Supreme Court of Canada
Joy Oil
Co. Ltd. v. The King, [1951] S.C.R. 624
Date:
1951-05-23
Joy Oil Company Limited And Joy Oil Limited, (Suppliants)
Appellants;
and
His Majesty The King (Respondent) Respondent.
1950: November 27, 28; 1951: May 23.
Present: Rinfret C.J., and Rand, Estey, Locke, and Fauteux
JJ.
ON APPEAL PROM THE EXCHEQUER COURT OF CANADA.
Crown—Petition of Right—Claim of subsidies on sale of
gasoline—P.C. 1195, February 19, 1941—Orders 010 and 010A of the Oil
Controller— "in any place", meaning ambiguous—Orders
misconstrued—Reference back to Commodity Prices Stabilization Corporation.
By P.C. 1195 of February 19, 1941, the Oil Controller was
empowered to regulate the maximum price at which oil (which term included
petroleum and gasoline) might be sold "in any place, area or zone."
By Order 010 dated Oct. 21, 1941, the Controller directed that from and after
that date "the price to be paid in any place shall not exceed the maximum
price at which such petroleum product was sold * * * in such place * * * on
Sept. 30, 1941, plus any applicable price increase confirmed by this Order * *
*". The increase permitted in the price of grade 2 gasoline was one cent
per gallon. The appellants operated service stations in Montreal, Toronto and
Windsor where they retailed grade 2 gasoline at a price lower than their
competitors. They imported their supplies from Trinidad but following the
outbreak of war this source was cut off and they were forced to import from the
U.S.A. at a higher cost. In November and December 1941, the Wartime Prices and
Trade Board issued two statements of policy announcing the coming into force of
a complete control of all prices, and that higher prices would not be permitted
than those at which goods were actually sold during the four weeks Sept. 15 to
Oct. 11, but that importers could continue to import in the normal manner with
the assurance that appropriate subsidies would be provided. The appellants
construed the Order to restrict the price increase permitted them to one cent
per gallon above the price at which
[Page 625]
gasoline had been sold at their various "places of
business", i.e., each service station. Their application for a subsidy was
refused by the Commodity Prices Stabilization Corporation on the ground that
there were similar goods available in Canada at a reasonable price and that the
price ceiling was not on an individual but on a geographical basis and the
appellants could have increased their price to that of their competitors.
An appeal was taken to the Exchequer Court of Canada where the
ruling of the Corporation was upheld.
Held: that the expression "in any place" used
in the Orders of the Oil Controller of Oct. 1, 1941, and Jan. 28, 1942, was
ambiguous and the appellants' application for subsidies had been refused on a
misconstruction of such Orders: the judgment appealed from should therefore be
set aside and the matter referred back to the Commodity Prices Stabilization
Corporation to deal with such claims on the footing that the Orders permitted
the appellants to increase their prices only to the extent of one cent per
gallon on Sept. 30, 1941.
Appeal from the judgment of the Court of Exchequer,
O'Connor J. dismissing suppliants' Petition of Right
by which they claimed to be entitled to, and sought to recover from His
Majesty, subsidies on motor gasoline imported by them in the period December 1,
1941 to July 1, 1942.
J. J. Robinette K.C. and W. H. Thompson
K.C. for the appellants.
Hugh O'Donnell K.C. and Luc André Couture
for the respondent.
The judgment of the Chief Justice, Locke and Fauteux JJ. was
delivered by:
Locke J.:—The
disposition to be made of the present matter depends, in my opinion, upon the
construction to be placed upon the language of the Orders of the Oil Controller
of October 21, 1941, and January 28, 1942. That the expression "in any
place" in these Orders is ambiguous is undoubted and it is accordingly
necessary, in order to resolve the question, to examine such of the documents
as may properly be referred to in order to construe the language.
It was by Order-in-Council P.C. 2516 made on September 3,
1939, that the Wartime Prices and Trade Board was constituted in the exercise
of powers conferred upon the
[Page 626]
Governor General in Council by The War Measures Act,
1914, and by the Regulations then enacted the Board was empowered, inter
alia, to fix maximum prices or margins of profit at which any necessary of
life might be sold or offered for sale in Canada by manufacturers, producers,
jobbers, wholesalers or retailers. P.C. 3398 made on December 5, 1939,
rescinded P.C. 2516 and enacted Regulations which defined more fully the duties
and powers of the Board. By Order-in-Council P.C. 2715 of June 24, 1940, a
Wartime Industries Control Board was set up, to consist of the Controllers from
time to time appointed by the Governor in Council on the recommendation of the
Minister of Munitions and Supply, and by Order-in-Council P.C. 2818 made on
June 28, 1940, regulations respecting oil were made and George R. Cottrelle
appointed oil controller with powers which included that of fixing, with the
approval of the Minister of Munitions and Supply, maximum prices or maximum
markups at which oil and oil products might be sold or offered for sale.
Order-in-Council P.C. 1195 of February 19, 1941, rescinded the regulations
respecting oil enacted by P.C. 2818 and substituted new regulations which, inter
alia, empowered the oil controller, subject to the approval of the Minister
of Munitions and Supply, to fix or regulate the price or fix the minimum or
maximum price at which oil might be sold "in any place, area or
zone", and further:
to prohibit or regulate any practice or mode of dealing in
or with oil or related thereto or used or followed in connection therewith
which, in the judgment of the Oil Controller, would or might increase or tend
to increase the price of oil to any person or class of persons or which would
or might affect or tend to affect the orderely purchase, sale or distribution
of oil;
and, subject to the approval of the Minister, to fix or
limit the quantity of any oil which might be sold or distributed by any person
or classes of persons for any specified use.
Order-in-Council P.C. 6834 of August 28, 1941, rescinded the
regulations of the Wartime Prices and Trade Board enacted by P.C. 3998 as thereafter
amended. The recital to this order declared in part that it was deemed to be in
the national interest that the Wartime Prices and Trade Board regulations
should be extended to goods and services
[Page 627]
not within the jurisdiction of the Wartime Industries
Control Board or any of the various controllers that had been appointed:
in order that, in co-operation with other governmental
departments and agencies, there may be co-ordination of administrative action
in respect of good and services;
and that it was deemed desirable that public control of
the prices of goods or services, when imposed, should be exercised by or with
the concurrence of the Wartime Prices and Trade Board, and that to effectuate
such purpose it was necessary to establish new regulations in regard to the
operations of that board. The powers of the board were declared to include that
of fixing specific or maximum or minimum prices or markups at which any goods
or services might be sold. By a further Order-in-Council P.C. 6835 of August
29, 1941, the order of June 24, 1940 was amended and regulations were
prescribed for the operations of the Wartime Industries Control Board and the
powers of that board and of its members defined with particularity. The
preamble to this Order-in-Council recited, inter alia, that in view of
the increasing complexity of the duties of the various controllers and of the
problems which confronted them and of the fact that the functions and duties of
each of them were to a considerable degree interdependent and correlated, not
only with those of other controllers but with those of the Wartime Prices and
Trade Board, it was deemed advisable to take further measures to promote
co-ordination and integration of the functions and activities of such
controllers and by creating a closer relationship between them and the Wartime
Industries Control Board and the Wartime Prices and Trade Board "to
promote cooperation between them and reduce the possibility of any confusion
arising as a result of the exercise and discharge of their various powers,
functions and duties." The regulations made were designed to effectuate
that purpose. Regulation 8 provided that every controller should have power,
subject to the approval of the chairman of the Wartime Industries Control Board
and the concurrence of the Wartime Prices and Trade Board to fix maximum prices
or markups at which any goods under his jurisdiction might be sold or offered
for sale generally or in any place,
[Page 628]
area or zone. Regulation 10 (iii) authorized each
controller to exercise his powers in respect of, or in relation to, such
things:
either generally throughout Canada or in any particular
province, place, area, zone or locality designated by the Controller.
