Canadian Egg Marketing Agency v. Richardson

Canadian Egg Marketing Agency v. Richardson
Collection
Supreme Court Judgments
Date
1997-05-30
Report
[1998] 3 SCR 157
Case number
25192
Judges
Lamer, Antonio; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.
On appeal from
Northwest Territories
Subjects
Action
Constitutional law
Notes
SCC Case Information: 25192
Decision Content
Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157
Canadian Egg Marketing Agency Appellant
v.
Pineview Poultry Products Ltd. and
Frank Richardson operating as Northern Poultry Respondents
and
The Commissioner of the Northwest Territories
as represented by the Attorney General of the Northwest Territories,
the Attorney General of Canada,
the Attorney General for Ontario,
the Attorney General of Quebec,
the Attorney General of British Columbia,
the Attorney General for Alberta,
the Council of Canadians,
the Sierra Legal Defence Fund Society
and the Alberta Barley Commission Interveners
Indexed as: Canadian Egg Marketing Agency v. Richardson
File No.: 25192.
*1997: May 30.
*Present: Lamer C.J. and La Forest, L’Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.
** Rehearing: 1998: March 19; 1998: November 5.
** Present: Lamer C.J. and L’Heureux‑Dubé, Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie JJ.
on appeal from the court of appeal for the northwest territories
Practice ‑‑ Standing ‑‑ Corporations ‑‑ Charter challenge ‑‑ Egg marketing scheme permitting only producers in provinces belonging to scheme to engage in interprovincial or export trade of eggs ‑‑ Corporate egg producers in Northwest Territories sued by state organ regulating production and marketing of eggs for damages arising from illegal interprovincial marketing of eggs ‑‑ Injunction also requested against egg producers ‑‑ Egg producers alleging in defence that federal legislation regulating egg marketing scheme infringing Charter freedom of association and mobility rights ‑‑ Whether egg producers entitled to standing to challenge legislation’s constitutionality.
Constitutional law ‑‑ Charter of Rights ‑‑ Mobility rights ‑‑ Right to pursue gaining of livelihood in any province ‑‑ Egg marketing scheme ‑‑ Egg producers in Northwest Territories unable to market eggs in interprovincial trade because egg marketing scheme permitting only producers in provinces belonging to scheme to engage in interprovincial or export trade of eggs ‑‑ Whether scheme infringing right to pursue gaining of livelihood in any province ‑‑ Whether scheme discriminating primarily on basis of residence ‑‑ Canadian Charter of Rights and Freedoms, s. 6(2) (b), (3) (a) ‑‑ Canadian Egg Marketing Agency Proclamation, C.R.C., c. 646 ‑‑ Canadian Egg Licensing Regulations, 1987, SOR/87‑242, ss. 3, 4(1), 7(1)(d), (e) ‑‑ Canadian Egg Marketing Agency Quota Regulations, 1986, SOR/86‑8, ss. 4(1)(a), 5(2), 6, 7(1).
Constitutional law ‑‑ Charter of Rights ‑‑ Freedom of association ‑‑ Egg marketing scheme ‑‑ Egg producers in Northwest Territories unable to market eggs in interprovincial trade because egg marketing scheme permitting only producers in provinces belonging to scheme to engage in such trade ‑‑ Whether scheme violating freedom of association ‑‑ Canadian Charter of Rights and Freedoms, s. 2 (d) ‑‑ Canadian Egg Marketing Agency Proclamation, C.R.C., c. 646 ‑‑ Canadian Egg Licensing Regulations, 1987, SOR/87‑242, ss. 3, 4(1), 7(1)(d), (e) ‑‑ Canadian Egg Marketing Agency Quota Regulations, 1986, SOR/86‑8, ss. 4(1)(a), 5(2), 6, 7(1).
