Turner’s Dairy Ltd., Et Al., v. Lower Mainland Dairy Products Board, Et Al,, [1940-41] CTC 363

Macdonald C.J.B.C. (dissenting) :—First some preliminary observations. In the formal judgment under review it is declared that orders numbered 11, 12, 13, 14 and 15 of the appellant Lower Mainland Dairy Products Board are ultra vires, that two members of the Board, its servants or agents, be restrained from compelling the respondents to comply with their, provisions and that appellant Milk Clearing House Ltd. be restrained from acting as the designated agency pursuant to the orders. No claim was made in the prayer for relief in respect to Order 11 and it was conceded at the hearing, as I recall it, that it was included in the judgment by error. Order No. 12 designates appellant Milk Clearing House Ltd. as the agency to market the regulated products. This is authorized by s. 5(a) of the Act and by 10(a) of the Scheme later referred to: No. 12 [13?], a penalty order is authorized by s. 5(e) of the Act and by s. 10 (k) of the Scheme. No objection was taken, as I understood counsel, to the validity of these two orders : the right to designate an agency and to impose penalties is clear; it was contended, however, that the agency designated, viz., appellant Milk Clearing House Ltd., was a colourable device or a mere sham. As to Order 14, known as the "‘Base and Quota Order, ‘‘ in so far as " Base” is concerned, having reference to the amount of milk a farmer produces on an average for a certain six months” period respondents’ counsel said at the trial ""that is a legitimate regulation that every one agrees with.’’ We are therefore only concerned with Orders 14 (in part), all of Order 15, and the type of agency referred to in the Act and in Order 12.

The controversy herein relates therefore to the validity or otherwise of two orders promulgated by appellant Lower Mainland Dairy Products Board constituted by His Honour the Lieutenant-Governor in Council to administer a scheme regulating the marketing of dairy products (also established by the Lieutenant-Governor in Council) in the lower Mainland of British Columbia pursuant to the Natural Products Marketing (B.C.) Act, R.S.B.C. 1936, c. 165. This Act with detailed provisions outlining the powers of the Lieutenant-Governor in Council (s. 4) and of the appellant Board created by it (s. 3) was declared valid by the Judicial Committee in Shannon v. Lower Mainland Dairy Products Bd., [1938] 4 D.L.R. 81, A.C. 708.

It was this Board, so constituted and endowed with powers under an intra vires Act, that passed the orders held to be ultra vires. Obviously if the Board kept within the four corners of the "additional powers” conferred by s. 5 and if the powers contained in the Scheme devised by His Honour the Lieutenant- Governor in Council and vested in the Board by s. 4 are within provincial authority no debatable question should arise unless considerations, later referred to, raise, not fanciful, but substantial questions of law and of fact.

It was held, as I interpret the reasons for judgment of the learned trial Judge, that although on their fair grammatical construction the orders are "plain on their face’’ the Court should inquire "‘as to the motives which actuated the members of the Board in passing the orders,’’ or as put in another place "‘as to what was the purpose of the members of the Board in passing the orders.’’ That inquiry was made, inadmissible evidence in my opinion was received and colourful language employed by counsel for respondents in attacking the chairman of the appellant Board which, if justified at all, should have been applied to the Legislature and to His Honour the Lieutenant-Governor in Council, the real authors of all that occurred, and the conclusion reached by the trial Judge that one feature of the Scheme or rather of the orders (the Scheme was held to be valid) viz., the appointment of appellant Milk Clearing House Ltd. as an agency, was "‘an imposing facade,’’ "‘a mere sham’’ and that two members of the Board ‘‘over-stretched their hands’’ doing violence to the legal maxim quando aliquid prohibetur ex directo, prohibetur et per obliquum. It is a sound legal principle that when anything is prohibited directly, it is also prohibited indirectly ; if however there are no facts to which the maxim can adhere it is of no utility here. The appellant Board was not prohibited directly from doing any single act outlined in the orders declared to be ultra vires; it might, with deference, possibly apply to the trial Court: it cannot do indirectly what it cannot do directly, viz., prevent a Board legally constituted from passing orders legally authorized.

It was also found by the trial Judge that ‘‘the real purpose and effect of the impugned orders (inasmuch as some producers. of milk supply one market and others another market) was to take from the producer supplying the fluid market a portion of his real returns and to contribute the same to other producers. for the purpose of equalization and that being so I am satisfied. the orders cannot stand.”

It will be found upon later examination that this, with respect, is not so; however the suggestion appears to be, that because of this ‘‘real purpose’’ an indirect tax beyond provincial authority was imposed. Neither the trial Judge nor counsel for respondent stated explicitly that a public body with delegated powers to do so for a public purpose imposed a tax : a direct statement is. avoided. My brother O’Halloran for example in his reasons states "‘in substance they create an indirect tax;” my brother Sloan ‘‘in their real purpose and effect’’ they ‘‘impose an indirect tax’’ while respondents’ counsel in his factum states “in pith and substance” it is taxation.

Certainty is a feature of taxation legislation: the language employed must be clear and unambiguous. Here it is said to have been imposed in an impossible way, viz., by indirection or by implication; no one points to any language anywhere in the Act, in the Scheme, or in the orders, unambiguous or otherwise, imposing a tax : hence the submission must be that unambiguous words, or in fact any words at all directly revealing or indicating a tax are unnecessary; it is enough if in substance a tax is imposed by, I assume, the orders, because by no ingenuity can it be found in the Act. I can understand one saying that in substance certain words mean thus and so : where however no words can be found remotely indicating that the subject-matter referred to is taxation it is impossible to say that in substance it is taxation. These orders, in my opinion, either reveal a tax or they do not: there is no middle ground. if they do, I venture to think that never before has a taxing statute been so curiously and loosely worded.

This conclusion, viz. that the Board was either given powers of taxation and exercised it, or exercised powers of taxation ex mero motu, an obvious impossibility, is based upon the decision of the Judicial Committee in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd. [1933] 1 D.L.R. 82, A.C. 168. There a dairy products sales adjustment Act enacted in 1929 by c. 20 was considered; it was held ultra vires inasmuch as a public body, a " Committee of Adjustment” was created and made certain levies in the matter set out in, and as authorized by the Act itself. These levies were held to be taxes. I shall later show why it was called a tax and point out the wholly different situation with which we are concerned. Were it not for that decision the present action, in my judgment, would not have been brought; the trial Judge referred to it: the judgment is based upon it. The case put forward is that by the impugned orders (it cannot be said by the Act, as it is intra vires) an attempt was made to circumvent that decision, as if that mattered, so long as powers conferred on the- Legislature, not by the Courts but by the B.N.A. Act, an Imperial Statute, were utilized. It is enough to say that none of the powers thus conferred, made use of in enacting the orders, were destroyed or declared beyond provincial competency by the Crystal Dairy case: they relate to property and civil rights. It is a contradiction in terms to say that if on their fair construction the orders are found to be clearly authorized by the Act and, as the trial Judge correctly found, by a valid Scheme, they can be read as doing something other than the plain intendment of the words suggest. The words of the present Chief Justice of Canada in Re Reciprocal Insurance Legislation, Craigon v. The King, Otte v. The King, [1924] 1 D.L.R. 789 at p. 795, A.C. 328, 41 Can. C.C. 336 at p. 343, where he stated that granted there is an absolute jurisdiction the words of a statute “must take effect according to the proper construction of the language in which they are expressed’’ are applicable to these Orders.

By the orders it is submitted apparently—and if I appear to be indefinite it is because, apart from the maxim referred to, no concrete propositions of law were put forward—that the appellant Board in substance did what the ‘‘Committee of Adjustment” did under the 1929 B.C. Statutes, c. 20, viz., impose an indirect tax. Of course if this Act or the orders are similar in form or even in substance to what will be referred to hereafter as the 1929 Act declared to be ultra vires the inquiry is at an end. It is not boldly stated that an examination of that decision by the methods lawyers properly follow, viz., by reading it, coupled with an examination of the present Act, the Scheme and the orders, will disclose an indirect tax. That process of ratiocination is not followed; questions of alleged colourability were introduced at the trial; evidence was taken, not to clear up ambiguities or to show in substance what the orders meant, but to show, strangely enough, that something entirely proper occurred, viz., an attempt (I think a successful attempt) in drafting the Act, the Scheme, and the orders to avoid conflict with the Crystal Dairy decision and to avoid the imposition of a tax. I do not understand how this proper use of legislative authority can be made the basis of an action. We know conflict with the Crystal Dairy decision was avoided by the Act: it is. intra vires: I doubt if it was suggested to the Courts that it was. so drawn that an indirect tax might in some way find shelter under it. That being so—the Act authorizing the orders being intra vires, it is seriously submitted that if the orders are literally, grammatically, in fact and in substance, within the four corners of the Act and an authorized Scheme established by the Lieutenant-Governor in Council and relate to provincial matters, there is still a further question to discuss. It is not said in the reasons for judgment that these orders placed beside that decision must be regarded as bad : yet that is the result. In Edwards v. Hall (1856), 25 L.J.Ch. 82 at p. 84, Cranworth L.C. said:

‘‘T never understood what is meant by an evasion of an act of parliament; either you are within the act of parliament or not . . . . If you are not within it, you have a right to avoid it, to keep out of the prohibition; if you are within it, say so, and then the course is clear. ”

This language is equally applicable to the orders and to a decision by the Courts: one is either within or outside their purview.

These orders in their practical results, it is said, accomplish what was condemned by the Judicial Committee in the Crystal Dairy case; that, with respect, is not so. It was not there decided that orders such as we are concerned with must necessarily be ultra vires, nor was any marketing policy condemned; it was confined to an inquiry whether or not the 1929 Act with its set-up, not this Act and orders with a different set-up, imposed an indirect tax. The orders are not objectionable in form—that appears to be conceded—nor I would add in substance; they are authorized and relate to subjects within provincial powers : on their face as the trial Judge intimates they are plain. But the "‘face, ‘‘ we are told, is really a mask: remove the mask and an indirect tax is revealed but not to the naked eye; it is said to be revealed, with respect for other views, by, I fear, a process of fallacious reasoning. We cannot find anywhere in the orders or elsewhere indicia of taxation.