On September 26, 1941, the oil controller in the exercise of
the powers conferred on him by Orders-in-Council P.C. 2818, 1195 and 6835 and,
with the approval of the chairman of the Wartime Industries Control Board and
presumably the concurrence of the Wartime Prices and Trade Board, revoked his
prior order 008 and by order 008A directed, inter alia, that after
October 1, 1941, no person should sell any motor fuel (defined in a manner to
include gasoline and lubricating oil) other than graded motor fuel as defined
by the order. Further terms of the order were designed to restrict and control
the quality and quantities of motor fuel sold in Canada required that all such
fuel delivered to passenger cars should be obtained only from service stations.
Thereafter P.C. 6835 was amended by P.C. 7824 adopted on October 8, 1941, but
effective as of August 29, 1941, whereby subsection 1 of section 8 of the prior
order was rescinded and the powers of the controllers to regulate prices and to
fix maximum or minimum prices declared to be exercisable only with the concurrence
of the Wartime Prices and Trade Board in lieu of that of the Minister of
Munitions and Supply.
It was under these circumstances that the oil controller
issued order No. 010 dated October 21, 1941. While his powers permitted him to
establish maximum prices in any "area, place or zone", the price
fixed was that to be paid "in any place." In so far as is relevant to
the present inquiry the order read:
9. From and after the date of this Order, the price to be
paid for petroleum products, or any of them, by any purchaser thereof shall be
regulated as follows:
(a) The price to be paid
in any place shall not exceed the maximum price at which any such petroleum
product was sold or offered for sale in such place or for delivery to such
place on the 30th day of September. 1941. plus any applicable price increase
confirmed, authorized or required by this Order and having regard to the
quantity purchased;
(b) For the purposes of
the foregoing clause (a) as applied to graded motor fuel, the maximum
price applicable in any place on the 30th day of September, 1941, shall be
ascertained having regard
[Page 629]
to the price of motor fuel having
the same or the nearest qualities to those specified by Order 008A for either
grade of graded motor fuel;
(c) No greater price shall
be charged to any person for petroleum products or any of them than that
provided by paragraph 7 and by this paragraph 9 of this Order.
10. Any person who sells petroleum products, or any of them,
at a price greater than is authorized by this Order as applicable at the place
of delivery thereof, shall be guilty of a breach of this Order and liable to
the penalties provided by law.
The increase permitted to be made in the price of grade 2
motor fuel, being the quality sold by the appellant, was 1 cent per imperial
gallon "in any place." This order was approved by the chairman of the
Wartime Industries Control Board and of the Wartime Prices and Trade Board.
On November 1, 1941, Order-in-Council P.C. 8527 was adopted
on the recommendation of the Minister of Finance establishing what were
described as the Maximum Prices Regulations to be administered by the Wartime
Prices and Trade Board. The order defined the expression "goods" as
including any articles, commodities, substances or things and provided that the
maximum price at which any goods might be sold should be the highest lawful
price at which a person sold or supplied goods of that nature during the basic
period, being the four weeks from September 15, 1941, to October 11, 1941, both
inclusive. After providing that no person should after November 17, 1941, sell
goods at prices higher than the maximum price for such goods as provided in the
regulations, unless otherwise permitted under their provisions, it was provided
inter alia that:
3. (7) For the purposes of these regulations, each separate
place of business of a seller or supplier shall be deemed to be a separate
seller or supplier.
Section 4 provided in part that:
4. The provisions of Section 3 of these Regulations shall
not apply with respect to:
* * *
(g) any price fixed by the Board, or fixed or
approved by any other federal, provincial or other authority with the written
concurrence of the Board.
and Section 5(1) that:
Where under any other law any federal, provincial or other
authority has jurisdiction with respect to prices, or with respect to the
supplying of or trading in goods or services, such jurisdiction shall not be
deemed to be superseded by these regulations or by any action of the Board.
[Page 630]
except that any action heretofore taken or that may
hereafter be taken under such jurisdiction which is repugnant to any of the
provisions of these regulations or to any action of the Board pursuant to its
powers shall be of no force or effect so long as and to the extent that it is
so repugnant.
(2) No such federal, provincial or other authority shall fix
or approve any specific, minimum or maximum prices or markups in respect of any
goods or services without the written concurrence of the Board.
Heavy penalties were prescribed for any breach of the
regulations which were declared to be punishable, either upon indictment or
upon summary conviction under part 15 of the Criminal Code, and it was
declared that the regulations were to be read and construed as one with the
Wartime Prices and Trade Regulations which, as above indicated, had been
adopted by Order-in-Council P.C. 2516 on September 3, 1939. On the same date
P.C. 8528 rescinded the Wartime Prices and Trade Board regulations made by P.C.
6834 and prescribed new regulations, which included the power to fix specific
or maximum prices or markups at which any goods might be sold and extended the
powers of the board to take measures deemed desirable in the national interest,
for the purpose of restraining increases in the cost of living.
On November 21, 1941, the Wartime Prices and Trade Board
published what was called its "Preliminary Statement of Policy",
reciting the reasons which had led the government to decide upon a complete
control of all prices to become effective on the first of the following month,
and outlining generally the steps proposed to be taken to make such control
effective. Since the operations of the oil controller were but part of the
general scheme of price control and were exercisable only with the approval of
the Wartime Prices and Trade Board, the terms of this statement are to be
considered. After stating that higher prices would not be permitted than those
at which goods were actually sold during the four weeks September 15 to October
11 and that the fundamental duty of the board was to see that prices would not
rise higher than the level reached during this basic period, it was said that
in particular the prices paid by consumers of goods and services must not rise
and that such consumers might not lawfully be charged more for any goods than
the highest price charged by the storekeeper or supplier of such goods during
that period. It was declared that the price ceiling applied to each individual
store department or branch on the basis
[Page 631]
of its own prices for each separate kind and quality of
goods during the basic period, that the lower-price stores were not permitted
to raise their prices to the level of the higher-price stores. Those engaged in
selling goods at retail were directed that, if necessary, they must
reduce their prices on December 1, so that no price should be higher
than the highest price charged by the same store, branch or department of a department
store for goods of the same kind and quality during the basic period, and
dealers were warned that any price increases above that level would render them
liable to prosecution and to have their licences to do business suspended or
cancelled. The statement further indicated that if the burden of restraining
prices fell too heavily upon an industry the board would recommend to the
government that the people as a whole should take a share of the burden and
that subsidies be granted or the price of raw materials controlled. It was
stated that it was intended to establish a government corporation to deal with
cases in which it might be deemed advisable to stabilize raw material cost.
Dealing with those engaged in the import of goods the statement declared that
the whole question of imports in relation to the price ceiling was being
studied by the board and that a statement of policy might be expected in the
near future.
On December 2, 1941, the board issued a further statement of
its import policy. Since it is contended by the appellants that in the
circumstances of the present case they had acquired contractual rights as
against the Crown, its terms are of importance. Dealing with goods imported for
civilian purposes, within which class those of the appellants fell, it was said
that the general principle was that imported goods would in general cost the importer
no more than was appropriate in relation to retail selling prices and that:
Importers may, therefore, continue importing in the normal
manner, with the assurance that appropriate subsidies will be provided with
respect to goods imported on and after December 1, 1941, on the basis outlined
below. The methods will in the first instance consist of direct subsidies to
importers, with the possibility that from time to time duties and taxes on
imported goods may be reduced in such a way as to make subsidies unnecessary.
Having said this, however, the above quoted statement was
followed immediately by a clause stating that the
[Page 632]
board reserved the right to exclude any goods or kind of
goods from the import subsidy, that it could not be expected to approve
subsidies if the increase in import prices was not of significant proportions
for those concerned, but that if the increased cost was greater than the amount
which could reasonably be expected to be absorbed the board, acting whenever
possible on the advice of its administrator, would set the subsidy at a
reasonable level. It was further declared that importers must realize that the
board in carrying out its import policy must have regard for the position of
domestic producers and that:
diversion from domestic to foreign sources of supply, if not
occasioned by a shortage of supplies in Canada, may require reduction or
elimination of the subsidy with respect to such imports or exclusion of the
importer concerned from the benefits of the subsidy system.
It was said further that subsidies would be paid on all
eligible goods imported through normal trade channels for eventual sale to
domestic consumers and that claims for subsidies were to be submitted monthly
by all importers concerned. As to imports by retailers within which class the
appellants fell, the statement proceeded:
The Board will endeavour to measure the amount of the
subsidy in such a way that the retailer will receive his goods at a cost which
is reasonable in relation to his retail ceiling price. It follows that those
who maintained low retail prices during the basic period will be able to
continue to sell at those prices without undue hardship. Each retailer who
imports direct should prepare a list of his ceiling prices for imported goods.