The respondents, Richardson, operating as Northern Poultry, and Pineview Poultry Products Ltd., are the NWT’s only egg producers. Richardson began producing eggs in 1987, followed by Pineview in 1990, and they have both marketed their eggs in intraprovincial and interprovincial trade. Since 1972, the Canadian egg market has been regulated through a federal‑provincial scheme of interlocking laws and regulations. The appellant CEMA is in charge of regulating the interprovincial trade in eggs and allocates federal egg quotas to each of the 10 provinces, but not to either territory. Under the federal part of the egg marketing scheme, a federal quota and licence are needed to produce and market eggs for interprovincial and export trade. The effect of the exclusion of the NWT from the various regulations is that no eggs produced in the NWT can lawfully be marketed interprovincially or exported. In 1992, CEMA sued the respondents for damages arising from illegal interprovincial marketing of eggs. It also sought an injunction preventing them from marketing their eggs in interprovincial trade. In defence, the respondents challenged the constitutional validity of the federal egg marketing legislation. The trial judge granted public interest standing to the respondents. On the constitutional issues, he held that the Canadian Egg Marketing Agency Proclamation, ss. 3, 4(1), 7(1)(d) and (e) of the Canadian Egg Licensing Regulations, 1987, and ss. 4(1)(a), 5(2), 6 and 7(1) of the Canadian Egg Marketing Agency Quota Regulations, 1986 infringed ss. 2 (d), 6(2) (b) and 15(1) of the Canadian Charter of Rights and Freedoms , and could not be saved by s. 1 . On the matter of remedy, the trial judge granted NWT egg producers a constitutional exemption from the regulatory system. The Court of Appeal agreed with the trial judge that the respondents should have public interest standing and affirmed his decision except with regard to s. 15(1) of the Charter . This appeal raised the following issues: (1) whether the respondents have standing to attack the constitutionality of the federal egg marketing scheme as a defence to the civil suit; and (2) whether this scheme violates ss. 2 (d) and 6 of the Charter . The s. 15(1) issue was not raised before this Court.
Held (McLachlin and Major JJ. dissenting): The appeal should be allowed.
Per Lamer C.J. and L’Heureux‑Dubé, Gonthier, Cory, Iacobucci, Bastarache and Binnie JJ.: The respondents could be granted standing in this Court under the residuary discretion. This Court is always free to hear Charter arguments from parties who would not normally have standing to invoke the Charter on the basis of the residuary discretion if the question involved is one of public importance. The constitutionality of the federal egg marketing scheme is clearly an issue of national importance, as are the more specific issues raised with regard to whether ss. 2 (d) and 6 of the Charter apply to corporations. In any event, in this case, the respondents have standing to challenge the constitutionality of the federal egg marketing scheme through an extension of the Big M Drug Mart exception. They need not seek public interest standing. While, as a general rule, a provision of the Charter may be invoked only by those who enjoy its protection, the Big M Drug Mart exception, which grants standing as of right to an accused charged under legislation alleged to be unconstitutional, should be extended to allow corporations to invoke the Charter when they are defendants in civil proceedings instigated by the state or a state organ pursuant to a regulatory scheme. Just as no one should be convicted of an offence under an unconstitutional law, no one should be the subject of coercive proceedings and sanctions authorized by an unconstitutional law. Here, the respondents do not come before the court voluntarily. They have been put in jeopardy by a state organ bringing them before a court by an application for an injunction calling in aid a regulatory regime. Success of that application could result in enforcement by contempt proceedings. If the foundation for these remedies is an unconstitutional law, a defendant should not be barred from raising its unconstitutionality solely because the constitutional provision which renders it invalid does not apply to a corporation.
Section 6(2) (b) of the Charter guarantees the right to “pursue the gaining of a livelihood in any province” and s. 6(3) (a) narrows the ambit of that right, making it subject to laws of general application in the province, except those which discriminate against individuals “primarily on the basis of province of present or previous residence”. These sections should be read together as defining a single right, rather than one right which is externally “saved” by another. Section 6(3) (a) is not a “saving” provision in the way in which ss. 6(3) (b), 6(4) , or 1 of the Charter are; none of these sections is essential to defining the purpose of the sections which they limit. The interdependence of s. 6(2) (b) and (3) (a) should be given full effect by determining the purpose and scope of the two provisions together without leaving any room for a second application of s. 6(3) (a).
Section 6 of the Charter guarantees the mobility of persons, not as a feature of the economic unity of the country, but in order to further a human rights purpose. It is centred on the individual. Section 6 relates to an essential attribute of personhood and guarantees that mobility in the pursuit of a livelihood will not be prevented through unequal treatment based on residence by the laws in force in the jurisdiction in which that livelihood is pursued. Given this purpose, the focus of the analysis in s. 6 is not the type of economic activity involved, but rather the purpose and effect of the particular legislation, and whether that purpose and effect infringe the right to be free from discrimination on the basis of residence in the pursuit of a livelihood.
The scope of s. 6 must reflect the fundamental purpose underlying the section. In the context of an economy characterized by modern communications and forms of goods and services which are easily transported across great distances, it must be recognized that the hallmark of mobility required by s. 6 is not physical movement to another province, but rather any attempt to create wealth, whether by production, marketing, or performance, in another province. Since in this case residents of an origin province (the NWT) seek to market something of value ‑‑ eggs ‑‑ in other destination provinces, this is clearly an attempt to “pursue the gaining of a livelihood” in another province and engages the mobility right guaranteed by s. 6.
