Judgments

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A-67-78
Attorney General of Canada (Appellant) (Defendant)
v.
Labatt Breweries of Canada Ltd. (Respondent) (Plaintiff)
Court of Appeal, Jackett C.J., Pratte J. and Smith D.J.—Vancouver, April 11, 1979.
Prerogative writs — Declaration — Food and drugs — Appeal from Trial Division's declaration that product labelled "Special Lite" not likely to be mistaken for light beer as defined by Food and Drug Regulations — Regulations speci fied alcohol content for light beer — Label on respondent's product indicated alcohol content — Trial Judge found non compliance of respondent's product with the regulatory stand ards to be an irrelevant consideration — Issue as to correct ness of Trial Judge's decision that Labatt's `Special Lite" would not be mistaken for light beer as described in the Regulations — Whether or not the Regulation establishing a standard for light beer was invalid — Food and Drugs Act, R.S.C. 1970, c. F-27, ss. 2, 6, 25, 26 — Food and Drug Regulations, SOR/54-664, para. A.01.002, B.01.001, B.01.006, B.02.130, B.02.134.
This is an appeal from a judgment of Trial Division, in an action for a declaration, declaring that plaintiff's product, Labatt's Special Lite, as labelled, packaged and sold, would not likely be mistaken for light beer as described in the Regulations made pursuant to the Food and Drugs Act. These Regulations described standards for both "Beer" and "Light Beer". The Trial Judge made two findings: that regardless of the phonetic spelling "Lite", the beer was labelled, packaged and advertised as "light", and that the labels, cartons and advertising all indicated the alcohol content. The Trial Judge, however, did not consider the finding that the beverage was labelled, pack aged and advertised as a "Light Beer", even though it did not comply with the standard for light beer, to be relevant to the question he had to decide. Respondent adopts the position taken by the Trial Division and supports the judgment on the alternative ground that the paragraph of the Regulations estab lishing a standard for light beer was invalid: the Trial Judge assumed its validity.
Held, the appeal is allowed. There is an ambiguity as to whether, where a standard has been prescribed for a named class of food, section 6 prohibits labelling, packaging, selling or advertising an article not complying with the prescribed stand ard 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 trial judgment is based on the second alternative; if correct, section 6 would merely prohibit the passing off of an article as complying with a prescribed standard unless it com-
plied with it. The first alternative, however, is the correct one; 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. The statute provides for regulations prescribing standards for articles of a described class of food and makes it an offence, where a standard has been prescribed, to label, package, sell or advertise an article in such manner that it is likely to be mistaken for such food unless the article complies with the prescribed standard. If the Regu lation establishing a standard for light beer is valid, respondent was infringing section 6. The standard prescribed for light beer is not outside the powers conferred by thé Act on the Governor in Council. The object of the law—the protection of the public against health hazards and fraud, and against being misled intentionally or otherwise, as to what food they are getting— does not go beyond the ambit of the criminal law power as authorized by section 91(27) of The British North America Act, 1867.
Standard Sausage Co. v. Lee [1933] 4 D.L.R. 501 and [1934] 1 D.L.R. 706, applied.
APPEAL. COUNSEL:
W. J. A. Hobson, Q.C. and C. Bruce for appellant (defendant).
D. M. M. Goldie, Q.C. and D. Brown for respondent (plaintiff).
SOLICITORS:
Deputy Attorney General of Canada for appellant (defendant).
Russell & DuMoulin, Vancouver, for respondent (plaintiff).
The following are the reasons for judgment delivered orally in English by
JACKETT C.J.: This is an appeal from a judg ment of the Trial Division in an action for a declaration, declaring
1. The Plaintiffs product, Labatt's Special Lite (referred to in the Statement of Claim and seized or threatened to be seized pursuant to the provisions of the Food and Drugs Act R.S.C. 1970, C. F-27), as labelled, packaged and sold and as would have been advertised, is not likely to be mistaken for light beer as described in paragraph B.02.134 of the regulations made pursuant to the said Food and Drugs Act.
and awarding costs of the action to the respondent'. The labelling of the beverage in ques tion is typified by the following sample of one of the labels.
The relevant legislation is the Food and Drugs Act, R.S.C. 1970, c. F-27, and Regulations made thereunder. Section 25 of the Act authorizes regu lations (paragraph (c)) "prescribing standards of composition, strength ... or other property of any article of food" which word "food" includes, by definition (section 2), "any article ... for use as ... drink for man". There are Regulations under section 25 prescribing standards for inter alia "Beer" (paragraph B.02.130) and "Light Beer" (paragraph B.02.134). Section 6 of the Act 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.
Section 26 of the Act makes it a punishable offence to violate any of the provisions of the Act.
