Brant Dairy Co. v. Milk Commission of Ontario

providing for the licensing of any or all persons before commencing or continuing to engage in the producing, processing or marketing of a regulated product;

prohibiting persons from engaging in the producing, processing or marketing of any regulated product, except under the authority of a licence;

providing for the refusal to issue a licence to commence to engage in the producing, processing or marketing of a regulated product where the applicant is not qualified by experience, financial responsibility or equipment to properly engage in the business for which the application was made, or for any other reason that the Commission deems proper;

providing for the suspension or revocation of, or the refusal to issue or renew, a licence to continue to engage in the producing, processing or marketing of a regulated product, for failure to observe, perform or carry out the provisions of this Act, the regulations, any plan or any order or direction of the Commission or marketing board;

11. providing for,

i. the marketing of a regulated product on a quota basis,

ii. the fixing and allotting to persons of quotas for the marketing of a regulated product on such basis as the Commission deems proper,

iii. the refusing to fix and allot to any person a quota for the marketing of a regulated product for any reason that the Commission deems proper,

iv. the cancelling or reducing of, or the refusing to increase, a quota fixed and allotted to any person for the marketing of a regulated product for any reason that the Commission deems proper, and

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v. the terms and conditions upon which a person may market a regulated product in excess of the quota fixed and allotted to him;

13. providing for the control and regulation of any regulated product, including the times and places at which the regulated product may be marketed;

16. authorizing a marketing board to determine from time to time the price or prices that shall be paid for the regulated product or any class, variety, grade or size of the regulated product, and to determine different prices for different parts of Ontario;

18. authorizing a marketing board to pay from service charges imposed under paragraph 17 its expenses in carrying out the purposes of the plan;

19. authorizing a marketing board to use any class of licence fees and other moneys payable to it for the purposes of paying the expenses of the marketing board, carrying out and enforcing this Act and the regulations and carrying out the purposes of the plan under which the marketing board is constituted;

20. authorizing a marketing board to establish a fund in connection with the plan for the payment of any moneys that may be required for the purposes mentioned in paragraph 19;

31. providing that the regulated product shall be marketed by, from or through the marketing board, and prohibiting any person from marketing any of the regulated product except by, from or through the marketing board;

32. authorizing any marketing board to prohibit the marketing of any class, variety, grade or size of any regulated product;

33. requiring any person who produces a regulated product to offer to sell and to sell the regulated product to or through the marketing board constituted to administer the plan under which the regulated product is regulated;

34. prohibiting any person from processing, packing or packaging any of the regulated product that has not been sold to, by or through the marketing board constituted to administer the plan established for the control and regulation of the marketing of the regulated product;

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35. authorizing any marketing board to require the price or prices of the regulated product to be paid to or through the marketing board; and to recover such price or prices by suit in a court of competent jurisdiction;

36. authorizing a marketing board to purchase or otherwise acquire such quantity or quantities of the regulated product as the marketing board deems advisable and to sell or otherwise dispose of such quantity or quantities of the regulated product so purchased or otherwise acquired;

37. authorizing any marketing board to conduct a pool or pools for the distribution of all moneys received from the sale of the regulated product, and requiring such marketing board, after deducting all necessary and proper disbursements and expenses, to distribute the remainder of the moneys received from the sale in such manner that every producer receives a share of the remainder of the moneys received from the sale in relation to the amount, class, variety, grade and size of the regulated product delivered by him, and authorizing such marketing board to make an initial payment on delivery of the regulated product and subsequent payments until all the remainder of the moneys received from the sale is distributed to the producers;

Subdelegation of the Commission’s regulation-making powers under s. 8(1) to a marketing board is authorized by s. 8(6) which reads:

The Commission may delegate to a marketing board such of its powers under subsection 1 as it deems necessary, and may at any time terminate any such delegation.

I observe here that the regulation-making power of the Commission is, broadly speaking, of two kinds or classes. One class concerns regulations “providing” “prohibiting” or “requiring” certain things. The second class (as in paras. 16, 18, 19, 20, 32, 35, 36 and 37, all of which have been quoted above) concerns regulations “authorizing” a marketing board to do the things enumerated. The distinction between the two classes is one that the Commission observed in its O.Reg. 294/65, to which I will refer presently. It is, in my view, an important distinction that bears directly

[Page 142] on the validity of the regulations of the Board that are challenged in this case.

