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A-432-79
Agricultural Stabilization Board (Appellant) v.
Theo Jacobs, Edward Jacobs, Joseph Jacobs, Alois Jacobs, Marcel Jacobs, Frans Jacobs and Jacobs Farms Limited (Respondents)
Court of Appeal, Heald and Ryan JJ. and Kerr D.J.—Ottawa, February 8 and April 25, 1980.
Agriculture — Stabilization subsidies — Appeal from judgment of Trial Division declaring that Jacobs Farms Lim ited was entitled to payment of an additional sum as a subsidy under the Apple Stabilization Regulations — Board had refused to pay the full amount of the subsidy because the quantity of the commodity exceeded the quantity, established by the Board, beyond which subsidies would not be paid Whether the Board has the authority to set limits beyond or below which subsidies will not be paid — Whether the Board may exercise a discretion to pay the subsidy when a producer meets the conditions established — Appeal allowed — Apple Stabilization Regulations, SOR/76-518, s. 5 — Agricultural Stabilization Act, R.S.C. 1970, c. A-9, as amended by S.C. 1974-75-76, c. 63, ss. 2(1)(a),(6), 3(1), 4(5), 7(1)(a),(2), 8.1, 8.2(1),(2), 10(1)(a),(b),(c),(d),(g)•(1.1), 11(a), 13(5) — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 52(6)(i).
Appeal from a judgment of the Trial Division, declaring that Jacobs Farms Limited was entitled to be paid an additional subsidy under the Apple Stabilization Regulations. The Board had refused to pay the full amount of the agricultural com modity subsidy because the quantity of the apples, in respect of which the subsidy was claimed exceeded the quantity, estab lished by the Board, beyond which subsidies would not be paid. Whether the Board is empowered by the Agricultural Stabili zation Act to establish quantities in excess of or below which subsidies will not be paid to producers; and, whether the Board is under a duty to pay a subsidy to a producer who meets the conditions established under the Act and Regulations or wheth er it may pay or not at its discretion.
Held, the appeal is allowed. Jacobs Farms Limited had a legal right to have its claims considered and determined in good faith and in accordance with a correct reading of relevant law. The Board did not, in deciding to reject a portion of the claims submitted, purport to proceed on the basis that it had a discretion not to pay anything at all. There is really no question that the Board decided as it did because of the limits it had set. The critical issue thus is whether the Board had authority to set these limits. Once a price is prescribed for an agricultural commodity, the Board, by virtue of subsection 7(1) of the Act is under a duty "... to take such action in accordance with this Act as is necessary to stabilize ..." the price of the commodity at the prescribed price. The duty is imposed on the Board, not
on the Minister or the Governor in Council. The Trial Judge found, that certain of the express provisions of the Act clearly indicate a legislative intent to reserve to the Governor in Council exclusive authority to establish maximum eligibility standards. However, it is not the intent of the Act to vest in the Governor in Council the exclusive right to set a maximum on the quantity of an agricultural commodity for which an individual producer may claim subsidy. The power is a power to establish outer limits on the quantity or value of such an agricultural commodity. The provisions leave room to the Board to set limits (falling within a ceiling, if any, established by the Governor in Council) beyond which producers may not be paid in respect of claims submitted by them. Such limits must, however, be limits designed to implement price stabiliza tion and not to promote an unrelated purpose.
Joy Oil Co. Ltd. v. The King [1951] S.C.R. 624, referred to. R. v. Stevenson Construction Co. Ltd. (1979) 24 N.R. 390, referred to.
APPEAL. COUNSEL:
D. H. Aylen, Q.C. and A. S. Fradkin for appellant.
W. G. Sheppard for respondents.
SOLICITORS:
Deputy Attorney General of Canada for appellant.
Sheppard, Sheppard, Macintosh & Harlow, Simcoe, for respondents.
The following are the reasons for judgment rendered in English by
RYAN J.: This is an appeal from the judgment of the Trial Division [[1979] 2 F.C. 840], dated June 27, 1979, declaring that the respondent Jacobs Farms Limited (one of the plaintiffs below) was entitled to be paid a subsidy under the Apple Stabilization Regulations' ("the Regulations") in the amount of $117,969.09, $70,719.09 of which remained unpaid, and ordering the appellant, the Agricultural Stabilization Board ("the Board"), the defendant below, to requisition from the Min ister of Finance and to pay to the respondent the
SOR/76-518.
