Supreme Court of Canada
Labatt Breweries of Canada Ltd. v. Attorney General of Canada, [1980] 1 S.C.R. 914
Date: 1979-12-21
Labatt Breweries of Canada Limited (Plaintiff) Appellant;
and
The Attorney General of Canada (Defendant) Respondent;
and
The Attorney General of the Province of Quebec Intervenant.
1979: June 27, 28; 1979: December 21.
Present: Laskin C.J. and Martland, Ritchie, Pigeon, Dickson, Beetz, Estey, Pratte and Mclntyre JJ.
ON APPEAL FROM THE FEDERAL COURT OF APPEAL
Food and drugs—Standards for labelling—Beer labelled “Special Lite”—Likely to be mistaken for “Light Beer”—Food and Drugs Act, R.S.C. 1970, c. F-27, ss. 6, 25(1)—Food and Drug Regulations, C.R.C., c. 870, ss. B.02.130 to B.02.135.
Constitutional law—Food and Drugs Act—Invalidity of provisions establishing standards for beer—British North America Act, 1867, ss. 91, 91(2), 91(27), 92(13)—Food and Drugs Act, R.S.C. 1970, c. F-27, ss. 6, 25(1)—Food and Drug Regulations, C.R.C., c. 870, ss. B.02.130 to B.02.135.
The appellant began marketing a new brand of beer which it labelled “Labatt’s Special Lite”. The product contained 4 per cent alcohol (as indicated on the label) whereas according to the standard prescribed by the Food and Drug Regulations a “Light Beer” should contain no more than 2.5 per cent alcohol. The appellant sought a declaration that its product “is not likely to be mistaken for a light beer within the standard set out” in regulation B.02.134 enacted pursuant to s. 25(1)(c) of the Food and Drugs Act. The trial judge found that the appellant had not violated s. 6 of the aforesaid Act and granted the declaration. The Federal Court of Appeal came to the opposite conclusion and set aside the judgment of the Trial Division. Hence the appeal to this Court on two questions: (1) Whether appellant violated s. 6 of the Food and Drugs Act; (2) Whether ss. 6 and 25(1)(c) of the Act and regulations B.02.130 to 135 inclusive were constitutionally valid.
[Page 915]
Held by Martland, Ritchie, Dickson, Beetz and Estey JJ. (Laskin C.J. and Pigeon and Mclntyre JJ. dissenting): The appeal should be allowed with costs and a declaration issue that s. B.02.130 to B.02.135 of the Food and Drug Regulations are invalid and that ss. 6 and 25(1)(c) of the Food and Drugs Act are ultra vires Parliament in so far as they relate to malt liquors. Held by Pratte J.: The appeal should be allowed with costs and the judgment of the trial judge restored.
Per Martland, Dickson, Beetz and Estey JJ.: The sale of Labatt’s Special Lite Beer, unless labelled simply as “beer”, being the common name prescribed for use with reference to a product which conforms to the standards of beer as prescribed in the regulations, is a violation of s. 6 of the statute, without more. Here the appellant, by the adoption of the coined word “lite” and by associating it with the common name “beer” to produce a phonetic equivalent to another food, “light beer”, whose prescribed common name is “light beer” has sold as a light beer a product which conforms not with regulation B.02.134 (which describes a “Light Beer”) but which conforms with B.02.130 (which describes a “Beer”). The description “lite beer” must, in the ordinary usage of the language today, be synonymous with light beer, and the appellant’s product, having an alcoholic content of 4 per cent, does not conform with the standards prescribed.
As to the constitutional issue it requires an answer to the following question: what is the constitutional basis for the enactment by Parliament of the contested portions of the Act? The possible sources of this sovereign power include the federal authority under s. 91 of the B.N.A.Act in respect of criminal law, trade and commerce, and peace, order and good government.
Firstly there is no basis for the detailed regulation of the brewing industry in the production and sale of its product as a proper exercise of the federal authority in criminal law. Similarly the jurisdiction of Parliament in matters related to health, considered as an aspect of criminal law, has no application here.
Secondly the trade and commerce head of s. 91 of the B.N.A.Act cannot be applied to the regulation of a single trade, even though it be on a national basis. Here we are concerned with the proper regulatory authority in connection with the production process of a single industry and, to some extent, with the sale of its products, the latter being concerned largely with the use of labels or identification. Nowhere are the impugned statutory
[Page 916]
regulations or provisions concerned with the control or regulation of the extra-provincial distribution of these products or their movement through any channels of trade. On the contrary, their main purpose is the regulation of the brewing process itself by means of a “legal recipe”. Even if the Food and Drugs Act were to cover a substantial portion of Canadian economic activity, one industry or trade at a time, by a varying array of regulations or trade codes applicable to each individual sector, there would not, in the result, be at law a regulation of trade and commerce in the sweeping general sense contemplated in the Citizens Insurance case, (1881), 7 App. Cas. 96.
Thirdly the brewing and labelling of beer and light beer has not been said to have given rise either to a national emergency or a new problem not existing at the time of Confederation, nor to a matter of national concern transcending the local authorities’ power to meet and solve it by legislation. Therefore there is no basis for advancing the proposition that the impugned statutory provisions and regulations as they relate to malt liquors find their basis in law in the peace, order and good government clause of s. 91.
Per Ritchie J.: The manner in which the appellant seeks to market its “Labatt’s Special Lite” beer is not such as to make it likely that it will be mistaken for a food which complies with the standard prescribed by regulation B.02.134. The prominent display of the fact that the product contains 4 per cent alcohol by volume makes it unlikely for it to be mistaken for a “food” in which the alcohol by volume does not exceed 2.5 per cent. As to the constitutional question it should be answered in the manner indicated in the reasons of Estey J.
Per Pigeon and Mclntyre JJ., dissenting: As to the first point, the conclusion of the Federal Court of Appeal is correct. The question is not whether it is possible to ascertain from the label the exact nature of the packaged product. The question is whether a mistake is likely and it appears that this enquiry must be approached in the same way as the likelihood of confusion in trade mark infringement or passing-off. It is a matter of first impression. The words “Special Lite” are clearly the dominant feature here. The indication of the alcoholic content is down on the bottom line with the mention of the contents in millilitres and fluid ounces.
[Page 917]
The second question involves the difficult definition of the limits of federal power under the heading “The Regulation of Trade and Commerce”. The present regulations and statute do not prevent the appellant from marketing its product. The federal enactments under attack provide for no more than what might be called “labelling regulations”. These state what specifications must be met if some specific designations are used on food labels. This does not go beyond a proper concept of trade mark legislation as in the Dominion Trade and Industry Commission Act, 1935 case, [1937] A.C. 405 and there is no invasion of provincial jurisdiction.
Per Laskin C.J., dissenting: The present Food and Drugs Act clearly addressed itself, by the regulation-making power conferred under s. 25, to standards of strength and quality as well as labelling. If Parliament can set up standards for required returns for statistical purposes, it should be able to fix standards that are common to all manufacturers of foods, including beer, at least to equalize competitive advantages in the carrying on of business concerned with such products. The operations of brewers of beer extend throughout Canada, and the federal trade and commerce power should not be attenuated any further by denying Parliament authority to address itself to uniform prescriptions for the manufacture of food, drugs, cosmetics, therapeutic devices in the way, in the case of beer, of standards for its production and distribution according to various alcoholic strenghts under labels appropriate to the governing regulations.
[Citizens Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96 distinguished; Russell v. The Queen (1882), 7 App. Cas. 829; The Reference as to the Validity of Section 5(a) of the Dairy Industry Act, [1949] S.C.R. 1 aff’d [1951] A.C. 179; Dominion Stores v. The Queen, [1980] 1 S.C.R. 844, rev’g (1978), 18 O.R. (2d) 496, aff’g (1977), 17 O.R. (2d) 168; Toronto Electric Commissioners v. Snider, [1925] A.C. 396; Attorney General of Ontario v. Attorney General of Canada, [1896] A.C. 348; R. v. Eastern Terminal Elevator Co., [1925] S.C.R. 434; Reference Re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; Attorney General of British Columbia v. Attorney General of Canada, [1937] A.C. 377; R. v. Klassen (1959), 20 D.L.R. (2d) 406; Carnation Company Ltd. v. Quebec Agricultural Marketing Board, [1968] S.C.R. 238; Reference re Ontario Farm Products Marketing Act, [1957] S.C.R. 198; Caloil v. The Attorney General of Canada, [1971] S.C.R. 543; John Deere Plow Co. v.
[Page 918]
Wharton, [1915] A.C. 330; Reference re the Anti-Inflation Act, [1976] 2 S.C.R. 373; Re Insurance Act, 1910 (1913), 48 S.C.R. 260; MacDonald v. Vapor Canada Ltd., [1977] 2 S.C.R. 134; In Re The Board of Commerce Act (1920), 60 S.C.R. 456, [1922] 1 A.C. 191; Fort Frances Pulp and Paper Co. v. Manitoba Free Press, [1923] A.C. 695; Radio Reference, [1932] A.C. 304; Aeronautics Reference, [1932] A.C. 54; Attorney General of Ontario v. Canada Temperance Federation, [1946] A.C. 193; Attorney General of Ontario v. Attorney General of Canada, [1937] A.C. 405; Schweppes Ld. v. Gibbens (1905), 22 R.P.C. 601; J. Bollinger v. The Costa Brava Wine Co. Ltd., [1961] R.P.C. 116, referred to]
APPEAL from a judgment of the Federal Court of Appeal setting aside the judgment of the Trial Division. Appeal allowed, Laskin C.J. and Pigeon and Mclntyre JJ. dissenting.