I referred to the need of unambiguous words. It is impossible to find a tax unless the Legislature by an Act imposes it, or delegates that right to a public body. It was not contended that the appellant Board is a public body or if it is that the Legislature, as in the 1929 Act, delegated to it authority to impose levies; yet some public body, with delegated powers, whether the Clearing House Ltd. or the Board, must exist before taxation can be found. We have the benefit of many constitutional cases determining whether or not a tax exists and if so whether direct or indirect but none I am aware of decides that a tax may be found without the use of any language whatever relating to that subject. Clearly unless a Board has independent powers of its own volition to impose a tax—and it has not—it is necessary to find words in the Act giving it powers to tax. If the Board attempted to impose a tax it would be acting beyond its authority but that case is not put forward.

Ever since Joseph went up from Galilee to Judea to be taxed (Luke, Chap. 2, verses 1-5) in fact long before (2 Kings, Chap. 23, verse 35) a tax has always been imposed by sovereign authority, in that instance Caesar Augustus. Only a sovereign power possessing that right can delegate it to subordinate bodies like municipalities or boards. If it is not delegated these sovereign powers cannot be exercised by subordinates. The Legislature as a sovereign body has the right to tax by appropriate measures ; it did not take that right by this Act much less confer it on the appellant Board. We need not consider the question of direct or indirect taxes : the point is have we a tax at all ?

In the 1929 Act itself the Legislature did delegate or confer the power to tax on an "Adjustment Committee” and as it was found that it levied an indirect tax the Act was held invalid. Section 2 of that Act constituted the Adjustment Committee. Section 9 conferred power to make certain levies: it was not, to compare it to the case at bar, an attempted exercise by the Committee of independent powers of its own. Its wide powers were outlined in ss. 5 to 9. Sales were permitted by producers in the ordinary course and the full amount received belonged to the producers. From that sum received by sales on the fluid milk market an amount was compulsorily deducted by the Adjustment Committee and transferred to producers who received a smaller return from sales in the manufacturers’ market. A sold in the fluid milk market and was entitled to a definite sum: B sold in another market and received a smaller amount: a levy or tax was imposed on A and given as a bonus to B and in the result both received equal amounts. On that state of facts it was held a tax was imposed by a publie body for public purposes. I venture to think the Courts will not go further in determining where a tax may be found. The Judicial Committee did not decide that if the Legislature, as here, provided for price-fixing (and the Shannon decision shows it may do so: it is in the Act) and provided, not for free sales on the two markets at market prices with deductions from the proceeds received by one and a bonus to the other but rather for sales at a fixed price for the amount of the producers’ quota sold, not in the open market (that is prohibited) but to an agency, that an indirect tax would be imposed: there are no deductions whatever under the present Act and orders, no bonuses: all are treated alike. If by price-fixing without taking anything from one producer and giving it to another an indirect tax is disclosed the Act should have been declared ultra vires: it is in the Act the power to fix prices is found. If we were dealing with the sale of two grades of wheat or of any other product A and B, one commanding a better market than the other, the grower of the better grade receiving for years past the larger returns and to discourage or to lessen the growth of Grade A wheat and to increase the growth of the other the appropriate Legislature decided to fix a common price for both grades midway between the two they could do so without creating an indirect tax; no case decides otherwise. That too would be equalization of returns: it is not so therefore, as suggested, that where this occurs there must be a tax. It would be useless for the grower of Grade A wheat to say that in the past he received more for his product and that his real returns are still the same. That is what is said here. The answer is "‘that is all changed;’’ he now receives a fixed price regardless of grade. Price-fixing is

the basic feature of this Act: it was not included in the 1929 Act; in fact it was excluded in one important aspect, viz., in respect to consumers. When under the present Act the power to fix prices was held to be valid as well as all other parts of the Act it doesn’t mean that prices must be fixed in a manner satisfactory to the Courts; only the electors can complain in that respect : the power of price-fixing is there : it is as wide as the name itself. There is therefore no tax.

Let us examine this question in another way. I said to respondents’ counsel during the hearing of this appeal, at all events in substance if I may use that phrase properly, " " if this Act had been the first Milk Marketing Act enacted in this Province and the orders in question had been passed under it, with the agency, later referred to, provided for, and with the Scheme established: in other words if there had been no Act of 1929 and no Crystal Dairy case could we set these orders aside as ultra vires or as enacted without authority?’’ He replied, "‘the task would be more difficult as no evidence would be available.

The true answer is that sueh an action, under such circumstances, would utterly fail. There could, of course, be no question of colourability in that case—there should not be in this case—no question of trying to circumvent a decision of the Courts, nor of creating an "‘imposing facade.’’ How could it be otherwise unless the present orders in conjunction with the Act, on their proper construction, disclose a tax? This viewpoint raises curious implications. Let us suppose that the dairymen of Nova Scotia procured legislation precisely similar to this Act, in fact copied it; also that the Board passed similar orders and that the Scheme contained similar powers. Draftsmen ought to be familiar with decisions of the Courts based on the type of legislation they are drafting, not as a trap for the unwary but as a benign light showing how far Legislatures may or may not go in any direction: if they find a decision of the Judicial Committee reported fifty or a hundred years ago—there is no magic in a recent decision—based upon a comparable statute they ought to fashion their legislation around and about it in such a manner that it does not come into conflict with it ; all this would appear to be elementary. That is what the Legislature did in enacting this Act: they avoided conflict with the Crystal Dairy decision: they did not impose by the Act itself or give to any Board authority to impose an indirect tax and because that care and restraint was exercised the Courts pronounced the Act valid. However, the Nova Scotia draftsmen would not be obliged to read the Crystal Dairy decision: let us assume they did not do so; it would therefore be impossible, as in the case at bar, to

attribute a design to evade it: to speak of colourability, or of the "over-stretched hand” because they knew nothing of these elements considered vital by respondents to a proper consideration of this case. If the decision under review is right the Supreme Court of Canada would, in the event that the supposititious Nova Scotia Act with its orders and the British Columbia Act with its orders came before it for adjudication, be compelled to hold the former orders good and the latter orders bad. Such a result could only arise through confusion of thought and by disregarding legal principles.

Let us again test it in another way. The Legislature, if not concerned with loading the Act with cumbrous details, could have included in it every single subject-matter contained in the impugned orders. It could, by the Act itself not only provide for an agency generally but also specifically for the creation of a Joint Stock Company to act as agent: it may be it could say in the Act that the Courts must not call it a sham. It could provide in the Act that sales and re-sales could be made to and by the agent, and to and by none others at fixed prices, worked out in detail in the manner outlined in the orders inserting every detail in a schedule to the Act. It could provide for one market and for a basic price with final returns computed after delivery and re-sale precisely as outlined in the Scheme and orders. It would not be necessary to omit from the schedule a single detail although it might be found advisable to amend the Act from year to year: that is not material to my point. Had the Legislature done so the Courts would, at least, find it difficult—I, of course, say impossible—to embark on the inquiry that took place in this case. The Courts ought to be content in such a ease to look at the Act, read it intelligently, obtain evidence if necessary to remove obscurities, or to disclose precisely what the Legislature was doing; it should read, too, the decision in the Crystal Dairy case and on a question of construction of statutes decide whether or not this Act was a valid exercise of provincial powers. If that course had been followed no one could question the motives and bona fides of members of the Legislature or characterize the agency itself as hocus pocus, to borrow a phrase from the armoury of respondents’ counsel. It would be equally impossible to say it was an attempt to circumvent the Crystal Dairy case unless Legislatures must not exercise powers, never declared beyond their competency by the Courts, and clearly within it. Would such an Act be declared ultra vires? Wherein would it be beyond provincial authority? Why should different principles be applied, where instead of placing everything in the Act and a Schedule, these powers are delegated to a Board that keeps strictly within the authority given. If subordinate bodies exceed their jurisdiction or usurp powers approprite proceedings may be taken: we need not consider that until excess of jurisdiction or usurpation of powers is suggested : no one has pointed to a line, a phrase or a sentence in these orders and said in respect thereto " that is not covered by authority.’’ I shall refer to the covering authority later to remove all doubts.

The truth is, with deference to other views, a Court of law is asked to give effect to the views of a vocal minority of producers and of dealers; it is asked to prevent the Legislature from implementing legislation declared to be valid : because nothing but implementation occurred or was about to occur when this action was launched. If so-called iniquitous features of the Act and orders are pointed out the Court should also hear the views of the less clamorous majority: I know all this is immaterial but if one discusses the aspects of the case upon which respondents rely one must drift into irrelevancies. It at least has this relevancy—I can conceive of no ground for speaking of "sham’ agencies, and of ‘‘ever increasing bureaucracy,’’ except on the ground that this is unjust legislation, not a bona fide marketing Act and that the Courts should not permit its enforcement. The complaint is that it is unjust, or as it is said illegal, to interfere with the emoluments of those who hitherto largely controlled the fluid milk market. Briefly there are two markets for milk, the fluid market referred to, and the market for manufactured products, the former more lucrative. All producers strive to sell their milk in the best market ; the result is apparent ; prices for the producers in a buyers ‘ market thus created are depressed. The principle of the Act is that demoralization of prices for all producers, for the present ‘‘haves’’ as well as for the "‘have- nots,’’ will eventually ensue if all are permitted, without regulation, to compete in the fluid milk market: the consumer possibly might benefit unless disorderly marketing would lead to abuses detrimental even to his interests; it is however said to be disastrous to the producers. Unless all the producers are protected in securing a fair return every one suffers: that is the view of the Legislature. We are not concerned with whether or not that view is sound: it is not our concern: I only refer to it because respondents’ counsel vigorously condemned it, and made free use of epithets not without advantage, because I fear they assisted, in shaping in the minds of the able Judges the idea of colourability. He, in fact, caused an emotional disturbance in my brother Sloan which even I was powerless to allay, for did he not refer in his reasons to ‘‘the specious camouflage erected by inferior tribunals.’’ I will show presently that if there is camouflage anywhere—and with deference there is not— it is practiced by the Legislature and by His Honour the Lieutenant-Governor in Council, not by any so-called inferior tribunal. This view of congestion in the fluid milk market is shown to be that of the Legislature by the preamble to the 1929 Act and by the enactment of the present Act. The Legislature, concerned with the general welfare, believe that without regulation and control even the present advantages of the ‘‘haves’’ in the fluid milk market may prove to be illusory and short-lived; in other words they will lose much, if not all, of what they now possess through disorderly marketing and general demoralization of prices. These views I repeat, although they appear to be rational, may or may not be sound; again we are not concerned with policy: the Court must keep on its own side of the fence. If they are not sound redress should be sought by repeal or by amendment in the proper forum, not in the Courts.