Whether the impugned legislation “discriminate[s] among persons primarily on the basis of province of present . . . residence” under s. 6(3) (a) involves a comparison of residents of the origin province who attempt to make their livelihood in a destination province with residents of the destination province who also make their livelihood in the destination province. Since a livelihood may be pursued by means of production, marketing, or performance, in each case the appropriate comparison group will depend upon the nature of the livelihood which is restricted. Here, the respondents complain that their ability to pursue their livelihood by marketing their eggs in other destination provinces is being interfered with on the basis of their residence. In order to determine if there is discrimination, the terms according to which NWT egg producers can market their eggs in the destination province must thus be compared with the terms according to which egg producers resident in the destination province can market their eggs in the destination province. If those terms discriminate primarily on the basis of residence, then s. 6 is violated. The use of the word “primarily” in the mobility guarantee suggests that other purposes and effects must be weighed to determine whether the residential aspect of the discrimination is primary. In many cases, there may be valid reasons for the limitation of a legislative scheme to a single province or to parts of Canada; such reasons will displace the primacy of a discriminatory effect related to residency under s. 6. Whether the discrimination is unacceptable in the context of s. 6 depends entirely on which basis of discrimination is characterized as dominant, as denoted by the term “primarily”. When considering the need to determine the primary basis of discrimination set out in s. 6(3) (a), the division of powers analysis, focusing on the characterization of a dominant matter with which legislation is concerned, provides a helpful methodology which can be applied in determining whether there is discrimination “primarily” on the basis of residence.
The national egg marketing scheme does not discriminate primarily on the basis of residence. The original purpose of the scheme ‑‑ to ensure the orderly and fair marketing of eggs in Canada ‑‑ is valid, notwithstanding circumstances which have changed since 1972, and the use of historical production patterns as a means of allocating quotas furthers this purpose. The exclusion of the NWT producers is simply an application of the principle of quota allocation based on historical production patterns and shares the same unimpeached purpose.
The legal and practical effects of the legislative scheme must also be examined in order to determine constitutionality. It is possible that those effects might, over time, acquire such significance as to become the dominant feature of the legislation, thereby displacing the original purpose. The appropriate comparison group in measuring the discriminatory impact of the legislation is not established egg producers in the destination province who seek to market their eggs in the destination province, but rather new egg producers in the destination province who have no quota and who seek to market their eggs in the destination province. This is the only appropriate way to measure the significance of the producers’ residence on the operation of the egg marketing scheme. Unfortunately, little direct evidence on this issue was tendered before this Court or the courts below. The burden of proof in establishing a breach of a Charter right rests with the respondents in this case. Although they have shown that the legal effect of this scheme is to exclude them from the legal possibility of obtaining an egg quota, they have failed to demonstrate a practical prejudice relative to producers resident in the destination province or provinces who also do not have a quota that is great enough to have caused the primary purpose of the legislation to be defined as discriminating against NWT producers on the basis of their residence. The respondents therefore have failed to establish that the actual effects of the scheme as they relate to province of residence displace the valid legislative purpose as the dominant feature of the scheme.
The egg marketing scheme does not violate s. 2 (d) of the Charter . Freedom of association protects only the associational aspect of activities, not the activity itself. Although there is no trade or profession that one can exercise entirely by oneself, to contend that if it is necessary to associate with others to do something, then the right in s. 2 (d) reaches beyond protecting the act of associating to protect the very activity for which the association is formed, would have the effect of constitutionalizing all commercial relationships under the rubric of freedom of association. Section 2 (d) does not protect an activity solely on the ground that the activity is a foundational or essential purpose of an association. Moreover, s. 2(d) does not create a right to do in association what is unlawful for an individual to do. Thus, whether the activity is foundational to the association or the association is foundational to the activity, what is being attempted is to bring under constitutional protection activities that are not constitutionally protected when done by individuals, simply by virtue of the fact that individuals have associated for the purpose of carrying on this activity.
Per McLachlin and Major JJ. (dissenting): The respondents should be granted standing to argue the Charter issues in this appeal through an extension of the Big M Drug Mart exception.