D.M.M. Goldie, Q.C., and Donald J.M. Brown, for the appellant.
W.J.A. Hobson, Q.C., and J.M. Mabbutt, for the respondent.
Henri Brun and Jean-François Jobin, for the intervenant.
The following are the reasons delivered by
THE CHIEF JUSTICE (dissenting)—I agree with Mr. Justice Pigeon that the appeal should be dismissed with costs to the respondent. Like him I hold the view that Chief Justice Jackett of the Federal Court of Appeal was correct in his assessment of the application of s. 6 of the Food and Drugs Act to the appellant. The constitutional issue which Justice Pigeon resolved in favour of federal power, raises for me more extended considerations than those on which he was content to proceed and I wish to state my position briefly on what I regard as a highly important issue.
I do not think that the Dominion Trade and Industry Commission case is conclusive here. That was a case involving non-compulsory regula-
[Page 919]
tion whereas the Food and Drugs Act and the relevant Regulations thereunder operate compulsorily. I do not think that anything is added by reference to Dominion Stores Limited v. The Queen in which judgment was handed down by this Court on December 13, 1979. Insofar as it turned on dealing with local marketing it does not touch the present case. Even on the view of the dissenting Judges in the Dominion Stores case the matter is not advanced beyond what the Dominion Trade and Industry Commission case stands for. Part I of the Canada Agricultural Products Standards Act, R.S.C. 1970, c. A-8, is also an instance of non‑compulsory regulation by requiring anyone who uses the standards fixed by regulation thereunder to observe the prescriptions attached to the particular standard. I did not understand that the majority in the Dominion Stores case took any position on the validity of Part I of the federal Act; rather that majority appeared to find it inapplicable in the face of provincial legislation, a view which I, and those who joined with me in dissent, did not share because it was our opinion that, on the record there was no issue raised as to the application of provincial legislation.
The matter therefore comes down to whether this Court views the federal trade and commerce power as a sufficient support for the legislation and Regulations which are attacked in the present case. I would hold that it does, and, in so doing I would adopt the statement in the Parsons case, at p. 113, which envisages competent federal legislation by way of “general regulation of trade affecting the whole Dominion”.
It may be that the present case can be disposed of on the ground taken by my brother Pigeon that the regulations that are attacked amount to no more than labelling provisions. We are not concerned with a marketing situation, and hence this case is distinguishable from cases like the Natural
[Page 920]
Products Marketing Act case and Shannon v. Lower Mainland Dairy Products Board or even the Ontario Marketing case decided by this Court in 1957. There are, however, other matters that must be brought into account, matters which I think are relevant to the recognition of the federal trade and commerce power as a fully independent source of authority when viewed against the catalogue of provincial powers, especially the power in relation to “property and civil rights in the Province” under s. 92(13) of the British North America Act.
First, a brief reference to the history of the legislation and regulations whose validity is impugned in this case. Section 6 of the Food and Drugs Act, R.S.C. 1970, c. F-27, was enacted by 1952-53 (Can.), c. 38, s. 6. It reads as follows:
6. Where a standard has been prescribed for a food, no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for such food, unless the article complies with the prescribed standard.
The statute of 1952-53 (Can.), c. 38, was a complete revamping of the Food and Drugs Act, 1920 (Can.), c. 27, which applied only to food and drugs. The new Act was expanded to cover cosmetics and therapeutic devices, and sections to the same effect as s. 6 thereof (relating to foods) were enacted to require obedience to prescribed standards for drugs, cosmetics and devices in labelling, packaging, selling or advertising lest they otherwise be mistaken for such drugs, cosmetics or devices: see ss. 10, 17 and 20 of the present Act. Whereas the predecessor Act was limited to protection of the public against adulteration and misbranding, the new Act more clearly addressed itself, by the regulation-making power conferred under s. 25 upon the Governor-in-Council, to standards of strength and quality as well as labell-
[Page 921]
ing. Moreover, the new statute clarified any doubt that the violation of s. 6 would give rise to an offence.
There is no doubt that in its production and labelling of “lite” beer, the appellant did not conform to the standard strength prescribed for “light” beer under the regulations. (It is not contested that the spelling difference in the word used by the appellant and by the regulations does not affect the application of either s. 6 or of the regulations prescribing the limits of the alcoholic strength of that class of beer.) Its bottle label reflected its true strength which was beyond the limit fixed by the regulation. The question remains, therefore, whether, on the construction placed on s. 6 by Jackett C.J., which I accept, Parliament exceeded its legislative powers, both in the enactment of s. 6 and in authorizing prescription of standards of alcoholic strength.
In the Board of Commerce case, at p. 201, the Privy Council indicated that it might be open to Parliament “to call… for statistical and other information which may be valuable for guidance in questions affecting Canada as a whole. Such information may be required before any power to regulate trade and commerce can be properly exercised…”. I do not press any perfect analogy to the prescription of common standards for an article of food which is produced throughout the country and which is also imported from abroad, but it does appear to me that if Parliament can set up standards for required returns for statistical purposes, it should be able to fix standards that are common to all manufacturers of foods, including beer, drugs, cosmetics and therapeutic devices, at least to equalize competitive advantages in the carrying on of businesses concerned with such products. I find some reinforcement in this view of the scope of the federal trade and commerce power in s. 121 of the British North America Act which precludes interprovincial tariffs, marking Canada
[Page 922]
as a whole as an economic union.
The operations of Labatt Breweries and of other brewers of beer extend throughout Canada, and I would not attenuate the federal trade and commerce power any further than has already been manifested in judicial decisions by denying Parliament authority to address itself to uniform prescriptions for the manufacture of food, drugs, cosmetics, therapeutic devices in the way, in the case of beer, of standards for its production and distribution according to various alcoholic strengths under labels appropriate to the governing regulations.
The judgment of Martland, Dickson, Beetz and Estey JJ. was delivered by
ESTEY J.—The appellant seeks a declaration that its product “Labatt’s Special Lite” as labelled, packaged and sold “is not likely to be mistaken for a ‘light beer’ within the standards set out…” in the regulations under the Food and Drugs Act, R.S.C. 1970, c. F-27 (“the Act”). The relevant facts are few. The product in question is one of the malt liquors described in regulations promulgated under the Act and has an alcohol content of 4 per cent. This product was introduced to the market in the provinces of British Columbia and Ontario under this label:
[Page 923]
Two issues arise by reason of the marketing of this product under the label set out above. Firstly, the appellant takes the position that this product when so advertised is not likely to be mistaken for a light beer within the applicable regulation. This regulation, being s. B.02.134 of the Food and Drug Regulations, C.R.C., c. 870, was enacted pursuant to s. 25(1) of the Act to which I will return shortly. Section 6 of the Act states as follows:
Where a standard has been prescribed for a food, no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for such food, unless the article complies with the prescribed standard.
The second position taken by the appellant is that s. 6 of the Act and regulation B.02.134 are ultra vires the Parliament of Canada, and to the extent that it authorizes such regulation, s. 25 is likewise ultra vires.
I turn to the first position, namely whether or not the appellant’s product is likely to be mistaken for the beverage “light beer”. The relevant regulations on the first issue are B.02.130 and B.02.134.
B.02.130 [S]. Beer
(a) shall be the product of the alcoholic fermentation of an infusion of barley malt and hops or hop extract in potable water and brewed in such a manner as to possess the aroma, taste and character commonly attributed to beer;
(b) shall contain not less than 2.6% and not more than 5.5% alcohol by volume; and
(c) may have added to it during the course of
(i) cereal grain,
(ii) carbohydrate matter,
(iii) salt,
(iv) yeast,
(v) hop oil,
(vi) hop extract, provided it is added to the wort before or during cooking,
(vii) irish moss seaweed of the species Chondrus crispus,
(viii) carbon dioxide,
(ix) caramel,
(x) dextrin,
(xi) food exzymes,
[Page 924]
(xii) stabilizing agents,
(xiii) gibberellic acid,
(xiv) pH adjusting and water correcting agents
(xv) class I Preservatives,
(xvi) class II Preservatives,
(xvii) sequestering agent,
(xviii) yeast foods,
(xix) any of the following filtering and clarifying agents: acacia gum, activated carbon, asbestos, bentonite, calcium silicate, magnesium silicate, aluminum silicate, cellulose, China clay, Nylon 66, diatomaceous earth, gelatin, silica gel, polyvinylpolypyrrolidone, wood shavings derived from oak, beech, hazelnut or cherry wood.
(xx) polyvinylpyrrolidone, and
(xxi) ammonium persulphate.
B.02.134 [S]. Light Beer
(a) shall be the product of the alcoholic fermentation of an infusion of barley malt and hops or hop extract in potable water and brewed in such a manner as to possess the aroma, taste and character commonly attributed to light beer;
(b) shall contain not less than 1.2% and not more than 2.5% alcohol by volume; and
(c) may have added to it the ingredients mentioned in paragraph (c) of section B.02.130.
