Jamieson's Foods Ltd. v. Ontario Food Terminal Board, [1961] SCR 276

Supreme Court of Canada

Jamieson’s Foods Ltd. v. Ontario Food Terminal Board, [1961] S.C.R. 276

Date: 1961-02-13

Jamieson’s Foods Limited (Plaintiff) Appellant;

and

Ontario Food Terminal Board (Defendant) Respondent.

1960: November 7, 8; 1961: February 13.

Present: Kerwin C.J. and Cartwright, Abbott, Martland and Judson JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Landlord and tenant—Lease of premises in food terminal granted by statutory Board—Right to make reasonable rules reserved—Rules not to limit or restrict nature or extent of tenant’s business or mode of operation—Whether Saturday closing rule ultra vires—The Ontario Food Terminal Act, R.S.O. 1950, c. 261, as amended.

The defendant Board, a statutory corporation, owned and operated a food terminal in which the plaintiff, a wholesale fruit dealer, leased premises. The leases contained a clause reserving to the landlord the right to make reasonable rules, regulations and by-laws relating to operation and maintenance of the terminal, such rules not to limit or restrict the nature or extent of the tenant’s business or the mode of operation thereof.

On the recommendation of an association of wholesale fruit and produce tenants, the defendant passed a resolution on November 23, 1956, providing for Saturday closings of the terminal, and a rule to this effect was made on February 21, 1957. The plaintiff contended that the rule as to Saturday closing was ultra vires of the Board, that it did not constitute a reasonable rule within the meaning of the leases, and claimed an injunction and damages.

Judgment at trial was given in favour of the plaintiff. This judgment was reversed by the Court of Appeal and the plaintiff appealed to this Court.

Held: The appeal should be dismissed.

Prior to the enactment of ss. 13 and 14 of The Ontario Food Terminal Act, which conferred certain legislative powers to make regulations and rules, the Board had the necessary powers to carry on its business as defined in s. 4 of the Act, which included the operation of the terminal and the doing of such acts as might be necessary or expedient for carrying out those operations. The decision as to the times during which the terminal should be open for business was a part of the operation of the terminal and was a part of the business of the Board. The enactment of ss. 13 and 14 did not curtail those powers. It did not compel the Board to transact all business respecting the operation of the terminal by means of regulations or rules.

The provision for Saturday closing did not limit or restrict the nature or extent, or the mode of operation of the plaintiff’s business, and in the light of the circumstances which preceded the Board’s decision that the wholesaler’s portion of the terminal should be closed every Saturday throughout the year, the rule could not be considered as not being reasonable.

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Therefore the closing requirement did not involve a breach of the leases, because such procedure was permissible under the reservation clause.

The plaintiff had further contended that if the Board did have power to compel Saturday closing without breach of its leases, it could only do so, under the relevant clause, by means of a rule, regulation or by-law. During the period from December 1, 1956, when Saturday closings had commenced, until February 1, 1957, the only authority for closing had been the resolution made on November 23, 1956.

The effect of the clause was to reserve to the Board, as a contractual right, the power to control the hours of business in the terminal. As between itself and the plaintiff as its tenant, it could make rules relating thereto without the necessity of resorting to the legislative authority which it subsequently acquired under ss. 13 and 14 of the Act. The resolution of November 23, 1956, was a “rule” within the meaning of the clause in the lease and it was passed as a part of the operation of the Board’s business.

APPEAL from a judgment of the Court of Appeal for Ontario[1], reversing a judgment of Wilson J. Appeal dismissed.

A.L. Fleming, Q.C., and Meredith Fleming, Q.C., for the plaintiff, appellant.

R.E. Shibley and R.E. Scane, for the defendant, respondent.

The judgment of the Court was delivered by

MARTLAND J.:—The respondent, which is hereinafter referred to as “the Board”, is a corporation created by statute passed by the Legislature of Ontario, c. 63, Statutes of Ontario 1946. It was continued as a body corporate by the provisions of The Ontario Food Terminal Act, R.S.O. 1950, c. 261.

Section 4 of that Act defines its objects as follows:

4. (1) The objects of the Board shall be,

(a) to acquire, construct, equip and operate a wholesale fruit and produce market in the County of York to be known as the Ontario Food Terminal and to acquire and operate such facilities for the transportation and handling of fruit and produce as may be necessary for the purposes of the Terminal; and

(b) to do such other acts as may be necessary or expedient for the carrying out of its operations and undertakings.

Section 5 of the Act provides:

5. The Board may rent space in the Terminal to such persons and upon such terms as to the Board may seem proper and may make such arrangement and enter into such agreement with any such person as it may deem advisable in the circumstances.