$70,719.09 which remained unpaid 2 .
The Board had refused to pay the full amount of the agricultural commodity subsidy which was claimed under the Agricultural Stabilization Acta ("the Act") because the quantity of the commodi ty, apples, in respect of which the subsidy was claimed exceeded the quantity, established by the Board, beyond which subsidies would not be paid.
The appeal raises several questions, the answers to which depend on the interpretation of relevant provisions of the legislation. One of these is wheth er the Board is empowered by the Act to establish quantities in excess of or below which subsidies will not be paid to producers. The other is whether the Board is under a duty to pay a subsidy to a producer who meets the conditions established under the Act and Regulations or whether it may pay or not at its discretion. It was also submitted by the appellant that, at any rate, the Court does not have authority, by way of mandamus or an order in the nature of mandamus, to order the Board to requisition sums from the Minister of Finance for the purpose of paying subsidies.
If it is decided that the Board has authority to establish the quantity of a commodity above and below which subsidy is not to be paid, it will not be necessary to answer the other questions.
The Board is a corporation consisting of three members appointed by the Governor in Council (subsection 3(1) of the Act).
The purposes of the Act are set out in its long title and preamble. These read:
An Act to provide for the stabilization of the prices of agricul tural commodities
WHEREAS it is expedient to enact a measure for the purpose of stabilizing the prices of agricultural commodities in order to assist the industry of agriculture to realize fair returns for its labour and investment, and to maintain a fair relationship between prices received by farmers and the costs of the goods
2 The respondents conceded that the evidence would support a judgment in their favour of $54,973.99 only. Thus, even if the appeal were to fail on the merits, the judgment would have to be altered accordingly.
3 R.S.C. 1970, c. A-9, as amended by S.C. 1974-75-76, c. 63.
and services that they buy, thus to provide farmers with a fair share of the national income; Therefore Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
The agricultural commodities, the prices of which are to be stabilized, are either "named commodities" or "designated commodities". "Named commodities" are the commodities specifically named in paragraph 2(1)(a) of the Act; "designated commodities" are the agricultur al commodities, other than named commodities, designated (pursuant to paragraph 2(1)(b)) by the Governor in Council for purposes of the Act.
Paragraph 7(1)(a) and subsection 7(2) of the Act are in these terms;
7. (1) The Board shall from time to time
(a) take such action in accordance with this Act as is necessary to stabilize the prices of agricultural commodities at their respective prescribed prices;
(2) Action by the Board to stabilize the price of an agricul tural commodity under this Act shall be taken in relation to the agricultural commodity or in relation to such grade, quality, variety, class, type or form thereof, and with reference to such place or places, as the Board considers appropriate.
The method of determining the prescribed price at which agricultural commodities are to be stabil ized is set out in section 8.2 4 .
4 Paragraph 7(1)(b) and sections 8.1 and 8.2 are as follows: 7. (1) The Board shall from time to time
(b) make such recommendations, including recommenda tions respecting the index referred to in section 8.2 ... as are necessary to ensure that the prescribed prices for agricultural commodities in a year bear a fair relationship to the production costs of such commodities in the year.
8.1 The base price of an agricultural commodity in a year shall be the average price thereof at representative markets as determined by the Board for the five years immediately preceding the year.
8.2 (1) The prescribed price of an agricultural commodity in a year shall be,
(a) in relation to a named commodity, the amount obtained by adjusting ninety per cent, or such higher percentage as the Governor in Council may prescribe, of the base price thereof for the year by an index calculated in such manner as may be prescribed by the Governor in Council to reflect the estimated production costs of the commodity in the year as compared with the average of production costs for the five years immediately preceding the year; and
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The express powers of the Board are found in sections 10 and 10.1 of the Act. Paragraphs 10(1)(a),(b),(c),(d) and (g) and subsection 10(1.1) are in these terms:
10. (1) Subject to and in accordance with any regulations that may be made by the Governor in Council, the Board may
(a) purchase any agricultural commodity at the prescribed price;
(b) pay to producers of an agricultural commodity, directly or through such agent as the Board may determine, the amount by which the prescribed price exceeds a price deter mined by the Board to be the average price at which the commodity is sold in such markets and during such periods as the Board considers appropriate;
(c) make such payment for the benefit of producers as the Governor in Council may authorize for the purpose of stabil izing the price of an agricultural commodity at the pre scribed price;
(d) sell or otherwise dispose of, package, process, store, ship, transport, export, insure or otherwise deal in any commodity purchased by the Board under this section;
(g) do all such acts and things as are necessary or incidental to the exercise of any of its powers, duties or functions under this Act.
