T-1307-74
Steve Dart Co. (Petitioner)
v.
Board of Arbitration created by the Produce Li
censing Regulations established by P.C. 1967-
2265 and the members thereof (Respondents)
Trial Division, Addy J.—Montreal, June 17;
Ottawa, June 28, 1974.
Jurisdiction—Application for writ of prohibition—Agricul-
ture—Board of Arbitration created by Regulations under
statute—No authority covered by statute to constitute such a
Board—Prohibition granted against Board—Canada
Agricultural Products Standards Act, R.S.C. 1970, c. A-8,
ss. 3, 5-8, 10 and Produce Licensing Regulations ss. 20, 26,
30, 31, 34, 35, 42—Public Service Employment Act, R.S.C.
1970, c. P-32—British North America Act, ss. 92, 101—
Federal Court Act, s. 18.
The petitioner was licensed as a dealer in agricultural
products under section 6 of the Canada Agricultural Prod
ucts Standards Act, and under the Produce Licensing Regu
lations issued by order in council under the Act. The peti
tioner, on receipt of a shipment of corn from a dealer in the
United States, advised the shipper that it was not in good
condition and had inspection of it made by the Department
of Agriculture. The shipper filed complaint with the depart
ment, alleging non-payment of the purchase price. The
respondent Board advised the petitioner that, under section
26 of the Regulations, it must either pay the shipper's claim
or file a notice within 30 days and with reasons for contesta-
tion. The petitioner applied for a writ of prohibition against
the Board.
Held, application for prohibition lay against the Board, as
a "federal board, commission or tribunal" under section 18
of the Federal Court Act. The application should be granted
because the Canada Agricultural Standards Act contained
no specific provision for the establishment of such a Board
and no provision can be inferred from the power to make
regulations in section 8 of the Act. The Department had
attempted to create a court or tribunal by means of order in
council, whereas under section 101 of the British North
America Act, the power to create courts rested strictly with
Parliament.
Procureur Général de Québec v. Dame Lazarovitch
(1940) 69 Que. K.B. 214; Campbell's Trustees v. Police
Commissioners of Leith (1870) L.R. 2 Sc. & Div. 1; The
Attorney-General & Ephraim Hutchings (Relator) v. The
Directors, etc. of the Great Eastern Railway Company
[1879-80] 5 A.C. 473; Minister of Health v. The King
(on the Prosecution of Yoffe) [1931] A.C. 494; The King
v. National Fish Company Ltd. [1931] Ex.C.R. 75;
Gruen Watch Co. of Canada Ltd. v. Attorney-General
of Canada [1950] 4 D.L.R. 156; Pulp and Paper Work
ers of Canada v. Attorney-General for British Columbia
(1968) 67 D.L.R. (2d) 378, applied. In re The Board of
Commerce Act, 1919, and the Combines and Fair Prices
Act, 1919 [1922] 1 A.C. 191, referred to.
APPLICATION.
COUNSEL:
J. Ruby for petitioner.
G. Côté for respondents.
SOLICITORS:
Orenstein, Ruby, Michelin & Orenstein,
Montreal, for petitioner.
Laing, Weldon, Courtois, Clarkson, Par
sons, Gonthier & Tetrault, Montreal, for
respondents.
The following are the reasons for judgment
delivered in English by
ADDY J.: The petitioner, a Quebec corpora
tion, carries on business in the City of Montreal,
Province of Quebec, as an importer of fruit and
vegetables for the purpose of resale to the
public and to other dealers.
It is applying for a writ of prohibition to
restrain the respondent Board from hearing a
claim filed against the petitioner by M.J. Duer &
Company, a broker, dealer and shipper of fruit
and vegetables and other agricultural products,
of the State of Virginia, U.S.A., for alleged
failure to pay the sum of $3,992.10 for a ship
ment of some 862 crates of corn, which were
received in Montreal on or about the 16th of
July, 1973. The other relevant facts are set out
in the affidavit of the petitioner, the respdndent
Board not having filed any affidavit herein.