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Section 13 of that Act empowered the Minister of Agriculture, subject to the approval of the Lieutenant-Governor in Council, to make regulations in relation to various matters, including limiting or regulating the objects and powers of the Board and their exercise and also respecting any other matter necessary or advisable to carry out the intent and purpose of the Act.

The appellant is a corporation which imports, processes and distributes bananas as a wholesaler. It leased premises from the Board in the Ontario Food Terminal under a lease dated August 12, 1953, and additional premises in the terminal under a further lease dated July 1, 1954. Each lease was for a term of thirty years, with provision for renewal. Except for the dates, the description of the premises leased and the amounts of rental payable, the provisions of the two leases were the same.

Each lease included a clause in the following terms:

IT IS SPECIFICALLY UNDERSTOOD AND AGREED that the Landlord shall have the right to make all reasonable rules, regulations and by-laws relating to the operation and maintenance of The Ontario Food Terminal, including hours of business, sanitation, traffic control and all such matters as are required for or normally incidental to the proper management of a public market, but no such rules, regulations or by-laws shall in any way limit or restrict the nature or extent of the business carried on by the Tenant within the covenants hereinbefore expressed or the mode of operation thereof. The Tenant covenants and agrees that he will observe, abide by and conform to all such reasonable rules, regulations and by-laws made or established by the Landlord as aforesaid. If the Tenant shall fail to observe, abide by and conform to any such rules, regulations or by‑laws, then the Landlord may give notice to the Tenant, giving particulars of any such failure and appointing a time and place for the hearing of any complaint in connection therewith and if the Tenant shall fail to comply with the decision of the Landlord forthwith or to rectify the matter complained of the Landlord shall have the right to suspend or revoke any or all rights or privileges of the Tenant at The Ontario Food Terminal or the use of the facilities or equipment thereof and forthwith to determine this Lease.

At the times these leases were granted The Ontario Food Terminal Act did not contain any provisions regarding the making of rules or regulations by the Board. On March 31, 1955, by c. 52, Statutes of Ontario 1955, s. 13 of the Act was repealed and a new s. 13 was enacted, together with ss. 14 and 15. Sections 13 and 14 provided:

13. Subject to the approval of the Lieutenant-Governor in Council, the Board may make regulations,

(a) prescribing the officers of the Board;

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(b) prescribing the powers and duties of the manager of the Terminal and of the officers of the Board;

(c) prescribing the form of the seal of the Board;

(d) respecting the operation, management and maintenance of the Terminal;

(e) respecting any other matter necessary or advisable to carry out effectively the intent and purpose of this Act.

14. Subject to the regulations, the Board may make rules with respect to,

(a) the conduct of the Board’s employees;

(b) the conduct of the Board’s tenants and their employees;

(c) the conduct of any person on the Board’s premises for any purpose;

(d) the use by any person of the Board’s facilities and equipment.

Section 15 provided for the imposition of penalties for violations of the provisions of the Act, the regulations or any rule made under the Act.

Most of the wholesale fruit and produce merchants who leased premises in the terminal were members of an association called the Toronto Wholesale Fruit and Produce Merchants Association (hereinafter referred to as “the Association”). On October 30, 1956, a meeting of the Association was called, which all tenants of the Board, whether members of the Association or not, were invited to attend. The purpose of the meeting was to determine whether representations should be made to the Board to have the terminal closed on Saturdays. This question had been under consideration by the Association for some time previously.

The appellant was not a member of the Association, but its president and controlling shareholder, Mr. R.H. Jamieson, attended the meeting and moved a resolution to the effect that the market should be closed each Saturday in the year, without any exception. This motion was put to a vote and was carried by about a two-thirds majority.

A second meeting of the Association was held on November 1, 1956, with a view to presenting “a unanimous front” in making the Association’s recommendation to the Board. At this second meeting a motion to recommend that the terminal be closed on each Saturday throughout the year, with certain exceptions, was passed by a vote of 31 in favour and 3 against. Included in the resolution was an exception in favour of Power Food Markets, one of the Board’s tenants, which was not in the wholesale business,

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but used its accommodation as a warehouse for itself. At the second meeting Mr. R.H. Jamieson opposed the resolution because of the exception made in favour of Power Food Markets.

The resolution passed at the meeting of November 1, 1956, was communicated to the Board for its consideration. At a meeting of the Board on November 23, 1956, a resolution was passed providing for the closing of the terminal on Saturdays throughout the period from December 1, 1956, to May 1, 1957. A copy of this resolution, as passed by the Board, was sent to its tenants on November 26, 1956, and notice was given that the terminal would be closed in accordance with the resolution. The terminal was, in fact, closed, for selling fruit and produce, on Saturdays from and after December 1, 1956, in accordance with the resolution.

