Report) of a Royal Commission on the
[Page 1213]
Egg Industry in Ontario.
The background information supplied by the Attorney-General of Ontario was accepted by the Canadian Egg Marketing Agency and by the Ontario Egg Producers Marketing Board, who were separately represented, as well as by the Attorney-General of Ontario and the Ontario Farm Products Marketing Board, who were jointly represented—all of whom supported the validity of the legislation, orders and regulations involved in this Reference—as a statement of the facts and considerations against which the issues of validity could and should be determined. It was also referred to for the same purpose by the challenging appellants but the extensive additional material provided by the appellants was not viewed with reciprocal hospitality by the proponents of the legislation, orders and regulations. They alleged it to be irrelevant to the questions at issue, but in so far as it puts a different interpretation on the same basic facts—those reflected in the background memorandum of the Attorney-General of Ontario—it represents nothing more fearsome than argument which must be assessed for its relevancy and cogency in the same way as that offered by the proponents, whether in their factums or in oral submissions to the Court. There are in the appellants’ material statements of information by three Ontario egg producers referring to their experiences under the marketing plans and the adverse effect upon them of the system of levies and quotas. Other parts of the material consist, as counsel for those in opposition to the legislation say, of “information… obtained from government agency and board sources and in part from the discovery of documents in one levy action against the Ontario Board”. To some extent it is directed to the effect of the marketing system as bearing on the Constitutional questions before this Court. However, I find no such factual differences in the appellants’ memorandum of information as to put this Court to a choice that would influence the result to be reached on the questions that must be answered.
[Page 1214]
An examination of the material in the Case on Appeal and of the supplementary material, and of the statutes, orders and regulations to which this material is related gives the following picture of the interlocking scheme of control of egg marketing, both as to price and supply, established under federal and provincial authority.
The egg market in Canada and in the Provinces is a strictly regulated market, involving control of prices, the fixing of producing and marketing quotas, the imposition of several classes of levies upon producers and a surplus (over quota) egg removal programme through which eggs surplus to the table market are disposed of mainly to egg processors, although some may be redirected to the table market. This control programme is based on the table market, that is on the retail purchase of fresh eggs for consumption, representing in 1975 (according to the material before this Court) 92 per cent of eggs in the market, the other 8 per cent representing processing eggs used in the manufactured products market.
The main control agencies, in respect of the present case, are the Canadian Egg Marketing Agency established under s. 17 of the Farm Products Marketing Agencies Act, 1972 (Can.), c. 65, hereinafter referred to as CEMA, and the Ontario Egg Producers Marketing Board, established by Ontario Regulation 593/72 (as a continuation of a differently named board) under The Farm Products Marketing Act, R.S.O. 1970, c. 162, as amended,, hereinafter referred to as the Ontario Egg Board. CEMA was born of a proclamation of December 19, 1972, S.O.R./73-1, which followed upon an agreement between Canada and all the Provinces, and the marketing agencies of the parties, for the establishment of a comprehensive plan to regulate the marketing of eggs in Canada. Schedules to the agreement set out the terms of the proposed plan, involving the integration of federal and provincial prescriptions, and including the scheme of organization and powers of the
[Page 1215]
contemplated CEMA, as later established by S.O.R./73-1.
The control programme envisaged identical quotas for producers, whether in intraprovincial trade or in the interprovincial or export market, fixed by the national and provincial agencies in relation to an assigned egg production to each of the Provinces. Section 3 of the CEMA proclamation shows the dozen quantities and relative percentages assigned to each Province in the following table:
3. …
| |
|
TABLE |
|
|
| |
Column I |
Column II |
Column III |
| 1. |
British Columbia |
57,250,000 |
12.055 |
per cent |
| 2. |
Alberta |
41,344,000 |
8.704 |
” |
| 3. |
Saskatchewan |
22,611,000 |
4.760 |
” |
| 4. |
Manitoba |
54,189,000 |
11.408 |
” |
| 5. |
Ontario |
181,267,000 |
38.161 |
” |
| 6. |
Quebec |
78,647,000 |
16.556 |
” |
| 7. |
New Brunswick |
8,683,000 |
1.828 |
” |
| 8. |
Nova Scotia |
19,504,000 |
4.106 |
” |
| 9. |
Prince Edward Island |
3,028,000 |
0.637 |
” |
| 10. |
Newfoundland |
8,477,000 |
1.785 |
” |
|
|
|
|
|
|
The authority for this division in the CEMA proclamation is s. 24 of the federal Farm Products Marketing Agencies Act, reading as follows:
24. A marketing plan to the extent that it allocates any production or marketing quota to any area of Canada, shall allocate that quota on the basis of the production from that area in relation to the total production of Canada over a period of five years immediately preceding the effective date of the marketing plan. In allocating additional quotas for anticipated growth of market demand, the marketing agency shall consider the principle of comparative advantage of production.
The Court was told by counsel for the appellants that the percentages were modified in June, 1976 by S.O.R./76-371 but the modifications do not, of course, affect the constitutional issues that are before the Court. I should note that the production and percentage figure for Ontario, shown in the Table reproduced above, was prescribed by
[Page 1216]
Ontario Regulation 595/72 of December 28, 1972, made under The Ontario Farm Products Marketing Act, and in furtherance of the dovetailing Ontario Egg Producers’ Marketing Plan established by Ontario Regulation 593/72 of November 22, 1972, also made under The Ontario Farm Products Marketing Act.
In short, the overall scheme was to assign to each Province a share of the national market and to relate the quotas of producers in each Province to the particular share. Ontario went further by placing all laying hens on a quota basis and prohibiting possession of laying hens by persons without a quota. This was done by Board Regulation 2-75 of June 5, 1975, which was authorized by Ontario Regulation 434/75 of May 8, 1975, which in turn rested on the authority of s. 21a of The Farm Products Marketing Act, enacted by 1975 (Ont.), c. 6. The appellants take an objection to the Regulation as embracing the possession of laying hens whose production is solely for the interprovincial or export trade and, beyond this, attack the validity of s. 21a. The attack on the section is the subject of question 9 herein.
The material before the Court states that the Ontario quota system above-mentioned does not apply to persons who possess less than 500 hens and, further, that eggs produced and sold for hatching purposes are also exempt from the Ontario quota regulations. These exemptions were not said to have any market effect. The material is silent on this, but what it does show is that in Ontario about 1200 producers are registered with the Ontario Egg Board and they each have, on an average, about 10,000 laying hens.
Alongside the national and local quota system is a licensing system for grading stations where eggs are graded according to federal standards. Some producers do their own grading and may grade for other producers as well, but otherwise producers deliver their eggs to a grading station operator or have them picked up by such operators on some regular basis. The price paid to producers depends on the grade or grades of their eggs. The price is fixed weekly for the various grades of eggs by
[Page 1217]
consultation between the local boards (in Ontario, the Ontario Egg Board) and CEMA and is based, the Court was told, on a cost of production formula. Included in the so-called producer price are the levies imposed by CEMA and the local board, and I shall come to them shortly. The Memorandum of Information supplied by the opponents of the challenged legislation includes an illustration of the elements of the producer price fixed for grade A large eggs, and I reproduce it in full:
NATIONAL AVERAGE QUOTED PRODUCER PRICE FOR
GRADE A LARGE EGGS
(Based on Farm-Gate Cost of Production Model Results,
National Average, May 31, 1975)
(in ¢ per dozen)
| |
|
|
| Depreciation |
1.88 |
2.81 |
| Pullet |
11.23 |
16.78 |
| Feed |
32.84 |
49.08 |
| Labour |
4.30 |
6.43 |
| Overhead |
|
|
| Farm-Gate Cost |
54.33 |
81.20 |
| Producer Return |
|
|
| Net Producer Price |
56.46 |
84.38 |
| Conversion Factor to Grade A Large |
5.45 |
8.14 |
| CEMA and Provincial Board Levies |
|
|
| |
66.91 |
100.00 |
Although the levies are included in the estimation of the producer price, the grading station operator is required to deduct them from what he pays to the producers who trade with him. The grading station operator sells to the retail trade at a price fixed by the market or may sell to a wholesaler or broker who in turn sells to the retail trade. There appears to be nothing to prevent direct retail sales by the grading station operator. If he wishes to sell in the interprovincial or export market he must have a licence from CEMA as required under the Canadian Egg Licensing Regulations, S.O.R./73-286 of May 30, 1973, made by CEMA in pursuance of powers granted by s. 9 of
[Page 1218]
Part II of its constituent proclamation and approved pursuant to s. 7(1)(e) of the Farm Products Marketing Agencies Act. Surplus grade A eggs, that is surplus to the table demand, being eggs which the grading station operator cannot sell, are sold to CEMA which buys them, if they are within the provincial allocation, at the price paid to the producer plus an additional 7 or 8 cents per dozen to compensate the grading station operator for his costs of washing, grading and packaging. CEMA sells these eggs in the main to processors and at prices lower than what it has paid for them, making up the difference by levies imposed upon the producers.
The levies collected by grading station operators are imposed under the authority of two federal statutes, the Agricultural Products Marketing Act and the Farm Products Marketing Agencies Act, and are remitted, in Ontario, to the Ontario Egg Board which receives them both for itself and for CEMA. The validity of the imposition and collection of these levies is strongly challenged in the present case. The Ontario Egg Board, acting under authority given by s. 2(2) of the federal Agricultural Products Marketing Act (as first enacted by 1957 (Can.), c. 15) exacts now two types of levies; first, a levy to finance its own costs of administration and, second, a levy to cover the cost of the surplus removal programme in respect of over quota eggs. (There was, and may still be, a third levy to cover the cost of surplus removal of eggs within quota incurred prior to the institution of the CEMA surplus removal scheme.) CEMA imposes its levies under the Farm Products Marketing Agencies Act and they are of two types; first, a levy to cover its administrative costs and, second, a levy to cover the cost of its surplus removal pro-
[Page 1219]
gramme in respect of eggs which are within the provincial allocation but are in excess of table demand.
This integrated scheme is designed to introduce stability into the egg market on a national level by assuring all producers a producer price for their eggs within their respective quotas, regardless of whether those eggs are sold locally or extraprovincially and regardless of whether they are sold for table consumption or end up in the surplus removal programme. The producers, however, share the cost of this programme, again on a national level, through the levies payable in respect thereof. In short, if in a particular Province there is a large surplus of within quota eggs, it would be because the table demand there has been met by out-of-province eggs but the producers in that Province would still get the producer price for their eggs within their respective quotas and the deficiency in returns on the surplus sold by CEMA in the processors market would be made up by levies exacted from all producers equally.
III
In giving reasons for judgment for the majority of the Ontario Court of Appeal, MacKinnon J.A. summarized the main attack upon the federal and provincial legislation, and the orders and regulations thereunder, by those who appeared in opposition to their validity. It was said, on the one hand, that the federal legislation, orders and regulations encroached upon provincial legislative authority in relation to local and intraprovincial trade (a point, I may say, that was made in the Natural Products Marketing Act reference and that the levies imposed in pursuance of the federal enactments were a colourable device to interfere with the local egg market and were, in any event, not properly enacted or authorized under s. 54 of the British North America Act. On the other hand, the provincial legislation, orders and regulations were challenged as reaching into interprovincial and
[Page 1220]
export trade. Overall, a breach of s. 121 of the British North America Act was alleged in that the interlocking schemes interfered with the free flow of trade interprovincially.
Additional grounds of attack considered in the Ontario Court of Appeal concerned allegedly improper delegation, both in a constitutional sense and in the administrative law sense reflected in Brant Dairy Co. v. Milk Marketing Commission of Ontario. There was also a challenge to the levies from the standpoint of their taxation character, if they were taxes, and of their regulatory character if they were not. This last-mentioned issue was given particular emphasis in the submissions to this Court but no more than the emphasis on the delegation points. Various strands of the argument on these matters were bound up with the objections taken from the standpoint of alleged federal intrusion into local trade and provincial interference with interprovincial and export trade. The various issues are best considered in relation to the questions confronting this Court and I shall deal with these questions seriatim.
The first question engages the validity of ss. 2 and 3 of the federal Agricultural Products Marketing Act, which read as follows:
2. (1) The Governor in Council may by order grant authority to any board or agency authorized under the law of any province to exercise powers of regulation in relation to the marketing of any agricultural product locally within the province, to regulate the marketing of such agricultural product in interprovincial and export trade and for such purposes to exercise all or any powers like the powers exercisable by such board or agency in relation to the marketing of such agricultural product locally within the province.
(2) The Governor in Council may by order grant to any board or agency mentioned in subsection (1) authority
(a) in relation to the powers granted to such board or agency under the laws of any province with respect to
[Page 1221]
the marketing of any agricultural product locally within the province, and
(b) in relation to the powers that may be granted to such board or agency under this Act with respect to the marketing of any agricultural product in interprovincial and export trade,
to fix, impose and collect levies or charges from persons engaged in the production or marketing of the whole or any part of any agricultural product and for such purpose to classify such persons into groups and fix the levies or charges payable by the members of the different, groups in different amounts, to use such levies or charges for the purposes of such board or agency, including the creation of reserves, and the payment of expenses and losses resulting from the sale or disposal of any such agricultural product, and the equalization or adjustment among producers of any agricultural product of moneys realized from the sale thereof during such period or periods of time as the board or agency may determine.
(3) The Governor in Council may by order revoke any authority granted under this section. 1957, c. 15, s. 2.
3. The Governor in Council may make regulations prescribing the terms and conditions governing the granting and revocation of authority under section 2 and generally may make regulations for carrying the purposes and provisions of this Act into effect. R.S., c. 6, s. 3.
This is skeleton legislation, originating as to s. 2(1) and (3) and s. 3 in the Agricultural Products Marketing Act, 1949 (Can.), c. 16. Section 2(2) was introduced by an amendment to the 1949 Act (there was an inconsequential amendment also to s. 2(1)) by 1957 (Can.), c. 15, s. 2. It followed upon the decision of this Court in Reference re Farm Products Marketing Act of Ontario, the decision being handed down on January 22, 1957. What, quite obviously, precipitated the addition of the present s. 2(2) was the ruling of this Court in the aforementioned Reference that a Province could not constitutionally authorize a provincial marketing board to impose licence fees to cover losses in marketing surpluses of a regulated product and to use the funds to equalize or adjust
[Page 1222]
returns to producers in the regulated market because this would amount of indirect taxation. In so holding, this Court founded itself upon the judgment of the Judicial Committee in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Limited. I shall come shortly to a consideration of the Crystal Dairy case and to the cases in this Court which have dealt with it.
The appellants, in their attack upon s. 2 (and I should say here that if s. 2 falls, s. 3 must fall with it and does not need independent consideration) drew attention to the addition made by 1957 (Can.), c. 15 to the preamble to the Agricultural Products Marketing Act. In the original enactment the preamble was as follows:
WHEREAS it is desirable to improve the methods and practices of marketing agricultural products of Canada; and whereas the legislatures of several of the provinces have enacted legislation respecting the marketing of agricultural products locally within the province; and whereas it is desirable to co-operate with the provinces and to enact a measure respecting the marketing of agricultural products in interprovincial and export trade;…
The 1957 amendment added the following sentence:
…and whereas it is desirable to facilitate such marketing by authorizing the imposition of levies or charges for the equalization or adjustment among producers of the moneys realized from the marketing of the products:…
The thrust of the contention as to this addition is that it reinforces the submission as to the intrusion by Parliament into local and intraprovincial trade by the levy provisions of s. 2(2) as a derogation from the federal statute’s declared concern with interprovincial and export trade alone.
The submission as to s. 2(1) brings into question this Court’s decision in P.E.I. Potato Marketing
[Page 1223]
Board v. H.B. Willis Inc., and, alternatively, raises an issue as to the scope of that decision and, in consequence, of the later decision of this Court in Coughlin v. Ontario Highway Transport Board. The Willis case, to put it briefly, authorized a constitutional method of escape from the prohibition of the Nova Scotia Inter-Delegation case, Attorney-General of Nova Scotia v. Attorney-General of Canada, which denied authority for delegation of legislative power between Parliament and a provincial legislature. The Willis case permits delegation by Parliament of administrative authority to a provincial board to exercise like regulatory authority in an area of federal competence as it exercises in the provincial area. The administrative authority is to be exercised pursuant to federal orders, and I see nothing in s. 2(1) to give ground for impugning the decision of this Court in the Willis case which went so far as to support federal authorization by order-in-council for regulation making by the provincial board, thus supporting the administrative delegation by a concomitant power to enact subordinate legislation. The only difference between the 1949 federal Act that was under consideration in the Willis case and the same Act as it now reads is the exclusion in the present Act of the words “outside the Province” in s. 2(1) before the words “in interprovincial and export trade”. This does not, in my opinion, alter the application of the Willis case but is merely a reflection of a view taken in the Ontario Farm Products Marketing Act reference, referred to above, that federal competence in the regulation of interprovincial and export trade does not necessarily begin only at the point where a product crosses the provincial boundary.