It will be seen that the product has an alcoholic content as specified for “Beer” and is marketed under a label “Special Lite Beer” in which the letter grouping “lite” is phonetically identical with the category “light beer” in the regulation. It should be noted that the presence of the letter [S] in the headings of the regulations B.02.130 and B.02.134 is explained in regulation B.01.002.
B.01.002. Each section in this Part in which the symbol [S] appears between the section number and the name of the food described in that section prescribes the standard of composition, strength, potency, purity, quality or other property of that food and a section in which the symbol does not appear does not prescribe a standard for a food.
[Page 925]
The learned trial judge, in finding that the appellant has not violated the aforementioned regulations by the sale of this product in the manner described, stated:
There is no evidence before me describing, explaining or illustrating the aroma, taste and character commonly attributed to light beer. There is no evidence indicating the average, fair and reasonable Canadian would know what those particular attributes are. To my mind the hypothetically postulated Canadian would, as a prospective purchaser of the plaintiff’s product, consider it to be a beverage less heavy or not as heavy as other beer products, or likely of somewhat less alcoholic content than other beer products, or both.
In the case before me, the average fair and reasonable Canadian purchaser would, in my view, quickly become aware and appreciate (from the labelling, packaging and advertising) that the plaintiffs product contained 4% alcohol by volume and not some undisclosed, or difficult to perceive, content. It is said on behalf of the defendant that even in clear terms disclosing an alcohol content well above the maximum for light beer does not remove the plaintiff from the prohibition of s. 6 of the statute; that the other standard—”the aroma, taste, and character commonly attributed to light beer”—is equally applicable and important. But, as I have noted, there is no evidence to assist me in arriving at what that particular standard, or what the regulation’s phrase, light beer, conveys to the average, fair and reasonable Canadian.
On the evidence before me, it is my conclusion the plaintiffs Special Lite beverage (“food”) has not been labelled, packaged or advertised in such a manner that it is likely to be mistaken for the beverage “light beer” (“food”).
((1978), 84 D.L.R. (3d) 61, at pp. 66-67)
The Federal Court of Appeal came to the opposite result by determining that the regulations promulgated under the Act did (assuming their validity) prescribe a standard for light beer and accordingly, the Chief Justice, speaking on behalf of the Court, concluded:
In my view, therefore, it follows from the findings of the learned trial judge
(a) that the respondent was “labelling, packaging and advertising a beer using the descriptive adjective “light,” and
[Page 926]
(b) that that beer had an alcohol content of 4%. that the respondent was infringing section 6,…
((1979), 26 N.R. 617, at p. 624, [1980] 1 F.C. at pp. 248-49)
The regulations found in Part B (“Foods”), of the Food and Drug Regulations, supra, prescribe that the name of a food printed in bold face in the regulations, or a name prescribed by a regulation, is a “common name” to be used with reference to such food. The regulations then specify that such common name “shall be shown on the principal display panel”. In the case of light beer, those words become the prescribed common name of the product (“food” being defined in the statute as including “any article manufactured, sold or represented for use as food or drink for man,…”) by reason of regulation B.01.002. Similarly, the word “beer” is prescribed as the common name for the product produced pursuant to regulation B.02.130, supra.
It is clear therefore that standards have been prescribed for beer and light beer. It is also clear that those words have been arrogated by the statute for employment as common names with reference to those two food products. It is, with the greatest respect to those who hold a view to the contrary, thus abundantly clear that the sale of Labatt’s Special Lite Beer, unless labelled simply as “beer”, being the common name prescribed for use with reference to a product which conforms to the standards of beer as prescribed in the regulations, is a violation of s. 6 of the statute, without more. Here the appellant, by the adoption of the coined word “lite” and by associating it with the common name “beer” to produce a phonetic equivalent to another food, “light beer”, whose prescribed common name is “light beer” has sold as a light beer a product which conforms not with regulation B.02.134 but which conforms with B.02.130. The question to be answered is, of course, not the precise question answered by the judgment of the Federal Court of Appeal, namely that an infringement of s. 6 occurred, but rather whether the plaintiff is entitled to a declaration as sought in the statement of claim. In my view, the
[Page 927]
plaintiff is clearly not entitled either to the declaration with respect to regulation B.02.130 or to a declaration that the product is not “likely to be mistaken for a ‘light beer’ within the standard set out in paragraph B.02.134”.
I do not find it necessary to go further and deal with the question as to whether the prescribed standards in the two regulations would indeed create an understanding in actual or potential purchasers of the product that the product was either a light beer or a beer. It is also unnecessary to consider whether the use of the word “special” as an additional adjective qualifying the word “beer” in some way comes to the aid of the appellant. The description “lite beer” must, in the ordinary usage of the language today, be synonymous with light beer, and the appellant’s product, having an alcoholic content of 4 per cent, does not conform with the standards prescribed. The notice of 4 per cent on the label, in my respectful view, does not assist the appellant in establishing its entitlement to either declaration.
If it be necessary to find a violation of s. 6 by the actions of the appellant, I would adopt Chief Justice Jackett’s interpretation of s. 6 when he states in the judgment below, supra, at p. 623:
…applied to the facts of this case, section 6 means, in effect,
“Where a standard has been prescribed for (light beer), no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for (light beer), unless the article complies with the prescribed standard.”
Much argument was directed to the common understanding of the term “light beer” by the public. This discussion springs from the words employed in the two regulations quoted above in prescribing the specifications for both beer and light beer. It is said that the expression “light” with reference to beer is understood in Canada as being the same as in the United States where, according to the record, the term connotes that the beverage is low in carbohydrates of which alcohol
[Page 928]
is but one. It will be noted that each of the two classes of beer may include other carbohydrates in unspecified proportions. Hence it is said that 4 per cent alcohol might still indicate a light beer because the other carbohydrates may be reduced in proportion to the balance of the ingredients. In essence, the appellant asks the Court to find that it may produce and market a “malt liquor” with a name not prescribed as the common name for such a product when it contains 4 per cent alcohol, or alternatively, that the addition of adjectives in front of the word “beer” does not prevent the presence of the word “beer” operating as the assigned “common name” for such a product when it contains 4 per cent alcohol. The regulations are precise and nothing therein authorizes the addition of adjectives to the prescribed common name “beer” for the marketing to the public of this product. Similarly, in the case of light beer, the regulations do not authorize any perversion of the prescribed common name. The appellant, without saying so, argues that the right to add adjectives to the prescribed common name is inherent in the regulations. One of the added adjectives is “lite” which is a commonly used, phonetic spelling of “light,” and is indeed a commonly used homophone in our language. In my view, the use of “light” in association with beer is essentially a use of a prescribed common name, and here such use is made of the common name with reference to a product which does not conform to the standards prescribed by the regulations for that product. Whether or not this use in turn offends s. 6 depends upon the proper interpretation of that section. Before turning to that section, however, it must be observed that if the use of adjectives in association with prescribed names is permissible, then the appellant may, at least as regards the regulations under discussion, employ such words as “root beer,” “ginger beer,” or “near beer” with reference to this product. Clearly the word “beer,” when coupled with such qualifying words is not the prescribed name “beer” and would not be taken so by the public in considering the purchase of the product.
[Page 929]
The test established in s. 6, however, is “likely to be mistaken for such food” (in this case by definition in the statute, “light beer”). It is not necessary to go to the standards applied in other laws to apply this statutury test. The purchaser must be able to rely on the presence of the prescribed common name as indicating a product prepared in accordance with the specifications established under the Act. A purchaser must be able to do so without having to examine the container to ascertain the proportion of alcohol and other substances present in the product in order to determine which classification of malt liquors is being marketed under the label in question. The section certainly should not be construed so as to cause the purchaser to resolve an apparent conflict between the announced 4 per cent alcoholic content, and the phonetic equivalent of the prescribed common name “light beer” connoting as it does a lower alcoholic content. The presence of the additional adjective “special” does not assist the appellant in demonstrating that a mistake would not be “likely”.
I conclude that on the assumption that s. 6 and the applicable regulations cited above are valid, the appellant is not entitled to either declaration which it seeks in these proceedings.
I turn now to the constitutional issue. The appellant challenges the constitutional validity of s. 6 and s. 25(1)(c) of the Food and Drugs Act and the regulations promulgated thereunder with reference to the production and sale of beer. Before embarking on a discussion of the constitutional considerations, let us examine the form and thrust of the Act and its regulations.
Part I of the Act is entitled “Foods, Drugs, Cosmetics and Devices”. Under the heading “Food” we find four sections creating offences such as the sale of harmful substances, adulterated food and food unfit for human consumption and food manufactured under unsanitary conditions. There is a prohibition against the labelling, packaging, selling or advertising of food in any manner that is false and misleading or deceptive; and there
[Page 930]
is a general provision applicable to the whole of Part I making it an offence to advertise food, drugs, cosmetics or devices to the general public as a treatment, preventative or cure for any disease. Then we come to s. 6 in the “Food” portion of Part I of the Act which has already been set out above and which was relevant to the first issue as well as to the constitutional question. For convenience, I repeat s. 6 which reads as follows:
Where a standard has been prescribed for a food, no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for such food, unless the article complies with the prescribed standard.