In all I have said hitherto I have assumed that on the fair construction of the language employed in the orders they are strictly within powers validly conferred. I do so all the more readily because, seemingly in support of my own view, no one, as I understand it, suggests anything else: certainly the trial Judge does not say that tested in this way they are bad. Unless one looks at them through the Crystal Dairy case, using it, so to speak as a mirror, the orders are ‘‘plain on their face:” they only appear to be distorted into another meaning when, as often occurs, the mirror is not properly held. Nor did respondents’ counsel, as I understood him, submit that reading the orders literally and grammatically they contain provisions beyond powers conferred. He did not say that the orders disclose the existence of a public body authorized to tax and by the language used in fact imposed a tax for public purposes. That conclusion is reached, not in the proper way, viz., by reading the orders in precisely the same manner as the Judicial Committee read the sections of the 1929 Act; it is reached after reading and interpreting certain evidence, much of it inadmissible and useless for our purpose.

I refer now to the place in the Act, the Scheme and the orders of Milk Clearing House Ltd., an incorporated company and an appellant herein restrained by injunction from performing its intended functions. If there is any merit in respondents’ case it centres in this company: it has been called "‘a mere sham” and an ‘‘imposing facade : ” let us therefore submit it to detailed examination. It was to this company I referred when stating that provision for it and all other details might have been pro- vided for in the Act itself. It was incorporated under the Companies Act to act as the agency contemplated by s. 5(a) of the Act; its capital was fixed for the time being—it could be increased at any time—at $10,000; its shareholders are producers. It was never intended, it was submitted, to make a profit like an ordinary commercial concern, as if that mattered, and generally was a clever device invented by Mr. Williams, the Chairman of the Board, to circumvent the decision in the Crystal Dairy case. Indeed so much ingenuity has been expended—successful so far—in attempting to show that this agency is, as counsel put it, mere ‘‘hocus pocus’’ created for some vague improper purpose, presumably to avoid imposing an indirect tax, that it ought to follow if it is not a sham respondent cannot succeed. The true view is that it is authorized by a valid Act. There is the further point that even if it should be regarded as a sham the question of discovering an indirect tax is not advanced one iota; the only result would be an hiatus in a truncated structure; not a tax.

What are the facts? Is it a creation of Mr. Williams the Chairman of the Board? True it is not material so long as it is legal but I am endeavouring to lay this spectre of a sham and a device. The authority to appoint a single agency is given by s. 5(a) of the Act; it is the Act that authorizes the Board “to regulate the time and place at which and to designate the agency through which any regulated product shall be marketed ‘ ‘ and “marketing” is defined to mean buying and selling. Here we have authority given to the Board by an intra vires Act to name an agency to buy and sell the regulated product. For double assurance His Honour the Lieutenant-Governor in Council, not an ‘‘inferior tribunal, ‘ ‘ was authorized by the Act to vest in the Board power to ‘‘designate the agency through which any regulated product shall be marketed.” (Scheme 10(a)) The corporate structure of the agency was not defined: is it suggested that the Board could not designate a Joint Stock Company to act as agent? As stated in argument the Board might have appointed a large department store in Vancouver; if so would it be ‘‘a mere sham’’? So far we have the Board doing what an intra vires Act authorized in language too plain to be controversial.

It was submitted that the word ‘‘through’’ in s. 5(a) of the Act does not contemplate sales to ‘‘the agency” and “by” the agency. It is not inappropriate to speak of this as marketing ‘‘through’’ the agency; if some slight criticism of the use of the word might be made I would say de minimis non curat lex. I merely mention the point to dispose of it: the definition of "marketing'' and the wording of s. 5 clears up any doubts. The trial Judge did not think otherwise: he held the scheme to be valid. It is by the Scheme of His Honour the Lieutenant- Governor in Council that sales "‘to'' and "‘by'' the agency are authorized together with prohibition of all sales elsewhere. (10 (a) and (c)). “Marketing” meaning to buy and sell, with a prohibition against ‘‘marketing’’ except through the agency, it follows that it alone may engage in buying and selling. It thus appears that this so-called device of providing an agency through which or to which all sales must be made, with prohibition of sales elsewhere, is authorized, not by an inferior tribunal with indirect motives of its own, but by the august tribunal referred to : the device or so-called sham has at least distinguished parentage. Everything done is found in the Scheme and in s. 5 of the Act: the right to prohibit sales elsewhere (el. 10(c)): the right to establish one agency only to buy and sell (el. 10 (a) ) : how can such an agency, so authenticated, be called a sham? If there must be criticism or charges of camouflage let it be directed at the Legislature and at His Honour the Lieutenant-Governor in Council, including the Minister of Agriculture as one of its members, charged with the supervision of legislation of this nature, not at the Board, which without the slightest departure from the authority conferred carries out the provisions of a valid Act.

The foregoing should be sufficient: let us however pursue it further: this agency so created as aforesaid is called ‘‘a mere sham’’ for another reason. The trial Judge said:

“It is pretended that it was so incorporated as an ordinary commercial concern whose object is to buy in the cheapest market and sell in the dearest market and in the ordinary course of trade to make a profit for its shareholders. I think the more one examines the evidence the more he must become convinced that this is a mere sham. I do not believe it was ever intended that the Clearing House should make any profit and if there were any doubt on this one needs only to examine the evidence of Mr. Sherwood, one of the directors of the company. ‘ ‘

There is no occasion to speak of pretence when the purpose of its creation is outlined in the Act and Scheme. It is not stated in its memorandum of association that it is formed to buy in the cheapest market and to sell in the dearest. The conclusion that it is “a mere sham’’ is, with deference, reached by ignoring the objects of its creation. It is clear from what I have outlined why it was created. Oh but it is said this is a mere device to avoid imposing a tax. Even if that were true and the Board could itself impose a tax it would not be material. If that word must be used we should at least say " lawful device.’’ When it is said that it was designed to interfere by price-fixing with returns otherwise received by some producers there are two answers (1) it is legal to do so under this Act and (2) the attempt to regulate marketing might as well be abandoned unless the Legislature can interfere with uncontrolled competition in the fluid milk market. When the trial Judge finds that it was never intended that the Clearing House should make a profit, I would ask is it any less a company or an agency on that account? As a matter of fact a spread of .040 was provided to cover expenses: if there should be any surplus it would go to the shareholders as profits. It is true there was some confusion as to whether or not profit-making was intended: views mistaken or otherwise on this point are not material. An agency thus validly created for specific purposes authorized by the Act cannot become non est, nor yet "‘a mere sham’’ either by mistaken opinions or correct opinions as to its objects. The Board’s membership may be altered from year to year. Would it be called a good agency in a year where its members held the proper view of its functions as outlined in the Act and the Scheme, and a bad agency "‘a mere sham” in another year if its members thought that profit making for producer shareholders was mainly contemplated? The point has no significance; if profits, they will go to producers: if none it matters not at all. It is scarcely necessary to add that since the decision in Salomon v. Salomon & Co., [1897] A.C. 22, it is impossible to speak of this company as a sham organization—that argument was rejected there for less valid reasons. It is at present a skeleton organization—and that is regarded as proof that it is a sham; to say " " it is not much of an agency ’ ‘ does not advance respondents’ case in any degree. The fact is it never functioned: this action interfered with it doing so; a beginning only was attempted. It has in fact many duties to perform, but legality does not depend upon the extent of a company’s activities?

It is said to be a “mere facade’’ for other reasons, viz., that the mode of delivery of milk continued as in the past. The agency does not take physical delivery of the milk, for the present at all events, nor is it equipped to do so; hence it is a sham, as if A may not contract to sell to B with delivery direct to C. The fact that by Order 15 for the producer’s quota of fluid milk he is to be paid 560 with full returns ascertained after re-sales by the Clearing House is treated as further evidence of a sham creation as if members of a group could not sell to the agency at a unit price and on a fixed basis with final returns deferred. Are such contracts or compulsory transfers beyond provincial powers unauthorized or void for uncertainty or as against public policy? What is the principle?

Events may prove that this agency is far from being a sham creation. The Board might have provided—it has the right— as appellants’ counsel stated in argument to make it not only the sole purchaser of all milk produced within the huge area affected at prices fixed by the Board but also provide for direct sale and delivery with its own equipment to consumers without the intervention of the respondents in this action; the elimination of over a score of distributors would doubtless result in reduced costs of delivery. The Board recognized, for the present at all events, that dealers and distributors, whether too numerous or not, had their own investments: hence, whatever may occur later, at the inception of this scheme they were not eliminated: no one I trust will take this as a suggestion on my part; I am merely discussing the implications of treating this agency as a sham. It is not without significance, although it is true that a minority of producers oppose this legislation, it is the dealers, not producers, who are the plaintiffs in the action. Would the Courts prevent the formation of one great agency authorized by a valid act to buy and sell direct to the consumers without the intervention of middlemen? Such a company controlling the whole output under the supervision of a Board fixing prices as outlined in the orders would be strong enough to procure the best price for the producer and through eliminating duplicating distribution costs deliver at the lowest price to the consumer. If the present organization, so limited in its activities at present is a Sham what word should be applied to the larger creation? Yet if this judgment is right that could not take place : it suggests the need of exercising the greatest care in confining the Court’s activities to deciding legal problems.

