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
(Continued on next page)
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-
(Continued from previous page)
(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.
* * *
HEALD J.: I concur.
* * *
KERR D.J.: I concur.
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.