(1.1) For the purpose of stabilizing the price of an agricultur al commodity, the Board may exercise such other powers as are prescribed by the Governor in Council, upon the recommenda tion of the Board, for that purpose.
It was decided that subsidies should be paid to producers of apples during the 1975-1976 crop year.
At a meeting of the Board held at Ottawa on July 8, 1976, it was agreed with reference to the subsidization of apples that the "minimum and maximum eligibility of production units" would be 25,000 pounds and 750,000 pounds. No subsidy was to be paid to a producer who produced and sold less than 25,000 pounds or in respect of the first 25,000 pounds sold by a producer who other-
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(b) in relation to a designated commodity, the amount obtained by adjusting such percentage of the base price thereof for the year as the Governor in Council prescribes by the index therefor calculated as described in paragraph (a).
(2) In prescribing a percentage of the base price of an agricultural commodity under paragraph (1)(a) or (b), the Governor in Council shall be guided by the recommendations of the Board made pursuant to subsection 7(1) and such other factors as the Governor in Council considers to be relevant.
wise qualified for subsidy, nor in respect of sales in excess of 750,000 pounds.
The Trial Judge says in his reasons [at page 842] that:
In submitting the proposed Regulations to the Treasury Board the Minister stated:
Eligibility limitations have been set at 25,000 lbs. to 750,000 lbs. to achieve the maximum impact of the support program on producers, ensuring that the main direction of the support program is towards the medium size efficient fulltime pro ducers rather than smaller parttime operators and limiting the assistance to those very large producers who are better able to cope with the economic vagaries of the market place than the average.
The Apple Stabilization Regulations were enacted August 5, 1976. The Regulations desig nated apples sold as fresh apples or peelers and apples sold for juice, juice concentrate or vinegar as agricultural commodities for the purposes of the Act.
The Regulations also set the prescribed price for each of these commodities. And they authorized the Board to make payments to producers of 2.1 cents per pound of apples sold as fresh apples or peelers and 0.9 cent per pound of apples sold for juice, juice concentrate or vinegar.
The Regulations themselves placed no limits on the quantities eligible for subsidy. The press release issued by the Department on August 9, 1976 did, however, mention that apple growers might claim "payments on their sales from 1975 production between 25,000 and 750,000 pounds".
The Trial Judge [at page 842] noted that:
Following representations by trade associations, the Board, at a meeting December 24, 1976, ordered an increase in the max imum amount payable to producers where two or more partners were involved. A maximum of three partners in any producer were made eligible and the 25,000 pounds minimum was to apply to each partner. This change was announced by the Minister in a press release dated January 6, 1977.
There appears to be no doubt that the minimum and maximum levels were set by the Board at the direction of the Minister, who has authority by virtue of subsection 4(5) of the Act to issue direc tions to the Board. The Board must comply with directions given to it by the Governor in Council or the Minister in respect of "the exercise or perform ance of its powers, duties and functions under this Act".
Having received authorization from the Gover nor in Council, the Board obviously decided to make payments to producers pursuant to the au thority granted. From the record, it appears that the Board may have considered that it was pro ceeding to act under subsection 10(1), paragraph (b), and indeed the Regulations, in their preamble, refer to paragraph 10(1)(b). Subsection 5(1) of the Regulations does, however, authorize the Board to make payments to producers in the pre cise sums of 2.1 cents per pound of apples sold as fresh apples or peelers and 0.9 cent per pound of apples sold for juice, juice concentrate or vinegar "for the purpose of stabilizing the price of such designated commodities at the prescribed price"; the words used are the words which appear in paragraph 10(1)(c). Nothing, however, really turns on whether the payments the Board decided to make were to be made under paragraph (b) or
(c). .
Claim forms were distributed by the Board early in September, 1976. These forms included the statement:
Please note that claims will be accepted if the total quantity of apples marketed exceeds 25,000 lbs. to a maximum of 750,000 lbs.
