Supreme Court of Canada
Attorney-General for Manitoba v. Manitoba Egg and Poultry Association et al., [1971] S.C.R. 689
Date: 1971-06-28
The Attorney-General for Manitoba Appellant;
and
Manitoba Egg and Poultry Association, Manitoba Egg and Pullet Producers’ Association, Manitoba Feed Manufacturers Association, Manitoba Hatchery Association, Meat Packers Council of Canada, and Canadian Feed Manufacturers Association Respondents.
1971: May 31; 1971: June 1, 2, 28.
Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Hall, Spence, Pigeon and Laskin JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA
Constitutional law—Provincial legislation—Validity—Trade and Commerce—Control over all eggs whether produced in Manitoba or elsewhere.
The Lieutenant-governor in Council for Manitoba referred to the Court of Appeal for hearing and consideration, certain questions as to the legislative competence of the province to authorize a Regulation proposed to be made by the Lieutenant-governor in Council and an Order proposed to be made by the Producer Board to be established by the Regulation. The proposed Regulation and Order would vest in the Producer Board complete control over all eggs whether produced in Manitoba or elsewhere. The opinion of the Court of Appeal for Manitoba was that this was ultra vires. The Attorney-General for Manitoba appealed to this Court.
Held: The appeal should be dismissed.
Per Fauteux C.J. and Abbott, Martland, Judson, Ritchie and Spence JJ.: The Plan, constituted by the Regulation and the Order, is intended to govern the sale in Manitoba of all eggs, wherever produced; it is to be operated by and for the benefit of the egg producers of Manitoba and to be carried out by a Board armed with the power to control the sale of eggs in Manitoba, brought in from outside Manitoba, by means of quotas, or even outright prohibition. This Plan is ultra vires of the Manitoba legislature because it trespasses upon the exclusive legislative authority of the Parliament of Canada to legislate on the matter of the regulation of trade and commerce conferred by s. 91(2) of the B.N.A. Act. It not only affects inter-provincial trade in eggs, but it aims at the regulation of such trade. It is an essential part of
[Page 690]
this scheme specifically to control and regulate the sale in Manitoba of imported eggs. It is designed to restrict or limit the free flow of trade between provinces as such. The Regulation and Order are not severable because those portions which deal with local provincial trade in eggs are inextricably bound up with those which concern inter-provincial trade.
Per Hall and Laskin JJ.: The scheme embraces products which are in the current of inter-provincial trade and embraces them in whatever degree they seek to enter the provincial market. The scheme is on its face an invasion of federal power in relation to s. 91(2) of the B.N.A. Act. The proposed scheme has as a direct object the regulation of the importation of eggs, and it is not saved by the fact that the local market is under the same regime. Conversely, the general limitation upon provincial authority to exercise of its powers within or in the province precludes it from intercepting either goods moving into the province or goods moving out, subject to possible exceptions, as in the case of danger to life or health. The Manitoba scheme cannot be considered in isolation from similar schemes in other provinces. The existence of egg marketing schemes in more than one province, with objectives similar to the proposed Manitoba scheme, makes it clear that inter-provincial trade in eggs is being struck at by the provincial barriers to their movement into various provincial markets. To arrest such movement the aid of the Parliament of Canada must be sought. The question of severability does not arise.
Per Pigeon J.: The Plan is invalid as being designed to restrict or limit trade in eggs between provinces as such. An essential part of this scheme is to enable the Manitoba producers through the Board to restrict by means of quotas the local sale of eggs produced elsewhere to whatever extent will best serve their interests, even if this means a complete prohibition of such sale.
APPEAL from an opinion pronounced by the Court of Appeal for Manitoba, on a matter re-
[Page 691]
ferred to it by the Lieutenant-governor in Council. Appeal dismissed.
D.W. Moylan, Q.C., for the appellant.
Alan W. Scarth, Q.C., and T.P. Dooley, for the respondents, Manitoba Egg & Poultry Assoc, Manitoba Egg & Pullet Producers’ Assoc, Manitoba Feed Manufacturers Assoc and Manitoba Hatchery Assoc
Ronald J. Rolls, for the respondent, Canadian Feed Manufacturers Assoc
John W. Morden, for the respondent, Meat Packers Council of Canada.
C.R.O. Munro, Q.C., and T.B. Smith, for the Attorney-General of Canada.
G.S. Gumming, Q.C., and G.H. Cross, Q.C., for the Attorney-General of British Columbia.
J.E. Warner, Q.C., for the Attorney-General of New Brunswick.
François Mercier, Q.C., Marcel Trudeau, Q.C., and André Villeneuve, Q.C., for the Attorney‑General of Quebec
J.D. Hilton, Q.C., and D. Bernstein, for the Attorney-General of Ontario.
J. Holgate, Q.C., and G. Mylks, for the Attorney-General of Saskatchewan.
R. Riendeau, for Le Conseil de l’Alimentation du Québec.
C.H. Goulet, Q.C., and P.P. Hébert, for La Fédération des Producteurs d’Oeufs de Consommation du Québec.
The judgment of Fauteux C.J. and of Abbott, Martland, Judson, Ritchie and Spence JJ. was delivered by
MARTLAND J.—This is an appeal from an opinion pronounced, unanimously, by the Court of Appeal for Manitoba on a matter referred to it by an Order of the Lieutenant‑Governor‑in‑Council, dated November 5, 1970, as amended
[Page 692]
by a further Order-in-Council dated December 18, 1970. An appeal to this Court is permitted by s. 37 of the Supreme Court of Canada Act.
The Order-in-Council approved a recommendation of the Attorney-General for Manitoba for the submission to the Court of Appeal for its consideration of certain questions. The relevant portions of the Order-in-Council, as amended, are reproduced, as follows, with the answers given by the Court of Appeal to each of the questions:
To His Honour the Lieutenant-Governor-in-Council
The undersigned, the Attorney-General, submits for approval of Council a report setting forth that:
WHEREAS many Provinces of Canada, including the Province of Manitoba, have enacted legislation pertaining to the regulation and control of marketing of agricultural products;
AND WHEREAS certain of the marketing agencies established under the aforementioned legislation in some of the Provinces assert the right to prohibit, regulate and control the marketing within a Province of agricultural products produced outside that Province;
AND WHEREAS doubt exists concerning the extent to which a Province, or its creature, can lawfully exercise a right of the kind described in the preceding recital having in mind the limits of provincial legislative competence under the British North America Act, 1867;
AND WHEREAS pursuant to An Act for Expediting the Decision of Constitutional and Other Provincial Questions, being chapter C 180 of the Revised Statutes of Manitoba, 1970, it is deemed expedient and in the public interest to refer to The Court of Appeal for the Province of Manitoba for hearing and consideration the questions hereinafter set out;
THEREFORE he, the Minister, recommends:
THAT
1. Pursuant to the provisions of the above recited An Act for Expediting the Decision of Constitutional and Other Provincial Questions, and on the basis of the assumptions set out in paragraph 2, the questions set out in paragraph 3 be referred to The Court of Appeal for the Province of Manitoba, for hearing and consideration.