Dealing with imported fuel, it was said that, inter alia,
petroleum and its products "will be dealt with on much the same basis
as raw materials if circumstances so require." Having said that the
document represented the most comprehensive general statement which could be
made, importers were urged to have confidence that the board and the Commodity
Prices Stabilization Corporation (a Crown company later organized) would deal
with individual problems "fairly and reasonably" and that at that
time the important thing was that the import trade should be continued in
accordance with past practice, even if the present import prices involved an
actual loss to the importers concerned and that such subsidy adjustments would
be made retroactive to December 1. The statement declared further that the
organization of the Commodity
[Page 633]
Prices Stabilization Corporation was proceeding and that it
would supervise and handle subsidy arrangements in accordance with procedures
to be thereafter established.
Order-in-Council P.C. 9870 of December 17, 1941, authorized
the Minister of Finance to cause to be incorporated and organized a private
company under the Companies Act to be wholly owned by His Majesty in
right of the Dominion of Canada, to be known as Commodity Prices Stabilization
Corporation, with an authorized share capital:
for the purpose of facilitating, under the direction of the
Wartime Prices and Trade Board, the control of prices of goods, wares and
merchandises in Canada.
The Board was authorized from time to time to delegate such
of its powers to the company as it might deem advisable and the Minister of
Finance was authorized to execute an agreement between His Majesty and the
company in the terms of a draft annexed to the Order-in-Council, with such
changes that he might consider proper, and from moneys appropriated by
Parliament under the War Appropriation Act, 19141 the minister was
authorized to direct advances from time to time up to the amount of
$10,-000,000 for the purpose of paying, inter alia, sums by way of
subsidy. The proposed agreement which was apparently executed on January 6,
1942, authorized the company in the discharge of such duties and
responsibilities as might from time to time be delegated or committed to it by
the Minister of Finance or the Wartime Prices and Trade Board, to pay such
moneys by way, inter alia, of subsidies:
to any person, firm or corporation as may be deemed
advisable in accordance with the principles stipulated from time to time by the
Wartime Prices and Trade Board and approved by the Minister.
While this agreement was rescinded and replaced by a new
agreement made on the following July, the substituted document in like manner
required that any payments by way of subsidy should be in accordance with the
principles formulated from time to time by the Wartime Prices and Trade Board.
The appellant companies were at the time of the outbreak of
the Second World War and in the following years engaged in operating service
stations in Montreal, Toronto and Windsor for the retail sale of gasoline and
lubricating oils. Joy Oil Limited, incorporated in the Province of
[Page 634]
Quebec, operated in Montreal a marine terminal for the
purpose of receiving gasoline by ocean tankers and distributing it to their
service stations in the city of Montreal, and Joy Oil Company Limited, an
Ontario corporation, operated a terminal in Toronto for the purpose of
receiving supplies of gasoline by boat and also in tank cars for its service
stations operated in the Toronto district. The gasoline sold by the Quebec
company during the years 1940 and 1941 had been imported by water from
Trinidad. This was also the source of the gasoline sold at its filling stations
in Toronto throughout the year 1940 and for a portion of 1941. In the latter
year, however, owing to the activities of enemy submarines, this source of
supply was shut off and, according to the appellants, it was necessary for them
to resort to the United States market for their supplies, this resulting in a
large increase in their costs. The oil controller's order 010 provided that
from and after its date (October 21, 1941) the price at which graded motor fuel
might be offered for sale in the provinces of Ontario and Quebec should not
exceed the maximum price at which such product was sold or offered for sale in
such place on the 30th day of September, 1941, plus one cent per imperial
gallon, the increase provided by the order. On that date the prices charged by
both appellants for gasoline to consumers were substantially less than those
charged by the large oil companies operating in Canada and it is this fact
which renders the interpretation of the word "place" in the orders of
the oil controller of decisive importance. In Quebec the price charged was 2.7
cents a gallon less than the prices charged by the large companies, while in
Toronto it was approximately 4.7 cents lower.
The appellant companies interpreted order 010 as enabling
them to increase the prices charged at each of their service stations by one
cent above that charged at such station on September 30, 1941, and acted on
that understanding. P.C. 1195 authorized the appointment of a deputy oil
controller to have all of the powers of the oil controller, subject to any
restrictions thereof which the latter might from time to time impose and
subject in all cases to review by him. Charles E. Austin, the vice-president of
both of the appellant companies said that, at
[Page 635]
a time which he thought preceded the date of order 010
having heard a rumor that an order was to be made, he had an interview with
Stewart, the deputy oil controller, who informed him that each company was
bound by its own prices which had been in effect, that the controller was
following the policy of the Wartime Prices and Trade Board, that each station
was to be considered as a unit, and that the appellant companies could not
raise their prices to the level of the other companies. Stewart was not called
as a witness: Austin's evidence, however, as to the date of this discussion is
vague and unsatisfactory. Whatever may be said as to its admissibility if the
discussion took place following the making of the order, it was clearly
inadmissible if it was before that date. On October 28, 1941, a week after the
order had been made, the Joy Oil Company Limited wrote to the oil controller
apparently asking an increase in their quota of supplies. The letter was not
put in evidence and its contents can only be inferred from the written answer
of Stewart as deputy oil controller on November 6, 1941. That letter referring
to earlier orders of the board said in part:
Furthermore, your application is based on a complete
misunderstanding of the Order. You apparently entertain the view that a quota
can be fixed for your Toronto division regardless of the gallonage dispensed at
any unit within the Division. Paragraph 6 of Order 007 has not been affected by
the amendments contained in 007A and 007B.
This paragraph makes it clear that every station operated by
your Company is prohibited from selling more than its particular quota. If any
station operated by your Company is permitted to sell more gasoline than the
quota applicable to such station, the result is clearly a breach of the Order.
Your application for an increased quota for the Toronto
Division cannot be entertained as it is utterly inconsistent with the terms and
principles of the Order. Any application made under paragraph 4D of Order 007B
must be in respect of an individual station but, as mentioned above, any such
application cannot be granted if based only on the consequences of competitive
practices.
According to Austin, after receiving this letter he was
referred by Stewart to Frederick G. Cottle, a chartered accountant, apparently
acting as executive assistant to the oil controller, and was informed by him
that he agreed with Stewart's construction of the earlier orders and that the
regulations of the oil controller were based on treating each gasoline station
as a separate unit, both in so far as prices and the allocation of gasoline
under the rationing order
[Page 636]
were concerned. This evidence was admitted without
objection. Cottle, called by the Grown, while admitting the discussion as to
the earlier orders referred to in the letter of November 6, 1941, said first
that he could recall no discussion on that occasion or any other occasion with
Austin regarding prices and that he had not told or would not have told him
that individual stations were the basis for the administration of order 010
"for the simple reason that it was not true". When Austin, when recalled
later, repeated the statement as to what Cottle had said and the Crown was
permitted to recall Cottle he than said that he had no recollection at any time
of ever discussing the meaning of order 010 with Austin and that, if he had, he
was positive he would never have given the interpretation to him that he says.
Cottle's evidence, when read as a whole, appears to be indecisive and more in
the nature of argument than a positive statement on the point. The learned
trial judge, however, made no finding as to credibility as between these
witnesses.
The claims advanced by the appellants in the present matter
are in regard to their operations between December 1, 1941, and the latter part
of June 1942. According to Austin, when supplies of gasoline imported from
Trinidad were no longer available, he went to the oil controller to enlist his
assistance in purchasing supplies and approached all the larger oil companies
in an attempt to buy from them but without success, whereupon both companies
commenced to import gasoline from the United States. According, however, to
various witnesses employed by the larger oil companies, they had gasoline
available for sale and the learned trial judge accepted the evidence of Frank
G. Hall, a director of the Imperial Oil Limited, to the effect that graded
gasoline was available which the appellants could have purchased at any time
during the period in question at a tank wagon price of 17½ cents in Toronto and
17 cents in Montreal, both prices exclusive of taxes. The contention of the
appellants is that at these prices they could not have maintained the prices at
the figure authorized by orders 010 and 010A of January 28, 1942, which revoked
the prior order and substituted other regulations. The price increase in the
latter order was, however, the same as that in order 010 for graded motor fuel,
[Page 637]
that is one cent per imperial gallon above the price in
effect on September 30, 1941 "in such place". The necessity of
importing from the United States substantially increased the cost of gasoline
to both of the appellants and it is this fact which gives rise to the claims
for subsidy.