Nor is it a sound distinction to dwell, as did counsel for the appellants, on the fact that in the Willis case the federally authorized provincial board was the only “federal” agency authorized to market Prince Edward Island potatoes. This does not exclude a federal umbrella agency empowered
[Page 1224]
to act in the federal field in some co-ordinated fashion. Moreover, it proves too much to contend that federal adoption of provincial regulations for purposes of the delegation of authority to a provincial board offends the principles of the Nova Scotia Inter-Delegation case. There is nothing to preclude the debating of that adoption in Parliament, any more than the adoption by Parliament of its own regulations. It should be plain, in the light of the delegation cases which have followed after the Nova Scotia inter-Delegation case, that its basis is that the mutually exclusive legislative authority of Parliament and Provincial Legislatures cannot as such be exchanged between them but it does not preclude borrowing or adopting for valid federal purposes prescriptions which a Provincial Legislature may have validly enacted within its own areas of competence and, again, it does not preclude delegation of administrative authority to a provincial board which may be permitted by federal order to support that authority by being empowered to make implementing regulations.
What appellants in the lengthy attack in their factum on s. 2(1) point to is the alleged distortion of the principle of the Willis case when ten provincial marketing boards are given delegated authority to regulate marketing in interprovincial and export trade. This may make a federal umbrella agency all the more necessary but I do not see how it gives rise to a constitutional issue, even if it be an awkward way of overcoming a want of federal authority to regulate through an agency of its own the marketing of eggs throughout and beyond Canada, including local marketing. The distortion allegedly involved in the overall regulatory scheme is said by the appellants to impede the free flow of commodities but, apart from the effect of s. 121 of the British North America Act, that could be the effect of any federal regulatory scheme which had no interaction with provincial agencies and there is no constitutional infirmity in such a consequence.
[Page 1225]
What the objections come to, in the attempt to distinguish the Willis case and to regard its very facts as expressing the outward limit of federal resort to administrative delegation, is an assertion of colourability. The legislative scheme here is a far cry from that involved, say, in the legislation considered in Attorney-General of Ontario v. Reciprocal Insurers, which was regarded as a transparent attempt to evade constitutional limitations on federal insurance regulation by resort to the Criminal Code. Here there is no such colourable reliance, but a direct invocation of federal competence in relation to interprovincial and export trade with the authority to be exercised on a delegated basis by provincial agencies. The delegation, as I have already noted, cannot impeach the assertion of power; nor is it impeachable (to take another point raised by the appellants) on the ground that the delegates, the provincial boards, are given a discretionary authority as opposed to the compulsory exercise said to be commanded by the federal legislation considered in Coughlin v. Ontario Highway Transport Board, supra.
No doubt, there may be variations as among the Provinces on the way in which the delegated federal power is exercised by the provincial boards but, again, this is not a ground of constitutional objection but goes simply to the scope of the administrative delegation and is controllable at that level both by Parliament or the Governor-in-Council or by the Courts, as the case may be. Counsel for the appellants is, at bottom, complaining of the variation in standards resulting from the mode of administrative delegation adopted by Parliament, a variation that is also exhibited in methods of enforcement, as for example, by fine, by seizure, by peremptory penalty.
There is a case to be made, from the standpoint of administrative regularity in the interests of both the regulating agencies and of the regulated producers, for a uniform set of standards. Involved in
[Page 1226]
the appellants’ submissions, as reflected in their factum and in oral argument, was the contention that there is a constitutional requirement in the delegation of authority that standards be fixed by Parliament or where, as here, there is delegation in depth, that is by orders which the Governor-in-Council is authorized to make, the orders of the Governor‑in‑Council should establish standards and not, by wholesale redelegation, leave their determination to the provincial boards nor, as s. 2(1) provides, adopt the various provincial standards for federal purposes. I do not think this Court would be warranted in imposing such a constitutional limitation on the delegation of authority. The matter of delegation in depth is covered by the judgment of this Court in Reference re Regulations (Chemicals) under the War Measures Act, and I would not limit its rationale to emergency legislation. There is sufficient control on an administrative law basis through the principle enunciated and applied by this Court in the Brant Dairy case, supra (which arises for consideration under question 2) and I find no ground for raising it to a constitutional imperative.
It follows from the foregoing that the challenge to the validity of s. 2(1) of the Agricultural Products Marketing Act fails.
IV
The issues raised by the appellants in respect of the validity of s. 2(2) of the Agricultural Products Marketing Act require this Court (1) to consider anew what was decided by the Judicial Committee in the Crystal Dairy case and how that case sits in the light of a succession of cases in this Court; (2) to consider whether, apart from that case and later cases in this Court in which its application came up, s. 2(2) or any part thereof is vulnerable; and (3) to determine whether s. 54 of the British North America Act was violated in the enactment of s. 2(2) as one of the provisions introduced by 1957 (Can.) c. 15. It will be convenient to deal with the third point first.
[Page 1227]
Section 54 of the British North America Act reads as follows:
54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed.
It follows upon s. 53 which provides that “bills for appropriating any part of the public revenue, or for imposing any tax or impost, shall originate in the House of Commons”. The appellants urged that ss. 53 and 54, being embodied in the British North America Act and prescribing certain procedures for the lawful appropriation of any part of the public revenue or imposition of taxes, were constitutional imperatives which were enforceable by the Courts no less than other prescriptions which establish controls on legislative authority. The counter contention was that the sections merely established a procedure that spoke to the House of Commons alone and that it was for that House to act upon it and to enforce it without intervention of the Courts. British precedents were relied upon by the respondents although not based upon the terms of a fundamental written constitution, and they were relied upon by MacKinnon J.A. in his holding that conformity to s. 54 was not reviewable by the Courts once the legislation was enacted. Reliance was also placed upon the preamble to the British North America Act, referring to “a constitution similar in principle to that of the United Kingdom”. I do not think that this carries any force against express enactment. It may help to identify constitutional elements just as the British precedents may help to determine what is meant by any of the terms used in ss. 53 and 54, but I do not agree that they can control the determination of the question whether obedience to the prescriptions of those sections is judicially reviewable.
It is a curious feature of the issue under discussion that both the appellants and the respondents, albeit for different reasons, insisted that the levies
[Page 1228]
should be regarded as taxes. For the appellants it was a means of striking down s. 2(2) of the Agricultural Products Marketing Act if there was no message of recommendation by the Governor General and if this requirement was cognizable judicially. For the respondents it was a means of supporting the Crystal Dairy case. Implicit in their respective positions was the proposition that s. 54 cannot be evaded by a delegation device through which a subordinate agency is empowered to impose taxes as contrasted with their direct imposition by the House of Commons.
Although the record does not disclose whether there was in fact a message from the Governor General recommending the enactment of s. 2(2)—indeed, counsel for the appellants contended that, at least, leave should be given to produce evidence on the matter and counsel for the Attorney-General of Canada relied on the fact that there was no evidence of non-compliance with s. 54—I think I can take judicial notice of the procedure by which money Bills are introduced in the House of Commons. The present procedure, governed by House of Commons S.O. 62(2), introduced in 1968, provides that the message and recommendation of the Governor General in relation to any appropriation Bill or one to impose a tax shall be printed in the Notice Paper and in the Votes and Proceedings when the measure is to be introduced, and that the text of the recommendation shall be printed with or annexed to the Bill. Prior to 1968 the applicable procedure was that a money Bill had to be referred to a Committee of the Whole before it was dealt with in the House of Commons. A resolution of the Committee, where the Governor General’s recommendation was read out, preceded the introduction of the Bill and the resolution was recorded in the House Debates. There was no such resolution recorded in the Debates for the session in which the Bill 403, introduced on April 3, 1957 and embodying s. 2(2) was passed.
[Page 1229]
In the present case, I need not come to any definite conclusion as to whether ss. 53 and 54 lay down prescriptions which are cognizable in the Courts. In my opinion, for reasons that follow, I do not agree that the levies authorized by s. 2(2) can be characterized as taxes, having regard especially to the context in which authority to impose or exact them is given. They are merely ingredients of a regulatory scheme and fall to be considered as elements thereof.
I come now to the merits of s. 2(2) and to the Crystal Dairy case. MacKinnon J.A. for the majority of the Ontario Court of Appeal rightly took the position that he was bound by that case and by the judgments of this Court in which it was endorsed and applied, and that if a fresh look was required it was for this Court to take it. On the other hand, Dubin J.A. found that s. 2(2)(a) was ultra vires, apart from any challenge to the Crystal Dairy case, in that it (and s. 4(a) of S.O.R./72-243 which he held fell with s. 2(2)(a)) authorized the provincial marketing board to impose levies in relation solely to intraprovincial marketing of eggs, and it was incompetent for Parliament to authorize regulation of intraprovincial trade or to authorize exaction of levies by a provincial board in respect of that kind of trade.
Wilson J.A. considered that s. 2(2)(a) and (b) were not severable in their constitutional impact but that s. 2(2) was a conjunctive provision delegating composite authority which, I gather, must be exercised compositely to embrace all producers, whether they market intraprovincially or extraprovincially. Madame Justice Wilson went on to hold that s. 2(2) was taxation legislation under s. 91(3) of the British North America Act, authorizing a provincial board to impose indirect taxes and that its validity as such (involving in this respect an acceptance of the Crystal Dairy case that the levies were taxes) was somehow supported by the emphasis in the federal Act on regulation of interprovincial and export trade in agricultural products, although that was not its constitutional base. What emerges from her reasons is that s. 2(1) of
[Page 1230]
the Agricultural Products Marketing Act is an exercise of the federal trade and commerce power and s. 2(2) of the federal taxing power.
In his majority judgment, MacKinnon J.A. gave separate consideration (as did Dubin J.A.) to s. 2(2)(a) and (b). He found no difficulty in sustaining s. 2(2)(b) as an exercise of federal authority in relation to the regulation of interprovincial and export trade under s. 91(2) of the British North America Act and also of federal taxing power under s. 91(3). It was s. 2(2)(a) which required more extensive examination, and he proceeded to consider it as based primarily on federal power to impose or authorize the imposition of indirect taxes, and then (not differing particularly from the views of Wilson J.A.) he found additional support for it in a generous view of federal power to embrace in its undoubtedly valid legislation matters which it could not independently enact. The following passages in his reasons show this:
…a federal taxing statute which assists a local board in carrying out its regulatory duties with regard to both local and interprovincial trade in a fashion which would not be competent to a provincial legislature, cannot be said to be legislation which, in pith and substance, is legislation in relation to property and civil rights in the Province; I accordingly, have concluded that s. 2(2)(a) is competent legislation.
A secondary argument made by those supporting the legislation was that s. 2(2)(a) was legislation purely and simply with relation to the regulation of interprovincial and export trade. It was a necessary and integral part of the effective control of interprovincial and export trade, the argument went, that the common agency have the power to impose levies on local trade.
…
It may be that for the efficient marketing of a farm product extraprovincially it is necessary that the local
[Page 1231]
board have the power to impose levies on intraprovincial as well as extraprovincial trade. The words “such marketing” found in the 1957 amendment to the preambule may refer only to interprovincial and export trade, for the facilitating of which it is necessary to impose levies on both intra and extraprovincial trade. However, grammatically, “such marketing” could refer also to the words earlier found in the preamble, namely, “the marketing of agricultural products locally within the province”.
There was no factual background given to us with relation to this particular subsection to support directly the argument that it was essential and necessarily incidental to the effective control over interprovincial and export trade that levies be imposed by federal authority on intraprovincial trade to be used by the local Board. However, the subsection does allow for the granting of authority to a local board to fix, impose and collect levies with respect to the marketing of any agricultural product intraprovincially and extraprovincially. This indicates that both powers may be used contemporaneously, if need be, in aid of a national marketing scheme. This indeed was done by paragraph 4 of the Ontario Egg Order S.O.R./72-243 and is an answer to the argument that the legislation is a colourable use of the indirect taxation power to control a particular product in a particular province.
…
I can only gather from these passages either that the unlimited federal taxing power was itself a sufficient prop upon which the Parliament of Canada could exercise or authorize a provincial marketing board to exercise conjoint regulatory power over extraprovincial and intraprovincial trade or that the Natural Products Marketing Act case, which commanded a separation of regulatory authority in respect of extraprovincial trade from authority in respect of intraprovincial trade, limiting Parliament only to the former, must be modified or else distinguished. The intimation is that, in the case of a product passing into interprovincial and export trade as well as having an intraprovincial market, overall regulatory control
[Page 1232]
may be exercised under federal legislation where it is the result of a Dominion-Provincial agreement to which all Provinces were parties. This is to take an enlarged view of the federal trade and commerce power which is not supported by any existing authority. Nor can a federal-provincial agreement be a basis for enlarging either the legislative authority of Parliament or of a provincial Legislature. If the power asserted is not found in the Constitution, it cannot be given by agreement.
It is one thing for the Parliament of Canada to legislate in relation only to interprovincial and export trade with consequential effects upon the local or intraprovincial market, or for a provincial Legislature to legislate in relation to local and intraprovincial trade with consequential, with unplanned even if foreseen effects upon extraprovincial trade; it is a different thing for the Parliament of Canada to legislate to embrace expressly interprovincial, export and local or intraprovincial trade and to do so, as here, by expressly recognizing the separate sources of legislative power for the extraprovincial and intraprovincial regulatory authority. Assuming that there may be situations where the case for overall federal regulatory authority is so overwhelming as to justify sweeping into a federal scheme all phases of a marketing plan, including local transactions, s. 2(2) of the federal Act is not posited on any such basis. Rather it distinguishes, quite carefully, federal regulation of interprovincial and export trade from provincial regulation of intraprovincial trade and seeks to blend them administratively through exercise of a delegation power. In my opinion, in providing for authorization to local boards to impose levies in respect of intraprovincial marketing Parliament has purported to enlarge the powers of the local boards in a matter falling within exclusive provincial competence, and I am in full agreement with the dissenting reasons of
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Dubin J.A. below that Parliament has thus overstepped its own authority.
It is, of course, said (and, as I have noted, both MacKinnon J.A. and Wilson J.A. have taken the point) that what Parliament has done has been merely to supplement the existing regulatory authority of provincial boards in respect of local marketing by endowing them with a taxing power which, under the Constitution and the case law, they could not be given by the Legislature which authorized their creation. A Province cannot impose or authorize the imposition of indirect taxes, and if the levies authorized by s. 2(2) are species of taxation why cannot Parliament fill the gap in provincial regulatory power by supplying that authorization? Indeed, MacKinnon J.A. found reinforcement for his view in the so-called theory of exhaustiveness of legislative power, namely, that what is not given to the provincial Legislatures must rest with Parliament so that legislative authority in relation to any particular matter must be vested in the one or the other. Rand J. in a familiar statement of the principle expressed it in Murphy v. C.P.R., at p. 643, with necessary qualifications, as follows:
It has become a truism that the totality of effective legislative power is conferred by the Act of 1867, subject always to the express or necessarily implied limitations of the Act itself…
I need not dwell on all the limitations, but one recognized by the Courts is the prohibition of inter-delegation of legislative power as between Parliament and a provincial Legislature. There are others resulting from certain entrenched provisions of the Constitution as, for example, ss. 91(1), 99 and 133. The distribution of taxing authority suggests another limitation, this being a limitation on federal power to impose indirect taxes for provincial purposes. The question, as is well known, was raised and left open in Caron v. The King, at p. 1004, by Lord Phillimore and I leave it open here. There is, nonetheless, some incongruity in Parlia-
[Page 1234]
ment legislating to impose or authorize taxation for provincial purposes but that may be an undue nod to excessive formality. What is more to the point, however, is the view expressed by the Privy Council in the Employment and Social Insurance Act reference, at p. 356 that the use of the federal taxing power to finance a regulatory scheme which is itself beyond its authority cannot rectify the invalidity.
I think that this proposition is particularly applicable in the present case. The authorization of levies in respect of local marketing purports to put in place a cardinal feature of the marketing plan as it operates intraprovincially. If the levies are to be characterized as taxes, they are being applied here not as having any integrity of their own, as is the norm in taxation (albeit there are eddying consequences of tax measures), but as elements of a marketing scheme which Parliament could not itself prescribe, namely, a scheme of intraprovincial marketing. In short, the so-called taxes do not themselves reflect the pith and substance of the marketing plan of which they are part but rather take their colour from the scheme. Beyond this, it is, in my opinion, a mistaken view to regard the various types of levies associated with marketing schemes as species of taxes; they are integral to the operation of the schemes and are, in the context thereof, related either to their administration or to their price mechanisms designed to make the schemes tolerable and equitable for those compulsorily brought within their ambit.