[Page 693]
2. In answering the questions referred to it, The Court of Appeal be requested to make the following assumptions:—
(1) The Regulation attached as Schedule “A” hereto is proposed to be made by the Lieutenant-Governor-in-Council.
(2) The Act of the Legislature under which the Regulation is proposed to be made purports to authorize the making of such a Regulation by the Lieutenant-Governor-in-Council.
(3) The Order attached as Schedule “B” hereto is proposed to be made by the Producer Board to be established by the Regulation.
(4) The Act referred to in subparagraph (2), and the Regulation, purport to authorize the making of such an Order by the Producer Board.
(5) The Producer Board will have authority granted to it by the Governor‑in‑Council under Section 2 of the Agricultural Products Marketing Act (Can) R.S.C. 1952, Chap. 6, to regulate the marketing of eggs produced in Manitoba in interprovincial and export trade and for such purpose, with respect to persons and property situated within Manitoba, to exercise all or any powers like the powers exercisable by it in relation to the marketing of eggs locally within the Province.
3. The questions to be referred to The Court of Appeal be as follows:—
With especial reference to Sections 91, 92 and 121 of the British North America Act, 1867, and on the basis of the assumptions set out in paragraph 2,
(1) (a) Are the Regulation and the Order ones that it is within the legislative competence of the Manitoba Legislature to authorize the Lieutenant‑Governor-in-Council and the Producer Board respectively, to make?
ANSWER: No.
(b) If the Regulation and the Order or either of them, are in part only outside the powers of provincial legislative competence, which parts are so outside?
ANSWER: This should not arise.
(2) If the Regulation and the Order or either of them, are wholly or in part within the powers of provincial legislative competence
[Page 694]
(a) Would a person resident and carrying on business in a Province other than Manitoba be entitled to sell and deliver eggs produced outside Manitoba to any person in Manitoba, free from any regulation, direction or control by the Producer Board established by the Regulation, with respect to
(i) price,
(ii) quantity,
(iii) quality,
(iv) packaging,
(v) marking,
(vi) grading,
(vii) place of delivery,
(viii) identity of purchaser,
(ix) manner of payment, and
(x) contributions to the Producer Board, or
(xi) in respect of any one or more of those items,
or in any other respect?
ANSWER: Yes.
(b) Would any person resident and carrying on business in Manitoba be entitled to buy and take delivery of eggs produced outside Manitoba, from any person resident and carrying on business outside the Province, free from any regulation, direction or control by the Producer Board with respect to the matters set out in clause (a)?
ANSWER: Yes.
(c) If a purchaser to whom clause (b) applies, takes delivery in Manitoba of the eggs therein mentioned, would he then become bound in any respect by the provisions of the Regulation and the Order if he sought, in Manitoba,
(i) to consume the eggs, or
(ii) to use the eggs in his manufacturing business, or
(iii) to resell the eggs to a wholesaler, distributor, retailer or consumer?
ANSWER, in each case: No.
(d) If in relation to the persons described in clauses (a) and (b) or the purchaser described
[Page 695]
in clause (c), and in the circumstances described in those clauses, there is any respect in which the Producer Board can lawfully exercise powers of regulation, direction or control does that exercise become unlawful if it exceeds a certain degree as measured by its prohibitive or restrictive effect upon interprovincial trade, and if so is that degree capable of judicial definition?
ANSWER: A Provincial legislature may not exercise powers of regulation, direction or control, in respect of trade, if such exercise is, in essence and purpose, related to a Provincial boundary and impedes the free flow of trade across Canada. The degree of regulation, direction or control which is lawful would depend upon the factual situation and it would be inappropriate to attempt, in vacuo, a judicial definition.
The Regulation referred to in the Order-in-Council is described as “a Regulation providing for A Plan to Control and Regulate the Marketing of eggs in the Province of Manitoba”, such Plan to be known as “The Manitoba Egg Producers’ Marketing Plan.”
Section 2 of the Regulation contains the following definitions:
(a) “grading station” means an establishment the operator of which is under contract with the Producer Board, where any regulated product is graded, packed, marked and stored;
(b) “marketing” means selling, or offering for sale, and includes advertising, packing, storage, shipping, and transportation, but does not include packing and storage by a producer on his premises;
* * *
(d) “packing station” means an establishment the operator of which is under contract with the Producer Board, where any regulated product already graded is packed, marked and stored;
(e) “producer” means any owner of laying domestic hens who is marketing or who is producing and marketing any regulated product for any purpose other than incubation;
[Page 696]
(f) “Producer Board” means The Manitoba Egg Producers’ Marketing Board established by subsection (1) of Section 4 of this Regulation;
(g) “regulated product” means the egg of the domestic hen not used for incubation;
Section 3(a) and (c) provides that the purpose of the Plan is: “To obtain for producers the most advantageous marketing conditions for the regulated product” and also that its purpose is to regulate production to “avoid over-production thereof.”
Section 4(1) and (2) provides:
4. (1) There is hereby established a producer board to be known as The Manitoba Egg Producers’ Marketing Board.
(2) The Producer Board shall be made up of 6 members, all of whom shall be actively engaged in the production of the regulated product, to be elected by the producers as provided in a regulation to be enacted hereafter; a majority of the members of the Producer Board shall constitute a quorum for the conduct of business.