By letter dated May 23, 1942, the appellant Joy Oil Company
Limited filed its first application for a subsidy, explaining the circumstances
which made it necessary to import their supplies from the United States. By
letter dated July 14, 1942, the Commodity Prices Stabilization Corporation
Limited wrote in reply saying that the applications were rejected: the ground
assigned for the rejection was that it had been stated in the statement of
import policy of the Wartime Prices and Trade Board that no subsidy would be
paid if similar goods were available in Canada at reasonable prices, that the
information before the Corporation indicated that the maximum retail price of
Grade 2 gasoline at Toronto, as established by the oil controller, was 32 • 5
cents per gallon and that, accordingly, the applicants could have purchased
supplies in Toronto at prices which would have allowed them to sell at this
level and realize a fair profit. The statement referred to in this letter in
the declaration of policy made by the Wartime Prices and Trade Board on
December 2, 1941, was that it was fundamental that imported goods would not be
eligible for subsidy if such goods could be obtained in Canada in sufficient
volume and at reasonable prices, and followed earlier statements in the order
that, as to retailers, those who maintained low retail prices during the basic
period would be able to continue to sell at those prices without undue hardship,
and urged importers to have confidence that the board and the Commodity Prices
Stabilization Corporation would deal with individual problems fairly and
reasonably. Thus, while disclaiming the applicability of one term of the
Wartime Prices and Trade Board policy statement, the corporation insisted on
the application of another as an answer to the claim. A considerable
correspondence followed between the Commodity Prices Stabilization Corporation
Limited and the solicitors for the appellants. The corporation maintained its
stand and its grounds for the position taken. Ultimately, by letter dated
November 18, 1942, the appellants, through their solicitors, made a lengthy
submission to the Honour-
[Page 638]
able the Minister of Finance in which their position was
fully stated. The Minister replied to this letter on March 11, 1943, saying
that While the statement of policy of the Wartime Prices and Trade Board
clearly referred only to goods affected by the Maximum Prices Regulations of
December 1, 1941, he considered that vendors of petroleum products would also
be entitled to claim for payment of subsidies if the same were necessary in
order to enable them to sell at the selling price established under the oil
controller's orders 010 and 010A. The letter further said in part:
The question as to whether the Joy Companies are entitled to
receive payment of a subsidy would appear to depend upon the interpretation of
the word "place" as contained in the Orders above referred to. If, as
you contend, this word means "place of business", your clients are
entitled to payment of a subsidy. If, on the other hand, it means a
geographical area, i.e., a municipality or adjacent district, they are not,
since my advice is that no subsidy would have been required to enable your
clients to sell gasoline at the maximum price permitted in the Montreal and
Toronto areas.
and, after discussing the dictionary definition of the
word "place", said that the question as to the interpretation to be
placed upon the word, as used in the orders, had been submitted to the
solicitor of the Wartime Prices and Trade Board for his opinion and that he had
expressed the view that the word, as used in the orders, did not mean
"place of business" but rather a geographical locality, and that accordingly
the Minister had decided not to intervene.
The claim of the appellants is for a stated sum by way of
subsidy on the footing that the Crown became indebted to them in these amounts.
The claims are said to be based upon contract on the footing that there was an
offer or promise extended to the appellants by an authorized agent of the Crown
upon which "the suppliants acted to their detriment". By this,
however, I understand it is meant that the statement and declarations of policy
by the Wartime Prices and Trade Board were in effect an offer which had been
accepted by them by importing supplies from the United States and selling them
at the restricted prices. I agree with the conclusion of the learned trial
judge that the claim cannot be sustained on this basis. The further contention
that such a contractual relationship was "ratified" by the Minister
of Finance in his letter to the solicitors for the appellants is not, in my
opinion, well
[Page 639]
founded. I think that the letter was clearly not intended to
be more than an expression of the Minister's view as to the decisive point in
the matter and to indicate his intention to abide by the advice he had received
from the solicitor for the Wartime Prices and Trade Board.
I am, however, of the opinion that these conclusions should
not dispose of these claims. Their rejection was based upon the grounds stated
in the letter from the Commodity Prices Stabilization Board to the appellants
of July 14, 1942, and in reliance upon the interpretation placed by the
corporation on the language of the orders of the oil controller. If the proper
interpretation of those orders is that the "place" referred to was
the individual filling stations of the appellants in Toronto and Montreal and
not those cities respectively, it is plain that there has been no consideration
given to the claims for subsidy on their merits. The word "place" and
the expression "in any place" are clearly capable of either meaning.
The order of the oil controller does not fall within subsection (b) of
section 2 of the Interpretation Act (R.S.C. 1927, c. 1) and the
provisions of that statute do not apply to its interpretation. In my opinion we
are entitled, in order to assist in determining the meaning to be assigned to
this language, to consider, in addition to the other terms of the orders, the
Orders-in-Council which vested the powers in the controller in the exercise of
which the order was made, the terms of the Orders-in-Council which constituted
the Wartime Prices and Tirade Board and the other agencies set up for the
purpose of controlling prices in Canada and the statements of policy and the
regulations made by or on behalf of these various government agencies. The
office of the oil controller constituted by Order-in-Council P.C. 2818 was merely
to be one of the instruments used by the Wartime Prices and Trade Board to
control prices and margins of profit in Canada. The power vested in the
controller by P.C. 1195 to prohibit or regulate any mode of dealing which
"would or might increase or tend to increase the price of oil to any
person or class of persons" did not merely vest him with these powers but
contemplated their exercise and this overall purpose of the plan was made
manifest in all of the orders and regulations dealing with the subject of
control. The oil controller was not to conduct a species of control differing
from that to be applied
[Page 640]
to the sale of all other commodities or to act independently
of the Wartime Prices and Trade Board, except to the extent that that body
should permit. The preamble to P.C. 6835 of August 29, 1941, which prescribed
regulations for the Wartime Industries Control Board, stressed that the
functions and duties of the various controllers were interdependent and
correlated not only with those of other controllers but with the functions and
duties of the Wartime Prices and Trade Board, and that it was desirable to take
further measures to promote co-ordination and integration of their activities
by creating a closer relationship between them and the Wartime Industries
Control Board and the Wartime Prices and Trade Board. It was with this end in
view and with the purpose of ensuring uniformity of policy that the orders of
the oil controller were made subject to the approval of the Wartime Prices and
Trade Board in lieu of that of the Minister of Munitions and Supply, a change
affected by P.C. 7824 of October 8, 1941. It is, I think, clear both from the
language of P.C. 1195 and that of regulation 10 (iii), enacted by P.C. 6835,
that the word "place" is not to be construed as synonymous with the
words "area" or "zone" used in the former Order-in-Council,
or with any of the words "area, zone or locality" used in the
regulation. The fact that these words were used in addition to the word
"place" indicates, in my opinion, a restricted meaning for the latter
term. If the increase in price to be permitted by the order was one cent above
the maximum charged in the cities of Toronto or Montreal or other centres of
settlement on September 30, 1941, one would expect that, if not mentioned by
name, the areas would have been at least generally defined as the city, town,
village or locality within which the businesses affected were carried on. When,
shortly after order 010 was made, the appellant Joy Oil Company Limited asked
for an increased quota of supplies for its Toronto division, the controller,
refusing the request, replied that allocations could not be made in this
manner, but that every station operated by the company was prohibited from
selling more than its particular quota. The orders which affected this aspect
of the matter antedated order 010 and were not introduced in evidence, but the
ruling made by the controller's letter of November 6, 1941 indi-
[Page 641]
cated the intention, at least from the standpoint of
regulating supplies, of treating each filling station as a separate unit.