There then follow provisions with reference to drugs, cosmetics and devices. In each of these instances the statute prescribes a number of offences with reference to false labelling, manufacture under unsatisfactory conditions, sale of unsafe articles, and so on. Likewise in each segment under Part I we find a section comparable to s. 6, as for example s. 10 in the case of drugs. Part III of the Act deals with “Controlled Drugs” and establishes offences in connection with the trafficking in controlled drugs, possession of such drugs, and detailed provisions with reference to the prosecution of charges under the statute, search and seizure, etc. Under this Part, regulations may be promulgated by the Governor-in-Council with reference to the manufacture, sale, importation and other dealings with controlled drugs. Part IV deals in the same way with restricted drugs. In Part II of the statute, provision is made for the “administration and enforcement” of the Act, including the powers of inspectors, the power of forfeiture, the right to make analysis of substances. Section 25(1)(c) appears in this part and establishes the authority in the Governor-in-Council to pass regulations under the statute
…for carrying the purposes and provisions of this Act into effect, and, in particular, but not so as to restrict the generality of the foregoing…
(c) prescribing standards of composition, strength, potency, purity, quality or other property of any article of food, drug, cosmetic or device;
[Page 931]
The regulatory authority under subs. (c) appears to extend to the four classes of goods or articles regulated under Part I which include “foods” with which we are here concerned.
Under the authority of s. 25(1)(c), there has been produced an elaborate set of regulations dealing with the preparation, manufacture and sale of the four articles or commodities dealt with in Part I of the Act. We are here concerned principally with Part B of the Food and Drug Regulations, supra. Various regulations in this Part prescribe standards for a food, its composition, strength, potency, purity, quality or other property, and where a standard is so prescribed, the regulations require that such food shall contain only the ingredients included in the standard for the food and in prescribed proportions. In Division 2 of Part B, provision is made for alcoholic beverages. The threshold qualification for an alcoholic beverage is set at “1.2% or more alcohol by volume”, and s. B.02.003 requires the display of the alcoholic content by volume on what is referred to as the “principal display panel”. The part of the regulations pertaining to alcoholic beverages with which this proceeding is concerned commences under the heading “Malt Liquors” with regulation B.02.130, already reproduced above, which prescribes the nature of “beer”, its alcoholic content, and permitted additives. The other malt liquors described by these regulations are ale, stout, porter, light beer, and malt liquor. The only difference between these various malt liquors appears to be the alcoholic content, and “the aroma, taste and character commonly attributed to” them. As we have seen, the alcoholic content for beer shall be not less than 2.6 per cent and not more than 5.5 per cent by volume, and in the case of light beer shall be not less than 1.2 per cent and not more than 2.5 per cent alcohol by volume. It may be observed that s. 6 was introduced into the Act in 1953 and s. 25(1)(c) was expanded at the same time to its present form. Prior to that time, the statute was concerned with the adulteration of food, misbranding, the offering of food or drugs for sale as treatment for specified diseases, and the correct labelling of articles of food which were mixtures, imitations or substitutes. There were, however, regulations pertaining to malt liquors prior to the 1953 statute, defining
[Page 932]
beer and light beer as two of six classifications of malt liquors.
The statute and its implementing regulations thus construct a detailed code governing the manufacture of malt liquors, the labels or display panels on the article so produced, and the name under which the end product shall be sold. Regulation B.01.042 illustrates the detailed reach of this regulatory pattern.
B.01.042. Where a standard for a food is prescribed in this Part
(a) the food shall contain only the ingredients included in the standard for the food;
(b) each ingredient shall be incorporated in the food in a quantity within any limits prescribed for that ingredient; and
(c) if the standard includes an ingredient to be used as a food additive for a specified purpose, that ingredient shall be a food additive set out in one of the Tables to section B. 16.100 for use as an additive to that food for that purpose.
On the other hand, there are some regulations which deal in precise terms with the adulteration of all foods. These regulations include lists of substances prohibited in the production of food. No challenge is made with respect to these regulations.
What then is the constitutional basis for the enactment of the contested portions of this statute by Parliament? The possible origins of this sovereign power include the federal authority under s. 91 of the British North America Act in respect of criminal law, trade and commerce, and peace, order and good government. I turn first to the criminal jurisdiction.
The traditional root of discussions in this field is found in Russell v. The Queen where Sir Montague Smith said at p. 839:
Laws… designed for the promotion of public order, safety or morals and which subject those who contravene them to criminal procedure and punishment, belong to
[Page 933]
the subject of public wrongs rather than to that of civil rights… and have direct relation to the criminal law.
That there are limits to the extent of the criminal authority is obvious and these limits were pointed out by this Court in The Reference as to the Validity of Section 5(a) of the Dairy Industry Act (Margarine Reference), where Rand J. looked to the object of the statute to find whether or not it related to the traditional field of criminal law, namely public peace, order, security, health and morality. In that case, the Court found that the object of the statute was economic:
…to give trade protection to the dairy industry in the production and sale of butter; to benefit one group of persons as against competitors in business in which, in the absence of the legislation, the latter would be free to engage in the province. To forbid manufacture and sale for such an end is prima facie to deal directly with the civil rights of individuals in relation to particular trade within the provinces.
(per Rand J., at p. 50.)
The test is one of substance, not form, and excludes from the criminal jurisdiction legislative activity not having the prescribed characteristics of criminal law.
A crime is an act which the law, with appropriate penal sanctions, forbids; but as prohibitions are not enacted in a vacuum, we can properly look for some evil or injurious or undesirable effect upon the public against which the law is directed. That effect may be in relation to social, economic or political interests; and the legislature has had in mind to suppress the evil or to safeguard the interest threatened.
(per Rand J., at p. 49.)
This approach to the federal authority in the field of criminal law was relied upon by this Court in Dominion Stores v. The Queen (judgment rendered December 13, 1979). That there is an area of legitimate regulations in respect of trade practices contrary to the interest of the community such as misleading, false or deceptive advertising
[Page 934]
and misbranding, is not under debate. In the statute now before us, the question of mislabelling arises only after the category of ‘light beer’ is created and the specifications for its production are assigned. When all this has been ordained, the use of the words “Special Life” by the appellant may be said to be misleading to the beer buying public. The contest, however, is not in respect of this second stage, but rather the first stage, that is the right in the Federal Parliament and the Federal Government to establish the standards of production and content of this product. In any case, the first stage of the process does not come within the criminal law reach as traditionally described in the authorities. I can find no basis, therefore, for this detailed regulation of the brewing industry in the production and sale of its product as a proper exercise of the federal authority in criminal law.
The jurisdiction of Parliament in matters related to health similarly has no application here. Parliament may make laws in relation to health for the peace, order and good government of Canada: quarantine laws come to mind as one example. The Privy Council hinted that legislation enacted by Parliament to deal with an “epidemic of pestilence” would be valid in Toronto Electric Commissioners v. Snider. But we are not concerned with such matters here. Where health is an aspect of criminal law, as in the case of adulteration provisions in the statute, the answer is clear but here not helpful. The appellant discussed succinctly in its submission to this Court another aspect of the “health” jurisdiction.
Furthermore the regulations under consideration do not on their face purport to be, nor can they be, connected or related to the protection of health since any such beverage regardless of its name having an alcoholic content by volume of not less than 1.2% and not more than 8.5% and otherwise brewed in accordance with the process common to all “Malt Liquors” is presumptively not a hazard to health.
[Page 935]
One cannot successfully ground the contested elements of this legislation in the field of the federal health power.
By s. 91(2) of the British North America Act, authority with reference to “the regulation of Trade and Commerce” was assigned without qualification or explanation to Parliament. Without judicial restraint in the interpretation of this provision, the provincial areas of jurisdiction would be seriously truncated. It is not surprising, therefore, to find the Privy Council stating within 15 years of Confederation:
The words “regulation of trade and commerce,” in their unlimited sense are sufficiently wide, if uncontrolled by the context and other parts of the Act, to include every regulation of trade ranging from political arrangements in regard to trade with foreign governments, requiring the sanction of parliament, down to minute rules for regulating particular trades. But a consideration of the Act shews that the words were not used in this unlimited sense. In the first place the collocation of No. 2 with classes of subjects of national and general concern affords an indication that regulations relating to general trade and commerce were in the mind of the legislature, when conferring this power on the dominion parliament. If the words had been intended to have the full scope of which in their literal meaning they are susceptible, the specific mention of several of the other classes of subjects enumerated in sect. 91 would have been unnecessary; as, 15, banking; 17, weights and measures; 18, bills of exchange and promissory notes; 19, interest; and even 21, bankruptcy and involvency.
per Sir Montague Smith at p. 112 in Citizens Insurance Company of Canada v. Parsons. (Emphasis added.)
Thus it is clear that “minute rules for regulating particular trades” are not within the trade and commerce competence. The statute and regulation with which we are here concerned purport to establish such a detailed single industry regulatory pattern. The judgment of the Privy Council continues:
[Page 936]
Construing therefore the words “regulation of trade and commerce” by the various aids to their interpretation above suggested, they would include political arrangements in regard to trade requiring the sanction of parliament, regulation of trade in matters of inter-provincial concern, and it may be that they would include general regulation of trade affecting the whole dominion. Their Lordships abstain on the present occasion from any attempt to define the limits of the authority of the dominion parliament in this direction. It is enough for the decision of the present case to say that, in their view, its authority to legislate for the regulation of trade and commerce does not comprehend the power to regulate by legislation the contracts of a particular business or trade, such as the business of fire insurance in a single province, and therefore that its legislative authority does not in the present case conflict or compete with the power over property and civil rights assigned to the legislature of Ontario by No. 13 of sect. 92.
per Sir Montague Smith, id., at p. 113. (Emphasis added.)