Sections 5 and 6 read:
5. The Producer Board shall be responsible for the operation, administration, management and enforcement of this Plan.
6. The Producer Board shall with respect to the regulated product be the exclusive sales agent of all producers.
The relevant portions of s. 7 provide:
7. Every producer shall with respect to the regulated product:—
(a) Comply with all lawful orders and regulations of the producer Board;
(b) Perform any agreement entered into by the Producer Board as his exclusive sales agent;
(c) Obtain from the Producer Board production and marketing quotas, and abide by them;
(d) Entrust the Producer Board with the exclusive marketing of his production;
[Page 697]
The relevant portions of s. 8 are as follows:
8. The Producer Board may with respect to the regulated product:—
* * *
(b) Issue production and marketing quotas to producers;
* * *
(i) Establish quotas for production and sale, fix the time and place of marketing, prohibit marketing outside the fixed time or place or in violation of the established quota or standard, and prohibit the offering for sale of a particular regulated product to ensure the orderly marketing of the regulated product;
(j) Determine the mode and conditions of marketing the regulated product, or prohibit the marketing thereof otherwise than through its agency;
The Order of the Manitoba Egg Producers’ Marketing Board, referred to in the Order-in-Council, contains the following provisions:
1. In this Order:
* * *
(c) “distributor” means any person having a contract with the Producer Board and who is engaged in the selling of regulated product to retailers;
* * *
(j) “retailer” means any person engaged in the sale of any regulated product to consumers, regardless of the form under which such regulated product is sold. The term includes all government organizations, hospital, religious or school institutions, as well as all restaurants, hotels or enterprises which use any regulated product in their business.
2. A producer shall send his whole production to the grading station specified by the Producer Board.
3. A producer shall market his production through the Producer Board acting as his selling agent.
4. No person shall sell or offer for sale any regulated product except through the Producer Board acting as his selling agent.
[Page 698]
5. No person shall sell or offer for sale any regulated product which has not been graded, packed and marked in a grading or packing station, as the case may be, the operator of which is under contract with the Producer Board.
12. Regulated product shall be packed in containers provided by the Producer Board.
* * *
14. Cartons and cases of regulated product shall bear in indelible characters, easy to read, apparent and being at least one quarter of an inch high, the following inscriptions:
(a) The name of the grade of the regulated product;
(b) The number of the registered station where the regulated product has been graded and packed;
(c) The date of the grading;
(d) The place of origin of the regulated product;
(e) The Producer Board trade mark.
15. The indication of origin of regulated product produced in Manitoba shall contain the word “Manitoba”, which is reserved exclusively for such product. The indication of origin of any other regulated product is made by inscribing the name of the country of origin or, in the case of eggs coming from another Canadian province, the word “Canada”, or the name of the province of origin, or an equivalent expression.
16. Every week on Thursday the Producer Board shall set the price of each grade of regulated product. All regulated product shall be offered for sale to distributors at that price which remains in force from Monday to Saturday of the following week, both days inclusive.
* * *
19. The Producer Board as selling agent shall collect from the purchaser the price of any regulated product sold.
20. No producer may deliver any regulated product to any person except through a collector designated by the Producer Board. The regulated product shall be put in containers provided by the producer Board and furnished to the producer by the collector.
21. The Producer Board may enter into contracts with collection centers to receive and store regu-
[Page 699]
lated product, with packing stations for packing, marking and storage of regulated product, and with grading stations for the collection, washing, grading, packing and storage of regulated product and any other related operation.
22. The Producer Board may enter into contracts with distributors concerning the sale and distribution of regulated product.
The foregoing are the provisions of the Regulation and of the Order which are relevant to the consideration of this appeal. The Regulation and the Order, together, constitute what I shall refer to as “the Plan.”
At the outset it is desirable to consider the meaning of the word “producer”, which is defined, in both the Regulation and the Order, and which appears frequently in both. It is not, by its terms, specifically limited to persons in Manitoba who are owners of laying domestic hens who are marketing, or producing and marketing, eggs. However, as it is clear that the Manitoba Legislature does not have the constitutional power to regulate the activities outside Manitoba of persons outside Manitoba, and having in mind the nature of the regulation of “producers”, which many of the provisions of the Plan seek to impose, it is my view that, generally, the word, as used in the Regulation and in the Order, means a Manitoba producer.
The Plan, nonetheless, contemplates that it shall be applicable to all eggs marketed in Manitoba, whether or not they are produced in that province. While the provincial Legislature could not control, or permit the Producer Board (hereinafter referred to as “the Board”) to control the production of eggs in another province, the terms of the Plan are applicable to the produce of another province once it is within Manitoba and available for marketing.
That this is the position is illustrated by the fact that, whereas s. 8(b) of the Regulation authorizes the Board to issue production and marketing quotas to producers, para, (i) of the same section goes on to give a general authority to the Board to establish quotas for production and sale,
[Page 700]
to prohibit marketing in violation of an established quota and to prohibit the offering for sale of a particular regulated product to ensure the orderly marketing of the regulated product.
Sections 2 and 3 of the Order require a producer to send his whole production to a grading station specified by the Board and to market such production through the Board, acting as his selling agent. Sections 4 and 5 provide that “no person” shall sell or offer for sale any regulated product except through the Board acting as his selling agent and that “no person” shall sell or offer for sale any regulated product not graded, packed and marked in a grading or packing station, the operator of which is under contract with the Board.
These provisions make it clear that the Plan is intended to apply, not only to eggs produced by Manitoba producers, but to any eggs in Manitoba, wherever they may have been produced. This intent is placed beyond doubt by the provisions of ss. 12, 14 and 15 of the Order, which require the regulated product to be packed in containers, provided by the Board, which shall carry an inscription showing the place of origin of the regulated product and indicating whether such place of origin was in Manitoba, in another country, or in another province.
Complete control of the marketing of all eggs in Manitoba is vested in the Board. It is only through the Board, as selling agent, that any eggs may be sold or offered for sale. It has the authority, as already noted, to impose marketing quotas and to prohibit the offering for sale of a particular regulated product to ensure the orderly marketing of the regulated product. No eggs can be sold or offered for sale unless graded, packed and marked by a grading or packing station under contract with the Board. All eggs must be offered for sale to distributors, under contract with the Board, at prices set, from time to time, by the Board.
The Board, to which the Plan proposes to grant these broad powers, is not one which is to be
[Page 701]
appointed by the Manitoba Government, but is to be elected by the Manitoba producers. Its members must be actively engaged in the production of eggs. The main purpose of the Plan, to be achieved through the Board, is “to obtain for producers the most advantageous marketing conditions for the regulated product.”