Again it is said that orderly marketing could be accomplished without this agency. This is a statement without legal significance. Parliament in its wisdom provided for an agency : had it authority to do so? no other question is open for discussion. If one or more methods are available why may not any one of them be employed? One may take a longer road home to avoid a pitfall so long as one does not commit a trespass in doing so. These conjectures are beside the point. One could point to many valid reasons for its creation: its possibilities have been referred to. Respondents are not satisfied unless machinery is erected to disclose a tax.

A basic fallacy in respondents’ submission is that having once dealt unsuccessfully by the 1929 Act with a specific subject- matter, viz., relieving the evils that ensue through all producers attempting to share in the limited fluid milk market it is not possible to deal with the same subject-matter by other legislation or orders; such a view is, with respect, wholly fallacious. The present Act being intra vires they must contend that it does not deal with that subject-matter; in other words does not interfere with the right of all producers to sell where they will and to obtain without interference returns formerly received. But that is not so. It is the intra vires Act that sets up entirely new methods of marketing and provides for the agency giving it the right to buy and to sell at fixed prices.

I have not discussed the orders in detail for the reason, among others, that no one ventures to say that in any single particular they are not authorized by the Act and Scheme and do not relate to intra vires subject-matters. It is, of course, clear that the Scheme is in the same position as the Act so long as it does not depart from the provincial domain. So far as looking at the orders to see if they are authorized is concerned, they are in reality disregarded by respondents’ counsel and having laid them aside the contention is advanced that there is in reality no sale to the agency at all and no re-sale by it to the dealers (dairies) ; the agency is "‘a mere dummy’’ designed, I assume, by the Legislature in the first instance and by His Honour the Lieutenant-Governor in Council in the second, to conceal the real transactions in which it does not act qua purchaser. To one imbued with this view it appears to be useless to say that the Act, the Scheme and the orders provide for a sale to and a re-sale by the agency : that is the only real sale that takes place because no other kind of transaction is dealt with anywhere. Yet in respondents’ factum and in oral submissions we are asked to accept the view that there is really a sale direct by the producers to the dealers just as under the 1929 Act. The Board, we are told, merely intervenes, as the Adjustment Committee before it, to take part of the proceeds from one producer and give it to another: I do not accept that view because, with great respect for other views, it has neither facts nor logic to support it. Counsel does not say that literally there is a sale to the dealers: he says that in reality it takes place; we must, we are told, dispose of the case, as if it did occur.

All this suggests failure to recognize that the Act under review is not only a new Act but an intra vires Act with pricefixing as one of, at least its basic features. If under it marketing may be conducted as under the 1929 Act with deductions made as formerly some one blundered in permitting it to be held intra vires. If what is called the real transaction leads to an indirect tax and the method in which that so-called real transaction is carried out is succinctly set out in the present Act and the Scheme either the Act or respondents’ submissions must be ulta vires: we know the Act cannot be questioned. Marketing, or in other words buying and selling, is I repeat authorized by the Act itself, also the agency: how then can it be called a sham or a puppet designed to circumvent something or other without inveighing against the Act? Is the complaint that the agency is a joint stock company? there would be no merit in that suggestion. It must be a sham, if at all, because to put it as broadly as possible it is doing things illegal or things unauthorized. No individual or entity, acting with legal authority? pursuing lawful occasions, can be regarded as a sham, nor be subject to interference by the Courts. It must be said, to be consistent, that the Act authorized sham sales. If an intra vires Act provides for an agency and authorizes sales to it and by it surely when it does that very thing it cannot be said to be really doing something else. True no sales occurred thus far: the Orders were not implemented. But when they become operative it will be difficult to say that a transaction where a producer transfers title to milk to a company on terms that he will be paid for it at a price to be determined by the Board is not a sale.

I have already dealt with the suggestion that these are sham sales because delivery is not made direct to the purchaser; also the claim that the latter’s activities (I would add for the present) are limited. I might add a reference to the sale of certified raw milk in bottles governed by Order 15 R8 (h) and Order XIV R13; this it is said is a glaring example showing that no sale occurs. Under Order 15, Rule 14(d) delivery is taken on the vehicle of the producer and after certain checking re-delivery is made there. Of course if there is any virtue in physical delivery to the agency and the Courts insist that without it, there cannot be a sale, that can easily be provided for, however inconvenient. It is clear, however, one can provide for delivery anywhere, on the vendor’s or purchaser’s premises, midway between the two or even by the use of a symbol.

I turn to the Act for an answer to all allegations. The right to appoint a single agency, to classify milk, to determine the manner of its sale, the price at which it is to be bought and sold and to regulate the dairy business in the greatest detail is found in ss. 4 and 5 ; every detailed power granted is intra vires and no departure occurs in the Orders in a single instance. It is provided by one of these Orders (15) that for the producer’s quota of fluid milk he is to receive 560 and because all are treated alike (for it applies to all) it is called equalization in the unwarranted belief that where that word can be used it cannot be price-fixing, but taxation. The Act provides for pricefixing in the broadest fashion, the price at which the product may be bought and the price at which it may be sold (Scheme s. 10(g)). Order 15, s. 8, after providing that the price shall be according to classification fixes the price for the producers quota sold at the agency at 560 per pound butter fat. For the amount of fluid milk in excess of the quota the producer gets the price for manufacturing milk, viz., 25¢ a pound butter fat. If in computing final returns it results in equalization and equalization means an indirect tax regardless of the terms of the Act it is ultra vires. But who would suggest, in any event, that the Legislature by price-fixing cannot provide that the owners of products of different values should sell them at the same price for some good reason or for no good reason at all?

The right to make classifications (s. 5(a) of the Act) is clear, so also manner of distribution methods and grading. Sub-clause

(h) of s. 10 of the Scheme—and this is important: it covers basis and method of computation—gives authority to determine the basis on which the producers will be compensated for the whole or any portion of any classification of the regulated product. Is this authority ultra vires ? It is not so stated: what merit in saying that when it is carried out by the orders it results in an indirect tax? If the power itself is legal using it cannot have illegal consequences. Power is given too under 10(a) of the Scheme "‘to determine’ not only "‘the manner of distribution’’ but "‘the quantity and quality, grade, or class of the regulated product that should be marketed 7.e., bought and sold) : authority in meticulous detail is provided for each step taken ; it is to disclose that fact I refer to the orders.

It appears to be suggested that to avoid "‘equalization’’ the Board should pay one price to one producer and a different price to another producer for the same classification of milk. The scheme in fact prevents discrimination (s. 10(f) ) : if respondents had advanced the case that there was a breach of this regulation in respect to the former emoluments of the ‘‘haves’’ in the fluid milk market it would be more convincing than the suggestion that somewhere we find an indirect tax. The Board acted as the Act contemplated by ss. 4 and 5—fixed a uniform price to stabilize the market and to regulate the industry keeping in mind that a sine qua non to regulation and to orderly marketing is the prevention of a disorderly invasion by all producers without control, of the limited fluid milk market where oonnly exceeds demand. Even if true, for the time being at all events, that some producers by proximity to markets, their own assiduity, or for other reasons could maintain their favored places, it doesn’t follow that they are beyond interference by the provincial Legislature.

My brother O’Halloran refers to the compulsory nature of the sale, advancing for the first time the view that lacking a voluntary premise it cannot be a sale. It is said that because the Board designated an agency to which alone milk may be sold and from which alone milk may be bought by dealers and manufacturers it is a compulsory sale and ‘‘the element of compulsion dominates all others.’’ If, with deference, the suggestion has merit the attack should be directed elsewhere as these sales are provided for in the Act. No producer is compelled to sell to anyone: he is prohibited from selling except to the Agency ; that is what the Act authorizes.

A word on the submission that we are precluded by findings of fact from interfering with this judgment. Clearly the transactions contemplated by Order 15, viz., sale or no sale is a question of law: the Act and Orders simply must be construed. We are in the same position as the trial Judge to reach a conclusion: also equally in a position to say whether or not the members of the Board ‘‘over-stretched’’ their hand, meaning I assume, acted without authority. The same observations apply to the so-called findings of fact that the agency is a sham. If I am right in the method of approach the trial Judge, with respect, misconceived the true situation.

Even if there are any material findings of fact they were with deference based upon inadmissible evidence. No evidence should have been admitted on the basis of an erroneous conception of the applicability of a maxim referred to at the beginning of these reasons. As to one item of evidence there should be no question: a factum prepared by the chairman of the Board containing submissions to this Court, when acting as counsel in another case, where a different question was under review was received in evidence. Counsel may, properly enough, take one position today and another tomorrow.

Evidence too was admitted under cover of pleadings containing, in my opinion, astonishing allegations. In this case Turner’s Dairy Ltd. v. Williams, [1940] 3 D.L.R. 214, 55 B.C.R. 81, on a practice appeal this Court held, (to refer to one reason only) inasmuch as the statement of claim as it then read, contained no allegations against certain defendants, viz., members of the Board, they could not be examined for discovery. Following this decision and I think prompted by it the statement of claim was amended by alleging a conspiracy by Williams and Barrow two members of the Board, presumably to enact these Orders. This allegation did not stem from a desire by indignant plaintifs to proceed civilly against conspirators: damages were not sought: not even asked for. It should be called conspiracy de convenance. Two members of the Board were really charged with conspiring to carry out the Act. Respondents’ counsel told us—and I have no doubt it is true—that Mr. Barrow, a former Minister of Agriculture and a gentleman of the highest repute, would not be a party to wrong-doing; it would follow that if it exists Williams entered into a conspiracy with himself. A lawyer presumably may more readily be attacked: Mr. Barrow, however, was equally a party to the enactment of these Orders. I would add that, in my opinion, Mr. Williams’ conduct, is not open to criticism : he did not over-stretch his hand.