The matter is not to be determined, in my opinion, merely by
deciding what was the intention of the controller. As Phipson (8th Ed. p. 97)
puts it, in construing a written document, the question is not as to the
meaning of the words alone, nor the meaning of the writer alone, but the
meaning of the words as used by the writer. Some assistance is, I think to be
obtained from other terms of the orders. Order 010 defined consumer as any
person who acquires petroleum products for use only and not for the purposes of
resale, and by paragraph 7 provided that the price to be paid by a consumer for
graded motor fuel delivered by tank wagon should be one cent per gallon more
than the dealers' tank wagon price applicable at the place of delivery. The
price referred to was that in effect on September 30, 1941, and the place of
delivery the consumer's premises. I think the same meaning is to be assigned to
paragraph 9 of that order. The place referred to there was also, in my opinion,
the place of delivery which, in the case of service stations selling gasoline,
was their premises where delivery was made to the motor car of the consumer. To
construe the order otherwise, as applied to the present case, would restrict
dealers who delivered motor fuel to the premises of consumers to an increase of
one cent over their price at such place on September 30, 1941, while permitting
the appellant companies at their service stations to increase their prices for
gasoline delivered to motor cars by 5.7 cents a gallon in Toronto
and 3.7 cents a gallon in Montreal. While order 010 preceded P.C.
8527 by ten days and the latter order provided that the various provisions of
its paragraph 3, which included the provision that for the purpose of the
regulations each separate place of business of a seller should be deemed to be
a separate seller, should not apply to any price fixed by some other authority
with the written concurrence of the board, I think that the order, the
preliminary statement of policy and the further statement of import policy may
be considered as aids to the construction of order 010 as well as order 010A.
The regula-
[Page 642]
tions which had been enacted provided for the closest
liaison between the various controllers and the Wartime Prices and Trade Board,
and the chairman of that board had concurred in the order and was thus aware of
its terms. It must be assumed that the Wartime Prices and Trade Board was
following a consistent policy with all sellers of goods and not favouring some
vendors of gasoline over other retailers by permitting large increases in their
maximum prices. The fact that it was made clear by P.C. 8527 and the subsequent
statements that permitted increases were to be made on each individual seller's
price during the basic period supports rather than detracts from the
appellants' contention. That the matter was dealt with more specifically than
had been done by order 010 does not alter my view as to the construction of the
former document. It was not merely the appellants who construed the oil
controller's order in this way; I think it was so construed by those directing
the Wartime Prices and Trade Board. It is also significant, in my opinion, that
on January 28, 1942, when the oil controller had before him P.C. 8527 and the
declarations of policy of the Wartime Prices and Trade Board, the expressions
"in any place" and "in such place" were again used. I think
if, at that time, there had been any intention to treat the matter of permitted
increases in the price of oil on a different basis than all other commodities,
the oil controller would have taken pains to see that the order said so in
clear language.
The appellants in the present matter are not, in my opinion,
in the same favourable position as the taxpayer in Pioneer Laundry and Dry
Cleaners Ld. v. Minister of National Revenue , where
there was a legal right to an allowance for depreciation. Here, I do not think
the appellants have an enforceable right to a subsidy. I, however, consider
that they are entitled in law to have their claims considered upon a proper
basis. There has been here no exercise of discretion but merely a rejection of
the claims based on a misconstruction of the orders of the oil controller. I
would set aside the judgment appealed from and direct that the matter be
referred back to the Commodity Prices Stabilization Corporation to deal with
the claims for subsidies advanced in this action, on the footing that the
[Page 643]
orders of the oil controller permitted the appellants to
increase their prices only to the extent of one cent per gallon on September
30, 1941.
I agree with the disposition of the costs proposed by my
brother Rand.
Rand J.:—This
appeal concerns a claim made against the Crown for subsidies on gasoline
imported from the United States between December 1, 1941 and July 1, 1942. The
importers were companies which, at their own filling stations, sold directly to
consumers in Toronto, Montreal and Windsor. They had, for some years, brought
the gasoline in chiefly from Trinidad, and the retail price at which it was
sold ranged between 2½c and 3½c a gallon under that of their competitors. Owing
to the war, the supply from Trinidad was cut off, and they were forced to enter
the higher price market of the United States.
Under The War Measures Act, Order-in-Council P.C.
1195 of February 19, 1941, amending a previous order of 1940, was issued
dealing, among other things and subject to certain approvals, with petroleum
products and empowering the oil controller,
to fix or regulate the price or fix the maximum price or the
minimum price at which oil may be sold or offered for sale in any place, area
or zone by or to any person or class of persons and for such purpose to
designate any such person or class of persons or any such place, area or zone;
Acting under that authority, the controller, by order No.
010 of October 21, 1941, fixed maximum prices at which oil products could be
sold. Clauses 7 and 9 were as follows:
7. Subject to paragraph 8 of this Order, the tank waggon
price to be paid by a consumer for graded motor fuel delivered by tank-waggon
shall be one cent per imperial gallon more than the dealer's tank-waggon price
applicable at the place of delivery.
9. From and after the date of this Order, the price to be
paid for petroleum products, or any of them, by any purchaser thereof shall be
regulated as follows:
(a) The price to be
paid in any place shall not exceed the maximum price at which any such
petroleum product was sold or offered for sale in such place or for delivery to
such place on the 30th day of September, 1941, plus any applicable price
increase confirmed, authorized or required by this Order and having regard to
the quantity purchased;
(b) For the purposes of
the foregoing clause (a) as applied to graded motor fuel, the maximum
price applicable in any place on the
[Page 644]
30th day of September, 1941,
shall be ascertained having regard to the price of motor fuel having the same
or the nearest qualities to those specified by Order 008A for either grade of
graded motor fuel;
(c) No greater price shall
be charged to any person for petroleum products or any of them than that
provided by paragraph 7 and by this paragraph 9 of this Order.
As of November 17, 1941, general price control was set up by
Order-in-Council P.C. 8527 which excepted from its operation prices fixed by
any federal agency and approved by the chairman of the Wartime Prices and Trade
Board: within that exception were the maximum prices for petroleum products.
On December 2, 1941 and later, on January 1, 1942, the
Prices Board issued statements of policy on matters arising out of the sale of
imported goods for civilian purposes. The former laid down the general
principle that imported goods would cost the importer no more than was
appropriate to the retail ceiling prices, and declared that:
Importers may, therefore, continue importing in the normal
manner, with the assurance that appropriate subsidies will be provided with
respect to goods imported on and after December 1, 1941, on the basis outlined
below. The methods will, in the first instance, consist of direct subsidies to
importers, with the possibility that from time to time duties and taxes on
imported goods may be reduced in such a way as to make subsidies unnecessary.
The Board reserved the right to exclude any goods from the
subsidy and "to adjust the amount of that subsidy from time to time as may
be fair and reasonable in the circumstances". Consideration was to be
given, however, to "forward commitments" entered into after the date
mentioned. It was emphasized that the board would not approve subsidies where
the increase in import prices was not of significant proportions for those
concerned; that increases which the importer or his trade customers could
absorb without "undue hardship" should not "even" be
brought to the attention of the board. If, however, the increased cost was
greater than could be expected to be absorbed, the board would set the subsidy
at a reasonable level. It stated that if foreign suppliers should attempt to
raise prices unduly, the subsidy might be withdrawn as to their goods.
More specifically it declared that the retailer who found
his import prices to have risen "significantly above the
[Page 645]
level which prevailed for goods sold by him during the basic
period" might submit a claim to the board, and that the board would
endeavour to measure the subsidy in such a way that the retailer would
"receive his goods at a cost which is reasonable in relation to his retail
ceiling price". It was declared also to follow that "those who
maintained low retail prices during the basic period" would be able to
continue to sell at those prices without undue hardship. In some cases, it
might be more suitable to adjust subsidy by reference to average costs of a
number of retailers.