The petitioner is licensed as a dealer in
agricultural products for shipment to and from
the Province of Quebec pursuant to section 6 of
the Canada Agricultural Products Standards
Act, R.S.C. 1970, c. A-8 (hereinafter referred to
as the "Act") and under the Produce Licensing
Regulations (hereinafter referred to as the
"Regulations") which were issued pursuant to
the said Act under P.C. 1967-2265.
The petitioner, on receipt of the above-men
tioned corn, claimed that it was not in good
condition, advised the shipper by telegram and
requested an inspection of same by officers of
the Department of Agriculture. The petitioner
also claimed damages in excess of the price of
the goods. An inspection was immediately car
ried out by an inspector of the Department of
Agriculture and, subsequently, the shipper, by
letter dated the 11th of January 1974, filed the
formal complaint with the Department of
Agriculture pursuant to section 20 of the Regu
lations, claiming non-payment to it of the afore
said sum of $3,992.10. On the 21st of January
1974, the respondent Board formally advised
the petitioner by letter that, in accordance with
section 26 of the Regulations, it must either pay
the claim or file a notice contesting the claim
within thirty days. It also advised the petitioner
that it would be required in any notice contest
ing the claim to set out in writing the reasons
why it was resisting the claim and forward to
the respondent Board two copies of every letter
or document in its possession relating to the
subject-matter of the claim.
The petitioner's application for a writ of
prohibition is founded on the argument that the
Regulations issued pursuant to the Act, in so far
as they purport to set up the respondent Board
and to provide for its composition, for the grant
ing to it of judicial or quasi-judicial powers and,
more particularly, for the making by it of find
ings as to issues of liability arising between
individual parties and for the enforcement of
such findings, are ultra vires in that the Act does
not provide authority for any such Regulations
to be made.
The general purpose of the Act is obviously
to establish standards for agricultural products
and to regulate international and interprovincial
trade in these products. The Act makes specific
provisions for Regulations governing agricultur
al products to be issued by the Governor Gener
al in Council for the following specific
purposes:
a) the terms and conditions of grading, mark
ing and inspecting of products, and fees and
regulations pertaining thereto (refer Act sec
tion 3);
b) the prohibition of importation into or of
exportation out of Canada, or the conveying
or sending of such products from one prov
ince to another, and regulating the carriage of
such goods (refer Act section 5);
c) the licensing of agricultural products deal
ers in any province or the importation into or
exportation out of that province from any
point outside of the province, and the cancel
lation and suspension of such licences and the
prescribing of fees payable for same (refer
Act section 6);
d) the seizing, detention and disposal of any
agricultural products (refer Act section 10(4)).
The only other authority contained in the Act
providing for the issuing of Regulations is con
tained in section 8 of the Act, which grants a
general power to make regulations to carry out
the purposes and provisions of the Act. Section
8 reads as follows:
8. The Governor in Council may make regulations for
carrying out the purposes and provisions of this Act and for
prescribing anything that by this Act is required to be
prescribed. 1955, c. 27,s.8.
Section 31 of the Regulations provides that
there shall be a board of arbitration consisting
of three members—two of which are to be
appointed by outside bodies, namely, the
Canadian Horticultural Council and the Canadi-
an Wholesalers Association, and one member,
namely the Chairman, to be appointed by an
employee of the Department, that is, by the
Director of the Fruit and Vegetables Division of
the Products and Marketing Branch of the
Department of Agriculture, referred to in this
Act as "the Director".
Nowhere in the Act is there, in my view, any
specific provision for the setting up of any such
board and, a fortiori, is there any such provision
for delegating to any outside body or to an
employee of the Department the right to deter
mine the composition thereof. The only specific
provision for administrative personnel with any
specific functions is contained in section 7(1) of
the Act which gives the right to appoint inspec
tors, graders and "other persons necessary for
the administration and enforcement of this Act,
... [who are to] be appointed or employed
under the Public Service Employment Act".