We have, therefore, a Plan which is intended to govern the sale in Manitoba of all eggs, wherever produced, which is to be operated by and for the benefit of the egg producers of Manitoba, to be carried out by a Board armed with the power to control the sale of eggs in Manitoba, brought in from outside Manitoba, by means of quotas, or even outright prohibition.
The issue which has to be considered in this appeal is as to whether the Plan is ultra vires of the Manitoba Legislature because it trespasses upon the exclusive legislative authority of the Parliament of Canada to legislate on the matter of the regulation of trade and commerce conferred by s. 91(2) of The British North America Act.
When the Privy Council first addressed itself to the meaning of that provision it was stated that it included “regulation of trade in matters of inter-provincial concern” (Citizens Insurance Company of Canada v. Parsons). That proposition has not since been challenged. However, the case went on to hold that the provision did not include the regulation of the contracts of a particular business or trade in a single province.
This limitation on the federal power was reiterated in subsequent decisions of the Privy Council, the effect of which is summarized in Shannon v. Lower Mainland Dairy Products Board:
It is now well settled that the enumeration in s. 91 of “the regulation of trade and commerce” as a class of subject over which the Dominion has exclusive legislative powers does not give the power to regulate for legitimate Provincial purposes particular trades or
[Page 702]
businesses so far as the trade or business is confined to the Province.
In that case the Natural Products Marketing (British Columbia) Act, 1936, was held to be intra vires of the Provincial Legislature because it was confined to dealings with such products as were situate within the province, even though not necessarily produced there. The basis of this decision was that “The pith and substance of this Act is that it is an Act to regulate particular businesses entirely within the Province…” (at p. 720).
Similarly, this Court upheld, in Home Oil Distributors Limited v. Attorney-General of British Columbia, provincial legislation authorizing the fixing of wholesale or retail prices for coal or petroleum products sold in British Columbia for use in that province. This judgment was based upon the decision in the Shannon case.
The power of a provincial legislature to forbid generally the possession and sale of intoxicating liquor within the province had been previously declared in the case of R. v. Nat Bell Liquors, Limited.
The earlier authorities on the matter of provincial marketing regulation were considered by various members of this Court in the Reference Respecting The Farm Products Marketing Act, which case, as well as some of those authorities, was reviewed in the judgment of this Court in Carnation Company Limited v. The Quebec Agricultural Marketing Board. It was said, in that case, at p. 253:
While I agree with the view of the four judges in the Ontario Reference that a trade transaction, completed in a province, is not necessarily, by that fact alone, subject only to provincial control, I also hold the view that the fact that such a transaction incidentally has some effect upon a company engaged in interprovincial trade does not necessarily prevent its being subject to such control.
[Page 703]
Our conclusion was that each transaction and regulation had to be examined in relation to its own facts, and that, in determining the validity of the regulatory legislation in issue in that appeal, the issue was not as to whether it might affect the inter-provincial trade of the appellant company, but whether it was made in relation to the regulation of inter-provincial trade and commerce. There was cited the following passage from the reasons of Kerwin C.J. in the Ontario Reference (at p. 204):
Once a statute aims at “regulation of trade in matters of inter-provincial concern” it is beyond the competence of a Provincial Legislature.
It is my opinion that the Plan now in issue not only affects inter-provincial trade in eggs, but that it aims at the regulation of such trade. It is an esential part of this scheme, the purpose of which is to obtain for Manitoba producers the most advantageous marketing conditions for eggs, specifically to control and regulate the sale in Manitoba of imported eggs. It is designed to restrict or limit the free flow of trade between provinces as such. Because of that, it constitutes an invasion of the exclusive legislative authority of the Parliament of Canada over the matter of the regulation of trade and commerce.
That being so, I would hold that the Regulation and Order are not ones which are within the legislative competence of the Manitoba Legislature to authorize, and the answer to Question (1) (a) should be: No.
With respect to Question (1) (b), which raises the question of the severability of the Regulation and Order, I agree with the Court of Appeal that they are not severable because those portions which deal with local provincial trade in eggs are inextricably bound up with those which concern inter-provincial trade. My answer to Question (1) (b) would be that the Regulation and the Order are, in toto, outside the powers of provincial legislative competence.
The various questions contained in Question (2) are postulated upon the Regulation and the Order, or either of them, being wholly, or in part,
[Page 704]
within provincial legislative competence. In view of the answers given to Question (1) (a) and (b) these questions are not required to be answered.
In the result, I would dismiss the appeal, and, in answer to the questions referred to the Court of Appeal for Manitoba by the Lieutenant-Governor-in-Council, I would pronounce the opinion:
As to Question (1) (a) and (b), that it is beyond the legislative jurisdiction of the Manitoba Legislature to authorize the proposed Regulation and Order in question; and,
As to Question (2), that it does not, by the terms of the Order-in-Council 1083/70 dated November 5, 1970, require an answer.
The judgment of Hall and Laskin JJ. was delivered by
LASKIN J.—The utility of the Reference as a vehicle for determining whether actual or proposed legislation is competent under the allocations of power made by the British North America Act is seriously affected in the present case because there is no factual underpinning for the issues that are raised by the Order of Reference. Marketing data to illuminate those issues might have been set out in the Order itself (as was done, for example, in the Margarine Reference), or in an agreed statement of facts, or, indeed, might have been offered to the court to indicate the circumstances which prompted the questions addressed to it.
As it is, I know nothing of the nature of the market for eggs in Manitoba or outside of it, nothing of the production of eggs in that province, nothing of the uses to which the production is put, nothing of the number of producers in Manitoba, nothing of any problems that may have been created in relation to quality, price or otherwise by the entry of out-of-province eggs. I know only, and then in the broad terms set out in the first two recitals in the Order of Reference (and of
[Page 705]
which matters I could, in any event, have taken judicial notice) that (to quote them) “many Provinces of Canada, including the Province of Manitoba, have enacted legislation pertaining to the regulation and control of marketing of agricultural products” and “certain of the marketing agencies established under the afore-mentioned legislation in some of the Provinces assert the right to prohibit, regulate and control the marketing within a Province of agricultural products produced outside that Province”.