For about three years after The Milk Act was enacted and proclaimed, there were no powers exercised or regulations made that interfered with the appellants’ conduct of their businesses. After the Ontario Milk Marketing Plan had been established by O. Reg. 202/65 of October 28, 1965, the Commission issued O. Reg. 294/65, effective November 1, 1965. This regulation was a wholesale delegation to the Board of certain of the Commission’s powers under s. 4(2) of the Act, as appears by s. 5 of the regulation, and also of certain of the Commission’s regulation-making authority, as appears by s. 6 of the regulation. I reproduce s. 5 of the regulation which, as a comparison will show, is exactly in the words of s. 4(2)(d)(e)(g) and (h) of the Act:

The Commission delegates to the marketing board the power,

(a) to require persons engaged in producing or marketing milk to register their names, addresses and occupations with the marketing board;

(b) to require persons engaged in producing or marketing milk to furnish such information relating to the production or marketing of milk as the marketing board determines;

(c) to stimulate, increase and improve the marketing of milk by such means as the marketing board deems proper;

(d) to co-operate with a marketing board or a marketing agency of Canada or of any province of Canada for the purpose of marketing milk.

Section 6 of the Commission’s regulation aforementioned delegates to the Board the substantial portion of the Commission’s “providing”, “prohibiting” and “requiring” authority. Nineteen clauses, (a) to (s), are included in s. 6, reproducing the wording, literally in most cases, of paras. 1 to 8 inclusive of s. 8(1) of the Act, paras. 11 to 15 inclusive of the said s. 8(1), and paras. 17, 33, 34, 44, 45 and 31 thereof, in that order.

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Section 7 of the Commission’s regulation acts upon its power to “authorize” a marketing board to do the matters enumerated in paras. 16, 18, 19, 20, 32, 35, 36, 37 and 43 of the Act and uses the terms thereof.

The effect of O. Reg. 294/65, in its delegation to the Board was, in the first place, to substitute the Board for the Commission for the exercise of the powers granted by s. 4(2) of The Milk Act; second, it amounted to an exercise by the Commission of various of its powers under s. 8(1) to “authorize” the Board to do the things specified in the powers, and in this respect it put the Board in the same position as to those powers as it was in by the delegation to it of the powers under s. 4(2) of the Act; and third, it passed to the Board the various powers of the Commission to “provide”, “prohibit” or “require” certain things by regulation. (The italicizing is mine.)

The Board acted on the foregoing delegated authority under the four regulations which are questioned by the appellants, namely O. Reg. 52/68, filed on February 26, 1968; O. Reg. 68/ 68, filed on March 1, 1968; O. Reg. 70/68 and 71/68, filed on that same day. It is by virtue of these orders that The Milk Act, about three years after its enactment, took effect against the appellants.

Before dealing with the legal effect of these regulations of the Board, I propose to deal with the attack by the appellants on s. 6(c) and (i) of the Commission’s regulation O. Reg. 294/65. These provisions of that regulation read as follows:

The Commission delegates to the marketing board, its powers to make regulations with respect to milk,

(c) providing for the refusal to issue a licence to commence to engage in the producing of milk where the applicant is not qualified by experience, financial responsibility or equipment to properly engage in the business for which the- application

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was made, or for any other reason that the marketing board deems proper;

(i) providing for,

(i) the marketing of milk on a quota basis,

(ii) the fixing and allotting to persons of quotas for the marketing of milk on such basis as the marketing board deems proper,

(iii) the refusing to fix and allot to any person a quota for the marketing of milk for any reason that the marketing board deems proper,

(iv) the cancelling or reducing of, or the refusing to increase, a quota fixed and allotted to any person for the marketing of milk for any reason that the marketing board deems proper, and

(v) the terms and conditions upon which a person may market milk in excess of the quota fixed and allotted to him;

The quoted provisions delegate to the Board the Commission’s powers under paras. 3 and 11 of s. 8(1) of the Act. The basis of the attack on this delegation is that the Commission’s powers under these paragraphs were associated with a duty conferred on it alone; the language of the Act was express that what “the Commission deems proper” was to govern. I cannot agree with this reading of paras. 3 and 11 of s. 8(1). In authorizing unqualified delegation by the Commission to the Board, the Act envisaged a substitution of the latter for the former to the extent that the Commission deemed it proper to do so. I take this to mean that the Commission could lawfully invest the Board with the discretion originally committed to the Commission in the carrying out of the powers conferred by the Act.