As to the law we were referred to many cases; with respect, as I view it they are of no assistance. It is not necessary to cite law to support the simple proposition we are concerned with and eases on problems entirely different are of no assistance. I refer to some of the principal cases relied upon by respondents’ counsel to show, not only their inapplicability but also that any deductions of value support appellants’ case. If it is clear, as I think it is, that the Legislature directly or through subordinate bodies may make use of every scintilla of power conferred upon it by the B.N.A. Act and on the fair construction of the powers exercised in this case they do not go beyond the authority given the case is simple. It is true that in considering these orders or any document, contract or Act of Parliament one must regard the substance, not the form: but where is the difficulty about the substance or in other words the subject-matter of the orders under review? Confusion of thought ensues by attempting to show that these orders " 4 plain on their face ’ ’ cannot be construed as the language used therein suggests, because a successful attempt was made by the Act and by the Orders to avoid imposing an indirect tax; also to avoid conflict with a former decision of the Courts. Respondents’ case is based upon the erroneous view that this is not possible, it is not only legal but also perfectly proper. It is the duty of the Legislature (1) not to contravene a decision of the Courts and (2) not to impose an indirect tax yet, doing its duty in these respects, is treated as wrongdoing.

Let me illustrate the inapplicability of respondents’ case by a reference to Westminster Corp. v. London & North-Western Ry. reported in the House of Lords at (1905), 74 L.J. Ch. 629; the report of the trial and the decision of the Court of Appeal will be found in Volumes 71 and 73 respectively at pp. 34 and 386. The point for decision was whether or not a Board with authority to do one thing in fact did another, viz., having authority to construct underground lavatories in addition constructed a subway. It had authority to construct conveniences but not a subway from one side of the street to the other. This case is used as if appellants under the guise of carrying out an Order did something else not covered by any order. That sort of case may come up in the future: we are not concerned with it now. This case too was advanced to justify the use of certain objectionable evidence. If, of course, this Board, under the guise of using its authority to construct lavatories in addition constructed a subway, without authority, it could be shown by evidence that it acted mala fide : Certainly where there is authority to do one thing only and under colour of it the Board does something else it is acting in bad faith and that may be shown by evidence. It was material for the defendants to show by evidence, if possible, that to construct the conveniences it was unavoidable that a subway should also be built. It was held by the House of Lords that although the structure could be used as a subway for underground pedestrian traffic that was merely an incident to the proper use of the authority undoubtedly granted: in other words to provide underground entrances meant the creation of a subway. In the result it was found that the Board acted within its authority. That was the whole inquiry—looking at the language used in the authority conferred, having regard to evidence confined to whether or not the building of the subway was in substance merely the building of the conveniences or something else in addition the decision given by the House of Lords followed. There was no reference to doing anything indirectly. There is no pretence either that in the orders in the case at bar while power is given to do certain things the Board attempted to do other things; that is why the case is of no assistance.

When it is said that the real inquiry is whether or not the appellant Board in substance acted within authority conferred I agree at once but in ascertaining what, in substance, is meant by the orders one reads their contents; if upon doing so it is found they are not objectionable it is unnecessary to go further. If it is clear that A is given authority to do a certain thing easily defined and in itself legal it is impossible to say that this in substance means he is doing or trying to do something else. I suggest therefore it is elementary to say that it is necessary to show these orders are illegal or unauthorized before we can be asked to follow respondents in peregrinations through all sorts of by-paths.

When they referred to seeking the substance of the authority given in the Westminster case what was meant was this—look- ing at the authority given, does it in fact authorize the building of a subway as incidental to the conveniences? So too, in the case at bar to find in substance what the orders mean one looks at them to see if they contain powers validly conferred and if evidence is necessary to clear up obscurities it may be given.

The Lord Chancellor pointed out at p. 630 in the House of Lords report that ‘‘ Assuming the thing done to be within the discretion of the local authority, no Court has power to interfere with the mode in which it has exercised it . . . .” And again “When the Legislature has confided the power to a particular body, with a discretion how it is to be used, it is beyond the power of any Court to contest that discretion. ’’

All this is on the assumption that ‘‘the thing done is the thing which the Legislature has authorized.’’ I suggest it is wholly impossible to point out any "‘thing done’’ by the orders not authorized by the Legislature; again ‘ " if the power to make one kind of building was fraudulently used for the purpose of making another kind of building, the power given by the Legislature for one purpose could not be used for the other.’’ Not only have we no fraud in the case at bar, there was no attempt to do anything not authorized. Nor can the statement of Lord Maenaghten at p. 631, be disputed, viz.: ‘‘that a public body invested with statutory powers such as those conferred upon the corporation must take care not to exceed or abuse itS powers. It must keep within the limits of the authority committed to it. It must act in good faith.’’

A Board authorized to build underground conveniences could not use that authority to build a subway; it must act in good faith and it would have been restrained were it not for the reasons stated : certainly it would be mala fide to use powers given for other purposes on the pretence that it included unauthorized undertakings.

The statement of Lord Atkin in Ladore v. Bennett, [1939] 3 D.L.R. 1 at p. 7, A.C. 468, ‘‘that the Courts will be careful to detect and invalidate any actual violation of constitutional restrictions under pretence of keeping within the statutory field. A eolourable device will not avail,” was referred to. If there is an ‘‘actual violation’’ of ‘‘constitutional restrictions’’ in the ease at bar the Board, of course, should be restrained; no one has pointed out where the ‘‘actual violation’’ occurred. It can be said too as stated by Lord Atkin at p. 7 ‘‘nothing has emerged even to suggest that the Legislature . . . had any purpose in view other than to legislate . . . in relation to the class of subject which was its special care. ‘ ‘

Nothing has emerged to suggest that the Legislature had any purpose other than its professed purpose of assisting the dairy industry in providing for an agency and in conferring power on His Honour the Lieutenant-Governor in Council to provide for sales to it and by it and prohibition of sales elsewhere. There is not the slightest ground for suggesting that the Legislature was designedly unjust and if so it would not be for the Courts to correct it: still less are there grounds for the suggestion that one member of the Board with alleged evil intent conspired with another member with no evil intent to act beyond authority conferred.

Reliance was placed by respondents’ counsel on Municipal Council of Sydney v. Campbell, [1925] A.C. 338. There the council had power (1) to acquire land to make or extend streets, and (2) in addition to acquire lands to carry out improvements or remodelling in any part of the city. There were two distinct powers. They in fact acquired land to obtain its increase in value under the guise of securing it to carry out a remodelling scheme. It was a case, not only of abusing authority conferred but going beyond that authority. The limited purpose specified for which the Board might acquire land was clear; when they acquired it for a different purpose, viz., for gain, rather than to beautify or remodel they did so without authority. Again evidence was properly adduced to show that they never had any intention of using the land acquired for the only purpose covered. by authority. Again too the Court looked at the language used in conferring the authority and confined evidence to ascertaining whether or not they acted beyond the powers conferred. In that ease the Board travelled beyond the authority given; in our ease there is no pretence that appellants, on the proper construction of the orders, literally or in substance did so.

There is a cross-appeal: a declaration that the Scheme particularly s. 10(d) should be declared invalid was sought. The trial Judge held it valid. I have said enough, without further discussion, to indicate that the cross-appeal should be dismissed. I would allow the appeal.

SLOAN J.A.:—In my opinion there is ample evidence to support the findings of fact made by the learned trial Judge. That such evidence is admissible and relevant is to my mind not open to serious question. The pertinent authorities referred to in the judgment of my brother O’Halloran are, I believe, sufficient to support that view. In any event to hold in these days of an ever increasing bureaucracy that the Courts are powerless to sweep away specious camouflage erected by inferior tribunals to disguise the real purpose and effect of their law making activities would mean, in the language of Lindley M.R. in Frankenburg v. Gt. Horseless Carriage Co., [1900] 1 Q.B. 504 at p. 908, that ‘‘substantial justice would be sacrificed to a wretched technicality. ‘ ‘

In my view the facts found below bring the impugned orders within the reasoning and result of the Crystal Dairy case, [1933 I 1 D.L.R. 82. The said orders therefore, in their real purpose and effect, impose an indirect tax and for that reason must be declared ultra vires.

Whether the policy of the Board is deserving of praise or censure is a subject upon which I must decline to speculate. We are not concerned with the Board’s sagacity but solely with its legal competence to pass the questioned orders.

Counsel for the appellant suggested that the Board in setting up the single agency system was acting in the best interests of a large class of producers. That may be so for as Begbie C.J. said in Bishop of Columbia v. Cridge (1874), 1 B.C.R. 5 at p. 9 : "‘The judgments of Solomon have been considered as not without merit, though every one of them outrages the whole spirit of Magna Charta.’’

The fact that the actions of the Board are considered meritorious by a certain group cannot authorize*it to exercise powers which by reason of the legislative limitations of the Province eould not be validly conferred upon it.

During the hearing of this appeal I brought to the attention of counsel a matter which I considered relevant to the determination of whether the tax imposed herein was direct or indirect. I pointed out that whereas s. 21 of the Act considered in the Crystal Dairy case (supra) (Statutes of B.C. 1929, c. 20) expressly prohibited the Committee from fixing prices, the Act in question here, by s. 5(g) thereof, authorizes the Lieutenant- Governor in Council to vest in the Board price-fixing Dowers which would, of course, include the power to fix the price to be paid by the ultimate consumer for milk purchased on the fluid market. I then asked this question: ‘How far does the price- fixing power affect the transmissibility of the tax?’’ In other words would it restrain the tendency of the tax to enter into and affect the price the taxpayer would seek to obtain for his product? Not without doubt, in view of thé inadequacy of the discussion of the point, I have reached the tentative conclusion that such price-fixing power would not have that effect until overcised and then to the extent only to which such price regula- an, in its effect, might so affect the incidence of the tax that it became manifest the taxing authority was demanding the tax from the very persons it was intended or desired should pay it. A.-G. B.C. v. Kingcome Nav. Co., [1934] 1 D.L.R. 31, A.C. 45.

Here the price-fixing power has not yet been exercised. In consequence the tax, in its incidence, remains indirect.

I would dismiss the appeal.