A knowledge of the market in Manitoba, the extent to which it is supplied by Manitoba producers, and of the competition among them as it is reflected in supply, quality and price, would be of assistance in determining the application of the proposed legislative scheme. Thus, if out-of-province eggs were, to put an example, insignificant in the Manitoba market, this would be a factor bearing on a construction of the scheme as operative only in respect of Manitoba producers, retailers and consumers in production, distribution and consumption in Manitoba. Conversely, if such eggs were significant in the Manitoba market, the legislative scheme, not being expressly confined to production distribution and consumption in Manitoba, could properly be regarded as directed to the out-of-province eggs. In this respect, the issue would be one of its validity or invalidity, and not one of construing it to be applicable only to the distribution and consumption within the province of eggs produced in the province.
The absence of what I regard as relevant data leaves the position as one where, on the face of the legislative scheme and in the light of the arguments thereon addressed to the court, the contemplated regulations and order purport to embrace out-of-province eggs sent or brought into
[Page 706]
the province. Moreover, the embrace would extend to out-of-province eggs of whatever quantity, and to whatever extent they might engulf the Manitoba retailer and consumer market. On this view of the situation, there is the naked constitutional question to be faced, namely; there being no federal regulatory legislation in force with the same thrust, is the proposed scheme offensive to the legislative power of Parliament in relation to “the regulation of trade and commerce” under s. 91 (2) of the B.N.A. Act; and, if not or if so, is it, in any event offensive to the prescriptions of s. 121 of that Act?
Previous cases which have been concerned with the validity of provincial regulatory legislation as tested by the scope of s. 91 (2) alone (and not also by the concurrent presence of federal regulatory legislation) cannot be dissociated from cases which have been concerned with the validity of federal regulatory legislation and which, accordingly, have dealt affirmatively with the scope of s. 91 (2). These two classes are not necessarily opposite sides of the same coin, and hence, the frame of the legislation in each situation has central importance. On the provincial side, a comparison is apt of Lawson v. Interior Tree Fruit and Vegetable Committee of Direction with Shannon v. Lower Mainland Dairy Products Board; and on the federal side, a comparison may be made of Reference re Natural Products Marketing Act with Murphy v. C.P.R.
I adopt the position put by Rand J. in Reference re Ontario Farm Products Marketing Act, that there is a field of trade within provincial power, such power being a subtraction from that
[Page 707]
comprehended within s. 91 (2). The subtraction is, to me, quite rational under the scheme of the B.N.A. Act, although stronger terms, referable to a necessary degree of provincial autonomy, have been used in the cases to support it. That there is such subtraction if a provincial regulatory field is to be recognized was obvious to this court in its earliest years. In the very first reported case on the distribution of legislative power, Severn v. The Queen, Strong J., in a dissenting judgment which favoured the validity of the provincial statute that was successfully challenged, pointed out (at p. 104) that, literally, “the regulation of trade and commerce in the Provinces, domestic and internal, as well as foreign and external, [was] by the British North America Act exclusively conferred upon the Parliament of the Dominion”. A reduction of this all-embracing authority was effected by this Court in Citizens Insurance Co. v. Parsons, a decision affirmed by the Privy Council but with obiter remarks that led over the years to almost as much an attenuation of the federal power in relation to s. 91 (2) as its literal construction would have led to its aggrandizement. A necessary balance has been coming into view over the past two decades, as is evident from the judgments of this court in Murphy v. C.P.R., already cited (and emphasized by the refusal of leave to appeal in Regina v. Klassen) and Carnation Company Ltd. v. Quebec Agricultural Marketing Board.
What this balance points to is a more particular understanding of the meaning of the terms “trade” and “trade and commerce” as they relate respec-
[Page 708]
tively to the areas of provincial and federal competence. In Montreal v. Montreal Street Railway, the Judicial Committee referred to s. 91 (2) as expressing “two of the matters enumerated in s. 91”. That provision is perhaps better seen as specifying a single class of subject in words that indicate a stronger source of authority than would be found if “trade” alone was used or “commerce” alone. This view is strengthened by the fact that it is unnecessary here to rely on s. 91 (2) for transportation authority (having regard to ss. 92 (10) (a) (b),91 (10) and 91 (29)), in contradistinction to the judicial history of the commerce power in the United States under clause 3 of Article I of its Constitution and to the evolution of the power of the Commonwealth Parliament under s. 51 (i) of the Australian Constitution to make laws with respect to “trade and commerce with other countries and among the States”. Etymologically, commerce refers to the buying and selling of goods, and trade has among its meanings (other than commerce) that of mercantile occupation. Although literal application is unthinkable, these meanings do indicate the capacity which inheres in s. 91 (2).
Not too often in the history of the interaction of provincial and federal legislation with s. 91 (2) have there been attempts to define its terms. An early instance is that by Sedgewick J. in In re Prohibitory Liquor Laws. Another instance in which definition or specification was attempted is In re Canadian Insurance Act, 1910, affirmed. The meaning of “trade and commerce” in respect
[Page 709]
of transactions in goods, as opposed to non-commodity transactions, does not appear to have been elucidated in any reported case, but has been left to inference from the nature of the legislation under review. It has been put beyond doubt that Parliament’s power under s. 91 (2) is exclusive so far as concerns the prohibition or regulation of exports to and imports from other countries, and that a province may not, as legislator, prohibit or regulate the export of goods therefrom. This last-mentioned proposition, which is exemplified in such decisions as In re Grain Marketing Act, 1931, and Re Sheep and Swine Marketing Scheme, does not, however, mean that, in the absence of federal legislation, a province is incompetent to impose any regulation upon transactions in goods produced therein and between persons therein simply because the regulation may have an effect upon ultimate export of the goods from the province, whether in their original or in some processed form.
The stage of dealing at which the regulation is imposed and its purpose, on which economic data would be relevant, are important considerations in assessing provincial competence. This emerges clearly from Carnation Milk Company Ltd. v. Quebec Agricultural Marketing Board, supra, where this court rejected a contention that the regulatory scheme, as reflected in three challenged orders, constituted an unlawful invasion of federal power in relation to export. What was there involved was the fixing of prices, by arbitration if agreement could not otherwise be reached, at which milk and dairy products produced in the province were to be sold by provincial producers, operating under a joint marketing plan, to a dis-
[Page 710]
tributor and processor in the province. The fact that the processed products were largely distributed and sold outside the province did not react upon the validity of the scheme whose purpose was to improve the bargaining position in the province of provincial producers in their dealings with manufacturers or processors in the province. The regulatory scheme under attack did not involve a marketing control which extended through the various stages of production, distribution and consumption.