On February 1, 1957, a rule was made and filed by the Board, as O. Reg. 17/57, the material portion of which provided as follows:

HOURS OF OPERATION OF TERMINAL

16. Except for

(a) Sundays,

(b) New Year’s Day, Good Friday, Victoria Day, Dominion Day, the first Monday in August, Labour Day, Thanksgiving Day and Christmas Day, and

(c) Saturdays in the months of December, January, February, March and April, other than a Saturday that falls immediately after a Friday, or before a Monday, on which any day mentioned in clause b falls,

the terminal shall be open for selling fruit and produce.

The appellant commenced action against the Board on April 8, 1957, claiming a declaration that para. (c) of this rule was ultra vires of the Board, that it did not constitute a reasonable rule within the meaning of the leases and claiming an injunction to restrain the Board from acting in pursuance of it. The appellant also claimed damages at the rate of $400 for each Saturday that the terminal was closed from and after December 1, 1956.

Prior to the action coming on for trial, rule 16, as set forth in O. Reg. 17/57, had been replaced by a new rule 16, by O. Reg. 91/57, made and filed on April 18, 1957. The

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exact terms of this rule are not material. Its effect, as in the case of the preceding rule 16, was to make provision for closing on Saturdays during specified portions of the year.

Subsequently, rule 16, as contained in O. Reg. 91/57, was replaced by rule 16 as contained in O. Reg. 64/58, made and filed on March 19, 1958. Subpara. (3) of this rule provided that:

(3) The Terminal, other than the Farmers’ Market section thereof, shall not be open for selling fruit and produce on Saturdays.

Finally on May 16, 1958, regulations were made by the Board, pursuant to s. 13 of the Act, which were approved on May 22, 1958, and filed on May 23, 1958, included in which was a provision in terms identical to those of rule 16(3) as contained in O. Reg. 64/58.

Judgment at the trial was given in favour of the appellant. The learned trial judge held that the various rules regarding Saturday closing were ultra vires of the Board and further held that the Board had committed a breach of the leases made with the appellant by closing the terminal on Saturdays. He directed a reference to ascertain the damages sustained by the appellant.

This judgment was reversed on appeal by the Court of Appeal for Ontario[2], the conclusion of Laidlaw J.A., who delivered the judgment of the Court, being as follows:

My conclusion and opinion is that the case for the plaintiff fails because it has not been shown that the act of the Board in closing the Terminal, including the space occupied by the respondent, for selling fruit and produce on Saturdays was unlawful, but, on the contrary, I am satisfied that the act of the Board in doing so was clearly within the right possessed by it under the leases made by it with the respondent and, in any event, within the power possessed by it under sec. 4 of The Ontario Food Terminal Act.

I am in agreement with this conclusion.

It was contended by the appellant that the Board could not require the closing of the terminal on Saturdays, unless provision was made for such requirement in a regulation made by the Board, with the approval of the Lieutenant-Governor in Council, pursuant to s. 13 of the Act, or by a

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rule authorized by such a regulation. No regulation, pursuant to s. 13, dealing with Saturday closing, had been made by the Board until O. Reg. 131/58, which was filed on May 23, 1958.

I do not agree with this contention. Sections 13 and 14 of the Act do confer upon the Board certain legislative powers to make regulations and rules. For breaches of such regulations and rules penalties are provided. But this power to make regulations and rules was not given to the Board until the enactment of c. 52, Statutes of Ontario 1955. Prior to that time the Board had the necessary powers to carry on its business as defined in the objects clause, s. 4, which included the operation of the terminal and the doing of such acts as might be necessary or expedient for carrying out those operations. The decision as to the times during which the terminal should be open for business was, in my opinion, a part of the operation of the terminal. It was a part of the business of the Board. The enactment of ss. 13 and 14 did not curtail those powers. It did not compel the Board to transact all business respecting the operation of the terminal by means of regulations or rules. In my opinion the Board had the necessary power to pass and to put into effect its resolution of November 23, 1956, by virtue of s. 4 of the Act.

This brings us to the question as to whether the change respecting the times when the terminal should be open, which was made by the Board after it had granted leases to the appellant, was a derogation from the grants made by those leases. Each of them contained a covenant for quiet enjoyment. Each of them also contained the covenant, which has previously been quoted in full, reserving to the Board the right to make all reasonable rules, regulations and by-laws relating to the operation and maintenance of the terminal, including hours of business.

