T-4896-77
Theo Jacobs, Edward Jacobs, Joseph Jacobs,
Alois Jacobs, Marcel Jacobs, Frans Jacobs and
Jacobs Farms Limited (Plaintiffs)
v.
Agricultural Stabilization Board (Defendant)
Trial Division, Mahoney J.—Toronto, June 21;
Ottawa, June 27, 1979.
Agriculture — Stabilization subsidies — Apple producers
with crop size falling within a defined range provided with a
subsidy pursuant to Regulations established under Agricultur
al Stabilization Act — Whether or not the Minister of
Agriculture had right to impose a floor and ceiling on quantity
of apples produced in respect of which a subsidy is payable —
Whether or not Board had right to impose such floor or ceiling
motu proprio — Whether or not Board, once ceiling and floor
were established, had right to authorize payment in excess of
the ceiling, albeit on the Minister's direction — Agricultural
Stabilization Act, R.S.C. 1970, c. A-9, ss. 4(5), 8(1), 10(1), 11
— Apple Stabilization Regulations, SOR/76-518, ss. 2, 5.
Apples produced during the 1975-76 crop year were made a
designated commodity under the Regulations adopted under
the Agricultural Stabilization Act and producers with a crop
production falling within a range of production levels with a
fixed floor and ceiling, were provided with a subsidy. The issues
are the right of the Minister of Agriculture to direct the Board
to impose a floor and ceiling on the quantity of apples in
respect of which a subsidy was payable under the Apple
Stabilization Regulations, and the right of the Board to impose
such floor and ceiling motu proprio. The Board's counterclaim
for the return of subsidy already paid the plaintiffs raises the
further issue of whether, once the floor and ceiling had been
established, the Board had the right, on the Minister's direction
or otherwise, to authorize a payment of the subsidy in excess of
the ceiling in the case of a particular producer.
Held, the action is allowed and the counterclaim dismissed.
Nothing in the Act or Regulations precludes the Board from
extending or amending a limitation on eligibility to subsidy if it
has the authority to prescribe such limitation in the first place.
The counterclaim must fail whether or not the action succeeds.
Nothing in the preamble indicates that programs under the Act
were intended by Parliament to be directed toward or away
from any category or class of farmer. The ordinary meaning of
the Act's substantive provisions need not be stretched in order
to accommodate an intention expressed in its preamble. The
payment of a subsidy pursuant to the Act is not an ex gratia
matter. The annual limitation of $250,000,000 imposed by
subsection 13(5) on expenditures directly attributable to action
taken to stabilize agricultural prices does not, per se, vest the
Board with authority to limit producers' eligibility to subsidy.
Section 13 contemplates that amounts becoming payable in a
year may exceed that amount but precludes payment of the
excess until the necessary funds are provided by Parliamentary
appropriation. The requirement of subsection 4(5) that the
Board comply with the Minister's directions relates to "the
exercise or performance of its powers, duties and functions
under this Act". No such direction can vest the Board with a
power, duty or function that it does not already have. The
absence of the word "quantity" from section 8 of the Act is
significant, taken with the express delegation to the Governor
in Council, by paragraph 11(a), of the power to establish
ceilings on quantities, for it indicates that the Board had no
power to establish the ceiling.
ACTION.
COUNSEL:
W. G. Sheppard for plaintiffs.
A. S. Fradkin for defendant.
SOLICITORS:
Sheppard, Sheppard, MacIntosh & Harlow,
Simcoe, for plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: The issues are the right of the
Minister of Agriculture, hereinafter "the Minis
ter", to direct the defendant, the Agricultural Sta
bilization Board, hereinafter "the Board", to
impose a floor and ceiling on the quantity of apples
in respect of which a subsidy was payable under
the Apple Stabilization Regulations,' hereinafter
"the Regulations", and the right of the Board to
impose such floor and ceiling motu proprio. The
counterclaim raises the further issue of whether,
once such floor and ceiling were established, the
Board had the right, on the Minister's direction or
otherwise, to authorize a payment of the subsidy in
excess of the ceiling in the case of a particular
producer.
The object of the Agricultural Stabilization
Act, 2 hereinafter "the Act", is set forth in its
preamble:
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
I SOR/76-518.
2 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:
Certain named commodities are the subject of
continuing programs under the Act and provision
is made for the Governor in Council to designate
other commodities as conditions demand. Apples
produced and marketed during the 1975-76 crop
year were made a designated commodity by the
Regulations. The 1975-76 crop year ended August
31, 1976.