The declaration in the Trial Division judgment seems to have been granted pursuant to the prayer for relief contained in paragraph 11(b) of the statement of claim. It is to be noted that
(a) paragraph 11(b) claims a declaration that the beverage in question "as labelled, packaged and sold ..." is not likely to be
' No question as to the appropriateness of the matter for a declaratory judgment or as to jurisdiction has been raised by the parties or would seem to be so obvious that it should be raised by the Court.
mistaken for a "light beer" within "the standard set out in paragraph B.02.134", and
(b) the judgment attacked grants a declaration that such beverage "as labelled, packaged and sold ..." is not likely to be mistaken for "light beer" as "described in paragraph B.02.134".
In my view, a judicial declaration should only be granted in an action for a declaration if it will serve some immediate practical purpose of a com mercial or other nature. The sole evident purpose for the declaration attacked is that the respondent desires, for sound commercial reasons, to have it established that the prohibition in section 6 does not apply to what it had done and proposed to continue to do. In my view, unless the judgment is read as being, in effect a declaration to that effect, it should be set aside as not being a proper exercise of the Court's discretionary power to render declaratory judgments. 2
The parties, through counsel, agreed, during argument of this appeal, as I understood them, that the judgment of the Trial Division is to be read as a declaration, in effect, that labelling, packaging and selling the beverage in question in the manner in which it was labelled, packaged and sold did not constitute an infringement of section 6. That being so, the question arises as to whether that declaration can be supported on the material before the Trial Division.
The judgment attacked was delivered by the Trial Division on the assumption that paragraph B.02.134 of the Regulations had validly estab lished a standard for "Light Beer". In this Court, as I understand it, the respondent adopts the posi tion taken by the Trial Division and, in addition, supports the judgment on the alternative ground
2 Apart from the general principles governing a Court's discretion to grant declaratory judgments, the Federal Court cannot grant such a judgment unless, in so doing, it is adminis tering a federal law. Quaere whether delivering a declaration as to a fact without declaring whether there is or is not some legal result flowing from such a law as applied to that fact would be administering such a law.
that paragraph B.02.134 is invalid 3 .
To understand the reasoning whereby the learned Trial Judge reached the conclusion that the respondent was entitled to the declaration granted, it is necessary to have in mind that, when paragraphs B.02.130 and B.02.134 are read to gether, it appears that one of the two compulsory requirements of the standard prescribed for "Beer" was that it
shall contain not less than 2.6% and not more than 5.5% alcohol by volume; ...
that one of the two compulsory requirements of the standard prescribed for "Light Beer" was that it
shall contain not less than 1.2% and not more than 2.5% alcohol by volume; ...
and that the other compulsory requirement was that the beverage 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
(a) beer, or
(b) light beer,
as the case may be.
After reviewing the evidence, the learned Trial Judge, inter alia, made two findings as to the basic facts, viz.:
(a) that, regardless of the phonetic spelling "Lite", the respondent was "labelling, packag ing and advertising a beer, using the descriptive adjective `light' ", and
(b) that the labels on the individual bottles, the information on the carton, and the proposed advertising material all clearly indicate, even to the most casual observer or customer, that the alcohol content is 4%.
He stated the "issue" to be
In my view, if the judgment attacked is otherwise sustained on either ground, the declaration should be re-cast to make it clear that it is a declaration that what was being done was not a breach of section 6.
has the plaintiff [respondent] labelled, packaged or advertised its Special Lite product in such a manner that it is likely to be mistaken for Canadian light beer?
He expressed the view that that is "a question of fact, a jury question" and that, in deciding that question, he should try to put himself in the posi tion of "the average, fair and reasonable person". Thereafter, the learned Trial Judge dealt with the matter as follows:
There is no evidence before me describing, explaining or illustrating the aroma, taste and character commonly attribut ed to light beer. There is no evidence indicating the average, fair and reasonable Canadian would know what those particu lar 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 plaintiff's 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 char acter 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 plaintiff's 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").
It is apparent that what the learned Trial Judge decided was that, as labelled, packaged or adver tised, the beverage in question, which contained, and was described as having contained, 4% alcohol by volume, was not likely to be mistaken for a beverage complying with the standard prescribed for "Light Beer". It seems clear that he did not consider the finding that the beverage was labelled, packaged and advertised as a "Light Beer", even though it did not comply with the standard prescribed for "Light Beer", to be rele vant to the question that he had to decide.
In the circumstances, whether or not the decla ration should have been granted, assuming the validity of the prescribed standard, as it appears to
me, depends on the meaning of section 6 of the Act, which I repeat here for convenience:
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.
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, section 6 prohibits labelling, packaging, sell ing 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.