Jacobs Farms Limited is a large producer of apples. The individual respondents are sharehold ers in and employees of the company. Claims were filed by the company and by each of the individual respondents. The company filed a claim in respect of 790,233 pounds of fresh and processing apples. The individual respondents filed claims in respect of varying quantities of the two categories of apples.
The Trial Judge stated [at page 843]:
Initially, a payment of $15,750 (750,000 lbs. @ $0.021) was made to the Company. Following the Board's decision of December 24, 1976, a further $31,500 was paid the Company, giving it the maximum subsidy allowable for a partnership of three members. ...
The payment of $31,500 was the subject of a counterclaim in the action, but there is no cross- appeal from its dismissal.
The amounts paid to Jacobs Farms Limited were less than the amounts claimed. The appellant has submitted, among other things, that Jacobs Farms Limited cannot complain because the Board is under no duty to make any payments to it or to any other producer: the submission was that the authority vested in the Board, by paragraph (b) or (c) of subsection 10(1) of the Act, to make payments is purely discretionary. This submission, even if it were well founded in respect of the Board's power to make payments being discretion ary, would not seem to me to be a complete answer. The circumstances were that the Board, acting on the authorization of the Governor in Council and pursuant to paragraph 10(1)(c), had invited producers to submit claims. Jacobs Farms Limited had responded. I am of the view that Jacobs Farms Limited had at the very least a legal right to have its claims considered and determined in good faith and in accordance with a correct reading of relevant law 5 . The Board did not, in deciding to reject a portion of the claims submit ted, purport to proceed on the basis that it had a discretion not to pay anything at all. There is really no question that the Board decided as it did because of the limits it had set. In my view, the critical issue thus is whether the Board had au thority to set these limits. The Trial Judge held that the Board lacked such authority.
Once a price is prescribed for an agricultural commodity, the Board, by virtue of subsection 7(1) of the Act, is under a duty "... to take such action in accordance with this Act as is necessary to stabilize ..." the price of the commodity at the prescribed price. The duty is imposed on the Board, not on the Minister or the Governor in Council. It is true that the Minister or the Gover-
5 See Joy Oil Co. Ltd. v. The King [1951] S.C.R. 624, particularly per Rand J., at p. 650; and see R. v. Stevenson Construction Co. Ltd. (1979) 24 N.R. 390, per Le Dain J., at p. 407.
nor in Council may give the Board instructions on which the Board must act. But the statutory duty to stabilize is a duty imposed on the Board itself.
The Act vests the Board with powers by means of which to carry out its mandate. These are set out in paragraphs (a), (b) and (c) of subsection 10(1). They are supplemented by the authority, granted to the Board by paragraph (g) of the subsection, to "do all such acts and things as are necessary or incidental to the exercise of any of its powers, duties or functions" under the Act.
It would seem to me that the Board might well decide, in implementing the powers vested in it by subsection 10(1), paragraphs (c) and (g), that it would be desirable or even necessary to place limits on the quantities of the commodity in respect of which it was about to make payments. The Board might decide, as it did in this case, to establish quantitative limits in respect of individual producers if it was aware, as it was here, of the estimates of the costs of a program as approved by Treasury Board. Mr. Proulx, the Secretary Manager of the Board, stated in his evidence that the "eligibility limitations" were, in part at least, calculated so as "... to ensure that the total payments under the program would not exceed the amount of money which was available ...". The very presence in the Act of subsection 13(5) 6 , which places a limit on payments which may be made out of the Consolidated Revenue Fund for agricultural stabilization purposes, itself suggests that it might be necessary in relation to a particu lar program to limit payments to individual pro ducers in the light of the estimated costs of all programs approved. Mr. Proulx also said that limits were adopted "... to ensure that the individual payments to producers were not so large as to be inconsistent with financial assistance under other programs ...".
6 Subsection 13(5) provides:
13....
(5) A payment made out of the Consolidated Revenue Fund under subsection (1), together with the balance of the Account, shall not be greater than two hundred and fifty million dollars.
The Board might also consider it prudent under some programs to establish a minimum quantity as a test of eligibility for the purpose of avoiding a large number of very small claims of little more than nuisance value.