It may well be that a board consisting of three
persons might be considered as being among
those "persons necessary for the administration
and enforcement of the Act". But, in order for
such persons to be invested with any such
powers, specific authority must be provided to
allow the Governor General in Council by regu
lation to delegate the appointment of any such
persons to outside bodies or even to an
employee of the Department, namely, the Direc
tor. The application of the principle delegatus
non potest delegare to such cases is too well
known to warrant the citing of any authority in
support thereof. For the same reason, it is
equally obvious that section 8 of the Act, above
quoted, is not of any use to the respondent since
it contains no such specific power. That section
grants the additional right to make regulations to
carry out the purposes and provisions of the
Act, but such purposes and provisions must be
clearly expressed in or contained within or flow
by necessary implication from other sections of
the Act. It would permit the making of ejusdem
generis Regulations as those authorized in the
other sections of the Act providing for the issu
ing of Regulations. It would also permit a Regu
lation required to carry out effectively a clearly
expressed provision of the Act not falling within
one of the other sections authorizing the making
of Regulations; it certainly does not provide the
right to make Regulations covering a matter
which is not even remotely referred to in the
Act. (See Procureur Général de Québec v. Dame
Lazarovitch' ; Campbell's Trustees v. Police
Commissioners of Leith 2 .) The power to estab
lish a board of arbitration and to establish it
from among people to be designated by outside
bodies cannot be fairly regarded as incidental to
or consequential upon those things which Parlia
ment has authorized in this Act. (See The Attor-
ney-General & Ephraim Hutchings (Relator) v.
The Directors, etc., of the Great Eastern Rail
' (1940) 69 Que. K.B. 214 at 227.
2 (1870) L.R. 2 Sc. & Div. 1.
way Company 3 and Minister of Health v. The
King (on the Prosecution of Yoffe) 4 .) Delegated
authority must be exercised strictly and within
the strict limits of the statute. (See The King v.
National Fish Company, Ltd. 3 ; Gruen Watch
Co. of Canada Ltd. v. Attorney-General of
Canada 6 ; and Pulp & Paper Workers of Canada
v. Attorney-General for British Columbia')
Since there is no statutory authority for the
constitution of the respondent Board, prohibi
tion should issue against it on this ground alone.
As section 18 of the Federal Court Act gives
this Court the power to issue a writ of prohibi
tion against "any federal board, commission or
other tribunal", I find no difficulty in coming to
the conclusion that, by necessary implication,
this Court has a power to grant such relief
against a body which, although not legally con
stituted, purports to be and to act and exercise
powers as a federal board or tribunal pursuant
to federal regulations and a federal act. I do not
find difficulty either in concluding that prohibi
tion is a proper remedy in such a case.
I would, however, be remiss in my duty if I
failed to deal with the extensive arguments pre
sented by counsel pertaining to the powers
which the respondent Board purports to exer
cise under the Regulations and pertaining to the
various procedures provided for in the Regula
tions for the functioning of that Board.
The Regulations provide that a person may
file a complaint with the Director to the effect
that a licensee has failed to account in respect
of any transaction (refer Regulations section
[1879-80] 5 A.C. 473 at 476.
4 [1931] A.C. 494.
[1931] Ex.C.R. 75 at 82.
6 [1950] 4 D.L.R. 156 at 165, 166, 176 and 177.
7 (1968) 67 D.L.R. (2d) 378 at 383 and 384.
20(1)(c)) and provide also that a person shall be
deemed to have failed to account where he fails
to pay money due in respect of an agreement
for the sale of produce (refer Regulations sec
tion 20(2)(c)). They also provide that, where
the Director feels that there is sufficient evi
dence for the Board to hear a claim, he is
obliged to submit it to the Board (refer Regula
tions section 30: "... the Director shall submit
the claim and any counterclaim to the Board.")
The Board is then obliged to examine the evi
dence submitted by the Director and to render a
decision thereon. Before coming to any decision
the Board is also entitled to request that any
witness attend (refer Regulations section 32).