Section 6 of the Charter is designed to promote economic union among the provinces and to ensure to all Canadians the right to travel throughout the country, to choose a place of residence anywhere within its borders, and to pursue a livelihood, all without regard to provincial boundaries. Under s. 6, the right to pursue the gaining of a livelihood in any province (s. 6(2) (b)) is not an absolute right. To seize the intent of the framers of the Charter , the broad statement of rights must be read together with its limitations and exceptions, including the s. 6(3) (a) limitation, which saves laws of general application that may incidentally discriminate on the basis of present or previous residence.
The heading “Mobility Rights” does not confine the rights protected by s. 6(2) (b) to any particular set of situations. At the first stage of a s. 6 analysis, the broad wording of s. 6(2) (b) catches all laws or government practices that in purpose or effect impede the pursuit of a livelihood in any part of Canada on the basis of province of residence. All that is required to constitute an interference with the s. 6(2) (b) right is that the person be placed at a disadvantage in the pursuit of his livelihood of choice. In this case, the first stage of the s. 6 analysis is satisfied. By excluding residents in the NWT from the interprovincial and export trade of eggs, a right enjoyed by residents in other provinces, the egg marketing scheme has the effect of impeding the pursuit of a livelihood anywhere in Canada on the basis of province of residence. Both respondents suffer disadvantage in the pursuit of their chosen livelihood because they live in one province or territory as opposed to another. The mobility rights of each are thereby affected.
The error in the argument that the egg marketing scheme does not make a distinction based on residence because the scheme targets eggs, not people, is that it stops consideration of the effects of the scheme artificially at the product exported. If a law has the effect of impinging on the ability of people to pursue a livelihood, it is not exempted from s. 6(2)(b) merely because the mechanism by which the impingement is effected concerns the passage of goods and services across provincial boundaries. While s. 6(2)(b) focuses on free passage of people, not goods or services, the section protects the right to transfer goods and services across boundaries where this is integral to the way an individual earns his livelihood. As well, the argument that the scheme targets the residence of hens, not of people, also ignores the real effect of the scheme on egg producers who are residents of the NWT. If they move their production to a province while continuing to reside in the NWT, they are put at a competitive and personal disadvantage in the earning of their livelihood. If they move their residence across the border to escape this disadvantage, they lose their right to reside in the place of their choice. Either way, they suffer discriminatory effects because of their current residence in the NWT. Lastly, the argument that the egg marketing scheme discriminates on the basis of historical production patterns, and not on the basis of residence, should also be rejected. In this case, unlike the other cases cited, all producers in a territory are prohibited from participating in a scheme regulated by the federal government.
Federal legislation or practices which create impediments to mobility will not be immunized from review under s. 6(2)(b) merely because they do not discriminate between residents and non‑residents of a particular province. It must also be demonstrated that they do not discriminate between residents of the province or territory in question and residents of other provinces and territories in Canada. The proper comparators therefore for determining whether the impugned federal legislation in this case discriminates on the basis of present or previous residence are people in the rest of Canada, not just people in the NWT. The egg marketing scheme, as federal legislation, does not treat all people within Canada the same.
At the second stage of the analysis, s. 6(3) (a) of the Charter is aimed at “saving” a law or practice initially caught by s. 6(2) (b), unless its primary purpose or effect is to discriminate on the basis of residence. Provinces and the federal government are permitted under that section to impose disadvantages on the basis of provincial boundaries so long as this effect is incidental to another purpose within their proper legislative sphere. Here, the exclusion of the NWT from the federal egg marketing scheme disproportionately affects residents of the NWT and is not incidental to a larger purpose. The exclusion exists by historical accident. Because the scheme discriminates against egg producers in the NWT primarily on the basis of residence, it cannot be saved under s. 6(3) (a).
The infringement of s. 6(2)(b) is not justified under s. 1 of the Charter . The objective of the infringing aspects of the legislative scheme does not constitute a pressing and substantial state objective. The limitation is the result of historical accident, not design. It controverts the very objective of the egg marketing scheme, which is to create a stable, national supply management system for eggs. It follows that the scheme fails the first branch of the Oakes test. The declaration of inconsistency with the Charter should be suspended for six months from the date of this judgment to permit negotiations to proceed for inclusion of the NWT and Yukon.
Cases Cited
By Iacobucci and Bastarache JJ.