Some confusion arose at this point in the constitutional history of this country when the Privy Council in the decision in Russell v. The Queen, supra, raised some doubt as to the basis of prohibition legislation by the Parliament of Canada. However, in The Attorney General of Ontario v. The Attorney General of Canada, the matter was clarified when that Court determined that Russell v. The Queen, supra, did not base the federal prohibition legislation on the trade and commerce power.
Reverting to the Parsons case, supra, the trade and commerce head was there described as consisting of two branches. The first in the words of the judgment includes “political arrangements in regard to trade requiring the sanction of Parliament, regulation of trade in matters of interprovincial concern…”. The second branch is said to “…include general regulation of trade affecting the whole Dominion.” The first branch is illustrated in the succession of cases dealing with the marketing of natural products commencing with
[Page 937]
R. v. Eastern Terminal Elevator Co. and continuing to the recent egg marketing judgment in Reference Re Agricultural Products Marketing Act. The Eastern Terminal judgment is of assistance here in that it sheds light on the limited scope of the federal power under the trade and commerce heading with respect to the regulation of individual trades or sections of industry. As Duff J., as he then was, therein stated at pp. 446-7:
…the Dominion possesses legislative powers… to regulate this branch of external trade for the purpose of protecting it, by ensuring correctness in grading and freedom from adulteration, as well as providing for effective and reliable public guarantees as to quality. It does not follow that it is within the power of Parliament to accomplish this object by assuming, as this legislation does, the regulation in the provinces of particular occupations, as such, by a licensing system and otherwise, and of local works and undertakings, as such, however important and beneficial the ultimate purpose of the legislation may be.
…
There are two lurking fallacies in the argument advanced on behalf of the Crown; first, that, because in large part the grain trade is an export trade, you can regulate it locally in order to give effect to your policy in relation to the regulation of that part of it which is export. Obviously that is not a principle the application of which can be ruled by percentages. If it is operative when the export trade is seventy per cent of the whole, it must be equally operative when that percentage is only thirty; and such a principle in truth must postulate authority in the Dominion to assume the regulation of almost any trade in the country, provided it does so by setting up a scheme embracing the local, as well as the external and interprovincial trade; and regulation of trade, according to the conception of it which governs this legislation, includes the regulation in the provinces of the occupations of those engaged in the trade, and of the local establishments in which it is carried on. Precisely the same thing was attempted in the Insurance Act of 1910, unsuccessfully. The other fallacy is (the two are, perhaps, different forms of the same error) that the Dominion has such power because no single prov-
[Page 938]
ince, nor, indeed, all the provinces acting together, could put into effect such a sweeping scheme.
Other marketing statutes have suffered similar fates. The decisions in The Attorney General of British Columbia v. The Attorney General of Canada (Natural Products Marketing) and The Margarine Reference, supra, followed the principle of Eastern Terminal Elevator, supra, and in the latter case, the principles were extended to exclude the application of the trade and commerce head from the regulation of production of natural products. Commencing in the 1950’s, the decisions relevant to the marketing of natural products developed a trend which recognizes a federal competence in marketing legislation, even if intraprovincial trade is incidentally affected, provided the principal purpose and main thrust of the legislation was the regulation of interprovincial or international trade. R. v. Klassen, leave to appeal refused; Carnation Company Ltd. v. Quebec Agricultural Marketing Board at pp. 245 and 253 (which case dealt with the reciprocal situation, namely, intraprovincial marketing regulation incidentally affecting interprovincial marketing in the same field, and which followed the same reasoning in Reference re Ontario Farm Products Marketing Act). This approach was applied in the context of the distribution of oil in Caloil v. The Attorney General of Canada, wherein the Court applied this principle to the regulation of the importation of oil even to the point of the regulation of the flow of the commodity intraprovincially after its importation into the country.
The principles developed in the natural products marketing judgments only obliquely deal with the
[Page 939]
second branch of the Parsons description of trade and commerce, supra, and hence are not of direct application here. The impugned regulations in and under the Food and Drugs Act are not concerned with the control and guidance of the flow of articles of commerce through the distribution channels, but rather with the production and local sale of the specified products of the brewing industry. There is no demonstration by the proponent of these isolated provisions in the Food and Drugs Act and its regulations of any interprovincial aspect of this industry. The labels in the record reveal that the appellant produces these beverages in all provinces but Quebec and Prince Edward Island. From the nature of the beverage, it is apparent, without demonstration, that transportation to distant markets would be expensive, and hence the local nature of the production operation. This distinction between the flow of commerce, and production and local sale, if I may say so with respect, is pointedly made by Pigeon J. in Reference Re Agricultural Products Marketing Act, at p. 1293:
In my view, the control of production, whether agricultural or industrial, is prima facie a local matter, a matter of provincial jurisdiction. Egg farms, if I may use this expression to designate the kind of factories in which feed is converted into eggs and fowl, are local undertakings subject to provincial jurisdiction under section 92(10) B.N.A. Act…
and at p. 1296
“Marketing” does not include production and, therefore, provincial control of production is prima facie valid.
The first successful attempt to breathe life into the second branch of the Parsons trade and commerce description, supra, is found in John Deere Plow Co. v. Wharton,. The provincial legislature had attempted to establish regulation in a limited sense of federally incorporated companies within the provincial boundaries. The Court determined
[Page 940]
that such provincial action was ultra vires as being an invasion of the power of Parliament to regulate the exercise by federal companies of their powers throughout the Dominion. This subject should not be left without adding that the Court there found the constitutional basis for legislation authorizing the establishment of federal incorporations in the peace, order and good government clause while the regulation of their activities fell into the trade and commerce category. Viscount Haldane, speaking in the Wharton case, supra, stated at p. 340:
…the power to regulate trade and commerce at all events enables the Parliament of Canada to prescribe to what extent the powers of companies the objects of which extend to the entire Dominion should be exercisable, and what limitations should be placed on such powers. For if it be established that the Dominion Parliament can create such companies, then it becomes a question of general interest throughout the Dominion in what fashion they should be permitted to trade. (Emphasis Added.)
To this date this is still the test in determining whether the second branch of the trade and commerce power applies; vide Laskin C.J. in Reference re the Anti-Inflation Act, at p. 426.
What clearly is not of general national concern is the regulation of a single trade or industry. Vide In Re Insurance Act, 1910, at pp. 308-9; Eastern Terminal Elevator Co., supra.
The section of the Act before the Court in In Re Insurance Act 1910 provided:
3. The provisions of this Act shall not apply—
…
(b) to any company incorporated by an Act of the legislature of the late province of Canada, or by an Act of the legislature of any province now forming part of Canada, which carries on the business of insurance wholly within the limits of
[Page 941]
the province by the legislature of which it was incorporated, and which is within the exclusive control of the legislature of such province;
Nevertheless the statute was struck down as an attempt to regulate a trade within a particular province whether or not the trade was also carried on in all the provinces. The businesses before the Court were national concerns operating in several provinces under a statute which exempted from its application wholly intraprovincial businesses. Thus it is clear that neither national ownership of a trade or undertaking or even national advertising of its products will alone suffice to authorize the imposition of federal trade and commerce regulation.
In more modern times, this Court in Mac-Donald v. Vapor Canada Ltd. struck down that part of the Trade Marks Act of Canada purporting to create a cause of action in connection with “any business practice contrary to honest industrial or commercial usage in Canada”. Unrestricted geographic play of the provision was not sufficient to find legislative authority under the trade and commerce heading. Vide Chief Justice Laskin at pp. 156 and 159.
The Wharton judgment, supra, came in for examination in In Re The Board of Commerce Act where Duff J., as he then was, stated at p. 500:
…the regulation in question in Wharton’s Case, was not a regulation relating to any particular kind of trade or business, but a regulation touching the trading powers of all dominion companies engaged in any kind of business and applying to all such companies alike and thus at least potentially affecting Dominion trade and commerce in general through one of its most important instrumentalities.
This is of major importance in the disposition of the appeal now before us. As we have seen, the trade and commerce head cannot be applied to the regulation of a single trade, even though it be on a
[Page 942]
national basis, and in the Board of Commerce disposition, supra, the invocation of the trade and commerce head of federal jurisdiction is forbidden in the regulation of elements of commerce such as contracts, in an individual trade or concern even though the control was imposed in a series of separate regulatory codes each purporting to regulate a separate trade or industry. This very point appears in the judgment of Duff J., as he then was, at pp. 503-4:
…if such legislation could not be supported when the subject dealt with is a single commodity, or the trade in a single commodity, or a single group of commodities, how can jurisdiction be acquired so to legislate by extending the scope of the legislation and bringing a large number of specified trades or commodities within its sweep? Every consideration which can be invoked in support of the view that the authority to regulate by general regulations of uniform application the contracts of a trade in one commodity does not fall within [the commerce clause], can properly be brought to bear with I think increased force in impeaching legislation of the character now in question.