The discretions associated with the powers vested in the Commission by paras. 3 and 11 were as fully delegable as the powers themselves, of which, indeed, they are inseparable parts: see Mungoni v. Attorney-General of Northern Rhodesia[2], at p. 350. If the contrast with the power set out in s. 4(2) (e) of the Act (ending with the

[Page 145] words “as the Commission or marketing board deems proper”) is relied on, my view would be that it leads to the opposite conclusion to that urged by counsel for the appellants; and that is that s. 4(2) is couched so as to permit a partial delegation of an otherwise integrated power and discretion, while paras. 3 and 11 of s. 8(1) do not permit an associated operation of the powers thereunder by the Commission and the Board concurrently; rather, there must be delegation of an entirety or none at all. In my opinion, therefore, the attack on O. Reg. 294/65 fails.

Turning to the Board regulations above-mentioned, the challenge to O. Reg. 52/68 is directed particularly to ss. 3, 4 and 7 thereof, which are in these terms:

3. (1) Every producer shall offer to sell and sell the milk produced by him to the marketing board.

(2) No producer shall offer to sell or sell the milk produced by him to any person other than the marketing board.

(3) No person other than the marketing board shall buy milk from a producer.

4. (1) All grade A milk bought by the marketing board from a producer shall be sold by the producer and bought by the marketing board on a quota basis.

(2) The marketing board may fix and allot to persons quotas for the marketing of milk on such basis as the marketing board deems proper.

(3) The marketing board may refuse to fix and allot to any person a quota for the marketing of milk for any reason that it deems proper.

(4) The marketing board may cancel or reduce or refuse to increase the quota fixed and allotted to any person under subsection 2 for any reason that it deems proper.

(1) The milk of producers shall be transported by persons appointed by the marketing board as its agents for that purpose.

(2) No person shall transport milk produced by a producer other than a person appointed by the marketing board as its agent for that purpose.

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Section 3 of O. Reg. 52/68 is an exercise of the delegated power found in s. 6(o) of O. Reg. 294/65 which, in turn, was a delegation by the Commission, in almost literal terms, of the power conferred upon it by s. 8(1), para. 33 of the Act. I find the Board’s exercise of the delegated power unexceptionable; it has by regulation provided exactly what para. 33 required it, as a subdelegate, to do.

Section 4 of O. Reg. 52/68 is of another order. It purports to carry out what is delegated to it under subss. (i), (ii), (iii) and (iv) of s. 6(i) of the Commission’s Regulation 294/65. These provisions of the Commission’s regulation merely repeat the statutory terms of para. 11 of s. 8(1) with the substitution of the words “marketing board” for the word “Commission” in the statute. Paragraph 11 of s. 8(1) is a “providing” clause; the Commission, and, by delegation, the Board are authorized to provide by regulation for a quota system and for quotas. What the Board has done has been to exercise the power in the very terms in which it was given. It has not established a quota system and allotted quotas, but has simply repeated the formula of the statute, specifying no standards and leaving everything in its discretion.

I am of the opinion that s. 4 of O. Reg. 52/68 is ultra vires. The fact that the powers conferred are to be carried out on a basis that the Board deems proper does not entitle it to keep its standards out of the regulation. The “deem proper” clause of the empowering statute gives the Board (as subdelegate) a wide scope in setting up a quota system and in fixing quotas but it does not allow the Board to escape its obligation, as I read the statute, to embody its policies in a regulation.

A statutory body which is empowered to do something by regulation does not act within its authority by simply repeating the power in a regulation in the words in which it was conferred. That evades exercise of the power and, indeed, turns a legislative power into an administrative one. It amounts to a redelegation by the Board to itself in a form different from that originally authorized; and that this is illegal is evident from the judg-

[Page 147] ment of this Court in Attorney General of Canada v. Brent[3].

In the Brent case, what was in issue was the exercise of power delegated to the Governor in Council by the Immigration Act to make regulations respecting enumerated matters. What the Governor in Council did was to embody the very powers in a regulation which confided their application to a special inquiry officer. This was held to be an invalid subdelegation; it converted the required reflection in a regulation of the opinion of the Governor in Council into an unregulated exercise from time to time of the opinion of a special inquiry officer.

The principle is the same here. The Board was required to legislate by regulation. Instead, it has purported to give itself random power to administer as it sees fit without any reference point in standards fixed by regulation.