Finally, importers were urged to have confidence "that
the board and the Commodity Prices Stabilization Corporation (not at that time
incorporated) will deal with individual problems fairly and reasonably. At the
present time, however, the important thing is for import trade to be continued
in accordance with past practice, even if present import prices involve an
actual loss to the importers concerned, for subsidy adjustments will be made
retroactive to December 1st. Importers should, therefore, adjust their own
selling prices so as to enable retailers to carry on under the retail
ceiling". The statement of January 1, 1942, involved no change in
principle but clarified and amended the earlier one in certain details. By it,
also, certain goods previously eligible for subsidy were excluded. The trade
was notified that no subsidies would be paid if similar goods were available in
Canada at reasonable prices. It was stated that:
No definite rules can be laid down for raw materials, including
fuel. Each commodity may require separate treatment on the position of the
industry as a whole after intermediate selling prices of wholesalers, secondary
manufacturers and primary manufacturers have been adjusted.
On December 17, 1941, Order-in-Council P.C. 9870 authorized
the organization of a Crown company under the Companies Act to be known
as "Commodity Prices Stabilization Corporation" to be the agency for
facilitating, under the direction of the Prices Board, price control generally,
including the payment of subsidies, as part of the general price stabilizing
policy. With this corporation, the Crown entered into an agreement by which
accountable advances were to be made and by which the company was authorized in
the discharge of such duties and responsibilities as might from time to time be
delegated or committed to it
[Page 646]
to pay such sum or sums by way of subvention, subsidy, bonus
or otherwise, to any person, firm or corporation as may be deemed advisable in
accordance with the principles formulated from time to time by the Wartime
Prices and Trade Board and approved by the Minister.
Subsequently, on July 7, 1942, by Order in Council P.C.
5868, the corporation was authorized by section 1, ss. (2):
to pay such sum or sums by way of subvention, subsidy, bonus
or otherwise to any person, firm or corporation as may be deemed advisable;
provided, however, that the said company shall not enter into any agreement
binding itself to pay any such sum or sums to any person, firm or corporation
except with the approval of the Minister of Finance.
The appellant companies continued to import gasoline from
the United States during the period mentioned and submitted statements of costs
and prices in support of an application for subsidy. It was declined on the
ground that paragraph 9 of the controller's order 010 and paragraph 8 of the
controller's order 010A established maximum prices applicable generally in
geographical places; that the prices of the company's products as of September
30, 1941 were below the maximum prices in the three cities mentioned; and that
they could have purchased gasoline in Canada at a price which would have
enabled them to realize a reasonable profit within the maxima so
prescribed. The companies, contending that their own highest prices had become
fixed as maxima, laid their complaint before the Minister of Finance.
His reply contains the following paragraph:
The question as to whether the Joy Companies are entitled to
receive payment of a subsidy would appear to depend upon the interpretation of
the word "place" as contained in the Orders above referred to. If, as
you contend, this word means "place of business", your clients are
entitled to payment of a subsidy. If, on the other hand, it means a geographical
area, i.e. a municipality or adjacent district, they are not, since my advice
is that no subsidy would have been required to enable your clients to sell
gasoline at the maximum price permitted in the Montreal and Toronto areas.
The claims asserted in this proceeding are based on
contract: they treat the statements of policy as contractual offers made by an
authorized agency of the Crown and accepted by the action of the companies in
continuing to import; and the letter of the Minister, as creating a contractual
obligation conditional upon the interpretation of the language of the orders as
meaning their individual selling stations.
[Page 647]
These contentions were rejected in the Exchequer Court ,
and I agree with that result. The short answer in each case is that neither the
Board nor the Minister is shown to have evidenced the slightest intention of
entering into contractual obligations or of establishing legal relations of any
kind whatever. The language quoted from the declaration of policy shows that it
was what it purported to be, a statement of general principles to be followed;
and its qualifications and reservations and its references to modifications
which would affect the amount or payment of subsidies demonstrate the purpose
to perform the task of meeting price consequences of the emergency imposed by
the government on the corporation by an administration of practical and fair
measures carried out in good faith and according to the corporation's best
judgment in the light of all the circumstances. It was this the Minister had in
mind in his reference to the price maximum; but that he intended to take the
matter out of its ordinary channels and place the issue of the subsidies as
claimed on the interpretation of the clauses mentioned, is quite unwarranted.
Conceding the interpretation to be as urged by the companies, many other
factors would remain on which the decision of the corporation must be based,
and there was neither intention nor authority in the Minister to supersede that
jurisdiction.
But the interpretation adopted played a significant part in
the rejection of the claim, and it must, I think, be examined. Admittedly the
general price order fixed actual prices wherever they were being charged during
the basic period, and expressly provided that each separate place of business
should be deemed a separate seller or supplier. In a previous order of the oil
controller, a quota had been placed on permissible sales which likewise applied
to the individual place of sale such as, for example, a filling station. It is in
part against this background that the orders of the oil controller should be
viewed even though the first, 010, was issued prior to the general order. The
Prices Board had been in existence since 1939 and as individual price controls
were in substance merely particular cases of the general control, the companies
were
[Page 648]
entitled to assume that
the regulation of prices on petroleum was intended generally to be similar to
that of the broader measure.
It is seen that the words "place, area or zone" in
the authorizing regulation of P.C. 1195 apply to all goods placed under
controllers. It is unquestionable that they were intended to meet the
exigencies of widely differing commodities, and that they were not themselves
to be used in the specification of a special order. It was meant that the
controller could prescribe the maximum prices in relation to any particularly
described "place, area or zone", not that these words themselves were
to be put to such use. When, then, the word employed is so general as to fit
many different particulars, we must have regard not only to the evidence of its
meaning as afforded by other provisions of the order, but, as well, the fact
that the order was to be read and interpreted by laymen as a practical business
directive with the background of the general control; and that its
interpretation must respect the meaning that could fairly and reasonably be
given it by the trade, not something that lay hidden in the mind of the
draftsman.
Of the internal evidence in order 010, it will be noticed
that paragraph 7, which I have quoted, provides that the tank-waggon price to
be paid by a consumer shall be one cent a gallon more than the dealer's
tank-waggon price "applicable at the place of delivery." Now the
place of delivery to a dealer is generally, or certainly includes, a filling
station. It would be an extravagant use of business language to say that the
place of delivery to a dealer at his filling station by tank-waggon was
"at Toronto". It is a reasonable interpretation of that language that
what is intended is the actual point of delivery, not some indefinite
geographical area. There are hundreds of gasoline pumps set up near farm houses
along the main highways all over the country which are supplied by
tank-waggons; what could their "places of delivery" be except the
farmer's yard? Then clause 10 provides a penalty for any person who sells
petroleum products at a price greater "than is authorized by this order as
applicable at the place of delivery," i.e. to a dealer or a private
consumer at a filling station. Clause 11 likewise refers to the authorized
price "at the place of delivery". Clause 8(1) of order 010A
[Page 649]
refers to "delivery to such place" and clause 9,
providing a penalty, contains the same language "at the place of
delivery" as clause 10 of 010.
Against this, the preposition "in" is urged as
excluding the particular point of a sale or delivery, and no doubt it lends
itself somewhat to that view. But there are other considerations to which that
circumstance leads. In Toronto the appellants have 16 service stations. The
larger oil companies do not themselves sell to the retail trade, and the retail
prices are fixed by the proprietors of the individual stations. There is no
evidence that a uniform price is maintained throughout the city even of the
gasoline supplied by any one of the large refiners, yet the order, on the
interpretation given by the corporation, would fix as a maximum retail price
the highest charged by any service station in the city on September 30, 1941.
This, ordinarily superseded by competition, might easily be material in the
presence of quotas and short supply.
The price, not only of retail but of tank-waggon and rail or
water delivery in tank quantities, was also envisaged, and it is obvious that
if the appellants were compelled to purchase in Canada, they would purchase on
a large scale basis. What were the means open to them to determine the maximum
wholesale price, say, in Toronto? They had none themselves of ascertaining it,
and their competitive relation may be assumed to have been such as was not
conducive to exchanges. Not being refiners, they would have to submit
themselves to their competitors and as their purchases would call for greater
importation of crude oil, the only difference in the international aspect would
be the addition to the monetary exchange of the cost of refining in the United
States; but however repugnant all this might have been, if the circumstances
were such as to make the necessity clear, they would have had to submit to it.