It will be noted that in our Court the judgments were divided three and three and that the Privy Council in its judgment substantially approves of the position taken by Duff J. in this Court.
In the result, the trade and commerce power has been rescued from near oblivion following the Citizens Insurance case, supra, by the extension or development of the obiter or afterthought of Sir Montague Smith in that case. The application of the power to this stage in our constitutional development finds illustration firstly in general regulation of an element of trade such as the regulation of federal incorporations. With respect to legislation relating to the support, control or regulation of the various levels or components in the marketing cycle of natural products, the provincial authority is prima facie qualified to legislate with reference to production (vide Pigeon J. in the Reference Re Agricultural Products Marketing Act, supra, at p. 1296), and the federal Parliament with reference to marketing in the international and interprovincial levels of trade. In between, the success or failure of the legislator depends upon
[Page 943]
whether the pith and substance or primary objective of the statute or regulation is related to the heads of power of the legislative authority in question. Incidental effect on the other legislative sphere will no longer necessarily doom the statute to failure. Several indicia of the proper tests have evolved. For example, if contractual rights within the province are the object of the proposed regulation, the province has the authority. On the other hand, if regulation of the flow in extraprovincial channels of trade is the object, then the federal statute will be valid. Between these spectrum ends, the shadings cannot be foretold in anything approaching a constitutional formula. The majority of the illustrated tests thus far encountered are largely in the distribution, and not the production, of farm products. Here, however, we are concerned with the proper regulatory authority in connection with the production process of a single industry and, to some extent, with the sale of its products, the latter being concerned largely with the use of labels or identification. Nowhere are the impugned statutory regulations or provisions concerned with the control or regulation of the extraprovincial distribution of these products or their movement through any channels of trade. On the contrary, their main purpose is the regulation of the brewing process itself by means of a “legal recipe”, as counsel for the appellant put it. Indeed, if the industry is substantially local in character, as seems to be the case from the sparse record before the court (as noted above), the regulations are, in fact, confined to the regulation of a trade within a province.
In the end, the effort of the respondent here is simply to build into these regulations a validity essentially founded upon the embryonic definition of the application of the trade and commerce heading in the Citizens Insurance case, supra. That observation and the subsequent references thereto are all predicated upon the requirement that the purported trade and commerce legislation affected industry and commerce at large or in a sweeping, general sense. In the context of the Food and Drugs Act, it follows that even if this statute
[Page 944]
were to cover a substantial portion of Canadian economic activity, one industry or trade at a time, by a varying array of regulations or trade codes applicable to each individual sector, there would not, in the result, be at law a regulation of trade and commerce in the sweeping general sense contemplated in the Citizens Insurance case, supra. That, in my view, is the heart and core of the problem confronting the respondent in this appeal. Thus the provisions regulating malt liquors relate either to a single industry or a sector thereof, while other regulations appear to concern themselves in a similar way with other individual industries; the former being condemned by the Citizens Insurance case, supra, and the latter does not rescue the malt liquor regulations by reason of the Board of Commerce case, supra.
I conclude, therefore, in this part, that the impugned sections as they relate to malt liquors cannot be founded in the trade and commerce head of jurisdiction.
There remains to be examined the peace, order and good government clause in s. 91 as the basis for these federal regulations. This subject has already been adverted to above in connection with the health aspect of this statute. The principal authorities dealing with the range of the federal jurisdiction under this heading are illustrated by:
(1) Fort Frances Pulp and Paper Co. v. Manitoba Free Press, basing the federal competence on the existence of a national emergency;
(2) The Radio Reference and the Aeronautics Reference, wherein the federal competence arose because the subject matter did not exist at the time of Confederation and clearly cannot be put into the class of matters of merely local or private nature; and,
[Page 945]
(3) Where the subject matter “goes beyond local or provincial concern or interest and must, from its inherent nature, be the concern of the Dominion as a whole.” Attorney General of Ontario v. Canada Temperance Federation per Viscount Simon, at p. 205.
The brewing and labelling of beer and light beer has not been said to have given rise either to a national emergency or a new problem not existing at the time of Confederation, nor to a matter of national concern transcending the local authorities’ power to meet and solve it by legislation. This latter concept is the subject of analysis and review by P.W. Hogg, Constitutional Law of Canada, 1977 at pp. 259-261. That learned author concludes at p. 261:
These cases suggest that the most important element of national dimension or national concern is a need for one national law which cannot realistically be satisfied by cooperative provincial action because the failure of one province to cooperate would carry with it grave consequences for the residents of other provinces. A subject-matter of legislation which has this characteristic has the necessary national dimension or concern to justify invocation of the p.o.g.g. power.
I see no basis for advancing the proposition that the impugned statutory provisions and regulations as they relate to malt liquor find their basis in law in the peace, order and good government clause of s. 91.
[Page 946]
This Court in the Dominion Stores case, supra, was dealing with an attempt by the federal authority to regulate the flow of agricultural products in the province at the retail level of trade. In the proceedings now before the Court, at least one province (Quebec) claims the legislation in question to be an invasion of the provincial powers under s. 92(13) and (16). There can, in my view, with the greatest respect to those holding a contrary view, be no answer from the federal authority that the federal regulations in question are validated as trade mark legislation which, of course, finds its place under the trade and commerce power already dealt with. In Dominion Stores, supra, the majority judgment found no justification in the federal marketing scheme on the basis that the “voluntary” federal scheme created a trade mark or something analogous thereto, or that the retailer was bound as a licensee to conform to the federal Act, as was the case in Attorney General of Ontario v. Attorney General of Canada. Similarly, the arrogation here by Parliament of words from the language as “common names” to be used on a mandatory basis by anyone selling a malted liquor of any of the prescribed standards, creates no trade mark rights and obligations or rights and obligations analogous thereto. Neither is there any concern here for the presence or absence of a federal labelling power. Essentially, labelling is, where obligatory, for the purpose of preventing deception or the gaining by the vendor of unfair advantage over the purchaser in the marketplace. Here the food must be produced to certain standards and then sold with prescribed nomenclature. Ordinarily, in labelling legislation, the legislator prescribes no standards for the production or marketing of the article, but only requires the revelation of the contents and conditions of maintenance, etc. In my view, we are not here called upon to determine the presence or absence of any such federal labelling power.
For these reasons, I would therefore answer the following question in the negative:
[Page 947]
Is it within the competence of the Parliament of Canada to enact sections 6 and 25(1)(c) of the Food and Drugs Act R.S.C. 1970, c. F-27, and are regulations B.02-130 to B.02‑135 inclusive thereunder validly made?
and I therefore would allow the appeal, set aside the judgment of the Federal Court of Appeal and the Order of the Trial Division of the Federal Court, and declare that sections B.02.130 to B.02.135 inclusive of the Food and Drug Regulations are invalid and that sections 6 and 25(1)(c) of the Food and Drugs Act are ultra vires Parliament in so far as they relate to malt liquors. The appellant is entitled to costs throughout but there shall be no costs to or against the intervenor.
The following are the reasons delivered by
RITCHIE J.—On December 15, 1977, the appellant, a Canadian company carrying on the business of brewing and marketing beer throughout Canada, began to produce a new brand of beer entitled “Labatt’s Special Lite”, and upon this product becoming available on the market in British Columbia it was seized by the inspectors acting under the Food and Drugs Act, R.S.C. 1970, c. F-27 (hereinafter called the “Act”) on the ground that it violated sec. 6 of that Act. This was soon followed by a similar action being taken in the Province of Ontario. It was these seizures which gave rise to the present action which was commenced by the Statement of Claim dated the 21st of December, 1977, claiming inter alia for:
(a) a declaration that Labatt’s Special Lite has been labelled, packaged, and sold as a ‘beer’ within the standard set out in paragraph B.02.130 of the Food and Drug Regulations;
(b) a declaration that Labatt’s Special Lite as labelled, packaged, and sold and as would have been advertised is not likely to be mistaken for a ‘light beer’ within the standard set out in paragraph B.02.134 of the Food and Drug Regulations.
[Page 948]
The defendant (respondent’s) case was broadly stated in paragraph 6 of the Statement of Defence as follows:
6. In answer to the whole of the Statement of Claim the Defendant says and the facts are that on or about the 15th day of December, A.D. 1977 the Plaintiff commenced to sell and to advertise for sale an alcoholic beverage under the name ‘Labatt’s Special Lite’, and that the said beverage was and is labeled, packaged, sold and advertised is such a manner that it is likely to be mistaken for light beer, notwithstanding the fact that the said beverage does not comply with the standard prescribed for light beer by Regulation B.02.134 (S) of the regulations made pursuant to the provisions of the Food and Drugs Act R.S.C. 1970, c. F-27. (The italics are my own.)
It appears to me that the question placed in issue by this plea is whether or not the beverage in question is likely to be mistaken for one that complies with the standard prescribed in regulation B.02.134 (S) although it in fact does not do so. As will hereafter appear, I am of opinion that the Act and the regulations made thereunder insofar as they deal with alcoholic beverages and particulary “beer” and “light beer” are directed to “prescribing of standards of composition, strength, potency, purity, quality or other property” of the article in question. It becomes clear from a consideration of s. 25(1) of the statute that such standards are prescribed under the authority of the Governor in Council. That section reads as follows:
25. (1) The Governor in Council may make regulations for carrying the purposes and provisions of this Act into effect, and, in particular, but not so as to restrict the generality of the foregoing, may make regulations
…
(b) respecting
(i) the labelling and packaging and the offering, exposing and advertising for sale of food, drugs, cosmetics and devices…
to prevent the consumer or purchaser thereof from being deceived or misled as to its design, construction, performance, intended use, quantity, character, value, composition, merit or safety, or to prevent injury to the health of the consumer or purchaser.