What was raised in the Carnation Milk case was the meaning, for constitutional purposes, of an intraprovincial transaction where the issue was seen in the context of goods leaving the province. The present Reference raises this question in the context of goods entering the province and their subjection, in consequence, to the same regulatory scheme that operates upon like goods produced in the province. This was a matter which had been considered in the Shannon case, supra, and in Home Oil Distributors Ltd. v. Attorney-General of British Columbia, in both of which the impugned schemes were held to be within provincial legislative competence.
There is a passage in the reasons of the Judicial Committee in the Shannon case which has a bearing on this Reference. Lord Atkin said this (at pp. 718-719 of [1938] A.C.):
It is sufficient to say upon the first ground that it is apparent that the legislation in question is confined to regulating transactions that take place wholly within the Province, and are therefore within the sovereign powers granted to the Legislature in that respect by s. 92 of the British North America Act, Their Lordships do not accept the view that natural products as
[Page 711]
defined in the Act are confined to natural products produced in British Columbia. There is no such restriction in the Act, and the limited construction would probably cause difficulty if it were sought at some future time to co-operate with a valid Dominion scheme. But the Act is clearly confined to dealings with such products as are situate within the Province.
The second sentence in this passage must be read in the light of the history of marketing leglislation as it evolved in that period. Parliament and provincial legislatures had enacted what they thought was dovetailing legislation only to find that the central piece, the federal enactment, had overreached in attempting to encompass purely intra-provincial transactions in products grown and marketed in the province, this element of the scheme being founded on the fact that some portion of the product might be exported: see Attorney-General of British Columbia v. Attorney-General of Canada. The Privy Council appeared to think in the Shannon case that effective cooperation in marketing could better be ensured if the small extra-provincial element was an appendage of provincial legislation. The decision did not foresee the later developments in this area through such legislation as the Motor Vehicle Transport Act, 1954 (Can.), c. 59 and the Agricultural Products Marketing Act, R.S.C. 1952, c. 6, as amended by 1957 (Can.), c. 15.
In my opinion, the Shannon case cannot today have the effect which a literal application of the second sentence of the quoted passage would suggest. Moreover, the fourth and last sentence indicates that the legislation did not purport to apply to out-of-province producers. However, I find this difficult to reconcile with the second sentence unless it be taken that the marketing scheme did not apply to out-of-province products on their mere
[Page 712]
entry into the province or that any such application was de minimis and not an aim of the scheme. If so, the scheme in the Shannon case differs from that involved in this Reference.
Home Oil Distributors Ltd. v. Attorney-General of British Columbia concerned not a marketing scheme of the type involved in the Shannon case or in the present case, but rather a price fixing scheme, embracing both maximum and minimum prices for coal and petroleum products sold at wholesale or retail in the province or for use in the province. It was urged that the legislation was intended to protect local industry from outside competition and, indeed, was aimed at extraterritorial sources of supply and at an integrated interprovincial and international industry. The challenge to the validity of the legislation was made by companies operating refineries in the province who sold to persons in the province, but whose raw supplies came from outside. There was no attempt to control the entry of their oil which, when refined in the province, was marketed therein, save as that control resulted from the price fixing authority. In these circumstances, the legislation was upheld on the principle of the Shannon case.
I cannot see in the Home Oil case any parallel with the marketing scheme which the Order of Reference put before the Manitoba Court of Appeal. In saying this, I reserve my opinion on a question not dealt with in the reasons of this court in the Home Oil case; that is, whether it would have made any difference if under the power given to “fix schedules of prices for different qualities, quantities, standards, grades and kinds of coal and petroleum products” imported goods
[Page 713]
were treated discriminatorily simply because they were imported.
Neither in the Shannon case nor in the Home Oil case was there any attempt to examine the various elements or sets of relationships in a marketing or price fixing scheme with a view to elucidating the meaning, for constitutional purposes, of intraprovincial trade and commerce. This exercise fell to this court in the Ontario Farm Products Marketing Act Reference, supra. What emerges from the various reasons of the members of the court is that (1) individual contracts for the sale and purchase of goods in a province do not engage federal power under s. 91 (2) where any applicable provincial legislation relates merely to the terms of the contract; (2) regulation of the marketing, or the processing and marketing, of products in a province for consumption therein is within provincial competence; (3) regulation of the marketing of provincial produce intended for export or sought to be purchased for export is beyond that competence; (4) regulation of production or manufacture must be distinguished from regulation of transactions in the product and it cannot be said that the former is so wholly within provincial regulatory competence as in all cases to cover production or manufacture for export; and (5) even in respect of the latter, it cannot be categorically stated that ultimate extra-provincial destination will foreclose provincial regulation of intermediate steps in the marketing process. The matter was put in the following words by Martland J. speaking for the court in the Carnation Company case:
While I agree with the view of the four judges in the Ontario Reference that a trade transaction, com-
[Page 714]
pleted in a province, is not necessarily, by that fact alone, subject only to provincial control, I also hold the view that the fact that such a transaction incidentally has some effect upon a company engaged in interprovincial trade does not necessarily prevent its being subject to such control.
The Ontario Farm Products Marketing Act Reference, although refining the meaning of an intra-provincial transaction, did not expressly address itself to the position of an extraprovincial producer, or a purchaser from him, seeking to bring his production into a province free of a regulatory scheme applicable to local produce. Fauteux J., as he then was, noted in that Reference that the hog marketing scheme which was the subject of the court’s concern did not cover hogs produced outside the province nor were producers outside the province affected thereby. “In the result”, he said, “any one in Ontario is free to import therein and one beyond its boundaries to export thereto the regulated product” (at p. 254 of [1957] S.C.R.). This is, however, precisely the issue that must be faced in the present Reference.
It must be faced under a scheme which, as set out in the proposed measures attached to the Order of Reference, has the following elements:
(1) A Producer Board is established through which all eggs to be marketed in Manitoba must be sold.
(2) All such eggs must go to grading and packing stations which are to be operated by persons under contract with the Board.
(3) All such eggs must be graded, packed and marked in the grading and packing stations.
[Page 715]
(4) They are to be packed in containers provided by the Board which are to bear inscriptions of the grade, station number, grading date, place of origin of the eggs and the Board trade mark.
(5) Only authorized collectors may take delivery of eggs from a producer.
(6) Production and marketing quotas may be allotted to producers by the Board.
