Fauteux C.J.
The judgment of Fauteux C.J. and Abbott, Martland, Judson, Spence and Pigeon JJ. was delivered by
PIGEON J.
PIGEON J.—This appeal is from a judgment of the Court of Appeal of Manitoba affirming a judgment of the Chief Justice of the Court of Queen’s Bench granting an injunction against the appellants, Burns Foods Limited, Canada
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Packers Limited and Swift Canadian Co. Limited (the Packers), and dismissing their counterclaim. The injunction restrains the Packers from slaughtering hogs in Manitoba unless same have been purchased from the respondent Manitoba Hog Producers’ Marketing Board (the Board). The Packers’ counterclaim is for a declaration that The Natural Products Marketing Act, R.S.M. 1970, c. N20, as amended by 1971 (Man.), c. 67 and 1972 (Man.), c. 77, and Manitoba Reg. 180/71, Manitoba Reg. 4/72, Manitoba Reg. 97/72 and conditions of sale made pursuant to Manitoba Reg. 4/72 are invalid by reason of being ultra vires the Province of Manitoba. At the hearing in this Court, the Packers’ attack was really pressed against Manitoba Reg. 97/72 only. The intervention of the Attorney General for Canada was limited to that point. On the other hand, the Attorneys General for Ontario, British Columbia, Alberta and Saskatchewan intervened to support the validity of all the regulations under attack.
In 1971, The Natural Products Marketing Act of Manitoba (the Act) was amended so as to include in the definition of natural products
live-stock raised, kept, prepared for slaughter, slaughtered or skinned within the province.
At the end of the same year, Manitoba Reg. 180/71 established “The Manitoba Hog Producers’ Marketing Plan”. In this Plan “producer” is defined as follows:
“producer” means any person who raises, keeps, prepares for slaughter or slaughters hogs within the province and includes the employer of any such person, a person who under any lease or agreement is entitled to a share of the hogs raised by any such person, and a person who takes possession of any hogs from any such person under any form of security for a debt;
Following upon the establishment of the Plan, the Board made an order known as Manitoba Reg. 4/72, effective January 1, 1972. Section 2 of this order reads:
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2. Except where he buys through the Producer Board, no processor shall buy or accept delivery of hogs which are subject to regulations by the Producer Board from a producer.
In view of the definition of “producer” above quoted, this provision was inapplicable to hogs bought in Saskatchewan or in any other province, the persons raising hogs in a province other than Manitoba not being “producers”. Even without that definition, this would not be construed as applicable to purchases from outside Manitoba. However, in a telegram sent to the Packers on January 7, 1972, the chairman of the Board, after quoting excerpts from the regulations, said:
It has come to the attention of the Board of Directors of the Manitoba Hog Producers Marketing Board that, during the week ending January 7, 1972, hogs were slaughtered in this province which were not purchased through the Board. It is assumed that these hogs came from Saskatchewan. Please be advised that this procedure must cease forthwith.
Under date July 17, 1972, the Board made an order, known as Manitoba Reg. 97/72, adding to Reg. 4/72 after s. 2:
2A. No Manitoba processor shall prepare hogs for slaughter in Manitoba or slaughter hogs in Manitoba unless same have been purchased from the producer board and where hogs have been brought into the province they shall, for the purpose of the Act, be deemed to be hogs produced in Manitoba and shall be subject to the same provisions of the Act and regulation as hogs produced in Manitoba.
In a press release issued by the Board on the date of its application for the injunction, namely August 15, 1972, the factual situation was described as follows:
PACKERS DEFY MANITOBA HOG BOARD ORDER
At the beginning of this year the Manitoba Hog Producers’ Marketing Board ruled that all hogs slaughtered in this province must be sold on the
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Board’s teletype auction system. This involves about 25,000 hogs per week from Manitoba producers and about 1,000 each week from Saskatchewan.
Recently the major packers questioned the Board’s legal authority to stop them from buying additional hogs from outside the province on a “direct to plant” basis. In fact, during the last three weeks they purchased about 1,750 head contrary to the Regulations. In the Board’s opinion this is a serious threat to the orderly marketing program that has been operating in the Province and have instructed their legal counsel to proceed with a request for an injunction from the Courts.