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 misled 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" 4 . It, therefore, con templates 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 5— and makes it an offence, where a standard has been prescribed for a "food"—i.e. for a class of food 5 —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 5 —"unless the article complies with the prescribed standard."
In my view, therefore, it follows from the find ings of the learned Trial Judge
4 This seems to be the basis on which the Food and Drug Regulations were framed (see P.C. 1954-1915 dated December 8, 1954 [SOR/54-664] as amended). Paragraph A.01.002 (which appears in Part A under the heading "Administration" and sub-heading "General") provides that "These regulations, where applicable, prescribe the standards of composition, strength ... or other property of the article of food ... to which they refer." Paragraph B.01.001 (which appears in Part B under the heading "Foods" and sub-heading "General") pro vides that, in that Part, "common name" means inter alia "(a) the name of the food printed in bold-face type ..." and paragraph B.01.006 (which appears under the same sub-head ing) provides, inter alia that, unless otherwise provided, the label of a package of food shall carry on the main panel of the label "the common name of the food". The Regulations, as already indicated, contain standards for beer and light beer each of which names are printed in bold-face type.
5 When there is an authority to make a "regulation" pre scribing standards for "an article of food", inasmuch as the word "regulation" implies a general rule, in my view, it must be read as an authority to prescribe a standard for a class of foods. It follows that the reference to "such food" in section 6 is to an article of the class of foods for which the standard has been prescribed.
(a) that the respondent was "labelling, packag ing and advertising a beer, using the descriptive adjective `light' ", and
(b) that that beer had an alcohol content of 4%,
that the respondent was infringing section 6, if the Regulation establishing the standard for light beer was valid.
I turn therefore to the respondent's alternative argument, which is, in effect, as I understand it, that the Regulation prescribing a standard for light beer is invalid as being an attempt to regulate local businesses in each province.
As I understood counsel, the alternative argu ment is not an attack on the validity of the Food and Drugs Act but is rather a submission that, if section 6 has the meaning that I find that it has, the standard prescribed for light beer is outside the powers conferred by that Act on the Governor in Council. In effect the position taken, as I under stand it, is that the Act authorizes a regulation prescribing a standard that, read with section 6, is calculated to prohibit the marketing of dangerous substances as food or the fraudulent marketing of an article of food as being an article of a class or kind to which it does not belong. From this basis, the argument continues that, if the standard pre scribed is such that section 6 would prohibit mar keting where neither dangerous substances nor fraud is involved, the standard is not one that the Governor in Council was authorized to prescribe.
The argument is one of gravity. Prima facie the part of the Food and Drugs Act in question (here- inafter sometimes referred to as "the law in ques tion") restricts the manner in which various local businesses involved in the manufacture and distri bution of food may be carried on. On the other hand, without taking time to research its history, it can be said that the Food and Drugs Act has, for a very long time, been accepted, substantially as it presently exists, as an important element of the laws enacted by Parliament for the protection of the Canadian public; and a restriction on its ambit
such as is urged by the respondent would, almost certainly, seriously undermine, if not destroy, its efficacy as presently framed 6 .
It is of importance, therefore, that there be no unnecessary delay in disposing of this appeal so that any doubt as to the effectiveness of the statute may be finally dealt with by the Supreme Court of Canada as quickly as possible and corrective meas ures, if necessary, may be considered by the appro priate legislative authorities with a view to reduc ing to the minimum the time that the public may be left without whatever protection is deemed essential by such authorities.
I propose to consider the alternative argument on the assumption that the standard in question has not been prescribed to provide the public with protection against a danger to health or fraud because I know of no way whereby a court can, by a mere consideration of the Regulations or other wise, divide the standards between those that have been prescribed for one of those reasons and those that have been prescribed to ensure that the public gets what it is entitled to expect that it is getting when it buys food by reference to common names. (For example, referring to the standard for light beer, I have no difficulty in conceiving of a member of the public who is particularly suscept ible to alcohol (which, depending on the quantity taken and the particular individual, can be a health hazard) being misled by the name "light beer" into thinking that he is obtaining a beverage with an amount of alcohol that is nominal in relation to that contained in ordinary beer; and, as it seems to me, it is more likely than not that a warning as to the percentage of alcohol would be meaningless to such a person unless it were, at the
6 The problems of enforcement that would arise if, on each prosecution, the Court had to decide whether the standard involved in the prosecution is calculated to protect the public against a danger to health or fraud or is merely calculated to protect the public against being misled are obvious. If time permitted, it would be of interest to research the legislative history of the statute to ascertain whether, when first adopted, Parliament, by preamble or otherwise, indicated the real "mat- ter" of the "law" (cf. sections 91 and 92 of The British North America Act, 1867) and whether subsequent changes were made by Parliament or Statute Revision Commissioners.
same time, contrasted with the percentage of alcohol contained in ordinary beer.)