The Regulations (section 34) then provide
that the respondent shall, within thirty days of
the decision, either satisfy the award or forward
to the Director a cheque in satisfaction thereof
or file a notice of appeal in accordance with
section 35 of the Regulations, which incidental
ly requires the appellant to pay the sum of
$75.00 as security for costs and also to deposit
a certified cheque in the full amount of the
"award or damages payable to the claimant".
There is also a mandatory provision to the
effect that, where a licensee fails ; to pay an
award or otherwise to comply with section 34 of
the Regulations, the Minister must cancel the
licence (refer Regulations section 42(2)). There
is provision for appeals to be heard before
another board called the Board of Review con
sisting of five members. The Regulations also
make provision for security in the form of a
bond in double the amount claimed where the
claimant is a non-resident. Throughout the vari
ous Regulations there is a constant reference to
damage or loss sustained by a claimant over
which the Board would have jurisdiction.
All of the above sections of the Regulations
set up a trial tribunal and an appeal tribunal, and
a procedure to try the merits of any complaint
lodged by "any person" who may choose to
lodge a complaint against a licensee to the effect
that the latter might, among other things, have
"failed to account in respect of any transaction"
or "without reasonable cause rejected or failed
to deliver any produce, bought, sold or con
signed in accordance with the terms of a con
tract" (refer Regulations section 20(1)(c) and
(d)) to grant awards of damages arising out of
such claims and to enforce the awards by means
of an automatic forfeiture of licence in the
event of non-compliance with an award.
There is no statutory authority whatsoever
for the setting up of any such system of trial
and appeal tribunals or for determining the
issues which the above Regulations purport to
have determined. The provisions of section 8 of
the Act, which I have quoted above, do not
come anywhere near to providing any such
authority even by remote implication. Counsel
for the respondent Board argued that, in effect,
the Board would be merely deciding whether a
licence was to be cancelled pursuant to the
Regulations in this respect which were issued
under the authority granted by section 6(1) of
the Act which reads as follows:
6. (1) The Governor in Council may make regulations for
the licensing of dealers to deal in any agricultural product
shipped from or to a place outside the province in which
such dealer carries on business, and for the issue, cancella
tion and suspension of licences including the prescribing of
fees for the issue thereof.
The exercise of a power to revoke a licence in
order to enforce a finding as to a claim between
individuals which the Board has no statutory
power to make is an abusive and illegal use of
such power and is subject to being restrained
when its use is threatened, regardless of the fact
that section 6(1) does provide authority for the
making of regulations dealing with the cancella
tion or suspension of licences.
What was attempted by the Department, in
effect, was to create a tribunal or court by
means of order in council. Under section 101 of
the British North America Act, the power to
create courts rests strictly with Parliament. It
would be a sorry day indeed if tribunals with
jurisdiction to determine the issues between citi
zens could be set up by mere order in council.
Even if all of the provisions contained in the
Regulations were actually embodied in the Act,
it might possibly still be argued successfully,
having regard to the fact that such extensive
powers in a board of arbitration would not
really be required to properly administer the
provisions of the Act, that the purported grant
ing of such powers might constitute an infringe
ment of the property and civil rights provisions
contained in section 92 of the British North
America Act (see In re the Board of Commerce
Act, 1919, and the Combines and Fair Prices
Act, 1919 8 ). But I am, of course, refraining
from considering this point as it is not required
in order to decide the issue before me.
The penalty which is automatically imposed if
a licensee does not pay a debt which the Board
of Arbitration finds to be due by him to another,
is much more harsh on the defendant than the
possible effects of a writ of execution issued
out of a civil court. Debtor's prison has disap
peared several years ago, but an automatic and
obligatory cancellation of a person's licence for
debt and, therefore, the removal of that person's
livelihood is a most drastic and a most severe
penalty to be suffered for non-payment of a
debt; it is not too far removed from debtor's
prison.
For these reasons, as well as on the original
grounds that there was no statutory authority
whatsoever to constitute the Board of Arbitra
tion, the motion is granted and prohibition shall
issue.
s [1922] 1 A.C. 191 at 197 and 198.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.