(c) prescribing standards of composition, strength, potency, purity, quality or other property of any article of food, drug, cosmetic or device;… (Italics are my own.)
[Page 949]
Regulation B.01.002 provides that:
Each section… for which the symbol (S) appears between the section number and the name of the food described in that section prescribes the standard of composition, strength, potency, purity, quality or other property of that food and a section in which the symbol does not appear does not prescribe a standard for a food.
The standard prescribed for beer is set out in para. B.02.130 (S) of the regulations and it contains twenty-one separate headings, one of which is that beer “shall contain not less than 2.6% and not more than 5.5% alcohol by volume”. There is no serious denial of the fact that light beer is a “beer” within the meaning of this definition but the regulation which prescribes the standard for light beer is B.02.134 (S) which provides:
B. 02.134 (S) Light Beer
(a) shall be the product of the alcoholic fermentation of an infusion of barley malt and hops or hop extract in potable water and brewed in such a manner as to possess the aroma, taste and character commonly attributed to light beer;
(b) shall contain not less than 1.2% and not more than 2.5% alcohol by volume; and
(c) may have added to it the ingredients mentioned in paragraph (c) of section B. 02.130.
For the purpose of ensuring that no consumer or purchaser shall be “deceived or misled” as to the strength, potency, purity or other property” of any article of food for which a standard has been prescribed, Parliament has enacted s. 6 of the statute which reads as follows:
6. Where a standard has been prescribed for a food, no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for such food, unless the article complies with the prescribed standard. (The italics are my own.)
As the learned trial judge observed, there was no evidence before him describing or illustrating the “aroma, taste and character commonly attributed to light beer” and in my opinion the present case is concerned exclusively with the question of whether the appellant’s product is so labelled as to make it likely that a consumer or purchaser would mistake
[Page 950]
it as containing the prescribed standard of “not more than 2.5% alcohol per volume”.
Both courts below took the view, with which I agree, that notwithstanding the difference in spelling, the use of the word “lite” in the title of “Labatt’s Special Lite” was equivalent to calling it “light beer”. It is, however, the standard prescribed by the regulations and not the designated name of the product which is sought to be preserved from mistake by s. 6 of the Act and to this end the appellant caused a label to be affixed to each bottle of its product containing the following information:
| Labatt’s |
| Est’d |
1828 |
| SPECIAL LITE |
| BEER |
BIÈRE |
| 24x341 Ml/12 oz fl |
4% alc./vol. |
It is to be remembered that s. 6 only applies “where a standard is prescribed for a food” (which includes light beer) and as I have indicated, I take the view that the prohibition contained in s. 6 is limited to a case where the product is labelled in such a manner that it is likely to be mistaken for complying with the prescribed standard when this is in fact not the case.
Like the learned trial judge, I conclude that the manner in which the appellant seeks to market its “Labatt’s Special Lite” beer is not such as to make it likely that it will be mistaken for a food which complies with the standard prescribed by regulation B.02.134 (S). The prominent display of the fact that the product contains 4 per cent alcohol by volume in my opinion makes it unlikely for it to be mistaken for a “food” in which the alcohol by volume does not exceed 2.5 per cent.
In reaching the opposite conclusion, Chief Justice Jackett, speaking for the Federal Court of Appeal, embarked on the following analysis of the content and meaning of s. 6 of the Act:
There is apparently (although I should not have thought so) an ambiguity as to whether, where a standard has been prescribed for a named class of food,
[Page 951]
section 6 prohibits labelling, packaging, selling or advertising an article not complying with the prescribed standard in such manner that it is likely to be mistaken
(a) for food so named, or
(b) for food that complies with the prescribed standard.
The second alternative is the view of the section on which the judgment attacked appears to be based. If it is the correct view, section 6 merely prohibits the passing off of an article as complying with a prescribed standard unless it does comply with it. If the first alternative is correct, section 6 prohibits the passing off of an article as being of a named class unless the article complies with the standard prescribed for goods of the class named. In my view, the first alternative is the correct view and, applied to the facts of this case, section 6 means, in effect,
Where a standard has been prescribed for (light beer), no person shall label, package, sell or advertise any article in such a manner that it is likely to be mistaken for (light beer), unless the article complies with the prescribed standard.
In adopting his interpretation of s. 6 of the Act, it will be seen that the learned Chief Justice has found it necessary to transpose the language employed by Parliament and to supply the words “light beer” in place of “food” in considering the facts of this case.
In my view s. 6 is passed in furtherance of the authority of the governor in council under s. 25(1)(c) of the Act to make regulations prescribing the standard of (inter alia) potency, rather than the name of any article of food. It will in any event have been seen that I do not share the views expressed by the Chief Justice of the Federal Court and as I am satisfied that the manner in which the appellant’s product was labelled and advertised was not such that it would be likely to be mistaken for one which complied with the standard prescribed by regulation B.02.134 (S), I find that there was no breach of s. 6 of the Act and would accordingly allow this appeal with costs and restore the judgment of the learned trial judge.
[Page 952]
Having regard to the conclusion I have reached, no question arises as to the constitutional validity of s. 6 of the Act and it will accordingly be unnecessary for me to answer the question posed by the Chief Justice of this Court which was in the following terms:
Is it within the competence of the Parliament of Canada to enact s. 6 and s. 25(1)(c) of the Food and Drug Act, R.S.C. 1970 c. F-27 and are Regulations 02.130 and 02.135 inclusive thereunder validly made?
Since writing the above, it has become apparent that all other members of the Court are of opinion that the circumstances of this case do disclose a breach of s. 6 of the Act and it therefore does become necessary to answer the constitutional question posed by the Chief Justice which I would answer in the manner indicated in the reasons for judgment of my brother Estey, with the result that I would dispose of this appeal in the manner proposed by him.
The reasons of Pigeon and Mclntyre JJ. were delivered by
PIGEON J. (dissenting)—There are two questions in this appeal. The first question is whether the Federal Court of Appeal erred in holding, contrary to the finding of the Trial Division, that the appellant (“Labatt”) was in violation of s. 6 of the Food and Drugs Act (“the Act”) by labelling as “Special Lite” beer containing 4 per cent alcohol when, according to the standard prescribed under the Act, “Light Beer” shall contain not more than 2.5 per cent alcohol. The second question is whether ss. 6 and 25(1)(c) of the Act and regulations B.02.130 to 135 are constitutionally valid. On this second question, the Attorney General of Quebec has intervened in support of the appeal against the judgment holding the impugned sections and regulations valid and, consequently, dismissing Labatt’s action for a declaration that they were not infringed or, in the alternative, that they were invalid.
[Page 953]
On the first point, in view of the wording of s. 6, the question is whether Labatt’s “Special Lite” beer is labelled “in such manner that it is likely to be mistaken” for the “food” i.e., “light beer” for which a standard has been prescribed. This standard provides among other specifications that it shall not contain more than 2.5 per cent alcohol. The reason for which the trial judge held that there was no violation was expressed as follows (at pp. 65-66):
I go finally to the plaintiffs labelling, packaging and advertising of its Canadian product. I have no doubt the plaintiff is, regardless of the phonetic spelling “Lite”, labelling, packaging and advertising a beer, using the descriptive adjective “light”. The incorrect or phonetic spelling cannot disguise that fact. Additionally, words in the cartons and in the advertising material state that the beer is “brewed for lightness”. All that, however, does not end the matter. In my view, based on the evidence before me, the labels on the individual bottles, the information on the carton, and the proposed advertising material (including the notice to British Columbia Government Liquor Store outlets), all clearly indicate, even to the most casual observer or customer, that the alcohol content is 4%. (Foot-note omitted.)
On the contrary, Jackett C.J. said, in giving the unanimous opinion in appeal, (at p. 623-624):
As I conceive of the scheme of this aspect of the Food and Drugs Act, it is calculated to protect the food buying public, not only against dangerous foods but against being mislead (sic) concerning the composition of foods; and it proceeds on the basis that foods are bought by members of the public who do not know or understand the technicalities of the composition of food but buy goods by reference to “common names”. It, therefore, contemplates the prescribing of “standards” for foods sold under various common names that will ensure, if the prescribing is well done, that a member of the public will get what he is entitled to think that he is getting when he purchases an article by reference to a common name for which a standard has been prescribed, whether or not he knows or understands the technical description of what he is entitled to think that he is getting. The statute, therefore, provides for regulations prescribing standards for “any article of food”—i.e. for articles of a described class of food—and makes it an offence, where a standard has been prescribed for a
[Page 954]
“food”—i.e. for a class of food-, to label, package, sell or advertise an article in such manner that it is likely to be mistaken “for such food”—i.e. for an article of the class for which a standard has been prescribed—”unless the article complies with the prescribed standard”.
In my view, therefore, it follows from the findings of the learned trial judge
(a) that the respondent was “labelling, packaging and advertising a beer using the descriptive adjective “light”, and
(b) that that beer had an alcohol content of 4%,
that the resondent was infringing section 6, if the regulation establishing the standard for light beer was valid. (Foot-notes omitted.)