This view is at variance with what was said by the Privy Council in the Crystal Dairy case, but that case was itself reduced by later cases and, in my opinion, ought no longer to be regarded as stating the law on the subject of marketing levies. I support this conclusion by what immediately follows in these reasons.
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Lawson v. Interior Tree Fruit and Vegetable Committee of Direction, may serve as a starting point for consideration of the matter. There, a provincial marketing statute, which authorized the regulatory agency to exact licence fees from shippers of the regulated products and to impose levies upon any produce marketed to defray the costs of administration, was struck down because under its terms it reached into and was administered as encompassing extraprovincial trade. The Court also struck down the expenses levy as being an indirect tax and struck down the licence fee because, being characterized as an instrumentality for the control of trade, it did not fall within s. 92(9) of the British North America Act which referred to licences for the raising of a revenue. The licence fee aspect of the Lawson judgment was in effect overturned by the Privy Council in Shannon v. Lower Mainland Dairy Products Board, which sustained a provision for licensing and for licence fees in connection with an otherwise valid provincial marketing scheme. The Privy Council said this, at p. 721:
…Their Lordships do not consider it necessary to support this legislation by reference to s. 92(2). Without deciding the matter either way, they can see difficulties in holding this to be direct taxation within the Province. But on the other grounds the legislation can be supported. If regulation of trade within the Province has to be held valid, the ordinary method of regulating trade, i.e., by a system of licences, must also be admissible. A licence itself merely involves a permission to trade subject to compliance with specified conditions. A licence fee, though usual, does not appear to be essential. But, if licences are granted, it appears to be no objection that fees should be charged in order either to defray the costs of administering the local regulation or to increase the general funds of the Province, or for both purposes. The object would appear to be in such a case to raise a revenue for either local or Provincial purposes. On this part of the case their Lordships, with great respect, think that the present Chief Justice, then Duff J., took a somewhat narrow view of the Provincial powers under s. 92(9) in Lawson v. Interior Tree Fruit and Vegetable Committee of Direction… It cannot, as their Lord-
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ships think, be an objection to a licence plus a fee that it is directed both to the regulation of trade and to the provision of revenue…
There is one further aspect of the Shannon case to be noted. The licence fees were, by the legislation therein, to be available to pay the expenses of administration of the marketing scheme. On this score too, the licence fees were upheld, and thus there was a further repudiation of the Lawson case’s holdings, that which invalidated an expenses levy as being an indirect tax. What is evident from the passage in Shannon above-quoted is that although the Privy Council did not feel that the licence fee was a direct tax it did not think that the taxation power had to be invoked in considering the validity of a marketing scheme which included a provision for licence fees.
This judgment was given, of course, after the Crystal Dairy case had been decided, and it must be a matter of comment that the Crystal Dairy case was not mentioned in the reasons in Shannon although it was cited in argument. It seems to me quite obvious that what was decided in the Crystal Dairy case was considerably qualified by the Shannon judgment. In Crystal Dairy, the Privy Council dealt with a British Columbia milk marketing statute which sought to stabilize the market as between fluid milk and manufactured milk products, the instability resulting from the production above demand of fluid milk which commanded a higher price than did manufactured milk products. The regulatory agency was authorized to fix monthly the standard prices for fluid milk and for milk products, and then, on the basis of compulsory returns of weight and quantity sold by dairy farmers under the scheme, to apportion the difference between the total value of the sales in each class, calculated at the standard prices, over the whole body of farmers in proportion to the weight of fluid milk sold by each of them. The apportioned sum assessed against each farmer was payable on an apportionment basis to farmers who sold in the manufactured products market. The apportioned sum was called an adjustment levy and, in addition, another levy, one for the expenses
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of the regulatory agency was chargeable against the farmers.
In concluding that the adjustment levies were taxes, the Privy Council adopted the indicia of taxation expressed by Duff J. in the Lawson case, namely, that they were (1) enforceable by law; (2) imposed under authority of the Legislature; (3) imposed by a public body; and (4) imposed for a public purpose. These indicia would make any exaction included in a regulatory scheme a tax, without regard to its particular trade or marketing purpose, as in the Crystal Dairy case and other marketing cases, to be a price support or to be a price fixing mechanism. I do not think it reasonable to detach the provisions for levies from a marketing statute and view them in isolation. This was commented on by Rand J. in the Ontario Farm Products Marketing Act reference, at p. 217, where he said that “The reasons of Lord Thankerton [in the Crystal Dairy case] contain no reference to trade regulation; the statute is dealt with as one providing taxation to enable an equalization of price return”; and Rand J. went on to contrast the different approach taken in the Shannon case. I note also that there is a clue to the conception of provincial taxation in the formulation of the provincial taxing power in s. 92(2) of the British North America Act as being “direct taxation within the Province in order to the raising of a revenue for provincial purposes”. Marketing levies are not imposed to raise revenue in the sense stated ins. 92(2).
Having concluded in the Crystal Dairy case that the adjustment levy was a tax, it was easily perceivable that the Privy Council would be constrained to hold that the tax was an indirect one; and it then swept the expenses levies into the same net by assessing them as ancillary to the adjustment levies, an assessment which I find difficult to
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follow. It is, at any rate, now clear not only from the Shannon case but from judgments of this Court, beginning with Ontario Boys’ Wear Ltd. v. Advisory Committee, and extending through the Willis case, to Reference re Farm Products Marketing Act of Ontario, supra, that an expenses levy may validly be imposed by provincial legislation upon regulated producers and sellers to cover the cost of administering a provincial marketing scheme. It may be regarded as a “fee for services” to use the phrase of Kerwin J., as he then was, in the Ontario Boys’ Wear case, supra, at p. 359 and supportable under s. 92(13)(16) of the British North America Act, that is as an element of a valid regulatory scheme. It is quite clear from all of this that the Crystal Dairy case has been effectively overruled in respect of the validity of provincially authorized expenses or administration levies.
I turn now to the adjustment and equalization levies. Rand J. in the Willis case, supra, at p. 416, sought to soften the effect of the Lawson case and of the Crystal Dairy case, which held both expenses levies and adjustment levies to be invalid as indirect taxation, by seeing them, in the Lawson case, as part of an invalid provincial scheme to regulate interprovincial and export trade and, in the Crystal Dairy case, as “affecting” external trade. That has not, however, been the view generally taken of those cases, but the observations of Rand J. are relevant to the point I have already made, namely, that levies involved in marketing schemes must be viewed in their relation to the schemes and not as disembodied tax measures.
In Lower Mainland Dairy Products Board v. Turner’s Dairy Ltd., this Court applied the
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Crystal Dairy case to invalidate a regulatory milk marketing scheme which sought to overcome the indirect tax hurdle of the Lawson case. The same umbrella legislation was involved as that held valid in the Shannon case. The scheme in question centered on a regulatory agency through which all milk was to be marketed and which, consequently, had the exclusive right to sell to dairies and to manufacturers of milk products. The agency had price fixing authority, and a fixed percentage of milk purchased from producers was treated as sold in the fluid milk market and the remainder in the manufactured products market irrespective of the market in which each producer’s milk may actually have been sold. The receipts from sales to dairies and manufacturers less expenses were divided among the producers on a quota basis and, in the result, there was an equalization of returns. There were no specified levies exacted directly, as in the Lawson case, but rather a pooling of receipts in the hands of the regulatory agency which made the calculations leading to equalization of returns. This was held to be a colourable attempt to evade the Crystal Dairy case and the scheme was struck down. No point was made of the expenses deducted from the gross receipts.
The Crystal Dairy doctrine came up for consideration again in Reference re Farm Products Marketing Act of Ontario, a federal government reference of questions touching the validity of certain Ontario legislation, regulations and orders, brought before this Court at the request of the Government of Ontario. Among the eight questions submitted to the Court were a number dealing with, respectively, a service charge and with licence fees in respect of marketing, prescribed by the marketing agency, and since they were held valid without engaging the Crystal Dairy doctrine I leave them to one side. I leave also to one side a question involving compulsory licensing of processors of hogs and shippers which concerned the
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Court on the issue of encroachment on the federal trade and commerce power. Three of the questions touched the Crystal Dairy doctrine directly, and I propose to examine them and the answers given by the eight Judge Court (Kellock J. did not sit in the case) to those questions.
The first such question was also the first posed in the Reference and was as follows:
1. Assuming that the said Act applies only in the case of intraprovincial transactions, is clause (l) of subsection 1 of section 3 of The Farm Products Marketing Act, R.S.O. 1950 chapter 131 as amended by Ontario Statutes 1951, chapter 25, 1953, chapter 36, 1954, chapter 29, 1955, chapter 21, ultra vires the Ontario Legislature?
The statutory provision mentioned in this question was in these terms:
3. (1) The Board may,…
(l) authorize any marketing agency appointed under a scheme to conduct a pool or pools for the distribution of all moneys received from the sale of the regulated product and requiring any such marketing agency, after deducting all necessary and proper disbursements and expenses, to distribute the proceeds of sale in such manner that each person receives a share of the total proceeds in relation to the amount, variety, size, grade and class of the regulated product delivered by him and to make an initial payment on delivery of the product and subsequent payments until the total net proceeds are distributed.
This provision raised, in the view of the Court, a number of issues touching the relation between provincial regulatory power in respect of intraprovincial transactions and federal power in relation to the regulation of trade and commerce but, those apart, all members of the Court save Cartwright J. (as he then was) were of the opinion that the clause was valid.
Chief Justice Kerwin’s answer on the question was short, in the following terms, at p. 206:
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In view of the wording of question 1, I take clause (l) of subs. (1) of s. 3 of The Farm Products Marketing Act as being a successful endeavour on the part of the Ontario Legislature to fulfil its part while still keeping within the ambit of its powers. On the assumption directed to be made and reading the clause so as not to apply to transactions which I have indicated would be of a class beyond the powers of the Legislature, my answer to the first question is “No”.
Rand J. prefaced his consideration of all the questions by an examination of the scope of provincial regulatory authority in relation to marketing, and then answered question 1 as follows, at pp. 214-15:
Co-operative disposal may take different forms: it may be that of an exclusive local marketing by an agency, either as owner or agent, by which the products are disposed of and the returns equalized, a form, I should say, within the authority of the Province; or, in the interest of convenience and economy, the producers, as contemplated by the Act here, would make their own sales with all moneys made returnable to the agency, for the recovery of which it may bring suit, and by it equalized and distributed. Since prices can be fixed by the agency, at the point of collecting them the result in both forms becomes the same, and I cannot see any jurisdictional difference between the equalization in the two cases. The exclusion of such an ordinary device of co-operative marketing from Provincial power would be a curtailment which I cannot think warranted. As it appears elsewhere in these reasons, indirect taxation is not, under a licensing scheme, a disqualifying factor and in co-operative marketing the essential condition of indirect taxation, the general tendency to pass the tax on to another, is excluded.
A more specific indication of what was to be understood by the reference to equalization of returns in the reasons of Rand J. is seen in the reasons of Locke J., with whom Nolan J. agreed, in answering question 1. He said this, at p. 231:
The pools authorized by clause (/) appear to be designed to obtain the most favourable prices for the producers as a whole by selling the regulated product through the medium of a marketing agency, a procedure which, it is apparently hoped, will result in better prices
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being realized for the crop as a whole than would otherwise be possible. I do not consider that the decision of the Judicial Committee in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy, Limited supports a contention that the authority to authorize the proposed pools is beyond Provincial powers. In my view, the fact that some of the producers might under such regulations receive less for their product than they would if they were at liberty to sell when the opportunity offers and that others might receive more than they would otherwise receive does not mean that a tax is imposed upon one producer for the benefit of others. The design is apparently to realize what will be over the years better prices for all producers and this, in my opinion, is within the powers given by heads 13 and 16.
What this passage imports is that the regulatory agency would return the proceeds of sales made by it of particular producers’ products to those producers, less expenses of administration, on the basis of a pooling of all their products and of pooling the prices received so that whether or not some of the products were sold at a higher price than others of the same class, all products would be deemed to have commanded the same price. Fauteux J. (as he then was), with whom Taschereau J. and Abbott J. agreed, expressed the point clearly in distinguishing the Crystal Dairy and Turner’s Dairy Ltd. cases, saying, at pp. 251-52:
…In both the Crystal Dairy and Turner’s Dairy cases, though achieved by different methods, there was compulsory equalization of returns, traders of processed milk products receiving more, at the expense of traders in the fluid milk products. Under the Act here considered, there is no pooling of returns but a pooling of products aiming at more advantageous marketing and, hence, returns: each producer remaining entitled to receive out of the total returns—all necessary and proper disbursements and expenses being deducted—his share according to the amount, variety, size, grade and class of the product he pooled with the other producers. The object of the compulsory equalization and compulsory deduction is not here the same as in the Crystal Dairy and Turner’s Dairy cases, supra. In its normal operation, and this under the authorities is the test, the Act, in pith and substance, does not contemplate that
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one producer or one class of producers should contribute part of his or its returns to another producer or class of producers.
I am of the opinion that there is in the foregoing answers an erosion of the Crystal Dairy doctrine, and the dissent of Cartwright J. points this up. I should note, however, that the learned Justice took a different view from his brethren on the construction of the words of the governing statute, and he stated that were he able to construe the statute in the same way as did Rand J. he would, for the reasons given by Rand J., answer the questions in the same way. Proceeding, however, on another construction basis and referring to other statutory provisions in connection with his assessment of the provision set out in question 1, he expressed his view as follows, at pp. 242-43:
…the Act envisages situations in which while the regulated product is to be marketed through the designated marketing agency it is the producer and not the agency who becomes the vendor with whom the contract of sale is made and to whom the purchaser becomes indebted for the price.
…It also appears, …that the price received during the operation of a scheme by one producer, “A”, for a quantity of the regulated product of a certain variety, size, grade and class may vary from time to time and from place to place from the price received by another producer, “B”, for an equal quantity of the product of the same variety, size, grade and class. In such a situation the plain words of cl. (l) appear to me to empower the Board to authorize the marketing agency to distribute the total moneys received by it from the purchasers from “A” and “B” between “A” and “B” not having regard to the prices contracted to be paid to each of them but having regard only to the amount of the regulated product sold by each of them, in other words to make an equalization as was sought to be done by the legislation found to be invalid in the Crystal Dairy case.
I am not unmindful of the rule that if the words of an enactment so permit they shall be construed in accordance with the presumption which imputes to the legislature the intention of limiting the operation of its enactments to matters within its allotted sphere; but this rule
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does not permit the adoption of a forced construction at variance with the plain meaning of the words employed.
Using the example I have given above, the clause in question appears to me to empower the Board to authorize a marketing agency to deduct from the moneys received from the purchasers of the product of producer “A” not only “all necessary and proper disbursements and expenses” but also such amount as it may be necessary to add to the moneys received from the purchasers of the product of producer “B” to equalize the price received by “A” and “B” for products of like variety, size, grade and class. The fact that the amount required to make the equalization will be deducted from moneys received by the marketing agency on behalf of the producers instead of being collected from them as an “adjustment levy” does not appear to me to enable us to distinguish the clause in question from the legislation declared to be invalid in the Crystal Dairy case.
I pass to the other two questions which touch the Crystal Dairy case, being questions 7 and 8 in the Reference, and they are in the following terms:
7. Is the following draft amendment to subsection (1) of Section 7 of The Farm Products Marketing Act, ultra vires the Ontario Legislature either in whole or in part and if so in what particular or particulars and to what extent?
“Subsection (1) of Section 7 of The Farm Products Marketing Act as amended by Section 4 of The Farm Products Marketing Amendment Act, 1951, Section 6 of The Farm Products Marketing Amendment Act, 1954 and Section 7 of The Farm Products Marketing Act, 1955 is amended by adding thereto the following paragraph:
(ss) authorizing a local board.
(i) to inquire into and determine the amount of surplus of a regulated product,
(ii) to purchase or otherwise acquire the whole or such part of such surplus of a regulated product as the marketing agency may determine,
(iii) to market any surplus of a regulated product so purchased or acquired,
(iv) to require processors who receive the regulated product from producers to deduct from the moneys payable to the producers any licence fees payable by the producer to the local board and to remit such licence fees to the local board,
(v) to use such licence fees to pay the expenses of the local board and the losses, if any, incurred in the marketing of the surplus of the regulated product and
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to set aside reserves against possible losses in marketing the surplus of the regulated product,
(vi) to use such licence fees to equalize or adjust returns received by producers of the regulated product.”