These considerations, in the setting of the total control
and the generality of the language used, justified the companies in concluding
that the maximum price was intended to be that of the individual place of sale
or delivery. But even if that had not been so, the restriction to that at which
the product was sold, say, "in" Toronto, implied, as sold by the
applicant for subsidy. He would
[Page 650]
know only his own maximum price and, at the most, some of
those publicly advertised. In the large centres, the maximum geographically
could have been ascertained and announced by the controller rather than to have
had it disclosed at a trial by private witnesses after the event; and it would
have been out of the ordinary course of public regulation to charge the
applicant with responsibility for discovering business facts of his
competitors.
The final question is whether, under the terms of the
various orders, these appellants have acquired any right which can be
recognized as of a juridical nature. I think it indisputable that keeping in
mind the broad discretionary authority vested in the corporation, the times,
the unprecedented control of business, the absolute necessity for fair, equal
and impartial treatment in matters so immediately affecting the fortunes of
individuals, a duty arose to enter upon the adjudication of a claim for subsidy
in good faith and upon the basis of its relevant considerations. That their
range would be spacious does not convert the power into a privilege of acting
or not acting at pleasure: Julius v. Bishop of Oxford .
That duty has its correlative right in the individual. In
adjudicating, the corporation must proceed within and on proper interpretations
of the administrative legislation, and where, as here, it has misconstrued a
material provision, its adjudication is vitiated and its conclusion nullified.
The appeals should therefore be allowed and the matters
referred back to the government to pass upon the applications in the light of
the interpretation given to the order and all other proper circumstances.
In view of the fact that this declaratory relief was not
asked for and the claims as submitted must be rejected, the appellants should
recover one-third of their costs in both courts.
Estey J.:—The
appellants, incorporated in 1934, imported gasoline from Trinidad and sold it
to consumers at a price lower than that of their competitors. After the
outbreak of war, and because of the scarcity of shipping facilities, they were
forced to discontinue importation from
[Page 651]
Trinidad, but did so from the United States, where prices
were so much higher as, in their opinion, to justify an application to the
Commodity Prices Stabilization Corporation Ltd. for a subsidy covering the
period between December 1, 1941, and July 1, 1942. The amount claimed was
$459,845.73, with interest from September 15, 1942.
While the appellants are two separate companies, one
carrying on business in the province of Quebec and the other in the province of
Ontario, the issues raised are identical and for convenience only the claim of
the Joy Oil Company Limited, arising out of its Toronto business, will be
discussed. In Toronto it operates a marine terminal and sixteen service
stations.
The Joy Oil Company Limited based its claim for a subsidy
upon three statements issued by the Wartime Prices and Trade Board, which they
construe as an offer to pay a subsidy accepted by them in continuing to import
gasoline and sell it at the price fixed by either the oil controller or the
Wartime Prices and Trade Board. They contend that in this way a contract was
made which was ratified by the Minister of Finance in his letter to the
solicitors for the suppliants dated March 11, 1943.
The first of these statements was issued on November 21,
1941, entitled "Preliminary Statement of Policy", the second,
December 2, 1941, entitled "Import Policy", and the third, dated
January 1, 1942, entitled "Statement on Import Policy." These are
lengthy statements and need not here be reproduced. It is sufficient to observe
that they are written in neither the language of an offer nor that of orders or
documents purporting to create rights. They are rather statements of policy,
introducing price control, giving the reasons that made it necessary, and an
explanation of how it would be carried out. They also constitute an appeal that
because of the necessity for, the magnitude of and the difficulty involved in
price control, it could only be successful if all co-operated. Throughout it is
clear that these documents are related to others. This appears from the opening
paragraph of the first statement:
On December 1, 1941, there will come into force in Canada a
complete control of all prices. Higher prices will not be permitted than those
at which goods were actually sold during the four weeks September 15 to October
11. This far-reaching action will affect everyone. It is in the common interest
of all. It has an essential part to play in the successful carrying on of the
war.
[Page 652]
They specifically make reference to importers, and the
language, rather than constituting an offer, indicates that the importer who
follows the outline contained in these statements of policy will be dealt with
"fairly and reasonably." This is particuarly evident in para. 9 of
the statement of December 2, 1941, which reads, in part:
9. The above represents the most comprehensive general
statement which can be made. Importers are urged to have confidence that the
Board and the Commodity Price Stabilization Corporation will deal with
individual problems fairly and reasonably * * *
A reading of these statements leads to the conclusion that
subsidies were to be paid, not on the basis of a contract, but upon the basis
of a fair and reasonable consideration of each application made therefor.
The contention that the letter of the Minister of Finance
dated March 11, 1943, constituted a ratification cannot be maintained. Under
the authority hereinafter quoted (Order-in-Council P.C. 9870) the Commodity
Prices Stabilization Corporation Ltd. could agree to pay only such sums by way
of subsidies as it "deemed advisable" and even then the agreement was
not binding "except with the approval of the Minister of Finance."
The corporation had refused the subsidy and, therefore, there was no proposed
agreement that could be approved. The letter was an answer to a complaint
suggesting that the appellants had been discriminated against which, in effect,
asked that their application receive fair and equitable treatment. The Minister
reviewed the facts, particularly the opinion received by the corporation
relative to the word "place," and concluded that he could not
"interfere with the decision of the Commodity Prices Stabilization
Corporation that your clients are not entitled to payment of the subsidy
claimed." In these circumstances, even if the authority to approve could
be construed to include that to ratify, the Minister did not purport either to
approve or to ratify, nor, indeed, was there any agreement which he could
approve or ratify.
It is necessary, therefore, to determine whether the
appellant is entitled to a subsidy apart from any question of contract. These
statements must be read and construed with the Orders-in-Council already passed
relative to the creation of (September 3, 1939) and the powers conferred upon
the Wartime Prices and Trade Board; to the
[Page 653]
appointment of (June 28, 1940) and the powers conferred on
the oil controller and his order 010, October 21, 1941; to the creation of
(June 24, 1940) and powers conferred upon the Wartime Industries Control Board;
as well as the steps taken by these respective bodies relative to a fixing of
prices and, in particular, with respect to gasoline. That these respective
bodies were duly created and vested with all the powers they have exercised in
relation to this litigation, as well as the fact that their efforts were
coordinated and at all relevant times they were acting in concert, is clearly
established. It is unnecessary to examine in detail the origin, powers and
purposes of these bodies, except to emphasize that they were engaged in the
regulation and control of essential commodities and the fixing of maximum and
minimum prices with regard thereto.
The appellant made its application to the Commodity Prices
Stabilization Corporation Ltd. This corporation was incorporated "with the
intent and for the purpose of facilitating, under the direction of the Wartime
Prices and Trade Board, the control of prices of goods, wares and merchandise
in Canada, and with such powers, in addition to those conferred by the Companies
Act, as may be set forth in the Letters' Patent" (Order-in-Council P.C.
9870, December 17, 1941). Letters Patent were issued on the 24th day of
December, 1941, and expressly provided for the payment of such subsidies
"as the company may deem fit and proper." The foregoing
Order-in-Council P.C. 9870 was subsequently amended on July 7, 1942, by
Order-in-Council P.C. 5863, to provide that the company should pay only
such sum or sums by way of * * * subsidy, * * * as may be
deemed advisable; * * *
subject, however, to a further provision
that the said Company shall not enter into any agreement
binding itself to pay any such sum or sums to any person, firm or corporation
except with the approval of the Minister of Finance.
The corporation, under date of July 14, 1942, refused the
appellant's application for a subsidy on the basis that gasoline was available
in Canada and, therefore, the provisions of para. 4(c) of the
"Statement on Import Policy", dated January 1, 1942, prohibited the
payment of a subsidy.
[Page 654]
4. Importers should observe the
following points. in connection with goods eligible for subsidy:
* * *
(c) * * * No subsidies will be paid if similar goods
are available in Canada at reasonable prices.