It was submitted, however, and the Trial Judge found, that certain of the express provisions of the Act clearly indicate a legislative intent to reserve to the Governor in Council exclusive authority to establish maximum eligibility standards. Para graph 11 (a) of the Act is in these terms:
11. The Governor in Council may make regulations,
(a) establishing ceilings on the quantity or value of an agricultural commodity eligible for price stabilization under this Act;
I do not, however, with respect, find in this paragraph of the Act an intent to vest in the Governor in Council the exclusive right to set a maximum on the quantity of an agricultural com modity for which an individual producer may claim subsidy. The power, as I read it, is a power to establish "... ceilings on the quantity or value of an agricultural commodity eligible for price stabilization ...". The power, it seems to me, is a power to establish outer limits on the quantity or value of such an agricultural commodity. The provision leaves room to the Board to set limits (falling within a ceiling, if any, established by the Governor in Council) beyond which producers may not be paid in respect of claims submitted by them.
Nor do I find in subsection 7(2) or in section 8 of the Act an indication that the powers of the Board are not to extend to the fixing of limits on the quantities of commodities in respect of which a producer may claim stabilization payments. Sub section 7(2) has been quoted above at page 757. Section 8 provides:
8. In each year the Board shall establish the base price for each agricultural commodity, or the grade, quality, variety, class, type or form thereof, the price of which is to be stabilized under this Act.
The Act envisages that the Board may wish to stabilize prices, not merely of commodities as such, but of particular grades, qualities, varieties, classes, types or forms of commodities, possibly having in mind that distinct markets may exist in relation to different subgroups. That was in fact done in this case: a distinction was made between fresh apples and apples for juice, and a separate price was designated for each type. To refer in subsection 7(2) and in section 8 to subgroups in terms of grade or quality, without also mentioning quantity, does not, with respect, as I read the provisions, indicate an intention to exclude the Board from taking action in relation to quantities of a type of commodity in relation to which a base price has been established and a price designated.
My principal concern goes to rather a different matter. As already indicated, in submitting the proposed Regulation to Treasury Board, the Min ister indicated that the purpose of establishing the minimum and maximum limits was to ensure that the main direction of the support program would be "towards the medium size efficient fulltime producers rather than smaller parttime produc ers", and that the assistance provided by the pro gram would be restricted in so far as it applied "to those very large producers who are better able to cope with the economic vagaries of the market place than the average".
Mr. Proulx, after having stated that the limita tions were set with the estimated sum of money available for the program in mind, went on to say that the limits were set (I presume having the financial considerations in mind) "... in order to achieve direction of the program towards those middle range agricultural producers, apple pro ducers who most needed assistance and to avoid large payments to individual producers of very large size who were already financially capable of maintaining their apple production in their own right and who had sufficient financial resources to withstand any vagaries of the market place".
I have already indicated my view that it is open to the Board to set minimum and maximum limits within which payments may be made in implemen tation of a price stabilization program. Such limits
must, however, be limits designed to implement price stabilization and not to promote an unrelated purpose. The problem, as I see it, is whether the setting of the limits in relation to the apple price stabilization program for the purposes indicated had the effect of transforming the program into something other than a program to stabilize the prices of the designated commodities at the pre scribed prices.
After some hesitation, I have concluded that the limits did not have this effect. The program remained in essence a program designed to stabi lize the prices of designated commodities at the prescribed prices. The preamble to the Act indi cates that the purpose of price stabilization pro grams is to assist "the industry of agriculture" to realize fair returns for its labour and investment. A purpose of such programs is "to maintain a fair relationship between prices received by farmers and the costs of the goods and services that they buy, thus to provide farmers with a fair share of the national income". In my view, the limits set by the Board, considered in the light of the purposes of these limits and the statutory purposes of agricultural price stabilization, were such as to be permissible. They did not have the effect of trans forming the price stabilization program for apples into something else.
I would allow the appeal with costs. Pursuant to section 52, subparagraph (b)(i) of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, I would set aside the judgment of the Trial Division and substitute for it the following judgment:
1. The plaintiffs' action is dismissed.
2. The defendant's counterclaim is dismissed.
3. The defendant is entitled to recover its costs of this action to be taxed.
4. The plaintiffs are entitled to recover their costs of the counterclaim to be taxed.
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HEALD J.: I concur.
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KERR D.J.: I concur.
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