I respectfully agree with this conclusion. The question is not whether it is possible to ascertain from the label the exact nature of the packaged product. The question is whether a mistake is likely and it appears to me that this enquiry must be approached in the same way as the likelihood of confusion in trade mark infringement or passing-off. It is a matter of first impression. The words “Special Lite” are clearly the dominant feature here. The indication of the alcoholic content is down on the bottom line with the mention of the contents in millilitres and fluid ounces.
Counsel for Labatt relied on the judgment of the House of Lords in Schweppes Ld. v. Gibbens. This was a passing-off action which was dismissed because the words “Gibbens Soda Water” were prominently displayed on the label in large capital letters. One only has to look at the label as reproduced in the report (at p. 602) to realize how totally different the situation was from that which was created by the Labatt labels as reproduced in the printed case herein. The present situation is more nearly analogous to that which obtained in J. Bollinger v. The Costa Brava Wine Company Limited, where an injunction to restrain the use of the term “Spanish Champagne” was granted to French Champagne producers, although it is obvi-
[Page 955]
ous that Spanish sparkling wine does not come from the part of France called “Champagne” where sparkling wine known by that name is produced.
For the same reason, I doubt whether the likelihood of confusion can ever be ruled out when an officially defined trade designation is misapplied, as in this case. The clear intention of such defined designations is to prohibit their use except in accordance with proper specification and this objective will be seriously compromised by allowing deviations provided they are indicated. The effectiveness of such indications is inevitably questionable. If specific weights are prescribed for some packaged goods, it would be intolerable to allow other weights provided they are plainly marked. The intent of such provisions is that casual shoppers not be misled.
The second question involves the difficult definition of the limits of federal power under the heading “The Regulation of Trade and Commerce” (s. 91(2) B.N.A. Act). In Citizens Insurance Company of Canada v. Parsons Sir Montague E. Smith said (at p. 113):
Construing therefore the words “regulation of trade and commerce” by the various aids to their interpretation above suggested, they would include political arrangements in regard to trade requiring the sanction of parliament, regulation of trade in matters of interprovincial concern, and it may be that they would include general regulation of trade affecting the whole dominion. Their Lordships abstain on the present occasion from any attempt to define the limits of the authority of the Dominion parliament in this direction.
More recently, in a reference concerning the validity of the Dominion Trade and Industry Commission Act 1935, Lord Atkin said (at pp. 417-418):
[Page 956]
Sect. 18, sub-s. 1, provides that “the words ‘Canada Standard’ or the initials ‘C.S.’ shall be a national trademark and the exclusive property in and the right to the use of such trade-mark is thereby declared to be vested in His Majesty in the right of the Dominion. …” By sub-s. 2 such national trade mark as applied to any commodity pursuant to the provisions of that Act or any other Act of the Parliament of Canada is to constitute a representation that such commodity conforms to the requirements of a specification of a commodity standard established under the provisions of any Dominion Act. By s. 19, sub-s. 1, any producer, or manufacturer or merchant is given permission to apply the national trade mark to any commodity provided it conforms to the appropriate statutory specification, and by sub-s. 2 it is made an offence to apply the mark to any commodity in violation of the prescribed conditions.
There exists in Canada a well established code relating to trade marks created by the Dominion statutes, to be found now in Trade Marks and Designs Act, R.S.C., 1927, c. 201, amended by S.C., 1928, c. 10. It gives to the proprietor of a registered trade mark the exclusive right to use the trade mark to designate articles manufactured or sold by him. It creates, therefore, a form of property in each Province and the rights that flow therefrom. No one has challenged the competence of the Dominion to pass such legislation. If challenged one obvious source of authority would appear to be the class of subjects enumerated in s. 91(2), the Regulation of trade and commerce, referred to by the Chief Justice. There could hardly be a more appropriate form of the exercise of this power than the creation and regulation of a uniform law of trade marks. But if the Dominion has power to create trade mark rights for individual traders, it is difficult to see why the power should not extend to that which is now a usual feature of national and international commerce—a national mark.
…there seems no reason why the legislative competence of the Dominion Parliament should not extend to the creation of juristic rights in novel fields, if they can be brought fairly within the classes of subjects confided to Parliament by the constitution. The substance of the legislation in question is to define a national mark, to give the exclusive use of it to the Dominion so as to
[Page 957]
provide a logical basis for a system of statutory licences to producers, manufacturers and merchants.
In my view, the enactments and regulations under attack in the present case are essentially for the same legislative purpose as the sections considered by Lord Atkin. This purpose is to provide that some specific trade designations will guarantee compliance with what the 1935 statute called a “commodity standard” and is known in the present statute and regulations as a “specification” for a “food”. The 1935 statute would have such effect only if the producer, manufacturer or merchant chose to apply the trade mark “Canada Standard” or the initials “C.S.”. The present scheme controls whenever a defined designation is applied to a food for which a specification has been established. I fail to see how this difference can be significant from a constitutional point of view.
I cannot agree with Labatt’s submission that the present regulations and statute prevent it from marketing its product. In my view what is prohibited is marking it “light beer”. It is argued that the intention in using this description is not to mislead the public into believing that it is “light beer” as defined in the Regulations, i.e. 2.5 per cent alcohol, but to inform the public that this is a lighter beer. However, it is not marked Labatt’s Lighter Beer, but “Special Lite Beer” under “Labatt’s” prominently displayed in large characters well above “Beer” in smaller type. Even on the strict view that any use of the word “light”, properly spelled or mis-spelled, is prohibited. I fail to see how this can be said to amount to a prohibition of the sale of this particular product. Could they not label it as “Low-calorie” if they wished? It may be that this would not be commercially desirable but that is a matter of the wisdom of the legislation with which we are not concerned.
It is now necessary to consider the judgment rendered last week in Dominion Stores Limited v.
[Page 958]
The Queen reversing R. v. Dominion Stores. This was a prosecution initiated by a federal inspector for violation of the Canada Agricultural Products Standards Act (R.S.C. 1970, c. A‑8). The violation was alleged to have been committed in respect of apples offered for sale under the grade name “extra fancy”. Under the federal statute, grading is compulsory for agricultural products in extraprovincial trade only. As the apples in question were offered at retail in Ontario, the applicable grading statute was The Farm Products Grades and Sales Act (R.S.O. 1970, c. 161). This provincial statute requires grading with the same grade names and specifications as the federal statute, but is applicable to products in local trade only.
The basis on which the prosecution was initiated by the federal authorities under the federal statute was that; in addition to Part II requiring compulsory grading for international and interprovincial trade, there is a Part I providing for standards and making it an offence to offer for sale under an established grade name, a product which does not meet the requirements for such grade. The retailers being compelled by the provincial statute to apply the grade name, the federal inspectors claimed the equivalent in practical terms of the right to enforce the provincial statute concerning grade requirement specifications, by claiming violation of the federal standard. The conclusion of the majority in this Court rejected this as unwarranted federal interference in what was in truth the administration of the provincial statute. Estey J. said:
The federal statute seeks to add another consequence to the same action already proscribed under the Ontario Act. It is said that the result is simply that if the retailer affixes to the apples the “extra fancy” grade identification, he is to be prosecuted under the federal statute (assuming quality does not match the prescribed standards), but if he does not affix the label, he is to be prosecuted under the provincial Act. To that result, my
[Page 959]
strong preference is for the simple solution that Part I of the federal statute is inapplicable to the local trade here in question, and hence the charge, if any, must be laid under the provincial statute.
Estey J. also made it clear that this conclusion did not affect a federal trade mark statute:
…It is also, in my respectful view, quite wrong to regard the federal statute as being an innocent creation of something akin to a trade mark and to thereby assume that this federal statute is trade mark legislation. In fact and in law, it is marketing legislation enacted without sovereign power to do so in the hope that this deficiency will be filled with dovetailing provincial sovereign legislation. The province has cooperated in bringing in the marketing plan but takes the position here, and I believe rightly so, that the operative statute which may have been offended by the appellant is not the so-called trade mark legislation but the genuine marketing legislation of the province designed to fill the constitutional gap with reference to the marketing of fruit and vegetables in the Province of Ontario.
We are not confronted with a similar situation in the present case. In my view, the federal enactments under attack provide for no more than what might be called “labelling regulations”. These state what specifications must be met if some specific designations are used on food labels. In my view this does not go beyond a proper concept of trade mark legislation and I fail to see any invasion of provincial jurisdiction as was found in Macdonald v. Vapor Canada Ltd in respect of s. 7(e) of the Trade Marks Act.
I would, therefore, answer the constitutional question in the affirmative and dismiss the appeal with costs to the respondent. There should be no costs to or against the intervenor.
PRATTE J.—I would allow the appeal with costs and restore the judgment of the learned trial judge.
[Page 960]
Appeal allowed with costs, LASKIN C.J. and PIGEON and MCINTYRE JJ. dissenting.
Solicitors for the appellant: Blake, Cassels & Graydon, Toronto.
Solicitors for the respondent: Deputy Attorney General of Canada, Ottawa.
Solicitors for the intervenant: H. Brun, J.F. Jobin and Y. Bernier, Québec.
Email this Content