The same point of principle that emerges from the Brent case was taken earlier in this Court in Verdun v. Sun Oil Co. Ltd.[4] There the municipality was authorized under provincial legislation to act by by-law, inter alia, to regulate the location within the municipality of industrial and commercial establishments and other buildings intended for special purposes, and to divide the municipality into districts or zones for the purpose of such regulation and, with respect to each of such districts or zones, to prescribe various matters enumerated in the provincial grant of authority. What the municipality did by by-law was (to quote the words of Fauteux J., as he then was, speaking for this Court) “to leave ultimately to the exclusive discretion of the members of the Council of the City, for the time being in office, what it was authorized by the provincial Legislature…to actually regulate by by-law” (at p. 229). The learned Justice of this Court went on to say this (and it is highly appropriate to the present case):

Thus, section 76 [of the by-law] effectively transforms an authority to regulate by legislation into a

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mere administrative and discretionary power to cancel by resolution a right which, untrammelled in the absence of any by-law, could only, in a proper one, be regulated.

It was contended that the validity of the s. 4 of O. Reg. 52/68 is established by the judgment of this Court in Robbins et al. v. Ontario Flue-Cured Tobacco Growers’ Marketing Board[5], which affirmed judgments by the Ontario Court of Appeal[6], and by Grant J.[7], rejecting a challenge to certain regulations made by the Tobacco Board in pursuance of powers delegated to it by the Ontario Farm Products Marketing Board. The judgments of this Court and of the Ontario Court of Appeal are founded on that of Grant J., and I propose to examine its rationale with reference to the issue whether the delegated power herein was exceeded in the sense that it was not exercised according to its terms. I need not enlarge on the proposition that a statutory body like the Board in this case, especially one which is a subdelegate, must stay strictly within its powers; and unless there is adequate statutory language to that end, as was found to exist in Reference re Regulations (Chemicals)[8], it cannot redelegate, either to itself or to any one else the powers conferred upon it alone to be exercised by regulation.

There is a similarity in the powers conferred upon the Ontario Farm Products Marketing Board in the Robbins case and those conferred upon the Commission in the present case. In the Robbins case too the Marketing Board was authorized to delegate its regulation-making powers to a local board. There, as here, it was given broad powers to make regulations under s. 8 (the same section number in both cases). Both The Farm Products Marketing Act, now R.S.O. 1970, c. 162, which was involved in the Robbins case, and The Milk Act were amended in their respective sections 8 by 1968-69 (Ont.),

[Page 149] c. 37, s. 3(3) and by 1968-69 (Ont.), c. 67, s. 1, to add the following paragraph thereto (and I quote here the amendment to The Milk Act):

Where the Commission authorizes a marketing board to exercise any of the powers mentioned in subsection 1, the marketing board, in the exercise of such powers, may make regulations or orders or issue directions.

I point to this amendment as bearing directly on the issue raised by s. 4 of O. Reg. 52/68. In distinguishing regulations, orders and directions, it points up the legislative character of regulations. Nothing, in my opinion, turns on the inclusion in the aforesaid amendment of The Milk Act of a section providing that O. Reg. 294/65, O. Reg. 52/68, O. Reg. 68/68 and O./Reg. 70/68, inter alia, shall be deemed to have been made under The Milk Act as amended by the added clause above-quoted and shall be deemed to have been filed under The Regulations Act on the day of actual filing. The regulations in question remained such after as well as before the amendment.

The powers invoked in the Robbins case were not, however, only those under s. 8 as it had been amended by 1962-63 (Ont.), c. 45 (which were powers referable to any regulated product), but were also particular powers, in extension of those in s. 8, conferred by a new s. 18, also enacted by 1962-63 (Ont.), c. 45 and applicable to tobacco alone. In so far as the Robbins case turned on the retrospective application of the regulations to the 1963 tobacco year, it is clearly of no consequence for the present case. There are other distinguishing features based on the content of some of the regulations passed by the Tobacco Board which reflected known standards upon which that Board acted in enacting limitations and prohibitions upon the production of tobacco in view of the surpluses that had accumulated.

Where the Robbins case is similar to the present one is in the way the Tobacco Board exercised its delegated power to make regulations (in the words of s. 18(2) (a) of the statute)

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“providing for the refusal to grant a licence for the producing of tobacco for any reason that the Board deems proper”. The delegation to it of this power by the Farm Products Marketing Board was, of course, in those words, with the substitution of “local board” for “Board”. The Tobacco Board acted on this delegation by enacting this regulation:

The local board may refuse to grant a licence to produce tobacco for any reason that the local board deems proper.

Grant J. in sustaining the validity of this regulation said this (at pp. 66-67):

The 1963 amendments to the Act make it clear that it was the intention of the Legislature to confer an unrestricted discretion on the local board to grant or refuse licences to produce tobacco, annual tobacco acreage allotments and tobacco marketing quotas. There are no limits in the Act to the discretion granted to the Board and there is nothing therein requiring the Board to set up standards.