8. If the answer to question No. 7 is in the negative, could the Farm Products Marketing Board under the proposed amendment, authorize the local board to impose licence fees on all producers in the Province of the regulated product based upon the volume of the product marketed and to use such licence fees to equalize or adjust returns to the producers?
Rand J., speaking for himself and Kerwin C.J.C. on these questions, answered question 7 in the negative (the provision was not ultra vires) and question 8 also in the negative (the proposed authorization would not be intra vires). His examination of the issues was brief and in these words, at pp. 215-16:
Question 7 deals with marketing the surplus of a regulated product. I take “Surplus”, as determined, to be what remains in the hands of producers after the local market is satisfied. Subclauses (i), (ii), (iii) and (v) of the proposed s. 7(1)(ss) deal exclusively with a “surplus”; (iv) and (vi) do not expressly mention it, but in the context I am unable to interpret the language as applying to any other subject. Subclause (ii) authorizes purchase by the local board from a voluntary seller; there is no compulsion on either. The clause as a whole sets up a separate feature of regulation which would extend to disposal in external trade. But the producer remains free to enter that trade as he pleases; if he elects to sell to the marketing agency, he does so under the terms of the statute as a matter of agreement; and the provision for a licence fee and its application to the purposes mentioned are valid as contractual compensation for services. Any dealing with the product by the local board or others in external trade would obviously be subject to Dominion regulation.
Question 8 I take to ask this: Could the Farm Products Marketing Board, under the proposed amendment, impose fees on all producers of the regulated product destined to the local market to equalize the returns received for the surplus with those received for the
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product generally, that is, can the surplus be gathered in with that marketed locally and the whole equalized in returns? It would be adding the returns from the surplus to the equalization under clause (l) dealt with in question 1. That could not be done because the amendment is confined to dealings with the surplus; nor could it be done by an independent provision because, under the machinery of regulation provided, it would be within the decision in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy, Limited.
Locke J., for himself and Nolan J., answered questions 7 and 8 as follows:
Question 7: That part of clause (v) which authorizes the imposition of licences for the purpose of providing moneys to pay for the losses referred to, to set up reserves, and for the purposes referred to in clause (vi) is ultra vires.
Question 8: No.
He thus differed in part from Rand J., and his reasons for his answers were stated on pp. 237-38:
Clauses (i), (ii) and (iii) appear to require no comment since there is no compulsion on the part of the producer to sell to the local board.
Clause (iv) appears to me to be unrelated to the previous clauses since if the local board buys from the producer the latter would presumably have nothing to do with the processors. Processors who have purchased the regulated product from producers may be required, in my opinion, to deduct any licence fees lawfully payable by the producer from the purchase-money and remit the amounts to the local board.
Clauses (v) and (vi), to the extent that they authorize the use of moneys realized from licence fees to pay the operating expenses of the local board, are, in my opinion, intra vires. The proposed amendment is to be construed in the same manner as the section of the Act referred to in the first question and so applying to products marketed or purchased for consumption within the Province. On the assumption that the producer sells his own product on the market, a licence designed to raise moneys not merely for the expenses of the Board but to cover losses incurred by it in its market operations or to equalize or adjust returns received by all the producers would, in my opinion, be ultra vires. So-called
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licence fees or charges imposed for this purpose would, in my opinion, be taxes the nature of which could not be distinguished from the adjustment levies referred to in the Crystal Dairy case above referred to.
It will be seen from the report of that case that, on behalf of the respondent, it was contended not merely that the levies were bad as constituting indirect taxation but also that imposing them was an attempt to regulate trade which was, at least partly, interprovincial. The Judicial Committee, finding that the levies, being in the nature of indirect taxes, could not be supported, did not consider the argument based upon head 2 of s. 91. From the fact that the point was argued, however, and the further fact that the fluid milk market referred to was obviously within the Province, it is proper to conclude, in my opinion, that, though this substantial part of the product was sold for local consumption, the objection that the method adopted to equalize the returns of the producers was beyond Provincial powers must be given effect to. This aspect of the matter appears to me to be concluded by the judgment in that case.
I would not construe clauses (v) and (vi) as contemplating that the imposition and use of such licence fees for the last-mentioned purposes would be a matter of agreement between the local board and the producers. To do so would be to render the question itself pointless.
What I have said as to clauses (v) and (vi) of the proposed amendment referred to in question 7 applies to question 8.
Cartwright J. (subject to his qualification on construction, previously mentioned) came to the same conclusion as Locke J., as the following passages of his reasons, at pp. 246-47, show:
As to question 7, cls. (i), (ii), and (iii) of the proposed para. (ss) do not appear to be open to objection.
In dealing with cl. (iv) it must, I think, be assumed that the words “any licence fees payable by the producer” contemplate true licence fees such as the Legislature has power to impose or authorize and on this assumption the clause merely provides a method of collection of such fees and is unobjectionable.
Clause (v) purports to authorize the local board to use moneys compulsorily collected from producers of a product to make up the losses sustained by the board in
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purchasing the surplus of such product from other producers and reselling the same. In effect the board would be using such moneys to bring about en equalization, or a partial equalization, of the very sort which the Judicial Committee, in the Crystal Dairy case, held to be beyond the powers of the Legislature. The circumstance that the loss for which equalization is to be brought about is sustained by the local board in purchasing from the less fortunate producers and then reselling rather than by such producers themselves does not enable the nature of the legislation to be differentiated from that considered in the Crystal Dairy case; nor does giving to the moneys which the producers are required to pay for this purpose the name of licence fees afford a sufficient ground of distinction. In my view clause (v) is ultra vires of the Legislature; and for similar reasons I am of the same opinion as to cl. (vi).
From the wording of the opening clause of question 8, it would seem that, in view of my answer to question 7, it is not necessary for me to answer question 8, but it follows from the reasons I have given in answering question 7 that, in my opinion, the answer to question 8 would clearly be in the negative.
Fauteux J., giving the reasons in this respect of Taschereau and Abbott JJ., was of the same view as Locke J. and Cartwright J. with respect to questions 7 and 8. The Court was thus not quite unanimous on the answer to question 7 (the difference among them turning on Rand J.’s construction of the proposed amendment) but unanimous on the answer to question 8, and in that respect adhered completely to the Crystal Dairy case.
It is, in my opinion, not always a simple matter to dissociate construction from constitutionality, although the two are theoretically different. In the type of case before us, we are driven to consider how far there can be subtraction from the total integrity of a marketing scheme to regulate intraprovincial transactions so as to fasten on aspects thereof designed to make the scheme as fair as possible to all those brought within its scope and subject in the same way to its administration. There is a sharing of the risks in regulated marketing of the output of producers. Why should pooling of products and receipts and equality of distribution of returns—co-operative disposal as Rand J. named it—be treated as valid against the Crystal Dairy doctrine, but a pooling of products and
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returns and an equalization of returns, notwithstanding that different classes of products are sold, actually or notionally, at different prices or that surpluses of any class of the same product, commanding a lower price, are brought into calculation, be treated as invalid? In neither situation do the receipts reach nor are they intended to reach provincial coffers. Rand J. said in answering question 1 that co-operative disposal may take many forms. The same is true of any regulatory marketing scheme operating upon producers, and the adjustment of proceeds, whatever the manner in which the scheme is administered as a self-financing one, cannot be said to bring in a tax consideration as a dominating element.
This Court put a final piece in place in its examination of the relationship between an intraprovincial marketing statute and price adjustments as provided therein in its judgment in Crawford and Hillside Farm Dairy Ltd. v. Attorney-General of British Columbia, the reasons of a unanimous Court being delivered by Locke J. The case originated in a Reference to the British Columbia Court of Appeal of the following two questions:
1. Is the Milk Industry Act, c. 28 of the Statutes of British Columbia 1956, in its pith and substance a statute to regulate the production, distribution and marketing of milk and manufactured products within British Columbia and within the competence of the Legislative Assembly of British Columbia to enact or is it in its pith and substance a taxing statute to impose indirect taxation and ultra vires of the said Legislative Assembly and if it is ultra vires in what particular or particulars and to what extent?
2. Is Order No. 5 of the Milk Board under the said Act, dated the 18th day of January, 1957, intra vires of the said Milk Board and if not in what particular or particulars and to what extent?
That Court unanimously answered the first question in favour of the validity of the statute as being an intraprovincial milk marketing measure,
[Page 1250]
and rejected the contention that it was invalid as a measure in relation to indirect taxation. It seems to me that the British Columbia Court of Appeal returned to first principles in approaching the statute (as the reference question properly directed) from the point of view of ascertaining its pith and substance, its essential nature. As DesBrisay C.J.B.C. put it in his reasons, reported in (1959), 17 D.L.R. (2d) 637, at p. 640, the Act “does not possess the character of a taxing statute” but is in pith and substance “statute to regulate the production, distribution and marketing of milk and manufactured milk products within British Columbia and is within the competence of the Legislature”. The second question respecting the Order was also answered in favour of validity subject to reserve on infringement of the federal trade and commerce power, but Davey J.A. dissented on his construction of the Order as imposing indirect taxation through adjustment levies.
Although the validity of the entire statute was referred, there was, in fact, only one section thereof, s. 41, that raised the indirect tax issue because it was the provision which comprehensively empowered the Milk Board constituted by the Act to make regulatory orders. This Court therefore confined its answer in favour of validity to this one section, and it also upheld the validity of the questioned Order of the Milk Board. The powers of the Board to make regulatory orders covered every facet of control of the industry. Concentrating on the powers given by s. 41 I take them as summarized by Coady J.A. at p. 670 of 17 D.L.R. (2d) as follows:
…Those most relied upon as forming the basis of Order 5 are contained in s. 41(h) to (q). These clauses may be summarized as authorizing the fixing of minimum values at which vendors shall account to producers; fixing the blended price which shall be paid to all producers, taking into account the quantity of milk sold in the fluid and manufacturing market; apportioning the quantity of milk sold in the fluid market among the producers; ordering that the proceeds of all milk qualifying for the fluid market in each area of production and sold in both markets to be prorated among all producers so that each producer shall receive his propor-
[Page 1251]
tionate share of the total proceeds; establishing and adopting a formula for the purpose of fixing of prices in each area of production; directing accounts to be furnished by vendors to producers and the information to be disclosed in the said accounts; designating from time to time the vendor to whom or through whom a producer shall market his milk, and requiring every vendor to accept milk from such producers or other vendors as the Board may determine.
The background of the statute in a Royal Commission report is fully delineated in the reasons of the Court of Appeal; and, as in the case of earlier milk marketing statutes, it was an attempt to eliminate the chaos in the fluid milk market, there being full recognition that some way had to be found to deal with surplus milk after the fluid market demand was satisfied. There was the need to see that all licensed producers of qualified (fluid) milk would share equally in the monetary returns. Pooling was obviously necessary, and this was provided by the impugned Order which in elaborate and not easily comprehensible terms, set out the regulatory scheme. Davey J.A. in his dissenting reasons pointed out that nothing in the statute, that is, nothing in s. 41, authorized the imposition of indirect taxes but he construed the Order as doing just that in the way it regulated the vendors.
I can do no better to indicate how the issue of indirect taxation arose than to quote from the reasons of Coady J.A. in the Court of Appeal, at pp. 672-674:
In fixing the producer price a premium or bonus is attached to the value assigned by the Board to milk for the fluid market. Likewise, a value or price is assigned by the Board to milk for the manufacturing market. The producer’s price is then determined from these two values and will depend on the percentage of milk sold in each market. The value assigned to milk for the fluid market is determined by a plan referred to in the Commissioner’s Report and in the Act as “formula pricing”. This formula value is arrived at more or less arbitrarily. There are many factors to be considered in arriving at this value. These need not be examined as the
[Page 1252]
plan of “formula pricing” is not under attack. It should be added that this premium or bonus included in the formula value assigned to milk for the fluid market is designed to encourage farmers, who are assured of a uniform price and equalization in the market, to incur the expense required to provide the facilities which the Board by Regulation requires in order to ensure a consistent supply of “qualifying milk” for the public use.
So far as the producer is concerned, I can find no element of taxation involved under Order 5. There is no levy imposed on him and there is nothing taken from him that is his or to which he is entitled.
The next step is to consider whether there is any element of indirect tax involved in Order 5 as affecting the vendors of milk. The attack on Order 5 it should be observed was made largely on behalf of the vendors and vendor-producers. The submission is that in the plan outlined in Order 5, which requires vendors to make payments or contributions to equalize returns as among vendors is indirect taxation.
By the Act and by the Order, the qualifying milk of all producers is in effect pooled, though that term is not used in the Act or in the Order. While the vendor and producer make their own contract for the milk supplied, the price which the vendor must pay to the producer is fixed by the Board. This price does not depend on the market in which the vendor sells the milk. When the return is made to the Board by each vendor, which must be done on or before the 8th day of each month, showing the total sales made by him in each market during the preceding month, the producer-price is then determined. The amount which the producers as a class or group are entitled to receive for milk sold by the vendors is the total amount calculated on the formula price fixed by the Board covering sales in the fluid market and the price fixed for sales in the manufacturing market. The producer-price is then found by dividing the total value of all milk sold by the vendors in both markets, calculated on the values fixed by the Board, and dividing this total by the volume of milk sold measured in hundredweights. It may be found on the returns made by the vendors that a vendor has sold a greater or less percentage in the fluid market than the percentage of the fluid market bears to the total sales. The consequence is that one vendor may have a surplus on hand after paying the producer‑price to his producer and another vendor may show a deficit. The vendor who has over-sold his percentage in the fluid market will show a surplus and the
[Page 1253]
vendor who has under-sold his percentage in the fluid market will show a deficit.
The vendor who has sold too high a percentage of milk in the fluid market must then adjust the account with those who sold too low a percentage in that market. If all distributors sold the same percentage of milk in the fluid and manufacturing markets there would be no need for any adjustment of accounts. The Board has power under the statute to control and allocate the market as between vendors (s. 41 (q)). The vendors who confine their sales largely to the fluid market could be required under the statute to take such additional milk from other producers or other vendors as the Board may determine, which milk they obviously would have to sell in the manufacturing market, thus reducing their percentage of sales in the fluid market. To require the vendor to take additional milk in order to equalize his sales with other vendors between the fluid and the manufacturing market would mean the transportation of milk from, in some cases, considerable distances, which would involve the added cost of transportation. Instead of adopting that cumbersome method of equalizing returns between vendors so that each sold only his proper percentage in each market, a system of accounting or bookkeeping is employed to work out the equalization. In this balancing of accounts, s. 24(b)(i) of Order 5 provides that “every vendor must pay to the Board the amount by which the value of milk received by him as calculated under Section 18 hereof is greater than the amount he must pay to the producers”. Then in turn as to this amount, whatever it may be, s. 24(ii) provides that “the Board shall pay to every vendor the amount by which the value of milk received by him as calculated under Section 18 hereof is less than the amount which he must pay to producers”.
If it were possible to estimate in advance the total production of milk in a given area and the total percentage required to satisfy the needs of the fluid market, it would be possible for the Board to fix the percentage of milk to be sold by each vendor in the fluid market and in the manufacturing market. If this could be done in advance, there would be no necessity to make any adjustment between vendors such as is required at the present time since each vendor would have made the same percentage of sales in each market. The Board is the authority under the Act to apportion or allot the
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market percentages as among vendors. No tax is imposed on and no injustice is then done to the vendor who sells more than he is by law entitled to sell in the fluid market and consequently finds himself in the position that he must make this payment to the Board to adjust the deficiencies which are shown in the accounts of the vendors who sell less than their percentage in the fluid market.
The control of the market which the Board is entitled to exercise is intended to prevent any vendor from enjoying more than his proportionate share of the fluid market. This control can be exercised by requiring the vendor to handle additional milk, thus leaving him in the position of having no surplus after paying his producer the producer price fixed by the Board. Or it may be done by not interfering with his supply of milk and this may result in his selling more than his percentage in the fluid market and if he does, then calling on him to pay over the surplus in order to equalize returns with other vendors. There is no element of tax involved in whichever procedure is followed.
This balancing of accounts between vendors is an essential part of the system of equalization among producers and is a condition attached to the licensing of the vendors who are authorized to make distribution of what is in effect a pooled product. This in no way affects the price at which the vendor may sell in the fluid market. That is subject to open competition between vendors. When a vendor is thus called upon for payment the amount he is required to contribute is not something which belongs to him or to which he is entitled but represents an amount that is owing by him to the Board arising from the sale by him of a higher percentage in the fluid market than that to which he is by law entitled and payment of which must be made by him to equalize returns with other vendors. It is not a levy in the nature of a tax. It is not in my view something that will or can enter into or have a tendency to enter into and affect the price which the vendor will seek to obtain for his commodity.