Contrary to the thoughts expressed by Canada Packers, Swift Canadian and Burns Foods Ltd., that the Board’s ruling is restricting interprovincial trade—the Board says definitely not. The Manitoba Board receives and sells all hogs shipped from Saskatchewan or any other province each week and these hogs are handled in exactly the same manner as hogs that are offered from Manitoba producers. The fact that 800 to 1,000 hogs of Saskatchewan origin have been sold each week since the beginning of this year, attests to this fact.
The Board feels that if Manitoba packers are allowed to by-pass the teletype auction system of acquiring their supplies—the bargaining power of Manitoba producers is seriously jeopardized.
From Chief Justice Tritschler’s reasons in the Court of Queen’s Bench, I would quote the following excerpts:
Where a prohibition is directed against acts done within the province, then, prima facie, the legislation is within the provincial legislative sphere—Cowen v. Attorney-General for British Columbia [1941] S.C.R. 321 at 323. That is what we have here—a prohibition against slaughtering hogs in Manitoba that have not been purchased from the Board. The legislation is aimed at the marketing and processing of hogs in Manitoba, the regulation of the sale of hogs in Manitoba and the establishment of hog prices by local market action and not by the Board. It is not concerned with the action of the Packers in buying and taking possession of hogs in Saskatchewan, and bringing them into Manitoba. It is the slaughtering of the hogs in Manitoba to which the legislation is directed and that is a local matter.
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…it was urged against the legislation that the Saskatchewan producers had been “deprived of the benefit” of choosing direct sale to a Manitoba processor for the purpose of slaughter. Again there was no hint of concern on the part of extra-provincial producers nor any suggestion that a Manitoba processor would pay a Saskatchewan producer a price better than or even as good as he could get through the Board. On the contrary, it is evident that a Saskatchewan producer selling through the Board would receive a better price than if he sold direct to a Manitoba processor. This cannot be a restraint upon but an encouragement of interprovincial trade…
The power to maintain a fair price and an orderly marketing of hogs within the Province is not affected by the fact that some of the hogs are imported or that some of the hogs, in the same or an altered state, are exported from the Province unless it be shown that the legislation is merely a colourable device for assuming control of the interprovincial trade. In my view the evidence does not show that. It is essential to the success of the Plan that participation by Manitoba producers and processors be compulsory. If the Manitoba processor could bypass the system the Plan would be destroyed with great damage to the industry which has been built up. The legislation is aimed at the Manitoba processor to force him to buy his raw product in competition with all other Manitoba processors and thus to stabilize and maintain a fair price for any producer who sends his hogs to the Board for sale. No doubt this has an effect on the cost of doing business in Manitoba of companies engaged in interprovincial trade but that, by itself, is not sufficient to make the legislation invalid.
In the Court of Appeal, Dickson J.A. (as he then was) said in particular:
As I read the Act, the Plan and Orders, it seems to me that it is the slaughtering of hogs in Manitoba to which they are directed and, as Tritschler C.J.Q.B. said in the course of his judgment, “that is a local matter”. There are no internal indicia to be found in the written words to manifest an interprovincial concern; on the contrary the phrase “within the province” appears with great frequency. The legislation,
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in my opinion, affects interprovincial trade but merely as an incident of a scheme for controlling local trade within the Province and not as aiming to regulate trade in matters of interprovincial concern. The “aim” in my view is to equalize, in Manitoba, the bargaining position between those who are producing and selling, i.e. the Manitoba hog producers, and those who are buying and processing, i.e. the packers. It does not seem unreasonable that a compulsory marketing scheme be compulsory for all. I do not think that the legislation is designed to restrict or limit the free flow of trade between the provinces as such but rather to develop and maintain the orderly marketing of the regulated product.
There is no attempt in the legislation to empower the Board to restrict or limit by quotas, or to prohibit, the entry to Manitoba of the regulated product. Nor is any distinction drawn between Manitoba product and non-Manitoba product as in the Manitoba Reference. A producer of hogs in Saskatchewan is free to sell his hogs to the Board and to receive the same price and be treated in other respects in the same manner as a Manitoba producer. He is free to sell his hogs to the Packers in Saskatchewan for shipment to Manitoba. It is true that before the Packers can slaughter hogs so purchased, they must, in common with all Manitoba hog producers, offer them for sale to the Board but I do not understand this as creating any border barrier to hog movement.