I do not think that this is a correct analysis of the Act in question. It ignores the fact that not only delegation but subdelegation is involved, and that the power is circumscribed by the obligation to exercise it through regulations. This was the point taken by this Court in the Brent case. The passage quoted above from the reasons of Grant J. in the Robbins case puts the power into the category of an original grant of authority exercisable ad hoc or treats the power as if it was included among those given generally by s. 4 of The Milk Act, or the similar s. 4 of The Farm Products Marketing Act. I have already pointed out that s. 8 is of a different order.

I do not overlook the discretionary element in the grant of authority to the Commission and, by subdelegation, to the Board in this case and, similarly, to the relevant tribunals in the Robbins case. What is objectionable, in my view of the law, is not the breadth of the delegation or the subdelegation but the failure of the subdelegate (and it would equally be a failure in the Com-

[Page 151] mission itself as delegate) to provide even a minimum of direction and specification in s. 4 of O. Reg. 52/68. The Commission was given a discretion to fix the “law” on enumerated matters, and was authorized to subdelegate its power to the Board. Either one, as the regulation-making authority, could retain discretion as to the execution or application of the “law”, but that is not this case so far as s. 4 is concerned. There was no “law” stated.

The Board appreciated the need to offer some guide lines to those over whom it sought to exercise authority. Under date of February 27, 1968, it addressed a memorandum to “all dairies, distributors, industrial milk plants and milk transporters” which forewarned of regulations that were being prepared to be effective March 1, 1968, and designed, inter alia, to inaugurate area pooling to enable the Board to operate fluid milk price pools and in that connection to licence all producers, appoint transporters and establish five price pool areas. I note that this memorandum came a day after the filing of O. Reg. 52/68, but it also appears that O. Reg. 52/68 (which specified five pooling areas) and O. Reg. 70/68 were designed to implement the memorandum.

The Board had earlier formulated its quota policy under a policy statement of November 1, 1967, which elaborated upon a previous statement of policy dated in October of that year. This printed pamphlet or brochure of November 1, 1967, indicated the bases upon which fluid milk producers would be given quotas, and it also dealt with quota transfers and with maintenance and adjustment of quotas. There was no indication in this policy statement that a regulation would be promulgated to carry out the delegated authority granted by s. 6(i) of O. Reg. 294/65. A revised quota policy was issued under date of August 1, 1968, again without expressed inten-

[Page 152] tion to embody it in a regulation. This statement of policy ends with the following sentence:

This policy carries the intent of The Ontario Milk Marketing Board but is subject to revision and change or legal advice.

There can be and there was no pretence that this statement of policy satisfied the regulation-making authority delegated to the Board by the Commission. The Board had shown in at least part of its O. Reg. 70/68 that it knew how to fix standards in discharge of its power to make regulations, just as the Commission exhibited similar knowledge in its O. Reg. 432 respecting, inter alia, quality and sanitary conditions, and as the Board had also exhibited in its O. Reg. 71/68 respecting transportation.

Two points arise in connection with the Robbins case; the first is whether it should be followed because of an in para materia rule of construction, having regard to the similar objects of The Milk Act and of The Farm Products Marketing Act; the second is whether it should be followed in any event because it is more recent than the Brent case. On the first point, it is my opinion that what is involved is not simply a question of the construction of comparable statutes, but rather a general principle of the scope of delegated legislative power. The second point concerns the authority of decisions of this Court in subsequent cases and is of larger significance.

None of the Courts which heard and decided the Robbins case made any reference in their respective reasons to the Brent case. It was certainly cited, as the factum filed in this Court by the appellants in that case reveals. I do not propose to speculate in these reasons why it was not referred to and examined. For myself, I think it was a relevant authority, and, moreover, that it stated a principle which was apt in Robbins as it is here. It is a principle that this Court had also expressed in Verdun v. Sun Oil Co. Ltd., supra. The fact that Robbins was more recent than Brent

[Page 153] does not establish an invariable principle of preference as between two apparently conflicting judgments of this Court. It may have been the case in Robbins that the exigent situation facing the Ontario tobacco industry led to a wider construction of the special authority given by s.18 of The Farm Products Marketing Act, as enacted by 1962-63 (Ont.), c. 45, than would otherwise have been sanctioned. Grant J. appears to suggest this in the concluding paragraph of his reasons. Earlier in his reasons he had referred to the statutory changes as “economic and not merely regulatory”. I do not think that this is a distinction that supports a difference in legal principle. In any event, there can be no appeal to similar emergency circumstances in the present case; and in so far as principle is concerned, I am of the opinion that what was stated by this Court in the Brent case and earlier in Verdun v. Sun Oil Co. Ltd. should be applied here. Their force is not lost merely because they have not been considered in the reasons of this Court in a subsequent case.