The Board relies upon that clause for the contention that what it did in relation to Saturday closing involved no breach of its leases. The appellant argues that the clause does not assist the Board, because it contains the proviso “but no such rules, regulations or by-laws shall in any way limit or restrict the nature or extent of the business carried on by the Tenant within the covenants hereinbefore expressed or the mode of operation thereof”. It is urged

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that the Saturday closing requirement limited or restricted the nature or extent of the appellant’s business and the mode of operation thereof. It is further argued that the clause only permits “reasonable” rules, regulations and by-laws and that the Saturday closing requirement was not reasonable.

With respect to the question as to whether the provision for Saturday closing limited or restricted the nature or extent, or the mode of operation of the appellant’s business, I agree with the reasoning of Laidlaw J.A. when he said:

Does a rule or an order that the Terminal shall not be open for selling fruit and produce on Saturdays limit or restrict the nature or extent of the business carried on by the respondent? The nature of the respondent’s business is “importing, processing and wholesaling bananas”. Plainly, in my opinion, the nature of the respondent’s business is not affected in any way by the fact that the Terminal is closed on Saturday. The nature of its business remains the same whether the business is carried on one day a week or six days a week. Counsel emphasized that the “extent” of the business carried on by the respondent is limited or restricted by closing the Terminal on Saturday. He argued that the word “extent” as used in the clause is synonymous with “volume” or “quantity”. I do not think so. The word “extent” means “space over which a thing extends; width of application; scope.” (The Concise Oxford Dictionary.) That is the meaning which in my opinion should be given to the word in the clause under consideration. When it is read with that meaning it becomes plain that it is not applicable to a rule or regulation fixing the hours the Terminal is open for business for the sale of fruit or produce.

The main contention on behalf of the respondent is that the mode of operation of the business carried on by it is limited or restricted by the act of the appellant in closing the Terminal on Saturdays. Again I refer to the dictionary meaning of the word “mode”. It is “the way, manner in which a thing is done.” It is quite true that the operation of the business carried on by the respondent is limited or restricted by a rule or regulation respecting the hours of business, but I am quite unable to see how the mode of operation is in any way limited or restricted thereby. There is no evidence that the mode, manner or way of operation of the respondent’s business of “importing, processing and wholesaling bananas” was any different on one day of the week from another or that it was altered, limited or restricted in any way by reason of the fact that the operation was carried on for five days of the week and not for six days.

As to the reasonableness of the closing requirement, the evidence shows that the terminal was closed on Saturdays only after strong representations from the Association and at first was not closed on Saturdays throughout the year, as had been requested by the Association. It was only after a period of experiment, from December 1, 1956, to May 1, 1957, and a further period in the summer of 1957, that the Board decided that the wholesalers’ portion of the

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terminal should be closed every Saturday throughout the year. It is clear that the Saturday closing requirement was favoured by the great majority of the tenants of the Board having premises in the terminal. In the light of these circumstances, it does not appear to me that it can be contended successfully that the requirement imposed by the Board could be considered as not being reasonable.

In my opinion, therefore, the requirement for Saturday closing did not involve a breach of the leases with the appellant, because such procedure was permissible under the clause of the leases which has just been considered.

It was contended, finally, by the appellant that, if the Board did have power to compel Saturday closing without breach of its leases, it could only do so, under the relevant clause, by means of a rule, regulation or by-law. It was then pointed out that no “rule”, under s. 14 of the Act, had been filed pursuant to The Regulations Act, R.S.O. 1950, c. 337, until O. Reg. 17/57 was made and filed on February 1, 1957. Saturday closing had commenced on and after December 1, 1956, and during the period from that time until February 1, 1957, the only authority for closing had been the resolution of the Board made on November 23, 1956.

In my view, for the reasons already given, the Board had the necessary power to close its terminal without a legislative act. It did not have to make a regulation or a rule, under s. 13 or 14 of the Act, in order to do so. It is true that the clause of the leases refers to “rules, regulations or by-laws”, but it must be remembered that at the time the leases were made ss. 13 and 14 of the Act did not exist. At that time the only regulations mentioned in the Act itself were those which could be made by the Minister of Agriculture.

In my opinion, the effect of the clause was to reserve to the Board, as a contractual right, the power to control the hours of business in the terminal. As between itself and the appellant as its tenant, it could make rules relating thereto without the necessity of resorting to the legislative authority which it subsequently acquired under ss. 13 and 14 of the Act. The resolution of the Board on November 23,

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1956, was a “rule” within the meaning of the clause in the lease and it was passed as a part of the operation of the Board’s business.

In my opinion, therefore, the appeal should be dismissed with costs.

Appeal dismissed with costs.

Solicitors for the plaintiff, appellant: Fleming, Smoke & Burgess, Toronto.

Solicitors for the defendant, respondent: White, Bristol, Beck & Phipps, Toronto.