Although Coady J.A. held that the scheme above-described did not have the vice found in the Crystal Dairy or Turner’s Dairy cases, Davey J.A. concluded that the Order in empowering the Board to levy adjustments upon vendors was imposing indirect taxes and these levies constituted “an essential part of the scheme of price fixing contained in the Order” (at p. 665).
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What is significant to me is the recognition throughout that price fixing was involved. Locke J. in speaking for this Court and, after summarizing the regulatory scheme, said, (at p. 355 of [1960] S.C.R.):
…As between the producer and the vendor, the obligation of the latter is twofold, he must account for the full determined value of all the milk he has received and he must pay to the producer the blended producer price. In order that this may be done in the case of all the producers, the vendor is obligated to pay to the Board any amount by which the value of the milk purchased by him, determined in the prescribed manner, exceeds the amount to be paid for it at the blended price, computed as aforesaid, on the assumption that all vendors discharge this obligation. The amount paid to the Board in these circumstances is in satisfaction of a contractual obligation. It is in no sense a levy.
And, again, at pp. 356-57:
In my opinion, in dealing with the sale of milk for consumption within the Province, the Legislature might provide for the operation of a pool by a designated body to which all milk produced should be delivered and by which it would be sold and the net proceeds, after deduction of the operating expenses, divided among the producers of milk of equal quality in the proportion that the quantities delivered by each bears to the total quantity sold. I consider that s. 41 of the Act authorizes, and Order No. 5 provides, the machinery for the carrying out of what is in essence such a pool but operated in a manner which effects, for the benefit of the producers and consumers, a large saving of expense by avoiding to a large extent the cost which would be incurred in delivering milk from the eastern and southern portion of the production area to the large market for fluid milk in the cities of Vancouver and New Westminster. The practical effect of the legislation is that each producer receives his proportionate share of the higher value of milk on the fluid market, which is paid to him in the blended price that he receives from the vendor. It is true that he does not receive the full amount realized on the fluid milk market, as he would if the milk was sold on behalf of the pool to which he delivers his milk, since by the method followed the price paid by the vendors must, of necessity, enable them to sell milk on the fluid market at a profit. The fact that the Legislature considers that this method is preferable in the interests of the milk industry as a whole cannot have any bearing upon the validity of the legislation.
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I agree with the argument advanced by counsel for the Attorney-General of British Columbia that the legislation and the Order do not authorize or impose any levy or tax. In so far as the producer is concerned, the legislation authorizes the Board to fix the price which the vendor is to pay to him from month to month, this being the blended price referred to in the preamble, and the accounting value mentioned in the Order which is the value mentioned in paras. (h), (i) and (j) of s. 41.
In so far as the vendors are concerned, the contention that the amounts they may be required to pay to the Milk Board under the provisions of para. (b) of s. 24 of Order No. 5 is a levy or tax appears to me to be based upon a misapprehension of the real nature of the transaction between the producers and the vendors.
I think it is time that there was an end to making the validity of intraprovincial marketing schemes turn on fine distinctions between what is truly price fixing and what are adjustment levies, when in both situations the thrust of the regulatory scheme is to provide for orderly marketing and to equalize the position and the returns of producers or vendors, or both, by pooling production and controlling marketing through licensing and through quotas. It is said, however, and this was strongly argued by counsel for the respondent Ontario Egg Producers’ Marketing Board, that this Court had made a choice in the Farm Products Marketing Act reference in 1957 to stay with the Crystal Dairy doctrine and that as a matter of stare decisis, the doctrine should not be overthrown, especially when amending federal legislation in 1957 was based squarely upon its validity.
This argument would give me considerable pause if the Crystal Dairy case had not been attenuated in succeeding cases, and if I was not firmly persuaded that it was mistakenly based on the taxing power instead of turning on provincial regulatory authority in relation to intraprovincial transactions. In the Farm Products Marketing Act reference of 1957, to which attention was directed for the submission on stare decisis, Rand J. noted that this Court was now no less free than the Privy Council had been to review previous decisions,
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both of the Privy Council and of this Court, saying (at p. 212 of [1957] S.C.R.):
The powers of this Court in the exercise of its jurisdiction are no less in scope than those formerly exercised in relation to Canada by the Judicial Committee. From time to time the Committee has modified the language used by it in the attribution of legislation to the various heads of ss. 91 and 92, and in its general interpretative formulations, and that incident of judicial power must, now, in the same manner and with the same authority, wherever deemed necessary, be exercised in revising or restating those formulations that have come down to us. This is a function inseparable from constitutional decision. It involves no departure from the basic principles of jurisdictional distribution; it is rather a refinement of interpretation in application to the particularized and evolving features and aspects of matters which the intensive and extensive expansion of the life of the country inevitably presents.
Ten years later, Cartwright J., as he then was, speaking for the majority of this Court in Binus v. The Queen, at p. 601, affirmed this Court’s authority to depart from its previous decisions but cautioned (and I agree with the caution) that it should do so only for compelling reasons.
In the past few years this Court found compelling reason to depart from previous decisions in three cases, as follows: Hill v. The Queen, Paquette v. The Queen, and McNamara Construction (Western) Ltd. v. The Queen. There are equally compelling reasons here to set aside the Crystal Dairy doctrine and I would unhesitatingly do so.
In the result, I would hold that s. 2(2)(a) of the Agricultural Products Marketing Act is ultra vires the Parliament of Canada. This result is not, however, catastrophic because it is left to the provincial Legislatures to deal with price arrangements including provision for adjustment levies in the context of their valid legislation in relation to intraprovincial marketing. The power is where it should be in this respect.
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V
Question 2 raises not a constitutional question but asks whether certain orders made under and in pursuance of powers granted by the Agricultural Products Marketing Act are outside the statutory powers granted and exercisable under the Act. It would be simple enough to say, in view of my opinion on the validity of s. 2(2)(a) of the Act, that the orders, dealing as they do with power to impose levies in respect of intraprovincial marketing and with the imposition of such levies, are themselves invalid because of the constitutional infirmity of the parent legislation. However, in their administrative law aspect the principal objection to the orders is based on the judgment of this Court in the Brant Dairy case.
I do not agree that the vice found in the subdelegation in the Brant Dairy case exists here. This is not a case like the Brant Dairy case where, a power being delegated to make regulations on certain matters, it was exercised by conferring the same power upon the subdelegate. Under the Agricultural Products Marketing Act, the Governor in Council was empowered by order to grant authority to a provincial marketing board to impose certain levies and charges. The Governor in Council did this by the Ontario Egg Order, S.O.R./72‑243, granting in express terms power to the Ontario Egg Producers’ Marketing Board to impose levies. The Governor in Council, as a delegated authority, was not itself empowered to impose levies. Had that been the case, a different question would be presented if it exercised that power by simply redelegating it to a more subordinate agency instead of itself exercising the power. In the present case the Ontario Egg Producers’ Marketing Board acted upon the power conferred upon it and prescribed the levies to be exacted.
The Governor in Council, in my opinion, could have circumscribed the range of authority which it was empowered to delegate under s. 2 of the
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Agricultural Products Marketing Act, as s. 3 makes clear, but it was not obliged to do so, nor does s. 2 entitle it to hold in its own hands and to exercise powers delegable for exercise by provincial marketing boards.
Objection was taken, inter alia, to the punitive levy imposed by s. 3(2) of S.O.R./75-217 upon producers in respect of sales of eggs in excess of their quotas under the plan, but I do not find this to go beyond their authority which is related to the implementation of the plan.
I would answer “no” to question 2.
VI
Question 3 concerns the validity of the federal Farm Products Marketing Agencies Act and, in particular, (a) ss. 2(e)(vi), 18 and 23 and (b) ss. 6, 7, 17 and 32. I am unable to see any ground for impugning the validity of ss. 6, 7 and 32. Sections 6 and 7 concern the function and powers of an advisory National Farm Products Marketing Council and s. 32 concerns federal-provincial agreements under which a federal agency may exercise functions relating to intraprovincial trade, thus envisaging delegation by the Provinces to a federal agency rather than vice versa., Section 17 has a definite relation to ss. 2(e)(vi), 18 and 23 and should be considered with them.
The contention of the appellants on ss. 2(e)(vi), 17, 18 and 23 is that they involve federal intrusion into intraprovincial marketing. I set out the provisions relevant to this contention, which read as follows:
2. (e) “marketing plan”… includes provision for all or any of the following:
(i) the determination of those engaged in the growing or production of the regulated product for interprovincial or export trade and the exemption of any class of persons so engaged from the marketing plan or any aspect thereof;
…
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(vi) the imposition and collection by the appropriate agency of levies or charges from persons engaged in the growing or production of the regulated product or the marketing thereof and for such purposes classifying those persons into groups and specifying the levies or charges, if any, payable by the members of each such group;…
17. (1) The Governor in Council may by proclamation establish an agency with powers relating to any farm product or farm products the marketing of which in interprovincial and export trade is not regulated pursuant to the Canadian Wheat Board Act or the Canadian Dairy Commission Act where he is satisfied that a majority of the producers of the farm product or of each of the farm products in Canada is in favour of the establishment of an agency.
(2) The Governor in Council, in order to determine whether a majority of producers of a farm product are in favour of establishing an agency, may request that each Province carry out a plebiscite of the said producers.
(3) Every agency established pursuant to this Act is a body corporate.
18. (1) A proclamation establishing an agency shall…
(c) set out the terms of any marketing plan that the agency is empowered to implement;
…
23. (1) Subject to the proclamation by which it is established and to any subsequent proclamation altering its powers, an agency may
(a) purchase any regulated product in relation to which it may exercise its powers and any farm product, wherever grown or produced that is of the same kind as the regulated product in relation to which it may exercise its powers, and package, process, store, ship, insure, export or sell or otherwise dispose of any such product purchased by it;
(b) implement a marketing plan the terms of which are set out in the proclamation establishing it or in any subsequent proclamation issued under subsection (2) of section 18 in respect of it;
…
(e) designate bodies through which any regulated product in relation to which it may exercise its powers
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or any variety, class or grade of any such product shall be marketed in interprovincial or export trade;
…
(g) by order, require any persons designated by it who are engaged in the marketing of any regulated product in relation to which it may exercise its powers, or any persons who are members of a class of persons designated by it and who are so engaged, to deduct from any amount payable by him to any other person engaged in the production or marketing of such regulated product any amount payable to the agency by such other person by way of licence fees, levies or charges provided for in any marketing plan that the agency is authorized to implement and to remit all amounts so deducted to the agency;
(2) An agency may perform on behalf of a province any function relating to intraprovincial trade in any regulated product in relation to which it may exercise its powers that is specified in an agreement entered into pursuant to section 32.
(3) An agency may, with the approval of the Governor in Council, grant authority to any body, authorized under the law of a province to exercise powers of regulation in relation to the marketing locally within the province of any regulated product in relation to which the agency may exercise its powers, to perform on behalf of the agency any function relating to interprovincial or export trade in the regulated product that the agency is authorized to perform.
I should note here that a second ground of attack upon the foregoing provisions was that they violated s. 121 of the British North America Act, the so-called “free trade” provision, which states that “all articles of the growth, produce or manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces”.
The Court was informed that as of the time of the hearing the Farm Products Marketing Agencies Act had been utilized to set up marketing plans only for eggs and for turkeys. The appellants viewed the Act as escaping its required limitation to interprovincial and export trade in four different respects in the present case. They contended that
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the Act established a regulatory agency with powers over the whole of a particular farm product; that it vested in the agency control of supply; that the agency had unlimited power in disposal of surpluses; and that its power to exact levies from producers to finance the marketing scheme and, in particular, the cost of disposing of surpluses was exercisable without limitation to interprovincial and export marketing.
In factual support of these contentions, the appellants asserted that ninety per cent or more of Canadian egg production was marketed locally. The background material submitted in the Reference shows, however, a considerable interprovincial movement of eggs since some Provinces produce above local demand (e.g. Ontario, Manitoba and Nova Scotia and, it seems, British Columbia as well) and others are net importers of table eggs. Be that as it may, the concern here is with the thrust of the statute and not with its administration, unless the facts show that any attempted limitation to interprovincial and export trade is a façade. I cannot, on the material before the Court, say that here but, of course, this does not conclude the constitutional issue raised by the appellants.
Sections 17(1) and 18(1)(c) relate to the creation of an agency, and despite the wording of s. 17(1) I have no doubt (and, if I did, I would so resolve it) that the agency is limited to exercising its powers in relation to any designated farm product to the marketing thereof in interprovincial and export trade. The marketing plan, which by s. 18(1)(c) must be set out in the proclamation under s. 17(1) establishing an agency, is by definition in the opening words of s. 2(e) limited to regulation in interprovincial and export trade. The same limitation is not expressed in subclause (vi) of s. 2(e), concerning the imposition of levies on, inter alia, producers, but it is found in subclause (i) which, like subclause (vi), refers to those “engaged in the growing or production of the regulated product”,
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and it is also found in subclauses (ii) to (v), inclusive which it is not necessary to reproduce. The fact of the exclusion of the reference to interprovincial and export trade in subclause (vi) is said by the appellants to point directly to a federal attempt to sweep intraprovincial trade into its regulatory control.
Subclause (vi) relates only to levies or charges, and it is entirely probable that it was considered to be within federal authority to authorize their imposition (as being indirect taxes) upon producers engaged in intraprovincial marketing only as well as upon those engaged in interprovincial or export trade, and indeed, to delegate that imposition to provincial boards. I have already dealt with these matters in relation to question 1 and, in the light of my observations there, I would think it rational to limit the scope of subclause (vi) to interprovincial and export trade to make it consistent with the other subclauses of s. 2(e). Indeed, if the levies or charges were imposed at grading stations established to handle eggs in interprovincial or export trade there could be no valid objection to them.
At the same time, I am quite aware of the problem that exists in making a federal marketing scheme effective if the regulatory agency cannot reach back into production. The matter was noticed many years ago in a study by Professor Corry for the Rowell-Sirois Royal Commission on Dominion-Provincial Relations, entitled “Difficulties of Divided Jurisdiction” (Royal Commission Study, Appendix 7, 1939, p. 11) where he said this:
The purpose of imposing standard grades, standard packages, and honest marks for agricultural products is much more complex. It is not merely to protect the consumer. These regulations aim to protect the producer in his dealings with the middleman. They seek to improve quality by providing a premium to competent producers. They seek to facilitate all dealings in the product and thus to lower handling charges. The accom-
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plishment of these objects is calculated to increase demand and promote agricultural prosperity.
If this policy is to be effective, the regulative structure must be placed on the channels of assembly rather than on those of distribution. Grading, packaging and marketing provisions must be enforced at the point where the producer makes contact with the dealer or processor. However, at this point, it is very often impossible to say whether the particular lots being graded will remain in provincial trade or will ultimately be drawn into interprovincial or export trade. Yet, even if the sole purpose were to grade surpluses in order to ensure their access to export markets, there are strong reasons for grading at this point. If grading is postponed until the product reaches an export warehouse, the uncertainty as to grade must constantly hamper movements into export channels.
The logic of the situation argues for the grading of the whole product as early as possible in the assembling process. The difficulty is that it is often impossible to say, at this stage, whether the power to inspect and assign the grades rests with the Dominion or with the province. Even if it were possible, it would be a waste and a duplication to maintain two sets of inspectors. Unified administration is necessary if the function is to be performed most efficiently.
The Agricultural Products Marketing Act of 1949 was undoubtedly a response to the problem, and the Act now under discussion is another response. Whether a stronger response is needed and can constitutionally be provided does not have to be decided here.
Appellants point to s. 22, dealing with the objects of an agency, as embracing overall marketing, but it is a declaratory provision that must yield to those that prescribe the powers and scope of authority of an agency.
I do not think that constitutional infirmity can be based on s. 24 which refers to allocation of production or marketing quotas without limitation to interprovincial and export trade. No doubt, this expression of quota allocations had in view federal-provincial co-operation in marketing, but, apart from that (and I have already said that such co-operation cannot increase legislative power, however it may make exercise of existing powers
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more effective), I do not think Parliament is precluded from allocating quotas on an industry‑wide basis if it relates them to its regulatory control in relation to interprovincial and export trade. I do not agree, therefore, that there is here an unconstitutional control of supply.