In my view, it is apparent that what the impugned regulations require the Packers to do with respect to hogs from Saskatchewan is to buy them from the Saskatchewan producer through the Manitoba Board. This is what the telegram and the press release say, it is clearly what the Board intended, and it is also what was meant to be required by the injunction order as appears from Tritschler’s C.J.Q.B. reasons. The Board never had any intention of allowing the Packers to buy from themselves through the Board hogs purchased by them from producers in Saskatchewan.
While the definition of “producer” may be wide enough to include a packer who has
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bought hogs, there is in the Marketing Plan (Regulation 180/71) a provision clearly designed to enable the Board to prevent the Packers from so doing. It is s. 10A(1):
10A. (1) No producer shall in any fiscal year of the producer board, market more than five thousand hogs without a licence permitting him so to do, issued by the producer board.
The effect of the Regulation under attack must, therefore, be taken to be that the Packers are prohibited from slaughtering in Manitoba hogs raised in Saskatchewan or in any other province, unless those hogs are purchased from the producer through the Board. It is true that this prohibition does not apply unless the hogs are slaughtered in Manitoba, but that is the only purpose for which they are bought by the Packers. At the hearing in this Court, the position taken by those who sought to support the validity of the Regulation was that the order under attack was made by the Board with the conscious realization that it would affect hogs brought from another province.
The question then becomes whether, as an incident of its authority over the local matter of hog slaughter by the Packers in Manitoba, this province can regulate the buying of hogs by the Packers from producers in another province. As we have seen, the injunction is aimed at preventing the Packers from buying hogs in Saskatchewan, direct from the producer, for slaughter in Manitoba. Such acquisition is a contract made outside Manitoba. Of course, the parties could choose to make it in that province, but they would certainly choose to make it in Saskatchewan when desirous, as the Packers are, of avoiding subjection to the Manitoba Plan. However, if the order is valid, the conditions of the sale will be regulated by the Manitoba Plan, even when the Packers deal with the Saskatchewan producers in that province. Such a contract is clearly not within the legislative authority of the Province of Manitoba (Royal
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Bank of Canada v. The King[2]). Can it be brought in because, as Tritschler C.J.Q.B. puts it: “If the Manitoba processor could bypass the system, the Plan would be destroyed with great damage to the industry which has been built up”. In my view, the answer to this question is to be found in the following sentence of Lord Atkin’s judgment in the 1937 Natural Products Marketing Act case (Attorney-General for British Columbia v. Attorney-General for Canada[3]) at p. 387:
“Parliament cannot acquire jurisdiction to deal in the sweeping way in which these enactments operate with such local and provincial matters by legislating at the same time respecting external and inter-provincial trade and committing the regulation of external and inter-provincial trade and the regulation of trade which is exclusively local and of traders and producers engaged in trade which is exclusively local to the same authority: (The King v. Eastern Terminal Elevator Co. [1925] Can. S.C.R. 434).”
If the federal Parliament cannot regulate local trade because it would be more efficient to regulate it together with the extra-provincial trade, a fortiori a provincial Legislature cannot regulate interprovincial trade in a given product because this appears desirable for the effective control of intra-provincial trade.[4] In other words, the direct regulation of interprovincial trade is of itself a matter outside the legislative authority of any province and it cannot be treated as an accessory of the local trade. This is not a case of subjecting all goods of a certain kind within a province to uniform regulations, such as the retail sale price (as in Home Oil Distributors Ltd. v. Attorney-General of British
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Columbia et al.[5]). It is a case of directly regulating extra-provincial trade operations in their essential aspects namely, the price and all the other conditions of sale. In effect, the impugned Regulation does not really deal with goods already brought within the province. What it seeks to accomplish is to require that their acquisition from the producer in another province be made in accordance with the law of Manitoba, not with the law of the province of origin. It is true that it does not purport to prohibit the bringing in if that requirement is not complied with, but the same result is sought by providing that the goods cannot then be used for sole purpose for which they are brought in, namely immediate slaughter.
Nothing that was said in any previous case supports the proposition that such direct interference with interprovincial trade may be effected by a provincial authority. This is not an insignificant interference. On the contrary, it is not denied that the interprovincial trade in hogs between Saskatchewan and Manitoba is substantial. It is no answer to say that there is no discrimination, not only because this is due to a policy decision subject to alteration at the will of the Board, but also because it is the substance of the interprovincial trade that is being regulated, not some accessory or unessential aspect. To make a comparison with the trucking industry, it is the equivalent of rate fixing for interprovincial transport as opposed to the setting of the speed limits.