(7) The Board may establish quotas for production and sale and also fix the time and place of marketing and, equally, may prohibit marketing otherwise or in violation of established quotas or standards.
(8) The Board may contract with distributors as its intermediaries in sales to retailers.
(9) Weekly prices for each grade of egg are to be set by the Board and distributors are entiltled to buy at those prices.
Although the emphasis is on control of the Manitoba producers and distributors in order (as stated in the proposed measures) “to obtain for producers the most advantageous marketing conditions” and “to avoid overproduction”, the scheme brings into its grasp “persons” as well as producers, that is, those outside the province who are either producers or distributors seeking to enter the Manitoba market, or those inside the province who are not themselves producers but who bring in out-of-province eggs for disposition in Manitoba. This view is reinforced by the provision for indicating the origin of eggs, including eggs other than those produced in Manitoba.
There may be a variety of reasons which impel a province to enact regulatory legislation for the
[Page 716]
marketing of various products. For example, it may wish to secure the health of the inhabitants by establishing quality standards; it may wish to protect consumers against exorbitant prices; it may wish to equalize the bargaining or competitive position of producers or distributors or retailers, or all three classes; it may wish to ensure an adequate supply of certain products. These objects may not all nor always be realizable through legislation which fastens on the regulated product as being within the province. That is no longer, if it ever was, the test of validity. Just as the province may not, as a general rule, prohibit an owner of goods from sending them outside the province, so it may not be able to subject goods to a regulatory scheme upon their entry into the province. This is not to say that goods that have come into a province may not, thereafter, be subject to the same controls in, for example, retail distribution to consumers as apply to similar goods produced in the province.
Assuming such controls to be open to a province, the scheme before this court is not so limited. It embraces products which are in the current of interprovincial trade and, as noted at the beginning of these reasons, it embraces them in whatever degree they seek to enter the provincial market. It begs the question to say that out-of-province producers who come in voluntarily (certainly they cannot be compelled by Manitoba) must not expect to be treated differently from local producers. I do not reach the question of discriminatory standards applied to out-of-province producers or distributors (that is, the question of a possibly illegal administration of the scheme as bearing on its validity) because I am of opinion that the scheme is on its face an invasion of federal power in relation to s. 91 (2).
[Page 717]
There are several grounds upon which I base this conclusion. The proposed scheme has as a direct object the regulation of the importation of eggs, and it is not saved by the fact that the local market is under the same regime. Anglin J. said in Gold Seal Ltd. v. Dominion Express Co. that “it is common ground that the prohibition of importation is beyond the legislative jurisdiction of the province”. Conversely, the general limitation upon provincial authority to exercise of its powers within or in the province precludes it from intercepting either goods moving into the province or goods moving out, subject to possible exceptions, as in the case of danger to life or health. Again, the Manitoba scheme cannot be considered in isolation from similar schemes in other provinces; and to permit each province to seek its own advantage, so to speak, through a figurative sealing of its borders to entry of goods from others would be to deny one of the objects of Confederation, evidenced by the catalogue of federal powers and by s. 121, namely, to form an economic unit of the whole of Canada: see the Lawson case. The existence of egg marketing schemes in more than one province, with objectives similar to the proposed Manitoba scheme, makes it clear that interprovincial trade in eggs is being struck at by the provincial barriers to their movement into various provincial markets. If it be thought necessary or desirable to arrest such movement at any provincial border then the aid of the Parliament of Canada must be sought, as was done through Part V of the Canada Temperance Act, R.S.C. 1952, c. 30, in respect of provincial regulation of the sale of intoxicating liquor.
[Page 718]
I do not find it necessary in this case to invoke s. 121, and hence say nothing about its applicability to the marketing scheme under review. I would also note at this point that nothing is added to provincial competence by the fact (under the assumptions stated in the Order of Reference) that the Producer Board was to have authority under the federal Agricultural Products Marketing Act, already mentioned, to regulate the marketing in interprovincial and export trade of eggs produced in Manitoba. The combined effect of Murphy v. C.P.R., supra, and P.E.I. Potato Marketing Board v. H.B. Willis Inc. gives federal authority for the delegation of power to act in respect of matters within federal jurisdiction; none is needed from the province, nor is there any accretion to its legislative authority.
I turn now to the questions put before the Manitoba Court of Appeal and to the answers thereto by Dickson J.A., who spoke for that court. They are as follows:
(1) (a) Are the Regulation and the Order ones that it is within the legislative competence of the Manitoba Legislature to authorize the Lieutenant-Governor-in-Council and the Producer Board respectively, to make?
Answer: No.
(b) If the Regulation and the Order or either of them, are in part only outside the powers of provincial legislative competence, which parts are so outside?
Answer: This should not arise.
(2) If the Regulation and the Order or either of them, are wholly or in part within the powers of provincial legislative competence
(a) Would a person resident and carrying on business in a Province other than Manitoba be entitled to sell and deliver eggs produced outside Manitoba to any person in Manitoba, free from
[Page 719]
any regulation, direction or control by the Producer Board established by the Regulation, with respect to
(i) price,
(ii) quantity,
(iii) quality,
(iv) packaging,
(v) marking,
(vi) grading,
(vii) place of delivery,
(viii) identity of purchaser,
(ix) manner of payment, and
(x) contributions to the Producer Board, or
(xi) in respect of any one or more of those items,
or in any other respect?
Answer: Yes.
(b) Would any person resident and carrying on business in Manitoba be entitled to buy and take delivery of eggs produced outside Manitoba, from any person resident and carrying on business outside the Province, free from any regulation, direction or control by the Producer Board with respect to the matters set out in clause (a)?
Answer: Yes.
(c) If a purchaser to whom clause (b) applies, takes delivery in Manitoba of the eggs therein mentioned, would he then become bound in any respect by the provisions of the Regulation and the Order if he sought, in Manitoba,
(i) to consume the eggs, or
(ii) to use the eggs in his manufacturing business, or
(iii) to resell the eggs to a wholesaler, distributor, retailer or consumer?
Answer: (i) No.
(ii) No.
(iii) No.
(d) if in relation to the persons described in clauses (a) and (b) or the purchaser described
[Page 720]
in clause (c), and in the circumstances described in those clauses, there is any respect in which the Producer Board can lawfully exercise powers of regulation, direction or control does that exercise become unlawful if it exceeds a certain degree as measured by its prohibitive or restrictive effect upon interprovincial trade, and if so is that degree capable of judicial definition?