0 ’Halloran J.A.:—This appeal lies from a judgment declaring that some five orders of the appellant Board, while in form appearing to be intra vires regulation of the marketing of milk are nevertheless invalid, because in substance they create an indirect tax. By agreement between counsel the operation of the orders was postponed pending the result of this litigation. It involves a decision as to the reality of the transaction embodied in the plan set up in the impugned orders. This cannot be done by studying the orders in vacuo. The Court should learn at least enough about conditions in the milk industry to understand why the plan came into being. For without this knowledge, the Court cannot appreciate the impact of the plan upon those conditions and thus envisage it in practice as it was intended.

I.

Milk is sold in the fluid and manufactured products markets. Much more of the milk produced is eligible for the fluid market than that market can absorb. Hence a great deal of it must be sold in the manufactured products market, principally for the production of butter, cheese and condensed milk, but at a much lower price because of outside competition in these products. Some dairy farmers sell all or nearly all their milk in the fluid market, while others have to be content with the manufactured products market. It is said for the former that better herds, locations, business methods, good fortune and other factors have brought this about. For the latter it is said, the fluid market thereby tends to concentrate in the hands of the few and larger farmers, and the great bulk of the smaller farmers cannot gain entry into the more profitable fluid market. The surplus fluid market milk available tends to create a "‘buyer's market’’ and it is said the dealers (dairies) are enabled to dictate the price to the farmer.

These conditions generally stated have been the cause of continuing dissatisfaction and demands for legislative control. The Provincial legislation declared ultra vires in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd., [1933] 1 D.L.R. 82, aimed to remedy this situation by equalization of financial returns to all dairy farmers, no matter in which market their milk might be sold. By that legislation passed in 1929 the dairy farmer, who had sold his milk in the fluid market, was subjected to what was called an adjustment levy for the benefit of the farmer who had to sell his fluid market milk in the manufactured products market. But the Judicial Committee upheld the decision of this Court, vide [1932] 2 D.L.R. 277, 45 B.C.R. 191, which in turn had affirmed the judgment of the learned trial Judge Mr. Justice Murphy (1931), 44 B.C.R. 508, that the plan imposed a tax on one farmer to bonus another and constituted an indirect tax beyond the power of the provincial Legislature.

The present statute the Natural Products Marketing (B.C.)

Act, R.S.B.C. 1936, ce. 165 was held intra vires in Shannon v. Lower Mainland Dairy Products Bd., [1938] 4 D.L.R. 81. It contains no provision for equalization of returns. In the present proceedings the respondents attacked the orders of the appellant Board on the grounds they are a colourable device to bring about equalization of returns. It is said that the effect of this eolourable plan in practice is to impose an indirect tax. It is necessary therefore to understand the practical working out of the plan contained in the impugned orders. All dairy farmers in the area are prohibited from selling their milk to anyone but a single agency, the appellant Milk Clearing House Ltd., which is also given sole power to sell to dairies and manufacturers.

II.

The appellant Board has fixed the price per pound butterfat the Clearing House shall pay the farmer for his fluid market milk and has also fixed the price at which the Clearing House shall sell fluid market milk to the dairies. No price has been fixed for milk sold in the manufactured products market. The difficulty here arises not in the fixed price of the fluid market milk payable to the farmer but in the amount of money payable to him. For the farmer is not paid the fixed price for the volume of fluid market milk which the Clearing House purports to buy from him, nor for the volume thereof actually sold in the fluid market by the Clearing House. The amount of money he is paid depends upon what is called his "‘quota,’’ which it will be seen is simply a formula used to compute his equalized amount based on a plan of equalization of returns. The Clearing House purports to buy from each farmer a monthly volume equal to his " base, ‘ ‘ a term used to describe his average monthly production of fluid market milk over a six month period com- posed of the last three months and the first three months of the year before the orders were passed.

If the Clearing House has sold in the fluid market during the month, only 60% of the total volume of the "‘bases’’ it purported to buy from all farmers, then each farmer’s ‘‘quota,’’ (a term used to describe the percentage of his ‘‘base’’ for which he will be paid the fluid price) would be 60% of his ‘‘base.’’ To illustrate, if the total of all ‘‘bases’’ was 100,000 pounds, of which 1,000 came from A, 1,000 from B, and 1,000 from‘C, and the total actually sold in the fluid market during the month was 60,000 pounds, then A, B and C at the end of the month would each be paid the fluid price for 600 pounds. Then let us carry the illustration further; suppose all of A’s milk, half of B’s milk and 30% of C’s milk was sold in the fluid market: each would still receive the fluid price for 600 pounds and the manufacturer’s price for the balance. It will thus be seen that farmer A would receive the fixed price for only 60% of the volume of his milk sold in the fluid market, although all his milk continues to be delivered direct from him to the same dairy, and all of it is sold in the same fluid market as before the orders were passed.

That occurs under the plan first, because only 60% of the total received (viz., 60,000 pounds out of 100,000) was sold by the Clearing House in the fluid market at the fixed price; and secondly because only 50% of B’s milk and 30% of C’s milk was sold in the fluid market. Then what happens to the proceeds of the other 40% of A’s milk under the plan? The answer is that sufficient is deducted therefrom and added to the payments to B and C to make them equal to A’s. That is the way the plan works out in practice. It is plainly equalization of returns. The foregoing analysis makes it clear that not only is equalization of returns the purpose and object of the plan contained in the orders, but that it is accomplished just as effectively as in the Crystal Dairy case, supra. Here it is true, the money is taken from farmer A before his monthly settlement while in the Crystal Dairy case it was taken afterward.

But the principle and purpose of the plan is the same. It may differ in form but not in substance. Another method of bookkeeping is employed, and a different routine of collection is pursued. There is, of course, no particular virtue in the words “equalization of returns.” These very words were not used by Lord Thankerton in his speech in the Crystal Dairy decision but the meaning they express here was adequately conveyed there in other language. The term has been used in the evidence and in the argument before us and is now used to describe in apt words that what takes place under the impugned orders has the same effect in "‘a practical business sense’’ (to use the term employed by Sir Lyman Duff and adopted by Lord Maugham in Re Alberta Legislation post) as what occurred in the Crystal Dairy decision, [1933] 1 D.L.R. 81 at p. 84, that is to say in Lord Thankerton ‘s language:

"‘To transfer compulsorily a portion of the returns obtained by the traders in the fluid milk market to the traders in the manufactured products market. ‘ ‘

III.

For the appellant it is contended the plan under review concerns milk sold by A, B and C and all the other farmers to the Clearing House and as there was no such sale in the Crystal Dairy case that decision can have no application here. Counsel for the appellants admits the farmers have to sell their milk to the Clearing House if they wish to remain in the milk business; but he says it is a sale nevertheless, and as the property in the milk then passes to the Clearing House, whatever occurs thereafter is of no interest to the farmers. There are two answers to this contention; first that it appears on the face of the impugned orders that the plan—of which the compulsory sale is an integral part—is necessarily premised on the payment of equalized amounts; and secondly that the compulsory sale is a sham sale set up to circumvent the effect of the Crystal Dairy decision. As to the first answer that the plan is premised on the payment of equalized amounts; the price payable by the Clearing House to the farmer is fixed at so much per pound butterfat and the volume of fluid milk received by the Clearing House from each farmer is known at the time of receipt.

One naturally asks why the delay until the end of a monthly settlement period to enable the Clearing House to calculate the amount payable to the farmer for his fluid market milk. Not because of price or volume, for one is fixed and the other ascertained immediately. It is not a delay in payment of a known amount of money. Nor is it to ascertain what percentage of the farmer’s volume may be actually sold in the fluid market, for that does not enter into it. I see no escape from the conclusion which the previous analysis of the plan compels, that it is to calculate an equalized payment to all farmers for fluid market milk during the settlement period, once the total volume of sales in the fluid market has been ascertained for that period. The orders reduced to what they really mean in practice, require all farmers to sell their fluid market milk to the Clearing House for an amount of money calculated upon what is an equalized return—that is to say, payment of an equalized amount. The payment of an equalized amount to the farmers is thus seen as the determining reason for the compulsory sale provision.

Without it the intricate provisions relating to ‘‘quotas’’ would be purposeless. That is why it is said the compulsory sale is necessarily premised on the payment of equalized amounts. Instead of being merely incidental to a plan of orderly marketing, equalization of returns emerges as the pith and substance of the plan outlined in the impugned orders. This conclusion should dispose of the question, subject of course as to whether it results in an indirect tax. But the second answer, that the compulsory sale is a sham sale is also referred to in view of the importance counsel attached to it. It may be considered under two branches; ; first that it is not a contract of sale wherein the property in the milk is passed to the Clearing House; and secondly that the purpose and object of the orders was equalization of returns, to be accomplished by a compulsory sham sale to a Clearing House set up as a figurehead to go through the motions of a pretended purchase hoping thereby to circumvent the effect of the Crystal Dairy decision.

As to the first branch; the arbitrary and one-sided transaction which the orders require to take place between the Clearing House and the farmer cannot be described as a "‘sale’’ in the sense that term is used in our law. The element of compulsion dominates all others. A contract of sale cannot take place when one of the so-called contracting parties is virtually deprived of the right to give or withhold his assent freely. Calling a transaction a sale does not make it a sale even in a Statute, if in substance it is not a sale. The Milk Clearing House Limited is in reality a puppet set up by the appellant Board to carry out the orders of the Board as an integral part of the plan to secure equalization of returns.

Although the Clearing House is incorporated and a separate legal entity from the Board, yet if it becomes material "‘to consider what is this thing which is described as a corporation” then as said by Lord Buckmaster in Rainham Chemical Wks. Ltd. v. Belvedere Fish Guano Co. (1921), 90 L.J.K.B. 1252 at p. 1257:

" 4 It may be established by evidence that in its operation it does not act on its own behalf as an independent trading entity, but simply for and on behalf of the people by whom it has been called into existence.”