In its letter refusing payment of a subsidy the corporation
pointed out that the oil controller's order 010 (October 21, 1941) established
maximum prices as of October 1, 1941, for gasoline which at Toronto, for the
grade (Grade 2) here in question, was 32.5c per gallon, and that
gasoline was available in Toronto which, when sold at 32.5c per
gallon, would give to the retailer a spread of 4c to 5.5c per
gallon, depending upon whether it was purchased on the basis of tank wagon or
tank car. It was also pointed out that quantity buyers might obtain jobber's prices
which would provide an even greater spread. In fact, throughout the
negotiations that followed, the corporation took the position that it was open
to the appellant to increase its retail price of 27 • 8c to the ceiling of 32 •
5c and to purchase gasoline on the same basis as other distributors, while the
appellant maintained it was not permitted to increase its price above 27.8c
per gallon. It was at this price that it was selling gasoline on October 1,
1941, the effective date of the price under oil controller's order 010, and
also the price at which it was selling gasoline in the basic period September
15 to October 11 as fixed by Order-in-Council P.C. 8527 dated November 1, 1941,
which provided:
The maximum price at which any person may sell or supply any
goods or services shall be the highest lawful price at which such person sold
or supplied goods or services of the same kind and quality during
the period September 15, 1941, to October 11, 1941. The
appellant contends that its price of 27.8c per gallon was fixed,
whether the matter be dealt with under the oil controller's order 010 or under
Order-in-Council P.C. 8527. It is conceded that, if the latter applies, the
price was so fixed. It is, however, contended that it does not apply because in
para. 4(g) of the latter (Order-in-Council P.C. 8527) it is provided:
4. The provisions of section 3 (price fixing) of these
regulations shall not apply with respect to:
* * *
(g) any price fixed by the Board, or fixed or
approved by any other federal, provincial or other authority with the written
concurrence of the Board.
[Page 655]
It is established that oil controller's order 010 was issued
prior thereto with the concurrence of the board. The question, therefore,
arises particularly under oil controller's order 010. Item No. 9 of this order
reads, in part, as follows:
9. From and after the date of this Order, the price to be
paid for petroleum products, or any of them, by any purchaser thereof shall be
regulated as follows:
(a) The price to be paid
in any place shall not exceed the maximum price at which any such petroleum
product was sold or offered for sale in such place or for delivery to such
place on the 30th day of September, 1941, plus any applicable price increase
confirmed, * * *
and Item No. 10 thereof, in part, as follows:
10. Any person who sells petroleum products, or any of them,
at a price greater than is authorized by this Order as applicable at the place
of delivery thereof shall be guilty of a breach of this Order * * *
The corporation's contention is that under oil controller's
order 010 prices were "set for gasoline on a geographical basis and not on
an individual basis," and, therefore, the word "place" in the
foregoing Item No. 9(a) should be construed to refer and be applicable
to all service stations in Toronto and not to the individual service stations.
This construction, if accepted, permitted the appellant to raise its price to
32.5c per gallon at its service stations in Toronto.
The word "place" is not defined in order 010, nor
is it defined in any other of the oil controller's orders. Not only does the
oil controller not define the word "place," but he never did fix any
"place, area or zone" within which a particular price would obtain.
The oil controller was a member of the Wartime Industries Control Board, which
was created, inter alia, in order that the controllers "should act
in respect to common problems along similar lines" (Order-in-Council P.C.
2715, June 24, 1940); and then by a further Order-in-Council (P.C.
6835, August 29, 1941) another step was taken to
further measures to promote co-ordination and integration of
the functions and activities of such Controllers, * * * by creating a closer
relationship between the Controllers, the Wartime Industries Control Board and
the Wartime Prices and Trade Board, to promote co-operation * * * and reduce
the possibility of any confusion arising as a result of the exercise and
discharge of their various powers, functions and duties.
P.C. 6835 was one of the Orders-in-Council under which the
oil controller issued his order 010.
[Page 656]
In these circumstances it is significant that The Maximum
Prices Regulations, as fixed by Order-in-Council P.C. 8527, November 1, 1941,
provided in sec. 3, subsection (7):
3. (7) For the purposes of these regulations, each separate
place of business of a seller or supplier shall be deemed to be a separate
seller or supplier.
The first of the three above-mentioned statements included:
The price ceiling applies to each individual store,
department or branch on the basis of its own prices for each separate kind and
quality of goods and services during the basic period. The lower-price stores
are not permitted to raise their prices to the level of the higher-price
stores.
It is also significant that the corporation, in refusing the
appellant's request for the allotment of a larger quota, stated:
If any station operated by your Company is permitted to sell
more gasoline than the quota applicable to such station, the result is clearly
a breach of the order.
Moreover, provision 8(1) of Order-in-Council P.C. 6835,
under which the oil controller issued his order 010, repealed the oil
controller's original authority in this regard, as contained in
Order-in-Council P.C. 1195. In the latter in particular the word "place"
appears several times and sometimes clearly means an individual place of
business. Indeed, in reading the order as a whole, it is quite open to the
construction that the word "place" throughout has that meaning. It
will be further observed that in issuing order 010 the oil controller used the
word "place" only and not the phrase "place, area or zone,"
as those words appear in para. 8(1) of Order-in-Council P.C. 6835.
This order 010 was issued October 21, 1941, before any of
the three statements above referred to. On January 28, 1942, after these
statements were issued, as well as Order-in-Council P.C. 8527, all making it
clear that prices generally were fixed in relation to the individual store or
place of business, the oil controller amended his order 010 by his further
order 010A, and even then did not define the word "place" to mean, in
effect, an area or zone as he now contends. It would seem that if he intended
the word "place", in his order, to have a meaning different from that
which obtained otherwise throughout price control that he would at least have
made it clear in order 010A.
[Page 657]
Throughout it is obvious that it was the intent and purpose
of the Governor in Council that the provisions respecting price fixing should
be read and construed together and that all bodies engaged in administering
price control should act together and in concert. It follows that the word
"place" ought to be construed as having the same meaning throughout,
unless in a particular order it is used in a context which shows some other
meaning was intended. Such is not found in Orders-in-Council P.C. 1195 and P.C.
6835, nor is it found in oil controller's order 010, and, therefore, the word
"place," as used therein, should be construed to mean the individual
service station. The appellant, therefore, could not raise its retail prices to
32.5c per gallon and gasoline was not "available in Canada at
reasonable prices" within the meaning of para. 4(c) above quoted.
The respondents contended that as the corporation was
authorized to pay such subsidy "as the company may deem fit and
proper" and then only "with the approval of the Minister of
Finance," its decision was the exercise of an "administrative
discretion" over which there was no control other than that it "shall
be in accordance with principles formulated from time to time by the Wartime
Prices and Trade Board and approved by the Minister." The difficulty in
applying the authorities cited by the respondents in support of the view that
the exercise of such a discretion is not reviewable by a court is that here the
company, upon the evidence, did not exercise a discretion, but rather acted
upon its construction of the above para. 4(c). The construction of such
a provision is a matter of law and not the exercise of a discretion.
Oil controller's order 010 does not deal with importation of
gasoline. That was otherwise dealt with. In addition to para. 9, already
quoted, of the statement of December 2, 1941, it contained this specific
reference:
Imported fuel—Coal, coke, petroleum and its products,
will be dealt with on much the same basis as raw materials if circumstances so
require.
Indeed, throughout it is not contested but that it was
intended those carrying on business would continue to do so and that if it were
necessary for them to import merchandise and to pay higher prices therefor an
application
[Page 658]
for a subsidy would be considered. Gasoline was not
available to the appellant in Canada at a reasonable price that would permit of
its carrying on business and selling its gasoline at the price fixed by the oil
controller at 27.8c per gallon.
The appellant's application was only considered upon the
basis that gasoline was available to it in Canada at reasonable prices. Under
these circumstances it would appear that the appellant is entitled to have its
application further considered. The matter should be referred back on the basis
suggested by my brother Locke and adopted by the Chief Justice and the costs
disposed of as my brother Rand suggests.
The appeal is allowed and the matter referred
back to the Commodity Prices Stabilization Corporation to deal with the claims
for subsidies advanced in this action on the footing that the orders of the oil
controller permitted the appellants to increase their prices only to the extent
of one cent per gallon on Sept. 30, 1941. In view of the fact that this
declaratory relief was not asked for and the claims as submitted must be
rejected, the appellants will recover one third of their costs in both Courts.
Solicitor for the Appellants: E. A. R. Newson.
Solicitors for the Respondent: Magee, O'Donnell
and Byers.
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