Answer: A provincial legislature may not exercise powers of regulation, direction or control, in respect of trade, if such exercise is, in essence and purpose, related to a Provincial boundary and impedes the free flow of trade across Canada. The degree of regulation, direction or control which is lawful would depend upon the factual situation and it would be inappropriate to attempt, in vacuo, a judicial definition.
On the appeal to this Court, the answer to question 1 (a), which concerned the main constitutional issue, was challenged by the appellant Attorney General of Manitoba, and by the Attorneys General of British Columbia, New Brunswick and Saskatchewan, intervenants; and save as to paragraph 15 of the proposed Order of the Producer Board (respecting the required indication of the origin of eggs going into the Manitoba marketing channel) was challenged by the Attorney General of Ontario, an intervenant; and save as to paragraph 14(e) of the proposed Order (respecting the required inscription of the Producer Board trade mark on the prescribed egg cartons and cases) was challenged by the Attorney General of Quebec, also an intervenant. The answer was fully supported, of course, by the various respondents, and also by the Attorney General of Canada, and by the Conseil de l’Alimentation du Québec, who were intervenants.
As is evident from my reasons, I concur with Dickson J.A. in the answer which he gave to question 1 (a). I am, therefore, unable to agree that either paragraph 14 (e) or paragraph 15 is severable; nor would I agree that, if severable,
[Page 721]
the proposed scheme would be within provincial competence. It follows that, in my opinion, as in the opinion of Dickson J.A., question 1 (b) does not arise.
Question 2, although postulated at the outset on the validity of all or part of the proposed scheme, invites answers to questions under part (a) thereof that themselves raise issues of validity. Since the proposed scheme cannot come into operation without the Producer Board as exclusive selling agent of all eggs to be marketed in Manitoba, question 2 can only be answered, in my opinion, on the assumption that out-of-province eggs are not within the scheme. On this footing, question 2 (a) should be answered “yes” and, similarly, question 2 (b).
Question 2 (c) is concerned with the Manitoba purchaser from an out-of-province vendor (as in question 2 (b)); and on the assumption already made as to question 2 as a whole, the answers to questions 2 (c) (i) and (ii) must be “no”. Question 2 (c) (iii) introduces, however, another element, namely, what I may call the “domestication” within the province of the out‑of‑province eggs. The answer to question 2 (b) settles, in my opinion, any doubt about the eggs not being in the course of interprovincial trade. What question 2 (c) (iii) raises is the point, if any, at which the eggs become subject to local regulation, not because they were produced in the province but because they have come to rest therein. This is a familar problem in American constitutional law which has been pragmatic in treating it, after its evolution under the “original package” doctrine: see Smith, The Commerce Power in Canada and in the United States (1963), at pp. 280-284.
I agree with Dickson J.A. that the issue is one for particular determination in each case, that is, as it arises under applicable legislation. So far as the scheme under consideration here is concerned, reselling would be caught by its terms
[Page 722]
and oblige the would-be reseller to come to the Producer Board. Hence, the answer to 2 (c) (iii) must depend on whether it can be said that the imported eggs are the subject of inter‑provincial trade or have ceased to be in the course of that trade. Having regard to the answer to question 2 (b) and to the frame of the marketing scheme, the answer to question 2 (c) (iii) must here be equally “no”.
Question 2 (d) cannot, in my view, be effectively answered without making assumptions about the role of the Producer Board in relation to retailers and consumers of eggs as well as producers, distributors or wholesalers; and, further, without connecting dealings of the Board in such cases with such items as price, quality and grading set out in question 2 (a). I am, therefore, of the same opinion as Dickson J.A. in so far as he says that it would be inappropriate to attempt, in vacuo, a judicial definition of the degree or range of provincial competence. The complete answer given by Dickson J.A. was supported by the Attorney General of British Columbia and by the Attorney General of New Brunswick; and the first part only was supported by the appellant Attorney General of Manitoba and by the Attorney General of Saskatchewan and, in effect, by the Attorney General of Quebec. The Attorney General of Ontario contended that the question could not be answered. The Attorney General of Canada took the broader position that question 2 as a whole did not require an answer, although he did give a general answer to question 2 (d) which amounted to a reaffirmation of the answer to question 1 (a). The respondents, in varying formulations of answers proposed by them emphasized the invalidity of any provincial regulation that interfered with or impeded inter-provincial trade or that discriminated in that aspect of the matter between local and external produce.
On the foregoing review, I am fortified in my opinion that I would have to postulate too many
[Page 723]
facts (and it would be imprudent to do so) to enable me to give any helpful answer to question 2 (d). I content myself with a general reference to my reasons on the issues raised by the question.
I would dismiss the appeal.
PIGEON J.—I am in agreement with the reasons and conclusions of my brother Martland subject to the following observations.
In my view, the statement of the Privy Council in Citizens Insurance Company v. Parsons must be read in the context of a case in which the actual decision was not as to the extent of federal commerce power but as to the provincial authority over local trade. Furthermore, the statement was immediately followed by this important qualification:
Their Lordships abstain on the present occasion from any attempt to define the limits of the authority of the dominion parliament in this direction.
Although I fully agree that the Plan in issue is invalid as being aimed at the regulation of interprovincial trade in eggs, I wish to restrict my reason for reaching this conclusion to the following consideration.
An essential part of this scheme designed to obtain for Manitoba egg producers the most advantageous marketing conditions, is not merely to subject eggs brought in from outside the province to the same trade regulations as those produced therein but, in effect, to enable the Manitoba producers through the Board to restrict by means of quotas the local sale of eggs produced elsewhere to whatever extent will best serve their interests, even if this means a complete prohibition of such sale. Thus the Plan is designed to restrict or limit trade between provinces as such.
[Page 724]
Appeal dismissed.
Solicitor for the appellant: G.E. Pilkey, Winnipeg.
Solicitors for the respondents, Man. Egg & Poultry Assn., Man. Egg & Pullet Producers’ Assn., Man. Feed. Manufacturers Assn. and Man. Hatchery Assn: Scarth & Simonsen, Winnipeg.
Solicitors for the respondent, Canadian Feed Manufacturers Assn.: Fasken & Calvin, Toronto.
Solicitors for the respondent, Meat Packers Council of Canada: Day, Wilson & Campbell, Toronto.
Email this Content