And vide also Palmolive Mfg. Co. (Ontario) Ltd. v. The King, The King v. Colgate-Palmolive-Peet Co., [1933] 2 D.L.R. 81 at p. 89, S.C.R. 131, as an example of two separate legal entities, yet held in fact and for all practical purposes to be merged, as one was merely the agent of the other subject in all things to its proper direction and control.

This so-called sale is in truth not a sale at all but a compulsory transfer to the Clearing House of the milk of A, B, and C and other farmers. That this compulsory transfer is designed for the specific purpose of achieving equalization of returns, which could not be operative without it, is fully demonstrated by the illustrations given of the plan in operation and the foregoing analyses. It is confirmed by the evidence of the chairman of the appellant Board. For when he was asked the reason for this compulsory measure and to state why the Clearing House could not operate effectively as sole agent or broker for the sale of the farmers’ milk he said:

"‘Under that arrangement, (viz., Clearing House as agent of the farmer) every producer’s milk would have to be followed right through until it was sold to the dealer. If producer A sold 100% of his milk to dealer X, then he would have to get fluid milk price for 100% of his milk.

"'And if producer B sold 100% of his milk through the (same) agency, and it all went to the manufacturer for manufacturing purposes—to manufacture, he would get manufacturing prices only.’’

This must be taken to mean that if the Board acted only as agent or broker it could not deduct anything from one farmer to equalize the payments to other farmers. To my mind it was another way of saying the Board could not enforce equalization of returns without a compulsory transfer of the milk and therefore the compulsory sale provisions were inserted in the orders. The evidence of the chairman of the Board just cited leads to the second branch mentioned, viz., the reality of the transfer of the milk to the Clearing House. It is said that this compulsory transaction is not a transfer in substance although it may be in form. The learned trial Judge found as a fact upon the evidence before him that it was an colourable device.

The ambiguous profit situation of the Clearing House; its vague financial set-up; its inadequate facilities in capital, plant and equipment to conduct operations on a scale entailed in the bona fide purchase of milk from the farmer and its distribution thereafter; the lack of any considered plan to raise or provide capital to operate in a commercial way; the fact the Clearing House must sell the milk in order to obtain money to pay the farmers for it; the continued delivery of the same farmer’s milk to the same dealer in the same way; ; the fact that fixing of prices to the farmer and to the distributors, the fixing of dealers ‘ “spreads” and other regulatory measures, may with the one exception of equalization of returns, all be enforced without the compulsory sale; these considerations when read together with the past and present conditions in the milk industry and previous attempts to cope with them, and the circuitous method adopted in the present plan to ascertain the pro rata amount payable to each farmer for his fluid market milk, all point convincingly to the conclusion reached by the learned trial Judge.

IV. ADMISSIBILITY OF EVIDENCE.

This finding of fact involves the admissibility of evidence to show the real scope and effect of the orders. The admissibility of evidence was one of the chief points in the argument before us. Counsel for the appellants did not dispute that such evidence may be introduced in respect to statutes and Municipal by-laws. As I understand his argument it is that evidence is not admissible because the orders being ex facie valid, the authority exercised is not beyond the power of the scheme or the Legislature to delegate to the appellant Board; it is said the same rule applies as in the interpretation of contracts, viz., that evidence is not admissible unless ambiguity arises as to the meaning of the language employed in the orders. He asserted that ambiguity did not exist.

But it is not the construction of the orders that is in question, it is the reality of the plan embraced by them, and it is particularly the reality of the sale or transfer of the milk to the Clearing House. For the appellants rely upon the legality of that transaction to escape the charge of imposing an indirect tax. It is said by the respondents that the plan when seen in its reality by the light of the evidence will disclose that these orders, ex facie valid in form though they may be, yet in substance are a colourable exercise of the Board’s power, for the reason that the Board under the guise of exercising its own power is in reality attempting to carry out an object beyond its powers. It is said that under the colourable cover of a broad scheme to regulate the milk industry the appellant Board in fact embarked upon a plan of equalization of returns which in its effect imposes an indirect tax.

It must be conceded that if the Board had power to do directly that which it is charged with seeking to accomplish by indirection, or if it were a question only of the construction of orders admittedly within its competence, then appellant’s objection to the admission of evidence would be on stronger ground. But if equalization of returns is found to constitute an indirect tax as charged, then no matter how unobjectionable the orders may be in form or how free from ambiguity their text may be, yet they are illegal as a colourable exercise of powers which the Board does not possess, and which cannot be conferred upon it by its parent provincial Legislature. It is obvious that if the orders do in effect constitute an indirect tax then they are invalid.

But it cannot be said that the orders may not be colourable, simply because they are apparently valid in form and free from ambiguity in their text. Such an argument would be a denial of the well recognized principle that the substance and not the form shall govern. Viewed in this light appellant’s contention is reduced to this proposition, viz., admitted that the orders may be colourable, yet because there is no ambiguity in their text, evidence may not be introduced to show they are merely a colourable device. The statement of this proposition carries its own rejection. Use of legal machinery for doing an illegal act will not purge its illegality, nor the indirectness of the means rid the act of its illegality, per the Karl of Halsbury in Daimler Co. v. Continental Tyre c Rubber Co. (1916), 85 L.J.K.B. 1333 at page 1338.

Re Reciprocal Insurance Legislation, [1924] 1 D.L.R. 789 at p. 795, 41 Can. C.C. 336 at p. 343 was a case where the impugned legislation was ex facie valid. Duff J. (as he then was) speaking for the Judicial Committee, stated the principles which seem to govern this discussion. His Lordship said at p. 795 D.L.R., p. 343 Can. C.C.: "‘Of course, where there is an absolute jurisdiction vested in a Legislature, the laws promulgated by it must take effect according to the proper construction of the language in which they are expressed. ‘ ‘

This "‘plain meaning” rule advocated by counsel for the appellants might be in point here if the effect of the orders to which objection is taken were within the competence of the Board. But then his Lordship referred to the different principle which applies to a "‘law making body of a limited or qualified character,’’ and said that in such a ease: ‘‘obviously it may be necessary to examine with some strictness the substance of the legislation for the purpose of determining what it is that the Legislature is really doing.’’

Reading these two excerpts together and applying them to this case it should follow (1) If a “law making body of a limited or qualified character’’ refers in a particular case to the Dominion Parliament or a provincial Legislature, a fortiori it must include an inferior law making body such as the appellant Board, which is the creature of a provincial Legislature: To hold otherwise would be to give an immunity to a provincially created Board not enjoyed by its parent Legislature or the Dominion Parliament; (2) If the appellant Board is of a limited or qualified character, then examination of the effect of its orders is not limited to the proper construction of the language in which they are expressed; (3) That the "‘substance’’ of its orders may be examined with some strictness to determine what it is that the Board is really doing; (4) obviously if the search for the intent of the Board were limited to the form of the orders, no occasion would arise to examine their "‘substance’’ with "‘some strictness’’ to find what it is the Board "‘is really doing.”

That examination of the ‘‘substance’’ of the orders must include the consideration of external evidence where it is necessary to do so to understand the working out of the orders "‘in a practical business sense,’’ I think is clear from what was said both by Sir Lyman P. Duff C.J.C. (with whom Davis J. concurred) in Re Alberta Legislation, [1938] 2 D.L.R. 81 at pp. 101-3, S.C.R. 100, and by the Lord Chancellor, Lord Maugham in the same case in the Judicial Committee vide [1938] 4 D.L.R. 433 at pp. 488-9, [1939] A.C. 117. Speaking of the examination of the effect of legislation Lord Maugham said:

" " The Court must take into account any public general knowledge of which the Court would take judicial notice, and may in a proper case require to be informed by evidence as to what the effect of the legislation will be. ff (The italics are mine).

And further at p. 439 having said it is not competent either for the Dominion or a Province: "Under the guise of the pretence or in the form of an exercise of its own powers to carry out an object which is beyond its powers . . .”’

The Lord Chancellor observed: ‘‘ Here again matters of which the Court would take judicial notice must be borne in mind, and other evidence in a case which calls for it.”

It remains to be determined if this is a proper case for the Court to be informed by evidence as to what the effect of the orders will be. The learned trial Judge on whom the initial burden fell came to the conclusion that it was. He had a wide judicial discretion in that respect. In my view he exercised it in accordance with correct principles and no injustice has resulted. I would add only that one need but read that evidence to realize that the legislative history and surrounding conditions have a direct bearing on the effect of the orders. Such evidence is essential in this case if the Court is to have knowledge of more than half the problem, and intelligibly decide if the Board, under the guise of exercising its own powers, is in reality attempting to carry out an object beyond its powers.

Even if, as argued by appellant’s Counsel, the orders are viewed by the rule which he contended applied to contract we find authority against the proposition that evidence is not admissible to determine the reality of the plan in the orders. Le Watson, Ex p. Official Receiver (1890), 59 L.J. Q.B. 394, a contract which was in form a hiring agreement was held to be in substance a bill of sale. The Court of first instance and the Divisional Court both held that the form of the documents only could be looked at. But the Court of Appeal held that the reality of the transaction was one of fact and that it was not prevented by the form of the document from going outside it and enquiring into the facts to see whether the document represented the real transaction. At p. 398 Lord Esher M.R. said :

‘‘I do not deny that people may evade an Act of Parliament, but they never will succeed in so doing by putting forward documents which contain a false description of the transaction, and the Courts will always go through those documents in order to arrive at the truth. ’ ‘

The Master of the Rolls said further at p. 398 : ‘‘The question as to the reality of the transaction is one of fact, and although the document may be looked at, it is only a part of the truth. ’

The above decision as well as Maas v. Pepper, [1905] A.C. 102 were recently applied by this Court in Monarch Securities Ltd. v. Gold, [1940] 3 D.L.R. 124, 55 B.C.R. 70. True they are eases of contract. But they are now referred to because it was on the analogy to contract that counsel for the appellants advanced his strongest argument against admission of evidence to show the reality of the plan set up by the impugned orders. The problem is not one of construction but the reality of the transaction.