Applied: R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; distinguished: Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; Dywidag Systems International, Canada Ltd. v. Zutphen Brothers Construction Ltd., [1990] 1 S.C.R. 705; considered: Law Society of Upper Canada v. Skapinker, [1984] 1 S.C.R. 357; Black v. Law Society of Alberta, [1989] 1 S.C.R. 591; MacKinnon v. Canada (Fisheries and Oceans), [1987] 1 F.C. 490; Groupe des éleveurs de volailles de l’est de l’Ontario v. Canadian Chicken Marketing Agency, [1985] 1 F.C. 280; Archibald v. Canada, [1997] 3 F.C. 335; referred to: Professional Institute of the Public Service of Canada v. Northwest Territories (Commissioner), [1990] 2 S.C.R. 367; Jamieson v. Attorney‑General of British Columbia (1971), 21 D.L.R. (3d) 313; Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138; Nova Scotia Board of Censors v. McNeil, [1976] 2 S.C.R. 265; Minister of Justice of Canada v. Borowski, [1981] 2 S.C.R. 575; Malartic Hygrade Gold Mines Ltd. v. The Queen in Right of Quebec (1982), 142 D.L.R. (3d) 512, [1982] C.S. 1146; Hunter v. Southam Inc., [1984] 2 S.C.R. 145; Winner v. S.M.T. (Eastern) Ltd., [1951] S.C.R. 887; Prince Edward Island Potato Marketing Board v. H. B. Willis Inc., [1952] 2 S.C.R. 392; Gold Seal Ltd. v. Attorney‑General for Alberta (1921), 62 S.C.R. 424; Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626; Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; Re Mia and Medical Services Commission of British Columbia (1985), 17 D.L.R. (4th) 385; Demaere v. The Queen in right of Canada, [1983] 2 F.C. 755; Eldridge v. British Columbia (Attorney General), [1997] 3 S.C.R. 624; Basile v. Attorney‑General of Nova Scotia (1984), 11 D.L.R. (4th) 219; Starr v. Houlden, [1990] 1 S.C.R. 1366; R. v. Morgentaler, [1993] 3 S.C.R. 463; Hodge v. The Queen (1883), 9 App. Cas. 117; Multiple Access Ltd. v. McCutcheon, [1982] 2 S.C.R. 161; Central Canada Potash Co. v. Government of Saskatchewan, [1979] 1 S.C.R. 42; Canadian Civil Liberties Assn. v. Ontario (Minister of Education) (1990), 71 O.R. (2d) 341; Milk Board v. Clearview Dairy Farm Inc. (1986), 69 B.C.L.R. 220, aff’d (1987), 12 B.C.L.R. (2d) 116; Reference re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313; Collymore v. Attorney‑General, [1970] A.C. 538; Re Retail, Wholesale & Department Store Union and Government of Saskatchewan (1985), 19 D.L.R. (4th) 609; R. v. Skinner, [1990] 1 S.C.R. 1235.
By McLachlin J. (dissenting)
Black v. Law Society of Alberta, [1989] 1 S.C.R. 591; Murphy v. Canadian Pacific Railway Co., [1958] S.C.R. 626; Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198; Andrews v. Law Society of British Columbia, [1989] 1 S.C.R. 143; Law Society of Upper Canada v. Skapinker, [1984] 1 S.C.R. 357; RJR‑MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R. 199; Archibald v. Canada, [1997] 3 F.C. 335; Groupe des éleveurs de volailles de l’est de l’Ontario v. Canadian Chicken Marketing Agency, [1985] 1 F.C. 280; MacKinnon v. Canada (Fisheries and Oceans), [1987] 1 F.C. 490.
Statutes and Regulations Cited
Agricultural Products Marketing Act, S.N.W.T. 1991, c. 35 [not in force], s. 7(1), (2).
Broiler Hatching Eggs and Chicks ‑‑ Marketing, R.R.O. 1990, Reg. 396 [am. O. Reg. 744/91].
Canadian Charter of Rights and Freedoms, ss. 1 , 2 (d), 6 , 7 , 15 , 30 .
Canadian Egg Anti‑dumping Pricing Regulations, C.R.C., c. 654.
Canadian Egg Licensing Regulations, 1987, SOR/87‑242, ss. 3 [repl. SOR/88‑488, s. 1 ], 4, 7(1)(d), (e).
Canadian Egg Marketing Agency Proclamation, C.R.C., c. 646, Schedule, Part I, s. 2 [am. SOR/81‑713; repl. SOR/96‑140], Part II, ss. 2(1), 4.
Canadian Egg Marketing Agency Quota Regulations, 1986, SOR/86‑8 [am. SOR/86‑411], ss. 3, 4, 5, 6 , 7 , schedule [repl. SOR/97‑4, s. 1 ].
Canadian Egg Marketing Levies Order, SOR/95‑280 [am. SOR/95‑482, s. 1 ].
Canadian Egg Pricing (Interprovincial and Export) Regulations, C.R.C., c. 657.