A good deal of the argument of counsel for the appellants on question 3 involved a reference to the proclamation establishing the Canadian Egg Marketing Agency and to the marketing plan which is a schedule to the proclamation. The burden of their argument on control of supply and of disposal of surpluses turned on a consideration of the terms of the marketing plan. Question 3 is confined, however, to the validity of the Farm Products Marketing Agencies Act and, on a Reference, I do not think it is ordinarily wise or right to go beyond the question asked. It is the fact here that the proclamation and the included marketing plan are the subject of question 4 but that question is limited to whether the marketing plan is within the authority given by the Act and I shall come shortly to consider it in that aspect. What is sought here is to relate the plan to the statute for constitutional purposes, and I am, in this case, prepared to do so.
Considerable emphasis was placed by the appellants on ss. 2, 3 and 4 of the marketing plan as involving control of supply. I see nothing constitutionally wrong if a federal plan, related to interprovincial and export trade, bases its regulation in those respects on a consideration of production quotas in the various Provinces. It must be remembered that the establishment of similar provincial quotas for interprovincial trade and for local trade as a result of the federal‑provincial agreement was geared in part to provision for delegation of authority to provincial boards. Federal legislative authority which, when exercised, has a reactive effect on local production does not on that account become invalid if it is properly related to objects within federal competence. That is so here.
[Page 1266]
Again, I find no excess of legislative power in s. 23 of the Act. The appellants objected that s. 23(1)(a) which empowers an agency to purchase and dispose of any regulated farm product is not confined to interprovincial or export trade, but, in my opinion, statutory power to purchase and dispose of products does not raise a constitutional question save as it may be an element in regulatory authority which is itself impeachable. If s. 23(1)(a) is the basis of the surplus disposal programme of CEMA, as was contended by the appellants, I see nothing in it that compulsorily brings surpluses to the agency. In so far as they arise as a result of the regulated marketing under the plan, it is immaterial that they are marketable in local trade. A federal agency may lawfully be authorized to purchase in any market and to dispose of its purchases as an ordinary trader.
This brings me to the submissions of the appellants on s. 121 of the British North America Act. These submissions engage the proclamation and the terms of the marketing plan, as set out in S.O.R./73-1, rather than the authorizing provisions of the Farm Products Marketing Agencies Act. I can best indicate the appellants’ submissions on this point by referring to two paragraphs in their factum, as follows:
The essence of the Act is that quotas shall be established on the basis of a five-year average preceding the plan (Section 24) and that in the case of eggs, the amount of product marketed in interprovincial trade may be fixed. The Proclamation then fixes the amount of eggs that may be produced in Ontario (S.O.R./73-1, Section 3) and provides for anti-dumping between provinces (S.O.R./73-1, Section 11). The location of egg production and employment is fixed. Natural changes in the base of production are prevented. Export trade to the extent that it is the surplus of provincial production over provincial demand is absolutely fixed. Quebec is protected from any increased competition from Manitoba and Ontario, but at the same time, prevented from capturing any more of its local market or reducing imports.
[Page 1267]
The statute here, by authorizing the Canadian Egg Marketing Agency to limit and control inter alia which egg producers may market interprovincially, the number of eggs they may market and the price at which they may sell, effectively prevents the establishment of a single economic unit in Canada with absolute freedom of trade between its constituent parts, which was one of the main purposes of confederation and which is guaranteed by s. 121 of the Constitution.
I should add that the objection to the anti-dumping provision is that because it precludes the marketing in one Province of eggs produced in another at a price less than the aggregate of the price in the Province of production and reasonable transportation charges, it imposes a tariff through inclusion of the cost of transportation in the price to be charged in the importing Province. The shipper is not allowed to absorb the cost of transportation even if he wishes, and the result, it is said, is that producers in one Province are protected as against producers in another.
The authorities on s. 121 were brought into the submissions to support the contentions that s. 121 applies to federal legislation no less than to provincial legislation and that the marketing plan here exhibits a protectionist policy as among Provinces, impeding the flow of trade in eggs between and among Provinces. Reference was made to the observation of Viscount Simon in Atlantic Smoke Shops Ltd. v. Conlon, at p. 569 that “the meaning of s. 121 cannot vary according as it is applied to dominion or to provincial legislation”. It seems to me, however, that the application of s. 121 may be different according to whether it is provincial or federal legislation that is involved because what may amount to a tariff or customs duty under a provincial regulatory statute may not have that character at all under a federal regulatory statute. It must be remembered too that the federal trade and commerce power also operates as a brake on provincial legislation which may seek to protect its producers or manufacturers against entry of goods from other Provinces.
[Page 1268]
A federal regulatory statute which does not directly impose a customs charge but through a price fixing scheme, designed to stabilize the marketing of products in interprovincial trade, seeks through quotas, paying due regard to provincial production experience, to establish orderly marketing in such trade cannot, in my opinion, be in violation of s. 121. In Gold Seal Ltd. v. Dominion Express Co., both Anglin and Mignault JJ. viewed s. 121 as prohibiting the levying of customs duties or like charges when goods are carried from one Province into another. Rand J. took a broader view of s. 121 in Murphy v. C.P.R., where he said this, at p. 642:
I take s. 121 apart from customs duties to be aimed against trade regulation which is designed to place fetters upon, or raise impediments to, or otherwise restrict or limit, the free flow of commerce across the Dominion as if provincial boundaries did not exist. That it does not create a level of trade activity divested of all regulation, I have no doubt; what is preserved is a free flow of trade regulated in subsidiary features which are or have come to be looked upon as indicents of trade. What is forbidden is a trade regulation, that in its essence and purpose is related to a provincial boundary.
Accepting this view of s. 121, I find nothing in the marketing scheme here that, as a trade regulation, is in its essence and purpose related to a provincial boundary. To hold otherwise would mean that a federal marketing statute, referable to interprovincial trade, could not validly take into account patterns of production in the various Provinces in attempting to establish an equitable basis for the flow of trade. I find here no design of punitive regulation directed against or in favour of any Province.
I would accordingly answer question 3 in the negative in respect of the statute as a whole and in respect of the provisions that were particularly impugned.
[Page 1269]
VII
Question 4 relates to the validity of the Canadian Egg Marketing Agency Proclamation, S.O.R./73-1 as a whole and to s. 10 of the Proclamation in particular. The Proclamation has its source in s. 17(1) of the Farm Products Marketing Agencies Act which I reproduce again for convencience of reference, as follows:
17. (1) The Governor in Council may by proclamation establish an agency with powers relating to any farm product or farm products the marketing of which in interprovincial and export trade is not regulated pursuant to the Canadian Wheat Board Act or the Canadian Dairy Commission Act where he is satisfied that a majority of the producers of the farm product or of each of the farm products in Canada is in favour of the establishment of an agency.
In establishing an agency for the marketing of a certain farm product or products, the Governor in Council’s proclamation must, under s. 18(1)(c), “set out the terms of any marketing plan which the agency is empowered to implement”. The provisions of the schedule to S.O.R./73-1 purport to set out those terms, and they involve the Canadian Egg Marketing Agency, established by the Proclamation, and egg marketing boards of each of the ten Provinces in the implementation of the marketing plan. (The Quebec agency named in the order is Eggs for Consumption Producers’ Federation, Quebec, which is thus given board status). Section 10 of the Plan empowers the federal agency, by order or regulation, to impose levies or charges “on persons engaged in the production of eggs or the marketing thereof” and it may, with the concurrence of a provincial board, use the latter to collect the levies or charges that it imposes.
The definition of “marketing plan” in s. 2(e) of the Act is in part, as follows:
“marketing plan” means a plan relating to the promotion, regulation and control of marketing of any regulated product in interprovincial or export trade that includes provision for all or any of the following [The underlining is mine.]…
[Page 1270]
Then follows a list of matters i) to vi) which are summarized in the factum of the appellants in these words:
i) the determination of who are interprovincial and export traders;
ii) the determination of acts constituting interprovincial and export trade;
iii) regulation of the marketing of the regulated product on a basis that enables the agency implementing the plan to fix and determine quantity of the product which enters the stream of interprovincial and export trade and the price, time and place at which the regulated product may be so marketed;
iv) pooling of receipts from such trade;
v) licensing the traders in such trade;
vi) financing the system of such controls by levies of these activities.
The argument on S.O.R./73-1 as a whole is that there is a violation of the principle of the Brant Dairy case in that the proclamation did not set out all the terms of the Plan to be implemented by CEMA but rather redelegated to CEMA authority to fill out various terms by its own regulations and orders. Thus, it is pointed out (to take some examples in support of this contention set out in the appellants’ factum) that
There is no term in the plan for the determination of those engaged in the growing or production of the regulated product as contemplated by 2(e)(i). That is left to the agency to set out in its Quota Regulation S.O.R./73-289, Section 2.
There is no term in the plan for the exemption of any class of persons so engaged in the growing or production of the regulated product as contemplated by 2(e)(i). That is again left to be set out by the agency in its Regulation S.O.R./73-289.
…
The plan does contain in Section 1 a term which specifies:
“those acts that constitute the marketing of the regulated product”
as contemplated by 2(e)(ii), but fails to set out any term relating to the exemption of any class of marketers. It appears that the agency has set out that term by infer-
[Page 1271]
ence from its quota regulations quoted above in that the product of the exempt producer is exempt from the marketing controls.
This submission draws a distinction between the setting out of terms and the implementation thereof which I do not think can be supported when regard is had to other provisions of the Act. The appellants would read the word “implement” to mean purely administrative application of known terms, all of which are found in the Plan. The reading is, in my opinion, too narrow. The dictionary meaning of “implement” includes “to complete, supplement”: see Shorter Oxford Dictionary (3rd ed. reprint, 1947) p. 967. Section 23(1)(b) of the Act empowers an agency (subject to the proclamation which established it or any subsequent proclamation altering its powers) to implement a marketing plan the terms of which are set out in a proclamation, and s. 23(1)(f) expressly enables the agency to do what CEMA has done here. That provision reads, in part:
(f) Where it is empowered to implement a marketing plan, make such orders and regulations as it considers necessary in connection therewith…
I hold, therefore, that the legislation itself overcomes any difficulty which, in the absence of such provisions, would bring into play the principle of the Brant Dairy case.
Question 4(b) relates specifically to s. 10 of the Plan, which reads as follows:
10. (1) The Agency may, by order or regulation, impose levies or charges on persons engaged in the production of eggs or the marketing thereof and any such order or regulation may classify such persons into groups and specify the levies or charges, if any, payable by the members of each such group and provide for the manner of collection thereof.
(2) Levies imposed by any order or regulation referred to in subsection (1) shall be established at such levels as to produce in each year a return to the Agency that is an amount sufficient to defray its administrative and marketing expenses and costs as estimated by it for the year.
[Page 1272]
(3) The Agency, in estimating its administrative and marketing expenses and costs for a year, shall allow for the creation of reserves, the payment of expenses and losses resulting from the sale or disposal of eggs, equalization or adjustment payments among egg producers based on moneys realized from the sale of eggs during such period or periods of time as the Agency considers appropriate and any other expenses and costs deemed essential by the Agency for the realization of its objects.
(4) The Agency may, with the concurrence of a Commodity Board, appoint that Commodity Board to collect on its behalf the levies or charges imposed by any order or regulation referred to in subsection (1).
In so far as there is here an imposition of a levy in respect of intraprovincial trade the matter is covered by my reasons given in answer to question 1. I have, however, already indicated that I would read the power given in s. 2(e)(vi) of the Act as limited to interprovincial and export trade, and I would limit s. 10 of the Plan in the same way.
In the result, I would answer “no” to both parts of question 4.
VIII
Question 5 does not require any extensive consideration. The argument thereon related not directly to the levy orders which are specified in question 5 but rather to the constitutionality of the empowering statute and of the proclamation which authorized the imposition of the levies.
The Farm Products Marketing Agencies Act is, in respect of its provisions for levies, not explicit as is the Agricultural Products Marketing Act that levies in respect of intraprovincial trade may be imposed under federal authority. However, treating the Farm Products Marketing Agencies Act (as I said it must be) as directed to interprovincial and export trade I see only an accounting problem in the orders for levies. The orders themselves are clearly within the enabling authority.
[Page 1273]
On the footing of the limitation of the Act and of the proclamation and plan to interprovincial and export marketing, I would answer “no” to both parts of question 5.
IX
Question 6, relating to the Canadian Egg Licensing Regulations, S.O.R./73-286, involves a point made in respect of question 4, namely, that there is an infringement of the Brant Dairy principle because the terms of the licensing system were not fixed by the Governor in Council in the proclamation establishing CEMA and prescribing the marketing plan but, rather, power to do so was unlawfully delegated to CEMA.
Section 9 of the Marketing Plan is clear that CEMA is required to establish a licensing system for persons engaged in marketing of eggs in interprovincial or export trade. I have indicated in my answer to question 4 that supplementary orders and regulation are envisaged by the parent statute, and s. 9 of the Plan reflects this in giving such authority to CEMA.
I would answer “no” to question 6.
X
Question 7, relating to the validity of certain provisions of the Ontario Farm Products Marketing Act, raises issues as to the meaning of intraprovincial marketing, considered by the Privy Council in the Shannon case and by this Court in the 1957 Ontario Farm Products Marketing Act reference. It is contended by the appellants that the issues are not settled by the declared reach of the Act as set out in s. 2 thereof, reading as follows:
2. The purpose and intent of this Act is,
(a) to provide for the control and regulation in any or all respects of the marketing within Ontario of farm products; and
(b) where a plan establised under this Act for control and regulation of the marketing of a regulated product is amended to provide for control and regulation in any or all respects of the producing of the regulated product, to provide for control and regulation in any
[Page 1274]
or all respects of the producing and marketing within Ontario of the regulated product,
including the prohibition of such marketing or such producing and marketing, as the case may be, in whole or in part.
The challenged provisions of the Act are, respectively, s. 4 (dealing with the powers of the Farm Products Marketing Board (the regulatory under the Act)), s. 5 (respecting a petition by producers for a marketing plan), s. 6 (respecting powers of the Lieutenant Governor in Council to establish a plan and to constitute local boards to administer it), s. 8 (respecting the broad and extensive powers of the Farm Products Marketing Board to make regulations with respect to any regulated product), s. 9 (empowering the Board to make regulations vesting powers in local boards in respect of the marketing of a regulated product), s. 10 (empowering the Board at any time to limit powers delegated to or vested in local boards and to revoke any regulation, order or direction of a local board), s. 15a (empowering the Board to vest certain regulation making powers in local boards respecting seizure, detention and disposal of any regulated product where there are reasonable grounds for believing an offence against the Act or regulations has been committed) and s. 22 (providing for federal-provincial agreements for the exercise by federal agencies of delegated powers respecting intraprovincial trade and for the exercise by provincial or local boards of delegated powers respecting interprovincial or export trade in regulated product).
Section 22 may be considered apart from the other challenged provisions. The objection to it is in the power it vests in a provincial or local board, being themselves delegated agencies, to delegate their functions in intraprovincial trade to a federal agency. Subsections (3) and (4) of s. 22 are relevant in this connection and they read as follows:
…
[Page 1275]
22.(3) The Board or a local board may, with the approval of the Lieutenant Governor in Council, grant authority to any marketing agency of Canada that is authorized to exercise powers of regulation in relation to interprovincial or export trade in a regulated product to perform on behalf of the Board or local board any function relating to intraprovincial trade that the Board or local board may perform.
(4) The Lieutenant Governor in Council may grant authority to any marketing agency of Canada that is authorized to exercise powers of regulation in relation to interprovincial or export trade in a farm product to regulate the marketing within Ontario of such farm product, and for such purposes to exercise any power that it may exercise in relation to the marketing of such farm product in interprovincial or export trade.
The contention of the appellants appears to be that although the Legislature may authorize delegation to a federal agency under the principle of the Willis case, the situation is different if the Legislature empowers one of its delegated agencies, or indeed a sub-delegate, to delegate its own powers, themselves delegated, to a federal agency. I cannot follow this contention if it is intended to raise a constitutional issue. There is in both subsections (3) and (4) the interposition of the Lieutenant Governor in Council, just as in the Agricultural Products Marketing Act there is the interposition of the Governor in Council. Indeed, s. 23(4) is the provincial parallel to s. 2(1) of the Agricultural Products Marketing Act. Whatever may be said about the policy in s. 23(3), I am unable to agree that it violates any constitutional or administrative principle. It would be different, of course, if there was an attempted delegation to a federal agency under a provincial regulation which had no statutory backing for such a delegation.
The appellants’ objection to the other challenged provisions is to their alleged encroachment on interprovincial or export trade. In making the challenge, and in seeking to evade an obvious adverse answer based on reading s. 2 of the Act into its other provisions (this being reflected in the
[Page 1276]
reasons of MacKinnon J.A. in the Court of Appeal), the appellants stated in their factum that
The Court is not asked to consider the Act as applicable to a specific plan, nor subject to the assumption incorporated in the 1957 Reference. An answer to the validity of the question that makes that validity dependent on the manner in which the Act is subsequently carried out really leaves the question unanswered and invites further litigation.