This being so we should over-rule the objections taken to the admission of evidence which properly related to the purpose and object of the impugned orders and the reality of the plan set up therein. The evidence objected to and admitted was: (1) the ballot form ex. 6; (2) Marketing Board orders 3 through 9, ex. 4; (3) the evidence of E. G. Sherwood, a director of the appellant Milk Clearing House Ltd.; (4) the evidence of Charles

E. Thompson and (5) the evidence of M. 8S. Bryan verifying a radio speech made to the public by the appellant Williams on May 13, 1939, when he was introduced and spoke as chairman of the appellant Board; (6) the evidence given by the appellant Williams in cross-examination at the trial; (7) discovery evidence of Williams and Barrow.

The discovery evidence of Williams was first objected to on another ground. He was examined for discovery as an individual defendant. However, at the trial counsel agreed to treat his discovery evidence as if he had been examined as chairman of the appellant Board, but subject to his being examinable in that capacity as an "‘officer of a corporation” within the meaning of Marginal Rule 370C(1) of our Supreme Court Rules. The learned trial Judge held him examinable under that rule applying the decision of Martin J. (later Chief Justice of British Columbia) in Centre Star Mining Co. v. Rossland Miners Union (1902), 9 B.C.R. 190. I agree with the learned trial Judge that Williams’ discovery evidence was properly admitted at the trial as evidence of the chairman of the appellant Board. By Marginal Rule 1041 of our Supreme Court Rules the term "‘Corporation'' as used in the Supreme Court Rules "‘shall have the meaning assigned to it under the "‘Interpretation Act,’ and shall include any association, union, or body whatever.”

By s. 24(6) of the Interpretation Act, R.S.B.C. 1936, c. 1, " corporation ’ means ‘ " any incorporated company, association, society, municipality or body politic and corporate, howsoever and wheresoever incorporated. ’’

The appellant Board is not "‘incorporated;'' it cannot therefore be a “corporation” in the sense that term is defined in the Interpretation Act. But the additional words in Marginal Rule 1041 ‘‘and shall include any association, union or body whatever” widen the term ‘‘corporation’’ as used in the Supreme Court Rules to include legal entities which may not be “incorporated.” Otherwise these additional words in Marginal Rule 1041 would be meaningless. For if it were intended that the ‘‘association, union or body whatever’’ should be “incorporated” this was already covered by the definition of “corporation” in the Interpretation Act, and no additional or qualifying language would be required.

In the circumstances the words ‘‘and shall include any association, union or body whatever’’ in Marginal Rule 1041 should be regarded as words of amplification to include an unincorporated legal entity such as the appellant Board. Accordingly for the purposes of discovery examination at least the appellant Board should be regarded as a ‘‘corporation’’ within the meaning of Marginal Rule 3700(1). In Turner's Dairy Ltd. v. Williams, [1940] 3 D.L.R. 214, 55 B.C.R. 81 an interlocutory appeal in these same proceedings concerning refusal to answer questions on discovery examination, this Court held, applying the Taff Vale Ry. case, [1901] A.C. 426, that the appellant Board was a legal entity suable as such. And vide also Hollywood Theatres Ltd. v. Tenney, [1940] 1 D.L.R. 452 at pp. 473-5, 73 Can. C.C. 158 at pp. 183-5, 54 B.C.R. 247.

Then as to the discovery evidence of the defendant Barrow. I think it was proper evidence for the learned trial Judge to consider in relation to past and present conditions in the milk industry in so far as it. assisted him to understand the working out in practice of the plan outlined here. It related to a common issue between all the plaintiffs and all the defendants.

V. WHAT IS DONE CONSTITUTES A TAX.

Thus far it has been established that the impugned orders are a colourable device to effect equalization of returns; that is to say in the language of Lord Thankerton in the Crystal Dairy decision, [1933] 1 D.L.R. 82 at p. 84, they were designed: "‘to transfer compulsorily a portion of the returns obtained by the traders in the fluid milk market to the traders in the manufactured products market; that other . . . provisions afford the machinery by which this is enabled to be done. ‘ ‘

Does what takes place under this colourable device constitute taxation? The principle of the decision of the Judicial Committee in the Crystal Dairy case require an affirmative answer.

It is true in that case there was an adjustment levy upon A to provide the money to equalize payments to B and C. There is no such so-called adjustment levy here. But once it is found (as it has been) that equalization takes place, it is manifest that which is done here is just as much a compulsory taking from A to pay B and C, as if it were in fact done by a levy expressed to be for that purpose. That it is not called a levy or that it is not shown in that form is not material. For the compulsory transfer and other provisions (in Lord Thankerton’s language) “"afford the machinery by which this is enabled to be done.’’ Again it is the substance and not the form which governs.

The impugned orders, in my view, fall within the elements of taxation stated by Duff J. (as he then was) in Lawson f s ease, [1931], 2 D.L.R. 193 at pp. 197-8, S.C.R. 357 and by Lord Thankerton in the Crystal Dairy decision. The appellant Board which passed the orders and thereby directs and controls the Clearing House is undeniably a public and not a private body. It is equally clear its orders were passed for a public purpose and unless held invalid are enforceable by law.

VI. INDIRECT TAX.

The impugned orders impose a tax and the enquiry pressed further shows that the tax is indirect. Whether the plan im- poses an indirect tax depends upon the tendency of the tax to ‘‘enter into and affect the price of the product’’ per Duff J. (as he then was) in Lawson’s case at p. 197. That tendency is not ascertained by the ‘‘results in isolated or merely particular instances’’ per Viscount Haldane in A.-G. B.C. v. C.P.R., [1927] 4 D.L.R. 113 at p. 115, A.C. 934. It is "referable to, and ascertainable by, the general tendencies of the tax and the common understanding of men as to those tendencies’’ per Lord Hobhouse in Bk. of Toronto v. Lambe (1887), 56 L.J.P.C. 87 at p. 89. The price payable to the farmer was increased by the impugned orders.

The price to the consumer in Vancouver was not fixed by the Board although stated to be one of the lowest if not the lowest of any major city in Canada. When the appellant Board fixed the price the dealer had to pay the Clearing House at 600. per pound butterfat, the price the dealer was then called on to pay was increased in two ways. First when the Board fixed the price payable by the Clearing House to the farmer at 560. per pound butterfat, it thereby increased the price to the farmer by some 6 to 110. per pound more than the farmer had been receiving from the dealer. It is in evidence that before the orders were passed the dealers had been paying the farmer from 45 to 500. per pound butterfat for fluid market milk. Secondly when the appellant Board fixed the price payable by the dealers to the Clearing House at 600, per pound butterfat (which allowed a four cent ""spread” to the Clearing House) it thereby added another 40, to the price payable by the dealer.

Under the equalization plan in the Board’s-orders the dealers: had to pay some 10 to 150. per pound butterfat more than they did before. It is surely consistent with the ‘‘general tendency and the common understanding of men,’’ that when dealers are: compelled to pay such a substantial increase in the price of milk, that they will pass that increase or at least a goodly portion of' it on to the ultimate consumer. The existence of that general tendency is the more certain since it is in evidence that the Vancouver consumer has been paying a comparatively low price and that strong representations have been made that it is too low. It is in point to observe also that although the equalization plan of the appellant Board has brought about the price increases which give rise to that tendency, yet the Board has refrained from fixing the price to the consumer or taking any step to prevent the natural operation of that general tendency.

It may be accepted therefore as a general tendency that the increased price to the farmer not to mention the additional four cent ‘‘spread’’ to the Clearing House, will be passed on wholly or in large part to the ultimate consumer, now benefiting from low comparative prices; and vide Macdonald C.J.B.C. in the Crystal Dairy case, [1932] 2 D.L.R. 277 at pp. 279-80, 45 B.C.R. 191 and in the same case Macdonald J.A. (as he then was) at pp. 298-9. In the circumstances therefore the effect of the impugned orders is to impose an indirect tax. Such a result is not authorized by the Milk Scheme, under which the appellant Board operates. Even if it should be held to be within the Milk Scheme, then the Scheme itself is illegal to that extent for obviously it cannot exercise powers which cannot be given it by the parent statute.

VII. RE APPELLANTS WILLIAMS AND BARROW.

To succeed against the appellants Williams and Barrow, the respondents must show they did not act "‘in good faith in the performance or intended performance’’ of their duties as members of the appellant Board; vide s. 13 of the Natural Products Marketing (B.C.) Act, supra. The evidence discloses that under the guise of regulations for the marketing of milk they incorporated into the orders of the Board a colourable plan for equalization of returns which in its effect imposed an indirect tax. They sought to do something which has been found to be illegal. Therefore they have acted mala fide, vide Westminster Corp. v. London & North-Western Ry. (1905), 74 L.J. Ch. 629 Lord Macnaghten at p. 632. Lord Lindley said at p. 636 :

"‘Where a person is authorised by statute or by the common law to do what apart from such authority would be unlawful— for example, to commit a trespass—and the authority is conferred for some distinct and definite purpose, and is abused by being used for some other and different purpose, the person abusing it is treated as a wrongdoer from the first, and not only as a wrongdoer in respect of what can be proved to have been an excess of his authority. It is presumed against him that the abuse of his authority shews an intention from the first to commit an unlawful act under colour of a lawful authority.’’

It was contended Williams and Barrow were not proper parties to the action ; it was said there were no allegations against them. Reliance was placed on observations made in the course of the judgments in the practice appeal, vide [1940] 3 D.L.R. 214. But their description in the style of cause has been changed since then. The statement of claim has been amended since by charging these appellants in para. 28 thereof, with conspiring together to have the appellant Board pass the impugned orders to obtain equalization of returns illegally or improperly, and to disguise the true purpose of the orders. During the course of the trial the learned trial Judge ruled that these allegations against them were sufficient to constitute them proper parties to the action. I see no ground to hold otherwise.

Under cover of a broad scheme to regulate the milk industry the appellant Board embarked upon a plan which in its reality results in an indirect tax. The impugned orders sought to conceal their true scope and effect and were a colourable use of the Board’s powers. The Board attempted to do an illegal, act under colour of a lawful authority.

I would therefore dismiss the appeals of all the appellants.

Appeal dismissed.