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 Board, at a meeting on July 8, 1976, adopted
those eligibility limitations and I assume, although
it is not in evidence, that they were mentioned in
the Minister's recommendation to the Governor in
Council. The Regulations, made August 5, 1976,
are silent as to both floor and ceiling although the
press release, dated August 9, announcing the
program reiterated them. Following representa
tions by trade associations, the Board, at a meeting
December 24, 1976, ordered an increase in the
maximum 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.
The Regulations provide for payment of a sub
sidy of two and one-tenth cents per pound for
apples sold as fresh apples or peelers, i.e. for apple
sauce or pie filling, and nine-tenths of a cent per
pound if sold for juice, juice concentrate or
vinegar.
Claim forms for the subsidy were distributed to
producers early in September 1976. Included on
their face was the following:
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.
The plaintiff, Jacobs Farms Limited, hereinafter
"the Company", is a very large producer of apples
and other crops. The individual plaintiffs are all
shareholders and employees of the Company.
When the claim forms arrived, Theo Jacobs, the
treasurer and sales manager, had his secretary go
through the invoices for sales of apples eligible for
subsidy and sort them into seven batches covering
quantities that would support payment for the
maximum quantities prescribed. Claims were filed,
in mid-September, as follows:
Pounds of Fresh or Pounds of
Claimant Processing Apples Juicing Apples
The Company 790,233
Theo Jacobs 791,005
Edward Jacobs 823,216
Joseph Jacobs 777,397
Alois Jacobs 434,892 357,300
Marcel Jacobs 787,454
Frans Jacobs 780,893
Total 4,361,874 1,180,516
Supporting invoices all disclosed that the Com
pany was vendor of the apples. The Board acted on
the basis that it was the Company that was the
producer eligible to claim subsidy. It was not
misled nor did it act to its detriment in any way
because claims were made in the name of the
individual plaintiffs. The Board investigated the
claims and was fully apprised of the actual
situation.
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. It is this $31,500 that the Board,
by its counterclaim, seeks to recover.
The Board admits that, prior to August 31,
1976, the Company had marketed 5,256,380
pounds of fresh apples and peelers and 842,790
pounds of juicers. It does not admit that the
Company had itself produced them all. The Com
pany does buy and resell apples produced by
others. No explanation was given of the reduction
in the quantity of juicers from the 1,180,516
pounds originally claimed. Theo Jacobs was entire
ly credible. His evidence is that the above quanti
ties were produced, as well as sold, by the Com
pany during the crop year and that the
information was derived from the Company's
records by his secretary acting on his directions.
Evidence as to outside purchases was tendered.
This evidence was not contradicted in any way and
I accept it.
A number of the Board's contentions can be
disposed of summarily:
Firstly, as to the counterclaim, which was not
vigorously pressed, I see nothing in the Act or
Regulations that would preclude the Board from
extending or amending a limitation on eligibility to
subsidy if it has the authority to prescribe such
limitation in the first place. It follows that the
counterclaim must fail whether or not the action
succeeds.
Secondly, nothing in its preamble leads me to
the conclusion that programs under the Act were
intended by Parliament to be directed toward or
away from any category or class of farmer. It is
simply not necessary to strain or stretch the ordi
nary meaning of the substantive provisions of the
Act in order to accommodate an intention
expressed in its preamble.
Thirdly, I find nothing in the Act that leads me
to agree that the payment of a subsidy pursuant to
it is an ex gratia matter.
Fourthly, the annual limitation of $250,000,000
imposed by subsection 13(5) on expenditures
directly attributable to action taken to stabilize
agricultural prices does not, per se, vest the Board
with authority to limit producers' eligibility to
subsidy. On the contrary, taken as a whole, section
13 appears clearly to contemplate that amounts
becoming payable in a year may well exceed
$250,000,000; it does, however, preclude payment
of that excess until necessary funds are provided
by a Parliamentary appropriation. In fact, subsi
dies payable during the fiscal year ended March
31, 1977, did exceed the limit and a supplementary
appropriation was made to permit their payment.
Having said that about section 13, I must add that
this issue was not fairly raised by the Board in its
pleadings and the plaintiffs' objection, based on
non-compliance with Rule 409, was well taken. 3
Pertinent provisions of the Act follow:
4....