I return to O.Reg. 52/68 and to the challenge to s.7 thereof, already quoted. The contention is that no authority could be given to the Board to regulate transportation because neither s.4 nor s.8 mention transportation. The same attack is made on O.Reg. 71/68, filed on March 1, 1968, which deals in some detail with transportation. What is put against this submission is that “transportation” is included in the definition of “marketing” under s.1, para. 15 of The Milk Act, and that among the powers given to the Commission by s.8 and delegable to the Board are the power to provide for “the control and regulation of the marketing of any regulated product” (para. 13), the power to provide that a regulated product “shall be marketed by, from or through the marketing board” (para. 31), and the power to appoint agents (para. 43). The answer given to this composite submission is that s.18 of The Milk Act expressly includes “transportation” (para. 16) among the regulation-making powers

[Page 154] of the Commission (for which the approval of the Lieutenant-Governor in Council is required), and that none of these powers are delegable by the Commission. “Inclusio unius, exclusio alterius” appears to be the proposition.

The detailing of powers under ss.4, 8 and 18 of The Milk Act to be exercised by the Commission largely by regulation and to a smaller extent without, and delegable by it in respect of those under ss.4 and 8 only, is almost an in terrorem listing, exhibiting in my opinion duplication and overlap. It is not for me to say how the Legislature should deal with the problems involved in regulating milk marketing, but I cannot believe that a more symmetrical arrangement compatible with flexibility would have been impractical. I am not disposed, however, to frustrate the legislative purpose declared in s.2 of The Milk Act by a narrow construction, and hence I would not exclude regulation of transportation under s.8(1) because it is also comprehended under s.18. In my opinion, therefore, the attack on s.7 of O.Reg. 52/68 and on O.Reg. 71/68 fails. In coming to this conclusion, I do not rely at all upon the agent appointing power given by para. 43 of s.8(1).

The next submission of the appellants relates to the validity of O.Reg. 68/68 which deals with the licensing of milk producers. The attack here is upon s.3(4) of the regulation which is as follows:

The marketing board may refuse to issue a licence to commence to engage in the producing of milk where the applicant is not qualified by experience, financial responsibility or equipment to properly engage in the business for which the application was made, or for any other reason that the marketing board deems proper.

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This provision is an exercise of the delegated power set out in s.6(c) of O.Reg. 294/65 and comes directly from (and repeats in its words) the power conferred upon the Commission by para. 3 of s.8(1) of the Act. For the reasons already given by me for holding s.4 of O.Reg. 52/68 to be ultra vires, I hold that s.3(4) of O.Reg. 68/68 is also ultra vires.

O.Reg. 70/68 is challenged on the same ground as that raised against s.3 of O.Reg. 52/68. It stems from s.6(o), (p) and (s) of O.Reg. 294/65 which drew upon paras. 33 and 34 of s.8(1) of the Act. Sections 3, 4 and 5 of O.Reg. 70/68 which are the focus of the challenge to this regulation read as follows:

3. All milk supplied to a processor shall be sold to the processor by the marketing board and bought by the processor from the marketing board on the terms and conditions prescribed in this Regulation.

4. (1) No processor shall buy milk from any person other than the marketing board.

(2) No person other than the marketing board shall sell milk to a processor.

(3) No processor shall sell the milk produced by a producer.

5. No processor shall process, pack or package any milk that has not been sold by the marketing board.

They do not stand alone, but, as s.3 states, are reinforced by detailed provisions which are part of O.Reg. 70/68. I am of the opinion that O.Reg. 70/68 was a valid exercise of power properly delegated to the Board by the Commission.

It remains to consider the submissions of the appellant on ss.11 and 12 of The Milk Act. I have nothing to add on this score to what has been said by my brother Judson in his reasons, and, accordingly, I find that ss.11(2) and 12(2) do not have the effect of exempting the appellants from the force of O.Reg. 52/68 and O.Reg. 70/68.

In the result, I would allow the appeal and set aside the orders of the Ontario Court of Appeal and of Donohue J. in so far as they sustained the validity of the whole of O.Reg. 52/68 and

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O.Reg. 68/68; and I would modify those orders by a declaration that s.4 of O.Reg. 52/68 and s.3(4) of O.Reg. 68/68 are ultra vires. The appellants should have their costs throughout.