I am therefore, of opinion that the law in ques tion is not capable of being read subject to the implied limitation urged by the respondent; and that it is, therefore, either completely ultra vires or the standard under attack is valid.
As I understand the respondent's position on its alternative argument, it is that the limitation on the Governor in Council's powers to prescribe standards is based on the contention that it would be ultra vires Parliament to prohibit the marketing of goods under misleading names because a power to make criminal law would be restricted, in this field, to imposing a criminal sanction on acts that are dangerous to health or fraudulent. I propose to discuss this argument and, in view of my conclu sion with regard thereto, I will make no reference to the question whether the law in question can be supported under the introductory words, or Head (2), of section 91 of The British North America Act, 1867.
In the first place, it is to be noted that the law in question does not fall within certain classes of law that have already been held to be ultra vires Parliament, viz.:
(a) a law attempting, by a licensing system to regulate local businesses in a province',
(b) a law regulating what may or may not be manufactured or sold in a provinces, or
(c) a law creating rights of a tortious or con tractual nature arising out of the conduct of persons carrying on local businesses in a province 9 .
From a constitutional point of view, as I under stand it, what the law in question does do is to prohibit the marketing of a food, by reference to a specified name for which a standard has been prescribed, unless it complies with that standard.
7 The King v. Eastern Terminal Elevator Company [1925] S.C.R. 434; and Reference re Section 16 of the Special War Revenue Act [ 1942] S.C.R. 429.
8 Canadian Federation of Agriculture v. Attorney-General for Quebec [1951] A.C. 179.
9 MacDonald v. Vapor Canada Limited [1977] 2 S.C.R. 134.
Such a prohibition has been held by the British Columbia Court of Appeal to be a valid exercise of Parliament's power to make criminal law in the case of an earlier version of the Food and Drugs Act 10 ; and, unless there is some distinction, from a constitutional point of view, between what was involved in that case and what is involved in this appeal, I am of opinion that this Court should adopt and apply the decision in that case.
While the law attacked in this appeal is framed somewhat differently from the law that was con sidered in that case (e.g. it does not deem food not complying with a prescribed standard to be "adul- terated"), in my view, from a constitutional point of view, it comes to the same thing. In that case, it was held that a prohibition against marketing of food as "fresh meat" when it contained an agent not permitted by a standard prescribed for "fresh meat" was good criminal law even though the food in question was not injurious to health. I see no distinction between that prohibition and the law in question in this appeal.
The essence of the law attacked in this appeal, as I understand it, is that the marketing of an article of food is made subject to a criminal sanc tion if it is marketed under a name for which a standard has been prescribed and it does not comply with that standard. As it seems to me, the object of the law attacked is not only to protect the public against health hazards and fraud but, is also to protect members of the public from being misled, intentionally or otherwise, as to what food they are getting. This does not, as I understand the jurisprudence, go beyond the ambit of criminal law as authorized by section 91(27) of The British North America Act, 1867 11 .
10 Standard Sausage Co. v. Lee [1933] 4 D.L.R. 501 and [1934] 1 D.L.R. 706.
1 See Proprietary Articles Trade Association v. Attorney- General for Canada [1931] A.C. 310 per Lord Atkin at pp. 323-324: "... if.Parliament genuinely determines that commer cial activities which can be so described are to be suppressed in the public interest, their Lordships see no reasons why Parlia ment should not make them crimes", and also "Criminal Law connotes only the quality of such acts or omissions as are
While I recognize that the line between the law in question and a law regulating local businesses is thin by reason
(a) of the nature of the prohibition, and
(b) of the delegation by Parliament of the pre scription of standards,
as I read the reasons for judgment of the British Columbia Court of Appeal, the matter was con sidered by that Court from both points of view; and, as I have already indicated, I am of opinion that this Court should adopt and apply that Court's decision.
For the foregoing reasons, I am of opinion that the appeal should be allowed with costs, that the judgment of the Trial Division should be set aside and that the action in the Trial Division should be dismissed with costs.
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PRATTE J. concurred.
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SMITH D.J. concurred.
prohibited under appropriate penal provisions by authority of the State". The problem, of course, is to distinguish bona fide criminal law from a colourable law, i.e. a law in relation to a section 92 matter justified "by enacting ancillary provisions designated as new phases of Dominion Criminal Law". See Attorney-General for Ontario v. Reciprocal Insurers [1924] A.C. 328 per Mr. Justice Duff (as he then was) at pp. 340 et seq.
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