Constitution Act, 1867, ss. 91 , 91(12) , 92 , 92(9) , 92(13) , 121 .
Eggs ‑‑ Extension of Powers, O. Reg. 786/91.
Eggs ‑‑ Marketing, R.R.O. 1990, Reg. 407 [am. O. Reg. 154/94].
Farm Products Agencies Act, R.S.C., 1985, c. F‑4 [am. 1993, c. 3], ss. 2 “farm product”, “marketing plan”, 7(1)(d), 16, 17, 21, 22, 23, 37(1).
Farm Products Marketing Act, R.S.O. 1990, c. F.9, s. 21.
International Covenant on Economic, Social and Cultural Rights, Can. T.S. 1976 No. 46, Art. 6(1).
Universal Declaration of Human Rights, G.A. Res. 217 A (III), U.N. Doc. A/810, at 71 (1948), Arts. 2, 13(1), 23(1).
Authors Cited
Blache, Pierre. “Les libertés de circulation et d’établissement”. In Gérald‑A. Beaudoin and Errol Mendes, eds., The Canadian Charter of Rights and Freedoms , 3rd ed. Scarborough, Ont.: Carswell, 1996.
Brun, Henri, et Guy Tremblay. Droit constitutionnel, 3e éd. Cowansville, Qué.: Yvon Blais, 1997.
Dickson, Brian. “The Canadian Charter of Rights and Freedoms : Context and Evolution”. In Gérald‑A. Beaudoin and Errol Mendes, eds., The Canadian Charter of Rights and Freedoms , 3rd ed. Scarborough, Ont.: Carswell, 1996.
Hogg, Peter W. Constitutional Law of Canada, 4th ed. Scarborough, Ont.: Carswell, 1997.
Jackman, Martha. “Interprovincial Mobility Rights Under the Charter ” (1985), 43(2) U.T. Fac. L. Rev. 16.
Laskin, John B. “Mobility Rights under the Charter ” (1982), 4 Supreme Court L.R. 89.
Lee, Tanya, and Michael J. Trebilcock. “Economic Mobility and Constitutional Reform” (1987), 37 U.T.L.J. 268.
Schmeiser, Douglas A., and Katherine J. Young. “Mobility Rights in Canada” (1983), 13 Man. L.J. 615.
Shores, William. “Walking Onto an Unfamiliar Playing Field -- Expanding the Freedom of Association to Cover Trade” (1996), 6 Reid’s Administrative Law 1.
APPEAL from a judgment of the Northwest Territories Court of Appeal, [1996] N.W.T.R. 201, [1996] 3 W.W.R. 153, 132 D.L.R. (4th) 274, 38 Admin. L.R. (2d) 49 and 87, [1996] N.W.T.J. Nos. 6 and 38 (QL), dismissing the appellant’s appeal from a judgment of Weerdt J., [1995] N.W.T.R. 360, [1995] 8 W.W.R. 457, 129 D.L.R. (4th) 195, 33 Admin. L.R. (2d) 128, [1995] N.W.T.J. No. 71 (QL), declaring certain portions of the egg marketing scheme unconstitutional. Appeal allowed, McLachlin and Major JJ. dissenting.
François Lemieux and David K. Wilson, for the appellant.
Graham McLennan and Katharine L. Hurlburt, for the respondents.
James G. McConnell, for the intervener the Commissioner of the Northwest Territories.
Edward R. Sojonky, Q.C., and Ian McCowan, for the intervener the Attorney General of Canada.
Lori Sterling, for the intervener the Attorney General for Ontario.
Jean Bouchard, for the intervener the Attorney General of Quebec.
George H. Copley, Q.C., for the intervener the Attorney General of British Columbia.
Margaret A. Unsworth, for the intervener the Attorney General for Alberta.
David R. Boyd, for the interveners the Council of Canadians and the Sierra Legal Defence Fund Society.
Dale Gibson and Ritu Khullar, for the intervener the Alberta Barley Commission.
The judgment of Lamer C.J. and L’Heureux-Dubé, Gonthier, Cory, Iacobucci, Bastarache and Binnie JJ. was delivered by
//Iacobucci and Bastarache JJ.//
1 Iacobucci and Bastarache JJ. -- This appeal raises fundamental issues regarding the right to mobility guaranteed by s. 6 and the freedom of association guaranteed by s. 2 (d) of the Canadian Charter of Rights and Freedoms . These Charter rights are claimed by egg producers in the Northwest Territories who wish to market their eggs throughout Canada, although the Northwest Territories is not a party to the federal-provincial egg marketing scheme according to which eggs are marketed in the country.