The judgment of Abbott, Martland, Judson and Ritchie JJ. was delivered by

JUDSON J. (dissenting)—The two appellants in this Court are plaintiffs in an action against the Milk Commission of Ontario and the Ontario Milk Marketing Board in which they seek a judgment declaring:

(a) that Regulation 294/65 made by the Commission is ultra vires;

(b) that four Regulations made by the Board, 52/68, 68/68, 70/68, 71/68, are ultra vires; and

(c) that Regulations 52/68 and 70/68 of the Board do not apply to them as a result of ss. 11 and 12 of The Milk Act.

The trial judge dismissed the action and the Court of Appeal affirmed his judgment.

The appellants are producers, processors and distributors of grade A milk as defined by the Regulations, and were so engaged before the enactment of The Milk Act, 1965. In addition, one of the appellants, Brant Dairy, is a transporter of milk. Each appellant owns a farm, a herd of dairy cattle and a dairy which processes raw milk into the various fluid milk products. Each appellant distributes those fluid milk products to the ultimate consumer.

After March 1, 1968, when the Board’s regulations came into force, the Board and the Commission sought to compel the appellants to sell to the Board all the milk produced by them and purchase it back, or other milk, for processing in their dairies and distribution to their customers.

The appellants contend that ss. 11 and 12 of The Milk Act, 1965 exempt them from the regulations requiring them to sell their production to the Board and then purchase from the Board such

[Page 157] quantities as they require for their processing operation.

The Milk Act, 1965 was enacted to control the marketing of milk in all respects within Ontario. The Act established the Commission and authorized it to make regulations with respect to the marketing of milk, including quotas and pools for the distribution of moneys received from the sale of milk, and to delegate such powers to the Board.

Acting under s. 7(1) (a) of The Milk Act, 1965, the Lieutenant Governor-in-Council made O. Reg. 202/65 establishing a plan for the control and regulation of the marketing within Ontario of milk and cheese and constituting the Ontario Milk Marketing Board as a Board to administer the plan.

Under the authority of s. 8 of the Act, the Commission made O. Reg. 294/65 which delegated to the Board, powers to regulate the marketing of milk, including the marketing of milk on a quota basis, and the power to conduct a pool or pools for the distribution of all moneys received from the sale of milk.

The Board then made O. Reg. 295/65 in which it exercised some of the powers delegated to it by the Commission under O. Reg. 294/65, but the Board did not then exercise its power to conduct a pool or pools.

Then the Board made Ontario Regulations 52/68, 70/68 and 71/68 to implement the grade A milk pool. Under these regulations, all grade A producers in the province are required to sell their milk only to the Board. All grade A milk bought by the Marketing Board from a producer is sold by the producer and bought by the Board on a quota basis. All grade A processors are required to buy only from the Board. Producers are assigned to particular processors, and transporters are appointed to act as the Board’s agents to transport the milk from the producer’s premises to the assigned processor. The Board purchases milk F.O.B. the producer’s premises and delivers it to the processor. The processor pays the Board and the Board pays the producer. Since the price of milk and transportation costs vary in different parts of the province, five area

[Page 158] pools are created for the distribution of the moneys amongst the producers.

I will deal first with ss. 11 and 12 of The Milk Act. The appellants assert that because of subs. (2) of each of these sections, Regulations 52/68 and 70/68 do not apply to them. These sections read:

11. (1) Any person who is a producer and distributor is entitled in his respective capacities as a producer and as a distributor to all the rights and privileges and is subject to all the duties and obligations of a producer and of a distributor.

(2) Any person who is a producer and distributor shall be deemed to have received in his capacity as a distributor from himself in his capacity as a producer the milk produced by him that he distributes and to have contracted in that capacity with himself in his capacity as a producer for the marketing thereof upon the condition that the regulations, orders, directions, agreements and awards and the renegotiated agreements and awards made under this Act apply.

12. (1) Any person who is a producer and processor is entitled in his respective capacities as a producer and as a processor to all the rights and privileges and is subject to all the duties and obligations of a producer and of a processor.

(2) Any person who is a producer and a processor shall be deemed to have received in his capacity as a processor from himself in his capacity as a producer the milk produced by him that he processes and to have contracted in that capacity with himself in his capacity as a producer for the marketing thereof upon the condition that the regulations, orders, directions, agreements and awards and renegotiated agreements and awards made under this Act apply.

The only difference between the two sections is that s.11 deals with “producers and distributors” and s.12 deals with “producers and processors”. Both the appellants are producers, processors and distributors. Subsection (1) of each of the above-quoted sections makes it plain that the appellants are, in their respective capacities, entitled to all the rights and privileges but also subject to all the duties and obligations under the Act. The question is whether the second subsections modify

[Page 159] or limit the application of the first subsections to the appellants. My opinion is that they do not.