I confess to some difficulty in appreciating this assertion in the factum. It is commonplace that if a provincial marketing statute is limited in its thrust to intraprovincial trade, there being an express opening declaration to that effect, it ought not to be construed otherwise in any of its provisions unless they separately indicate a wider application. If they do not, it can then only be through monitoring the actual application and administration of the Act that any determination can be made whether there is an overreaching. The Act itself would not, however, be impeachable as encroaching on federal power but its overreaching administration would be invalidated as going beyond the scope of power conferred by the Act as well as being in itself unconstitutional.
This is trite law which all parties and intervenants in this appeal appreciate. How then is the Act itself open to attack if all its provisions are susceptible of an intraprovincial application? I agree with the appellants that there may be local controls applicable to a particular stage in the marketing of a product (“marketing” being defined as meaning buying, selling and offering for sale and including advertising, financing, assembling, storing, packing and shipping and transporting in any manner by any person) when that product is in the course of interprovincial trade so as to make those controls at least suspect. Certainly, the existence of dovetailing federal legislation with conjoint administration would make it difficult to challenge the “marketing” of a regulated product whether it ended up for consumption within the Province or outside. That, however, Cannot go to initial validity.
[Page 1277]
This position, in my view, is reinforced by the Willis case, upon which the appellants relied, because there members of this Court, having in mind that the potato business in Prince Edward Island was preponderantly an export business, gave careful examination to the regulatory scheme (as opposed to the Act under which it was promulgated) in assessing whether by its terms it purported to encroach on interprovincial or export trade. In the 1957 Farm Products Marketing Act reference, members of this Court spoke more generally than particularly in seeking to establish helpful guidelines for determining what is and what is not an intraprovincial transaction. All could agree on the obvious, as, for example, that shipment by a producer to someone outside the Province or sale for direct export was outside of provincial regulatory competence. (I say nothing here about production controls). Other elements of marketing, such as processing, presented difficulties and this was reflected in the reasons. I summarized those reasons in what I said in my concurring judgment in Attorney‑General of Manitoba v. Manitoba Egg and Poultry Association, at p. 713, and my summary was reproduced in the appellants’ factum. I need not set it out here, but merely point to it as an attempt to crystallize the different sets of circumstances that may face a provincial marketing scheme that attempts to regulate all transactions in the Province with respect to the regulated product.
The appellants themselves attempted a general classification of the situations that arise in any provincial marketing scheme in addressing the issues that they raised under question 7. They posed the following as the reference points for their submissions:
(a) Farm products produced in Ontario for consumption in Ontario
[Page 1278]
Such farm products are conventionally graded, processed, shipped and sold in the province for consumption in Ontario.
(b) Farm products produced in Ontario for consumption out of Ontario
These products may be graded, slaughtered or processed in Ontario, in whole or in part. The processing may be outside Ontario entirely. The buyer may come into Ontario to make the purchase, or the seller may leave the province to make the sale. This category includes goods for export, whether to another country or to another part of Canada.
(c) Farm products produced outside of Ontario for consumption in Ontario
Such products grown or produced outside Ontario may be graded, slaughtered or processed inside or outside of Ontario, part of the shipping will be in Ontario, the sales transaction may be inside or outside Ontario, depending on the manner of the formation of the contract. This category includes imported goods.
(d) Farm products produced outside Ontario and passing through the province on their way to consumption outside the province
Thus for example, hogs purchased in Saskatchewan, slaughtered on the way through Manitoba and shipped for consumption through Ontario to Montreal, or eggs produced in Manitoba, sold to a grader in Toronto for packaging and resale in Quebec. The farm products may be financed, advertised, shipped, graded or sold in any one of the provinces.
Both the 1957 Reference and the later judgment of this Court in Carnation Company Ltd. v. Quebec Agricultural Marketing Board indicate the practical impossibility of limiting consideration of constitutionality of a provincial marketing statute to the statute itself without referring to and considering the scheme of regulatory control promulgated in pursuance of the statute. Draftsmen of such statutes are careful to circumscribe their application in express terms. Unless, therefore, there is a background of marketing experience in the regulated product to establish extraprovincial operation of marketing controls, there is not much point in trying to invalidate the governing statute without reference to its projection in a specific
[Page 1279]
marketing scheme.
I do not see how the appellants can draw any comfort from the Manitoba Egg Reference, Attorney-General of Manitoba v. Manitoba Egg and Poultry Association, or from Burns Foods Ltd. v. Attorney-General of Manitoba, except in one respect. In the Manitoba Egg Reference what was put before the Courts were the terms of a proposed Regulation which was authorized by a supposed statute (terms unstated) and terms of a proposed order made by a Board to be established by the Regulation, the Board to have as well delegated powers under s. 2 of the Agricultural Products Marketing Act. There was no indication in the material put before the Courts in the Manitoba Egg Reference that the Regulation and the transactions thereunder were to be limited to intraprovincial trade. In that respect, the scheme was not unlike the legislation dealt with by this Court in the Lawson case.
My brother Martland, delivering the majority judgment in the Manitoba Egg Reference said this, after reviewing the proposed Regulation and Order, at p. 701:
We have, therefore, a Plan which is intended to govern the sale in Manitoba of all eggs, wherever produced, which is to be operated by and for the benefit of the egg producers of Manitoba, to be carried out by a Board armed with the power to control the sale of eggs in Manitoba, brought in from outside Manitoba, by means of quotas, or even outright prohibition.
And, again, at p. 703:
It is my opinion that the Plan now in issue not only affects interprovincial trade in eggs, but that it aims at the regulation of such trade. It is an essential part of this scheme, the purpose of which is to obtain for Manitoba producers the most advantageous marketing conditions for eggs, specifically to control and regulate the sale in Manitoba of imported eggs. It is designed to restrict or
[Page 1280]
limit the free flow of trade between provinces as such. Because of that, it constitutes an invasion of the exclusive legislative authority of the Parliament of Canada over the matter of the regulation of trade and commerce.
I point as well to the observations of Pigeon J. in his concurring reasons, at p. 723:
Although I fully agree that the Plan in issue is invalid as being aimed at the regulation of interprovincial trade in eggs, I wish to restrict my reason for reaching this conclusion to the following consideration.
An essential part of this scheme designed to obtain for Manitoba egg producers the most advantageous marketing conditions, is not merely to subject eggs brought in from outside the province to the same trade regulations as those produced therein but, in effect, to enable the Manitoba producers through the Board to restrict by means of quotas the local sale of eggs produced elsewhere to whatever extent will best serve their interests, even if this means a complete prohibition of such sale. Thus the Plan is designed to restrict or limit trade between provinces as such.
There is one feature of the proposed Regulation in the Manitoba Egg Reference to which I would draw attention here because of its relevance, in my opinion, to the answer that I would give to question 9, considered below. Among the powers vested in the Producer Board under the Regulation was power “to issue production and marketing quotas” and “to establish quotas for production and sale”. So it is that Martland J. said this of the marketing plan under the Regulation (at p. 699):
The Plan… contemplates that it shall be applicable to all eggs marketed in Manitoba, whether or not they are produced in that province. While the provincial Legislature could not contol, or permit the Producer Board (hereinafter referred to as “the Board”) to control the production of eggs in another province, the terms of the Plan are applicable to the produce of another province once it is within Manitoba and available for marketing.
The Burns case, as it was argued in this Court, concerned the validity of a regulation made under The Manitoba Natural Products Marketing Act.
[Page 1281]
The Act itself was not impeachable. What the regulation said was that a processor in Manitoba could not slaughter hogs therein unless they were purchased from the local producer board and hogs brought in from outside the Province were to be deemed to be hogs produced in Manitoba and hence subject to the Manitoba Act and regulations. This Court concluded that the effect of the regulation was to oblige a Manitoba processor, if he would buy out-of-province hogs, to buy them through the local producer board. This amounted to the regulation of the buying of hogs from producers in another Province and was outside the competence of Manitoba, especially since ordinarily the purchase would be made under a contract in the other Province and this too was beyond Manitoba’s control. My brother Pigeon, giving the reasons of the Court noted (at p. 503) that “The direct regulation of interprovincial trade is of itself a matter outside the legislative authority of any Province, and it cannot be treated as an accessory of the local trade”.
The issue in the Burns case does not, in my opinion, assist the contentions of the appellants here.
It is certainly true, as the appellants urge, that if this Court were to consider “the theoretical applications possible under the Act” it would be bound to conclude that there was an overreaching of provincial power. I do not agree that this was the approach taken to the federal Natural Products Marketing Act of 1934, considered by this Court in Reference re Natural Products Marketing Act, and by the Privy Council sub nom. Attorney-General of British Columbia v. Attorney-General of Canada. There, the Act itself provided that a marketing scheme could be approved if the Governor in Council was satisfied that the principal market for the natural product was oustide the Province of production or that some part of the product produced may be exported. [The underlining is mine.] That indicated, ex
[Page 1282]
facie, to the Courts that local marketing was to be swept into the federal scheme. There may be elements of such marketing that may be so embraced as a consequence of valid regulatory control but the legislation went far beyond this.
The present case is different in its avowed application, and there is no good reason to interpret the Ontario Act in all its possible applications merely because of situations in other Provinces that reflected or reflect an overreaching of power.
Section 15a of the Ontario Act was specially attacked because of its provisions authorizing regulations for the seizure, detention and disposal of a regulated product for reasonably apprehended breaches of the statute of regulations. Confiscation is a permitted sanction for breach of a valid provincial prescription and so long as the sanction is confined to intraprovincial transactions in the regulated product it is not objectionable.
My answer to question 7 is “no” on the construction that I would put on the challenged provisions.
XI
Ontario Regulation 595/72, which is the subject of question 8, provides for quotas for producers on the basis of the adoption of the same share of the Canadian egg market as was prescribed by the federal proclamation establishing CEMA and setting out the marketing plan to be administered by CEMA. This was a change from an earlier regulation which placed no limitation on quantity for marketing purposes.
It is clear that the intention was to mesh federal and provincial regulatory control so as to embrace both the producers who market their production in a particular Province and those who seek to export their production to another Province or beyond Canada. It was certainly open to the federal authorities to fix the respective provincial shares of
[Page 1283]
Canadian egg production for the purpose of regulating the movement of eggs in interprovincial or export trade. The share so fixed for a particular Province would establish a limitation for that Province in respect of its own marketing policies. Hence, the fact that a Province has adopted the same share percentage does not per se rule out its connection with intraprovincial trade. The adoption provides no more than a reference point by which to measure the provincial approach to marketing quotas for producers in the Province. I do not think that the use of this reference point amounts to an invasion of federal authority in relation to interprovincial trade. Rather, and the terms of the challenged Regulation so indicate, it is enacted under a recognition of that authority and an appreciation of the control of that trade under federal legislation. In short, it envisages that there will be interprovincial and export marketing by producers in Ontario.
In the result, I would answer question 8 in the negative.
XII
Question 9, involving s. 21a of the Ontario Farm Products Marketing Act, enacted by 1975 (Ont.), c. 6, s. 1 raises an issue somewhat similar to that just considered in respect of question 8, and one which I left open in dealing with the answer that I would give to question 7. This Court was told that it was only in 1972 that provision was made for quotas on the number of eggs that could be marketed by an Ontario egg producer: see 1972 (Ont.), c. 156. (That would necessarily have reference to marketing within the Province or in intraprovincial trade.) Section 21a goes beyond this and provides for control of production. It is a lengthy section which, to put it briefly, empowers the Farm Products Marketing Board to make regulations authorizing the Ontario Egg Producers’ Marketing Board to establish quotas on the number of fowl (domestic hens more than 20 weeks of age) a person may possess; to establish quotas on the number of eggs a person may produce; and, similarly, to establish quotas for hatching eggs and for
[Page 1284]
chicks-for-placement (female chickens 20 weeks of age or less).
Section 21a defines “producing” to mean “in the case of eggs and hatching eggs, the provision of housing, feed, water or care for the fowl that lay such eggs or hatching eggs, and the preparation of the eggs or hatching eggs for sale or for hatching, as the case may be”. Reliance by those supporting s. 21a is necessarily placed on s. 2 of The Farm Products Marketing Act, declaring its limitation to intraprovincial trade, as carrying s. 21a with it. There is no separate intraprovincial limitation in the provision. The far-reaching operation of the quota provisions is easily seen from the terms of the authority in that respect given to the Ontario Egg Producers’ Marketing Board. Section 21a(2)(d)(e) consists of the following provisions:
(2) The [Farm Products Marketing] Board may make regulations
…
(d) authorizing the local board,
(i) to require that eggs be produced on a quota basis,
(ii) to prohibit any person to whom a quota has not been fixed and allotted for the producing of eggs or whose quota has been cancelled from producing any eggs,
(iii) to prohibit any person to whom a quota has been fixed and allotted for the producing of eggs from producing any eggs in excess of such quota, and
(iv) to prohibit any person from producing eggs in premises other than premises in respect of which a quota for producing eggs has been fixed and allotted to such person;
(e) authorizing the local board,
(i) to fix and allot to persons quotas for producing eggs on such basis as the local board considers proper,
(ii) to refuse to fix and allot to any person a quota for producing eggs for any reason that the local board considers proper,
(iii) to cancel or reduce, or refuse to increase, a quota fixed and allotted to any person for producing eggs for any reason that the local board considers proper, and, without limiting the generality of
[Page 1285]
the foregoing, to cancel or reduce any such quota as a penalty where the local board has reasonable grounds for belief that the person to whom the quota was fixed and allotted has contravened any provision of this Act or the regulations, and
(iv) to. permit any person to whom a quota has been fixed and allotted for the producing of eggs to produce any eggs in excess of such quota on such terms and conditions as the local board considers proper;
Far reaching as the authority is, I think I am obliged to take it as directed to intraprovincial trade, set against the background of the provincial share of the Canadian egg market to which I have referred in dealing with question 8.
The issue raised by the appellants on s. 21a is that its application necessarily involves an interference with interprovincial and export trade. No doubt, control of production by quotas cuts more deeply than control of marketing which, as defined in the Act, excludes production. The federal Farm Products Marketing Agencies Act envisages quotas on quantity as part of any marketing plan established thereunder for the regulation of interprovincial or export trade, but it does not directly touch production, which is also excluded from the definition of marketing in the federal Act. Section 2 (e)(iii) of that Act provides for the inclusion in a marketing plan of
(iii) the marketing of the regulated product on a basis that enables the agency that is implementing the plan to fix and determine the quantity, if any, in which the regulated product or any variety, class or grade thereof may be marketed in interprovincial or export trade by each person engaged in such marketing thereof and by all persons so engaged, and the price, time and place at which the regulated product or any variety, class or grade thereof may be so marketed;
The appellants say that the issue of the validity of s. 21a is not concluded by importing into it the declared purpose of the Farm Products Marketing Act to limit its operation to intraprovincial trade.
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Their submission amounts to this: it is difficult enough to appreciate the extent of this limitation with respect to “marketing”; and to apply it to production of a natural or farm product like eggs is as difficult, in respect of producers who have or seek an interprovincial market or export market as it would be to apply it to a manufacturer of automobiles. I appreciate, of course, that we are involved here with a product (it is eggs, but could be automobiles) where, absent any regulation, the limits on production are dictated by economic considerations of the producer or manufacturer. There is, of course, a case to be made for the exercise of provincial authority where a natural resource is being exploited. Thus, it can readily be appreciated that a Province may have a valid conservation purpose in limiting the production of such a resource or, to take another example, in limiting the hunting season for wild animals if the survival of the species would be threatened if indiscriminate hunting was allowed, regardless of ultimate destination in either case.
Eggs like automobiles pass in interprovincial or export trade. The question then is this: If a Province may constitutionally limit the production of eggs by a producer, without regard to the course of his trade (which may be mainly in the interprovincial or export market), may it not do the same in respect of the manufacture of automobiles or any other product? It is true that a Province cannot limit the export of goods from the Province, and any provincial marketing legislation must yield to this. How then, it may be asked, can it be allowed to accomplish this forbidden end by choking off interprovincial trade at its very source, at the point of production?
I point out, however, that what we are dealing with here is a provision of a provincial marketing statute. The primary object is to regulate marketing in intraprovincial trade. Although it would not be a valid regulation of such marketing to impose
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quotas on production with a view to limiting interprovincial or export trade, I am not persuaded that I should give s. 21a, seen in the context of the Ontario Farm Products Marketing Act of which it is part, that construction. It is easy enough to project an application of s. 21a in line with the appellants’ submissions but that would be to speculate on an ultra vires application of the provision, and there is no material to support it. As MacKinnon J.A. pointed out in his reasons on this question in the Court of Appeal, it will be time enough to consider such a situation when it comes before us in a concrete case.