I. Facts
2 The respondents, Frank Richardson, operating as Northern Poultry, and Pineview Poultry Products Ltd., are the Northwest Territories’ only egg producers. Richardson began producing eggs in 1987, followed by Pineview in 1990.
3 The Canadian Egg Marketing Agency (“CEMA”) is charged with regulating interprovincial trade in eggs. It allocates federal egg quotas to each of the 10 provinces, but not to either territory. In September 1992, CEMA sued Richardson and Pineview for damages arising from illegal interprovincial marketing of eggs. It also sought an injunction enjoining the respondents from marketing eggs produced in the Northwest Territories in interprovincial trade.
II. The Canadian Egg Marketing System
4 The Canadian egg market is regulated by interlocking federal and provincial legislation and regulations that were passed pursuant to the 1972 Federal-Provincial Agreement in respect of the establishment of a Comprehensive Marketing Program for the purpose of regulating the marketing of Eggs in Canada and its 1976 amendments. On the federal side, there is the Farm Products Agencies Act, R.S.C., 1985, c. F-4 , and a series of regulations pertaining to eggs made under this Act, notably the Canadian Egg Marketing Agency Proclamation, C.R.C., c. 646 (“CEMA Proclamation”), the Canadian Egg Marketing Agency Quota Regulations, 1986, SOR/86-8 (“Quota Regulations”), the Canadian Egg Licensing Regulations, 1987, SOR/87-242 (“Licensing Regulations”), the Canadian Egg Marketing Levies Order, SOR/95-280, the Canadian Egg Pricing (Interprovincial and Export) Regulations, C.R.C., c. 657, and the Canadian Egg Anti‑dumping Pricing Regulations, C.R.C., c. 654. The constitutionality of the CEMA Proclamation and of parts of the Licensing Regulations and the Quota Regulations is at issue in this case.
5 The Farm Products Agencies Act is a general framework Act providing for the establishment of the National Farm Products Council (“NFPC”) and agencies (of which CEMA is an example) to regulate farm products. The NFPC is composed of between three and nine members appointed by the Governor in Council. It has the function of, among other things, reviewing marketing plans, orders and regulations proposed by agencies, and reporting its recommendations to the Minister of Agriculture.
6 Part II of the Act deals with farm products marketing agencies. Eggs are “farm products” for purposes of Part II by virtue of the definition in s. 2 . The Governor in Council can establish by proclamation agencies to regulate farm products (ss. 16 and 17). The objects of such agencies are to promote “strong, efficient and competitive production and marketing” of the farm product and to have regard to the interests of producers and consumers (s. 21). Section 22(1) contains a catalogue of powers that can be given to an agency by proclamation. These include the power to purchase the regulated product, to designate bodies through which the product can be marketed in interprovincial or export trade, and to exact levies from persons involved in marketing the regulated product. Agencies can also be empowered to make such orders and regulations as are necessary to implement a marketing plan (s. 22(1)(f)). The NFPC can designate certain classes of these orders as requiring prior approval by the NFPC (s. 7(1)(d)). The agency may exercise powers relating to intraprovincial trade that are delegated to it by provincial governments (s. 22(2)), and it may delegate powers relating to interprovincial or export trade to provincial bodies with the approval of the Governor in Council (s. 22(3)).
7 A “marketing plan” is a plan “relating to the promotion, regulation and control of the marketing of any regulated product in interprovincial or export trade” (s. 2 ). It can completely control interprovincial and export trade in a product by, among other things, defining who is involved in producing the product for interprovincial or export trade and what acts constitute interprovincial or export marketing of the product; by allowing the agency to fix the quantities and grades of the product that can be marketed by marketers; and by providing for pooling of receipts, licensing of producers and marketers, and collection of levies from producers and marketers (s. 2 ). Quotas in marketing plans are based on the past five years’ production in the area for which the quota is assigned (s. 23(1)). There is, however, provision for “additional quotas” that can be assigned to meet growth in demand (s. 23(2)).
23. (1) A marketing plan, to the extent that it allocates any production or marketing quota to any area of Canada, shall allocate that quota on the basis of the production from that area in relation to the total production of Canada over a period of five years immediately preceding the effective date of the marketing plan.
(2) In allocating additional quotas for anticipated growth of market demand, an agency shall consider the principle of comparative advantage of production.