The second subsections owe their origin to certain observations made in this Court in Crawford et al. v. Attorney-General of British Columbia et al.[9], where the British Columbia Milk Industry Act was under consideration. The marketing scheme provided for under that Act was fundamentally different from the one we now have in the Province of Ontario. Under the British Columbia Act producers could make their own contracts with processors as to time for delivery and as to quantities, but only as a blended price fixed by the British Columbia Milk Board. The object of the blended price was to arrive at a price for all purchasers based on a combination of the fluid milk prices (a higher price) and the price for milk for manufacturing purposes (a lower price). The scheme under the British Columbia statute contemplated that purchasers who sold more milk on the fluid milk market than other purchasers would have to account, through the Board, to those other purchasers who sold less than they did. The ultimate object was that each producer of qualifying milk should receive a uniform blended price for his product regardless of the ultimate utilization of his particular milk.

The observation made in this Court is the following:

The language of s. 44 of the Act must be construed as imposing upon a producer-vendor such of the obligations of a vendor as are by their nature applicable. The relation between a producer and a vendor, such as above referred to, is that of a vendor and purchaser and the obligation imposed by s. 24 rests upon a vendor qua purchaser. Since one cannot contract with oneself this portion of the order cannot refer to a producer-vendor. Whether there is anything done by the Board in its dealings with producer-vendors which may be objectionable as beyond its powers cannot be determined upon the material before us.

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For an understanding of the problem it is necessary to note that in the British Columbia Act, “vendor” is used in the sense of a processor or distributor. It would appear, therefore, that subss. (2) of ss. 11 and 12 were passed by the Ontario Legislature to meet the problem discussed in the Crawford case in the event that the Board should adopt a marketing technique similar to that in British Columbia, that is to say, where producers sell the milk to purchasers at a blended price fixed by the Board.

British Columbia, following the decision in this Court, amended its Act in terms corresponding to those of subss. (2) of ss. 11 and 12. These amendments were supported in the British Columbia Court of Appeal in Milk Board v. Hillside Farm Dairy Ltd. et al.[10]

The Ontario scheme under consideration in the present appeal differs from the British Columbia scheme dealt with in the Crawford case. The British Columbia scheme may, for brevity, be referred to as a system of equalization of payments to be made by producers who sell direct to the processor or distributor. O. Reg. 52/68, under consideration here, requires a producer to sell his milk to the Board and only to the Board. O. Reg. 70/68 requires processors to purchase milk from the Board and only from the Board. Therefore, in this situation, the first subsections are clearly applicable and the second subsections have no application.

Regulation 294/65 of the Commission

The plan with which we are concerned was established by O. Reg. 202/65. This was a regulation made by the Lieutenant Governor in Council pursuant to s. 7 of the Act. It dealt with the marketing within Ontario of milk and cheese and constituted the Board to administer the plan. Then followed O. Reg. 294/65, a regulation made by the Commission pursuant to s. 8 of the Act. It delegated extensive powers to the Marketing Board to make regulations relating to licences, quotas, requirement that producers must sell to or through the Marketing Board and the prohibition against processing, packing or packaging any

[Page 161] milk that had not been sold to or by or through the Marketing Board. It gave the power to determine prices and to conduct pools. This regulation of the Commission, O. Reg. 294/65, is attacked on the ground that it purports to delegate to the Board more than the Commission is authorized to delegate, and that as a result, the whole regulation is ultra vires the Commission.

The precise grounds on which the delegation is attacked are set out in paras. 14 and 15 of the statement of claim:

14. Ontario Regulation 294/65 is ultra vires the Commission in that section 6(c) and (i) thereof purport to delegate to the Board the power to make regulations respecting the refusal of licences and the fixing, allotting, refusing to fix and allot and the cancelling or reducing of quotas for any reasons the Board deems proper, contrary to the express terms of The Milk Act, 1965, section 8.

15. Ontario Regulation 294/65 is ultra vires the Commission in that section 7(h) thereof purports to authorize the Board to conduct pools for the distribution of monies received from the sale of milk when such pools have not been established.

The power of the Commission to deal with these matters is set out in s. 8(1) of the Act in paras. (3) and (11) respectively. The power of the Commission to delegate these powers is set out in s. 8(6) of the Act in the following terms:

(6) The Commission may delegate to a marketing board such of its powers under subsection 1 as it considers necessary, and may at any time terminate any such delegation.