(5) The Board shall comply with any directions from time to
time given to it by the Governor in Council or the Minister
respecting the exercise or performance of its powers, duties and
functions under this Act.
8. (1) 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.
10. (1) Subject to and in accordance with any regulations
that may be made by the Governor in Council, the Board may
(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;
(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.
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;
(b) prescribing or designating anything that by this Act is to
be prescribed or designated by the Governor in Council; and
(c) generally for carrying out the purposes and provisions of
this Act.
The Regulations provide:
2. In these Regulations, "producer" means a person residing
in Canada and producing apples.
3 Rule 409. A party shall plead specifically any matter (for
example, performance, release, statute of limitation, prescrip
tion, fraud or any fact showing illegality)
(a) that he alleges makes a claim or defence of the opposite
party not maintainable;
(b) that, if not specifically pleaded, might take the opposite
party by surprise; or
(e) that raises issues of fact not arising out of the preceding
pleading.
5. (1) The Board may make payments to producers of
(a) 2.1 cents per pound of apples sold as fresh apples or
peelers, and
(b) 0.9 cent per pound of apples sold for juice, juice concen
trate or vinegar,
for the purpose of stabilizing the price of such designated
commodities at the prescribed price.
(2) Payments made pursuant to subsection (1) shall be paid
directly by the Board or through such marketing agency as the
Board may determine in respect of apples grown during the
1975 crop year and marketed on or before August 31, 1976,
where the Board is satisfied as to the designated commodity
that such apples comprise.
The requirement of subsection 4(5) that the
Board comply with the Minister's directions
relates to "the exercise or performance of its
powers, duties and functions under this Act". No
such direction can vest the Board with a power,
duty or function that it does not already have.
Nothing in the Act empowers the Minister to
prescribe either minimum or maximum quantities
of a commodity in respect of which a producer is
entitled to subsidy. No such direction by him could
have any effect unless the power were already
vested in the Board and the Minister were merely
directing the Board to exercise it.
It was argued that the floor could have been
imposed by way of defining what a producer was. I
do not have to decide that because it was not done.
Clearly, the Governor in Council could, under
paragraph 11(a) have imposed the ceiling, if not
the floor. He did not do so.
The absence of the word "quantity" from sec
tion 8 of the Act is significant. That, taken with
the express delegation to the Governor in Council,
by paragraph 11(a), of the power to establish
ceilings on quantities, leads me to conclude that
the Board itself has no such power. To adopt the
constitutional analogy suggested by plaintiffs'
counsel, the specific field has been expressly dele
gated to the Governor in Council and no room is
left for the Board to take action in respect of it
under paragraph 10(1)(g), its general power to do
what is necessary or incidental to the carrying out
of its mandate.
The evidence adduced that the floor and ceiling
were features of the proposed program prior to the
making of the Regulation by the Governor in
Council was objected to and, again, the objection
was well taken. Just as the intention of Parliament
is expressed by its Acts and no reference is to be
had to Parliamentary debates, so the intention of
the Governor in Council must be gleaned from the
regulation made and the Act under which it was
made, not from material submitted to the Gover
nor in Council in support of the Minister's
recommendation.
Whatever value as evidence a press release
might be, if that press release were issued with the
publication of the program and before any dispute
as to the interpretation of a particular regulation
arose and if the regulation were truly ambiguous,
it is of no value where, as here, there is no
ambiguity and, hence, no necessity to seek assist
ance from extraneous sources in the construction
of the regulation. Press releases issued after a
dispute as to interpretation has arisen are clearly
inadmissible.
The limitations on eligibility were ultra vires the
authority of the Board. The Company was, of the
plaintiffs, the only producer entitled to claim the
subsidy. It was misled by the Board to claim
subsidy for a lesser quantity of apples than it was
entitled to claim. It is, in the circumstances, en
titled to be paid subsidy in respect of the quantity
to which it was actually entitled and not just the
quantity comprised in the applications made by it
and by the other plaintiffs on its behalf.
The Company is entitled to a declaration to the
foregoing effect and to an order in the nature of
mandamus requiring the Board to requisition from
the Minister of Finance payment to the Company
of the further sum of $70,719.09, being the total
subsidy payable in respect of 5,256,380 pounds at
2.1¢ and 842,790 pounds at 9/10 of a cent less the
$47,250 already paid. The counterclaim will be
dismissed. The plaintiffs are entitled to costs of the
action and the counterclaim.
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