I cannot, therefore, accede to the argument submitted by Mr. Hilton that the restriction is valid because it is imposed in aid of the object to ensure a fair price for the sale of the local product. The decision in Shannon v. Lower
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Mainland Dairy Products Board[6] is of no assistance because it is predicated on a finding “that the legislation in question is confined to regulating transactions that take place wholly within the Province”. The situation here is totally unlike that which obtained in Brant Dairy Co. et al. v. Milk Commission of Ontario et al.[7] In that case, the challenge on constitutional grounds was dismissed because there was no evidence that the orders had any extra-provincial effect. They did require the processors to buy exclusively through the Board, but all the producers were within the province. Similarly, in Carnation Company Ltd. v. Quebec Agricultural Marketing Board et al.[8], all the producers were within the province in which the processing plant was operating. The basis of the attack was not that extra-provincial producers were affected, but that a large part of the plant’s production was sold outside the province. From that point of view, the situation is much the same in the present case. It is conceded that two‑thirds of the Packers’ production is sold outside Manitoba. However, in view of what was decided in the Carnation case, this was not the basis of the challenge on constitutional grounds.
The Regulation was sought to be supported because it applies only to hogs brought within the province. The difficulty is that what the order in question does is really to prescribe the conditions under which the hogs may be brought in from outside and that is, in itself, interprovincial trade. It is not an incident of the operation of slaughter taking place within the province.
It was also said that the pith and substance is not to erect any barrier against the free flow of trade but to stabilize the price of hogs in Manitoba. The difficulty is that such regulation by subjecting the price of “imports” to the same
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regulations as local sales is, of itself, a regulation of the interprovincial trade. The fact that this is presently being done without the features of discrimination present in the Egg case (Attorney-General for Manitoba v. Manitoba Egg & Poultry Assoc. et al.[9]) cannot make a real difference, not only because discrimination could at any time be established at the discretion of the Board, but also because what is sought to be regulated in all its essential aspects is the trade in hogs between the Packers in Manitoba and hog producers in any other province.
For those reasons, I would allow the appeal, set aside the judgments in the Courts below, dissolve the injunction, dismiss the action and allow the counterclaim to the extent of declaring Manitoba Regulation 97/72 null and void. The appellants are entitled to their costs throughout against Manitoba Hog Producers’ Marketing Board but there should be no other order as to costs. Any right the appellants may have to apply to the Court of Queen’s Bench of Manitoba for an order as to damages by reason of the undertaking given August 21, 1972, and the subsequently issued injunction are reserved.
RITCHIE J. (dissenting)
RITCHIE J. (dissenting)—I am in agreement with the Court of Appeal of Manitoba that the impugned legislation is primarily directed to the slaughter of hogs within the province which is a local matter, and that it only affects interprovincial trade as an incident of a scheme for controlling local trade within the province and does not aim at the regulation of trade in matters of interprovincial concern.
For these reasons I would dismiss this appeal with costs.
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Appeal allowed, RITCHIE J. dissenting.
Solicitors for the appellants: Christie, Turner, DeGraves, McKay, Settle & Kennedy, Winnipeg.
Solicitors for the respondent, Manitoba Hog Producer, Marketing Board: Inkster, Walker, Westbury, Irish, Rusen & Hughes, Winnipeg.
Solicitor for the respondent, Attorney General for Manitoba: Deputy Attorney General for Manitoba.
Footnotes
- [1] [1973] 5 W.W.R. 60, 35 D.L.R. (3d) 581.
- [2] [1913] A.C. 283.
- [3] [1937] A.C. 377.
- [4] See also Viscount Simon’s judgment in Atlantic Smoke Shops Ld. v. Conlon, [1943] AC. 550, where he said (at p. 568): … the validity of s. 5 must be judged according to its terms, and, if its enactment by the provincial legislature be beyond the powers of that legislature, it cannot be justified on the ground that it is needed to make the whole scheme watertight.
- [5] [1940]S.C.R. 444.
- [6] [1938] A.C. 708.
- [7] [1973] S.C.R. 131.
- [8] [1968] S.C.R. 238.
- [9] [1971] S.C.R. 689.
Cases cited
Statutes and regulations cited
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Unresolved citations
- Section 2
- s. 2