It follows that I would sustain s. 21a and answer question 9 in the negative.
XIII
The last question for the consideration of this Court has to do with the validity of five regulations made in 1975 by the Ontario Egg Producers’ Marketing Board. The Ontario Court of Appeal refused to answer the question because no argument was addressed to it, but it added that “The Regulations referred appear to be authorized by the enabling legislation”, namely, The Farm Products Marketing Act. In this Court submissions were made in the factum of the appellants and, briefly, orally, invoking the principle of the Brant Dairy case to invalidate the challenged Regulations 2, 3, 5, 6 and 7. These Regulations were authorized by O. Reg. 434/75 made by the Farm Products Marketing Board pursuant to s. 21a of the Ontario Farm Products Marketing Act under which the Board is empowered to make regulations authorizing the Ontario Egg Producers’ Marketing Board to do certain things, as, for example, the things set out in s. 21a(2)(d)(e) which I have reproduced in connection with my discussion of question 9.
O. Reg. 434/75 must be examined to determine whether the Regulations by the Ontario Egg Producers’ Marketing Board were validly promulgated. Under s. 16(7) of O. Reg. 434/75 the parent Board authorized the Ontario Egg Producers’
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Marketing Board to do what is authorized by s. 21a(2)(h) of the Act and the latter Board has carried out that authorization exactly in Regulation 2. Section 21a(2)(h) is a parallel provision in relation to fowl with s. 21a(2)(d) dealing with eggs. Regulation 3, referable to eggs, carries out an authorization given by the parent Board under s. 21a(2)(d), such authorization being found in s. 16(3) of O. Reg. 434/75.
What s. 21a(2)(d) and (h) authorize in relation to eggs and fowl respectively are regulations by the parent Board authorizing the Ontario Egg Producers’ Marketing Board “to require that eggs (or fowl) be produced (or possessed) on a quota basis”, to prohibit a person without a quota from producing eggs (or possessing fowl), to prohibit producing (or possessing) in excess of quota and to prohibit producing eggs (or possessing fowl) in premises other than those for which a quota has been allotted. There can be no breach of the Brant Dairy principle if this authorization is carried out in the terms stated. Authority to fix actual allotments is separately provided for under s. 21a(e) and (i) in the case of eggs and fowl respectively.
Regulation 5 fixes allotments: for possessing fowl, pursuant to authority to that end given by s. 16(8) of O. Reg. 434/75. The Ontario Egg Producers’ Marketing Board has not simply repeated the authority but, as its terms required, has carried it out by making specific allotments to named persons in respect of described premises. Regulation 6 is a parallel provision in relation to allotments for production of eggs with Regulation 5. It carries out the authorization given by s. 16(4) of O. Reg. 434/75.
I find no fault with Regulations 2, 3, 5 and 6, in so far as any question arises as to their proper authorization.
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Regulation 7 provides for seizure, detention and disposal of eggs where there is a reasonably apprehended breach of the Act or regulations in relation thereto. The authority for this Regulation is s. 14 of O. Reg. 434/75 which the parent Board promulgated under s. 15a of the Act which empowers that Board to make regulations vesting in the Ontario Egg Producers’ Marketing Board the power to make regulations with respect to seizure, detention and disposal. I find no defect of proper statutory backing for Regulation 7.
My answer to question 10 is accordingly “no” but this answer does not embrace any conclusions on constitutional validity.
XIV
In the result, I would allow the appeal in part, and I would answer the questions placed before this Court, as follows:
Question 1: No, as to s. 2(1); yes, as to s. 2(2)(a); no, as to s. 2(2)(b); and no, as to s. 3 in respect of s. 2(1) and s. 2(2)(b).
Question 2: No.
Question 3: No.
Question 4(a): No.
(b): No.
Question 5(a): No.
(b): No.
Question 6: No.
Question 7: No.
Question 8: No.
Question 9: No.
Question 10: No.
The judgment of Martland, Ritchie, Pigeon, Beetz and de Grandpré JJ. was delivered by
PIGEON J.—I have had the advantage of reading the reasons of the Chief Justice. He has stated the facts and the questions in this reference and I will attempt to avoid any repetition. Being pressed for time, I will limit my observations to the essential.
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Question 1 asks whether ss. 2 and 3 of the Agricultural Products Marketing Act (Canada) are ultra vires.
Section 2(1) contemplates the delegation to a provincial marketing board of authority over interprovincial and export trade. It is clearly within the principle of the Willis case and the answer must be “No” as to s. 2(1) as well as to s. 3 in respect thereto.
Section 2(2) provides for levies in respect of products in intraprovincial trade (sub-para. (a) and in extraprovincial trade (sub-para. (b)).
It does not appear to me that appellants’ attack based upon the alleged absence of a message from the Governor General recommending its enactment, comes within the scope of the question submitted. Nothing in the order of reference or in the material submitted therewith, raises any issue with respect to the regularity of the adoption of the Act, as opposed to its intrinsic validity depending on Parliament’s legislative authority. On a reference the Court has to give answers on the basis of the questions submitted exclusively (Re: Quebec Magistrates’ Court), intervening parties are not permitted to raise other issues and to bring up other facts as they might in ordinary litigation. I would therefore decline to consider this ground of attack.
However, it appears to me that the appellants are entitled to request that consideration be given to ss. 53 and 54 of the B.N.A. Act in the following manner. It may be contended that, in authorizing a board or agency to impose and to use levies or charges, Parliament is indirectly doing what it may not do directly, namely, having a tax levied and appropriated otherwise than by means of a bill voted in the House of Commons on the recommendation of the Governor General. In my view this attack fails for two reasons. I agree with the Chief Justice that adjustment levies, as well as levies for
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expenses, are not taxes. Furthermore, ss. 53 and 54 are not entrenched provisions of the constitution, they are clearly within those parts which the Parliament of Canada is empowered to amend by s. 91(1). Absent a special requirement such as in s. 2 of the Canadian Bill of Rights, nothing prevents Parliament from indirectly amending ss. 53 and 54 by providing for the levy and appropriation of taxes in such manner as it sees fit, by delegation or otherwise.
Turning now to the question of substance, I agree with the Chief Justice that sub-para. (a) of s. 2(2) of the Agricultural Products Marketing Act, is invalid. This sub-paragraph purports to authorize the granting to a provincial board or agency of the authority to impose and to use levies or charges “in relation to the powers granted to such board or agency under the laws of any province with respect to the marketing of any agricultural product locally within the province”. As previously stated, I agree that such levies are not taxes when they are not collected for purposes other than defraying expenses or effecting adjustment or redistribution among producers. I find it quite proper for us to overrule what may be left of the judgment in the Crystal Dairy case. This might well be considered as the logical development of this Court’s unanimous decision in the Crawford and Hillside Farm Dairy case. As I see it, the net result of the milk marketing scheme upheld in that case was an equalisation of returns among producers which gave them, in the end, the same monetary returns as adjustment levies would have yielded in a simpler manner. It is axiomatic in constitutional law that the courts will look through any scheme in order to strike down all attempts to do indirectly what cannot be done directly: regard must be had to the substance and not to the mere form of the enactment, so that “you cannot do that indirectly which you are prohibited from doing directly” [per Viscount Simon in Attorney General for Saskatchewan v.
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Attorney General for Canada, at p. 124, quoting from Lord Halsbury in Madden v. Nelson and Fort Shefford Ry. Co., at p. 627]. If the complex scheme was valid and not just a colourable device, this is proof enough, in my view, that the direct method, the adjustment levies, are not unconstitutional as long as they are confined to intraprovincial operations as they were in that case. Being of opinion that adjustment levies are within provincial jurisdiction, it follows that federal legislation on the subject is invalid. I therefore agree that question 1 is to be answered: “Yes” as to s. 2(2)(a) “No” as to s. 2.(2)(b) as well as to s. 3 in respect thereto. It is obvious that it will not be more difficult for the Legislature of Ontario to cure the situation created by this decision than the somewhat similar situation due to one of our conclusions in the Anti-Inflation reference.
I agree with the Chief Justice that the orders mentioned in question 2 come within the scope of the Act.
Question 3 concerns the validity of the Farm Products Marketing Agencies Act. I have to disagree with the Chief Justice’s observations on s. 23(1)(a) in relation to the surplus disposal program of CEMA. It is not immaterial that surpluses are marketable in local trade and I do not agree that a federal agency may lawfully be authorized to purchase in any market and to dispose of its purchases as an ordinary trader. In the Shannon case, Lord Atkin said, at p. 719:
…It is now well settled that the enumeration in s. 91 of “the regulation of trade and commerce” as a class of
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subject over which the Dominion has exclusive legislative powers does not give the power to regulate for legitimate Provincial purposes particular trades or businesses so far as the trade or business is confined to the Province:…
In my view federal intrusion into local trade is just as unconstitutional when done by buying and selling, as when done through any other method. Viscount Simon’s and Lord Halsbury’s observations are just as applicable to federal as to provincial powers. Of course, this does not preclude operations by federal agencies acting for proper federal purposes. It does not appear to me that my disagreement on this point in any way affects the conclusion on the question namely that the Act is not invalid.
Questions 4, 5, 6 ask only whether various federal executive orders are ultra vires the enabling legislation. I agree to answer in the negative.
Question 7 asks whether some sections of The Farm Products Marketing Act of Ontario are ultra vires. I agree that a Legislature may delegate powers to an agency as much as it sees fit and that there is no reason to read this Act as going beyond its professed intent. The answer must therefore be “No”.
Questions 8 and 9 concern the validity of the egg producers quota regulations. 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 expression 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, unless they are considered as within the scope of “agriculture” in which case, by virtue of s. 95, the jurisdiction is provincial subject to the overriding authority of Parliament. In my view the Carnation case is conclusive in favour of provincial jurisdiction over undertakings where primary agricultural products are transformed into other food products. In that case, the major portion of the production was
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shipped outside the province ([1968] S.C.R. 238, at p. 242). In view of the reasons given, the conclusion could not be different even if the whole production had been going into extraprovincial trade.
In The King v. Eastern Terminal Elevator Co., it was decided that, for constitutional jurisdiction purposes, trade in grain was to be considered as distinct from production. Mignault J. said (at p. 457): “I have not overlooked the appellant’s contention that the statute can be supported under s. 95 of the British North America Act as being legislation concerning agriculture. It suffices to answer that the subject matter of the Act is not agriculture but a product of agriculture considered as an article of trade”. Duff J. as he then was, said with respect to legislative authority over a trade: “that is not a principle the application of which can be ruled by percentages”. It was therefore decided that Parliament could not assume legislative authority over grain elevators by setting up a licensing system. It was, however, pointed out that Parliament could subject grain elevators to its authority by a declaration under s. 92(10)(c). Parliament acted on the suggestion and thereby acquired complete control of the grain trade as is related in Jorgenson v. Attorney General of Canada. In the absence of a similar declaration applicable to a quarry supplying rock for ballast on an interprovincial railway, this quarry was held not to form part of the railway (C.N.R. v. Nor-Min Supplies). The Chief Justice said (at p. 333):
…The mere economic tie-up between the C.N.R.’s quarry and the use of the crushed rock for railway line ballast does not make the quarry a part of the transportation enterprise in the same sense as railway sheds or switching stations are part of that enterprise. The exclu-
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sive devotion of the output of the quarry to railway uses feeds the convenience of the C.N.R., as would any other economic relationship for supply of fuel or materials or rolling stock, but this does not make the fuel refineries or depots or the factories which produce the materials or the rolling stock parts of the transportation system.
In my view a similar reasoning must be made with respect to egg farms. No operator can claim exemption from provincial control by electing to devote his entire output to extraprovincial trade. I can find no basis for the view that there must be a division of authority at the stage of production between what will be going into intraprovincial and what will be going into extraprovincial trade. As I read it, the Eastern Terminal Elevator case stands squarely against such a contention. Eggs are a commodity like grain and they are treated in trade as fungible things. As a rule the person who is obliged to deliver grain of a given grade is not obliged to deliver any identified grain. (See Canada Grain Act, R.S.C. 1970, c. G-16, ss. 111, 115.) He satisfies his obligation by delivering the required quantity of proper grade. One of the purposes of the grading is precisely that goods of the same grade may be considered interchangeable. This holds true for eggs as for grain. The consequence is that any workable control scheme has to be effective with respect to all eggs irrespective of intended disposition. In Reference re The Farm Products Marketing Act of Ontario, Rand J. said at p. 214: “…trade regulation by a Province or the Dominion, acting alone, related to local or external trade respectively, before the segregation of products or manufactures of each class is reached, is impracticable, with the only effective means open, apart from conditional regulation, being that of co-operative action;…”.
We are not called upon to decide in the present case whether the federal Parliament could assume
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control over egg farms devoted exclusively to the production of eggs for extraprovincial trade. Under the present circumstances such farms are, like any other farms, local undertakings subject to provincial authority, irrespective of the destination of their output. I can see no reason why such legislative authority would not extend to the control of production as to quantity just as it extends undoubtedly to the price to be paid for raw materials.
This does not mean that such power is unlimited, a province cannot control extraprovincial trade, as was held in the Manitoba Egg Reference and in the Burns Foods case. However, “Marketing” does not include production and, therefore, provincial control of production is prima facie valid. In the instant case, the provincial regulation is not aimed at controlling the extraprovincial trade. In so far as it affects this trade, it is only complementary to the regulations established under federal authority. In my view this is perfectly legitimate, otherwise it would mean that our Constitution makes it impossible by federal-provincial cooperative action to arrive at any practical scheme for the orderly and efficient production and marketing of a commodity which all governments concerned agree requires regulation in both intraprovincial and extraprovincial trade. As early as 1912, it was asserted by the Privy Council that “whatever belongs to self-government in Canada belongs either to the Dominion or to the provinces”. (References Case, at p. 583). I do not overlook the admonition in the Natural Products Marketing Act case, at p. 389, that the legislation has to be carefully framed but, when after 40 years a sincere cooperative effort has been accomplished, it would really be unfortunate if this was all brought to nought. While I adhere to the view that provinces may not make use of their control over local undertakings to affect extraprovincial marketing, this does not, in my view, prevent the use of
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provincial control to complement federal regulation of extraprovincial trade.
In so far as the producer quotas are to be viewed as marketing quotas rather than as production quotas, it seems to me that their validity is established by the principle of the Willis case. Those quotas are fixed by the provincial board so the total will equal what the plan, established under the federal Act, provides for Ontario in respect of extraprovincial trade in addition to what comes under intraprovincial trade. The Board is properly empowered by provincial authority to regulate the intraprovincial trade and it has delegated authority from the federal in respect of the extraprovincial trade. I fail to see what objection there can be to overall quotas established by a board thus vested with dual authority, unless it is said that our constitution precludes any businesslike marketing of products in both local and extraprovincial trade except under a federal assumption of power, something which I think, is directly contrary to the basic principle of the B.N.A. Act.
In the result I would answer questions 8 and 9 in the negative, as the Court of Appeal unanimously did.
Question 10 deals with ancillary regulations complementing the basic quota orders. I agree that it is to be answered in the negative.
Judgment accordingly.
Solicitors for Ontario Egg Producers and other interested parties: Turkstra, Dore & Dolecki, Hamilton.
Solicitors for interested Egg Producers: Faskin & Calvin, Toronto.
Solicitors for the Attorney General for Quebec: Beaupré, Trudeau, Sylvestre, Taillefer & Léger, Montreal.
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Solicitors for l’Association des producteurs d’œufs québécois: Paradis, Paradis & Associés, Bedford, Quebec.
opposing the legislation.
Solicitor for the Attorney General of Ontario and Ontario Farm Products Marketing Board: Ministry of the Attorney General, Toronto.
Solicitor for the Attorney General of Canada and the National Farm Products Marketing Board: R. Tassé, Ottawa.
Solicitors for the Canadian Egg Marketing Agency: Herridge, Tolmie, Ottawa.
Solicitor for the Ontario Egg Producers Marketing Board: J.J. Robinette, Toronto.
Solicitors for la Fédération des producteurs d’œufs de consommation du Québec: Allaire, L’Heureux, Valiquette & Blain, Montreal.
Solicitor for the Attorney General of Nova Scotia: Department of the Attorney General, Halifax.
Solicitor for the Attorney General of Manitoba: Department of the Attorney General, Winnipeg.
Solicitor for the Attorney General of Alberta: Department of the Attorney General, Edmonton.
supporting the legislation.
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