8 The CEMA Proclamation establishes CEMA to regulate the production and marketing of eggs through a quota system. The quota system is described in the Schedule to the Proclamation. Each provincial egg marketing board appoints one member of CEMA; the Canadian Hatchery Federation and the Consumers Association of Canada likewise appoint one member each; and the Canadian Poultry and Egg Processors Council appoints two (s. 2 of Part I of the Schedule). There are no members appointed by the federal government. Thus, although it is established under federal legislation and exercises federal powers, CEMA is controlled by provincial and egg industry interests. The federal government exercises a supervisory role through the NFPC.
9 The Proclamation contemplates in Part II of the Schedule that CEMA will assign quotas to all egg producers in a province that hold quotas from provincial boards (s. 2(1)). Quotas assigned by CEMA are termed “federal”, and those assigned by provincial boards, “provincial”. The two quotas, federal and provincial, when added up, must equal the provincial allocations.
10 The provincial allocations were based on the average annual domestic production in Canada from 1967-1971, which was 475 million dozen. The Proclamation prohibits any order or regulation that would increase these allocations, unless the agency has taken into account any variation in the demand for eggs, and several other factors set out in s. 4(1):
4. (1) No order or regulation shall be made where the effect thereof would be to increase the aggregate of
(a) the number of dozens of eggs produced in a province and authorized by quotas assigned by the Agency and by the appropriate Board or Commodity Board to be marketed in intraprovincial, interprovincial and export trade, and
(b) the number of dozens of eggs produced in a province and anticipated to be marketed in intraprovincial, interprovincial and export trade other than as authorized by quotas assigned by the Agency and by the appropriate Board or Commodity Board
to a number that exceeds, on a yearly basis, the number of dozens of eggs set out in section 3 of this Plan for the province unless the Agency has taken into account
(c) the principle of comparative advantage of production;
(d) any variation in the size of the market for eggs;
(e) any failures by egg producers in any province or provinces to market the number of dozens of eggs authorized to be marketed;
(f) the feasibility of increased production in each province to be marketed; and
(g) comparative transportation costs to market areas from alternative sources of production.
Any reduction in total egg production is shared on a pro rata basis amongst the provinces, except that the allocations to New Brunswick, Prince Edward Island and Newfoundland cannot be reduced (s. 4(2) and (3)).
11 The Quota Regulations apply only to the marketing of eggs in interprovincial and export trade (s. 3). They prohibit a producer from marketing eggs in interprovincial or export trade except under a federal quota (s. 4). Only producers that hold a provincial quota are entitled to be allocated a federal quota (s. 5). A producer’s federal quota for a given period is the same as its provincial quota for that same period, less the quantity of eggs marketed intraprovincially by that producer during that same period (s. 6 ). In other words, each producer is free to market its eggs intraprovincially or extraprovincially. Put another way, whether eggs are produced under federal quota or provincial quota depends on where they are sold. This has the effect of unifying the intra- and interprovincial egg markets.
12 The Quota Regulations also provide that the total of federal quota, provincial quota, and eggs marketed under quota exemptions, cannot exceed the allocation for each province in the schedule (s. 7 ). The schedule sets out the number of eggs that can be produced and marketed for that year and is amended annually: CEMA estimates the total quantity of eggs required to satisfy the table market in Canada and subtracts the quantity of eggs produced and marketed by exempt producers (roughly 5 percent of the market). If the result is less than the base of 475 million, each province’s allocation is reduced proportionately. If the demand for eggs is greater than the 1972 base, CEMA assigns “overbase” quota according to criteria in s. 4 of Part II of the Schedule of the CEMA Proclamation. According to CEMA’s 1996 annual report, egg production was above the 1972 base for the first time in 1996. Because of growth in demand for eggs, the NFPC approved a quota of 1.26 million dozens overbase for 1997.
13 The Licensing Regulations deal with licences for marketing eggs in interprovincial and export trade. The Licensing Regulations apply to all marketers engaged in interprovincial or export trade in eggs, including those so engaged in the Northwest Territories and the Yukon (s. 3), and forbid anyone from marketing eggs in interprovincial or export trade without a licence (s. 4(1)).
3. These Regulations apply to persons who are engaged in the marketing of eggs in interprovincial or export trade in any province, including the Northwest Territories and the Yukon Territory, except persons who are buyers of less than 300 dozen eggs per month.
4. (1) Subject to subsections (2) and (3), no person shall engage in the marketing of eggs in interprovincial or export trade unless the person holds an appropriate licence.
14 A few observations can be made about the federal part of the egg marketing scheme. Federal quota is needed to produce eggs for interprovincial and export tra