T-1929-87
Jim Lacey of Maple Creek in the Province of
Saskatchewan, Russell Larson of Outlook in the
Province of Saskatchewan, Chris Boon of Lucky
Lake in the Province of Saskatchewan, Leah
MacDonald of Taber in the Province of Alberta,
Les Prosser of Minburne in the Province of Alber-
ta, Glenn Freadrich of Killam in the Province of
Alberta and Gary Nestibo of Goodland in the
Province of Manitoba (Plaintiffs)
v.
Her Majesty the Queen in right of Canada
(Defendant)
INDEXED AS: LACEY V. CANADA (T.D.)
Trial Division, Joyal J.—Regina, March 15;
Ottawa, August 30, 1989.
Agriculture — Sale of wheat through Canadian Wheat
Board in 1985-1986 crop year — Profits and losses — Method
of accounting — Whether Board may take profits from sales
of particular grade of wheat to offset losses from sales of
other grades in wheat pool (price pooling method of account
ing) or whether Board must distribute profits from sales of
particular grade among producers of that grade and have
Crown cover losses from sales of other grades (grade by grade
basis of accounting) — Act interpreted — Operation of Board
must be revenue neutral — Board not price or income support
agency — Statutory quid pro quo to sharing of profits: bearing
risk of losses.
The Canadian Wheat Board is an agent of Her Majesty the
Queen in right of Canada entrusted by Parliament to market
and sell Western grain on behalf of grain producers. In the
1985-1986 crop year, the Board's operations resulted in a
$54,300,000 surplus on sales of the plaintiffs' grade of wheat
and a $77,300,000 loss on sales of other grades of wheat. The
Board took the surplus to offset the losses and arrived at a net
deficit of $23,000,000, which, in accordance with the Canadian
Wheat Board Act, was covered by Parliamentary appropria
tions. It was the plaintiffs' position that the Board's losses,
according to law, must be calculated on a grade by grade basis
and that the surplus enjoyed on the sales of their own grades of
wheat should not be absorbed by the losses suffered through the
sales of other grades of wheat. The plaintiffs submitted that the
Crown was therefore bound to pay to the Board the total deficit
of $77,300,000 so that their own surplus may become available
for distribution. The Crown refused. The plaintiffs sought
declaratory relief with respect to the sums allegedly owing to
them from the sales of their wheat during the crop year
1985-1986.
Held, the action should be dismissed.
On the one hand, subsection 5(3) of the Act speaks of losses
incurred from its operations under Part III in relation to any
pool period, inferring of course that the wheat pool is to be
regarded as a unit in the determination of losses.
On the other hand, subsection 26(5) seems to provide to any
producer an assurance that whatever price he receives for his
particular grade, it will bear a proper relationship to that for
each other grade.
To add to the problem, there is the provision contained in
subsection 26(2) which, in entitling a producer to share in any
surplus according to grade, implies that each grade should be
treated as a separate unit.
The major purpose in creating and maintaining the Canadian
Wheat Board is the continued orderly marketing of grain at the
best possible price under existing market conditions for both
domestic and export trade. The cornerstone of the scheme to
achieve an orderly marketing of grain and to provide to all
producers equal access to the market is the concept of price
pooling among producers. This offsets price fluctuations during
any marketing year.
Prior to the crop year, the Board makes a calculated estimate
as to what price each grade will command. It then fixes an
initial payment price for each grade. Producers are paid
accordingly when they sell their wheat to the Board. In effect,
each producer, no matter what the downturn in market prices
over the crop year, is assured of receiving no less than the
initial payment. This not only guarantees a floor price to the
producer but also provides him with the necessary cash flow
pending final calculations at the end of the crop year. The
1985-1986 crop year was the only year over a period of twenty
crop years that the wheat pool suffered a loss which had to be
paid out of public monies.
The evidence is that Board expenses are calculated on a pool
basis, irrespective of whether a certain grade might require
more expenses than another. The reasonable conclusion is that
the scheme of the Act envisages a sharing of risks and rewards
between all wheat producers. As a result, it would be logical to
conclude that Parliament's intention in adopting the statute
was to create a wheat pool encompassing all grades of wheat
from which all profits realized on all sales, minus expenses
incurred on all sales, are distributed to the producers as final
payment.
This is confirmed by the Act itself. Subsection 5(3) refers to
operational losses covering the whole wheat pool: losses on
certain grades of wheat as well as profits on other grades are
pooled to arrive at a net surplus or net deficit position. Subsec
tion 26(2) does not speak of losses or the method of calculating
them. One must therefore go back to the more generic provi
sions of subsection 5(3) to discern Parliament's intentions.
Also basic to the scheme of the statute is that the operation
of the Board must be revenue neutral. It does not function as a
price or income support agency. The unrecoverable initial
payment is the only element of price support. To extend that
support in the manner suggested by the plaintiffs (entitlement
to profits on a grade by grade basis) would mean that the
producer would not have to bear the risks of losses on his grade
of wheat but would nevertheless be entitled to all profits
realized on that grade. Parliament would have said so more
clearly if that had been its intention. The situation which faced
the plaintiffs in 1985-1986 was an inherent risk which all
producers, irrespective of grades, sooner or later, have to bear.
It is, in essence, a statutory quid pro quo.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
An Act to amend The Canadian Wheat Board Act, 1935,
S.C. 1942-43, c. 4.
An Act to amend the Canadian Wheat Board Act, S.C,
1967-68, c. 5, ss. 3, 6.
Canada Grain Act, R.S.C., 1985, c. G-10.
Canada Grain Act, R.S.C. 1970, c. G-16.
Canadian Wheat Board Act, R.S.C., 1985, c. C-24.
Canadian Wheat Board Act, R.S.C. 1970, c. C-12, ss.
5(2),(3), 25(1) (as am. by S.C. 1972, c. 16, s. 3;
1974-75-76, c. 109, s. 2), (1.1) (as enacted by S.C.
1974-75-76, c. 109, s. 2(2)), 26(2) (as am. by S.C.
1974-75-76, c. 27, s. 1; 1976-77, c. 55, s. 2), (5), (as
am. by S.C. 1976-77, c. 55, s. 2) 27, 35 (as am. by S.C.
1972, c. 16, s. 5; 1976-77, c. 55, s. 2).
Canadian Wheat Board Act, S.C. 1919-20, c. 40, s. 15.
Canadian Wheat Board Act, 1922, S.C. 1922, c. 14, ss.
16, 17.
Canadian Wheat Board Regulations, C.R.C., c. 397, s.
26(1) (as am. by SOR/85-413, s. 1).
Order in Council P.C. 1917-1604, C. Gaz. 1917.51.1581.
Prairie Grain Advance Payment Act, R.S.C., 1985, c.
P-18.
The Canadian Wheat Board Act, 1935, S.C. 1935, c. 53.
Western Grain Stabilization Act, R.S.C., 1985, c. W-7.
CASES JUDICIALLY CONSIDERED
APPLIED:
Kiist v. Canadian Pacific Railway Co., [1980] 2 F.C. 650
(T.D.).
REFERRED TO:
Westminster Bank Ltd. v. Zang, [1965] A.C. 182 (H.L.);
R. v. Mojelski (1968), 65 W.W.R. 565 (Sask. C.A.);
Jones v. A.G. of New Brunswick, [1975] 2 S.C.R. 182; 45
D.L.R. (3d) 583; (1974) 1 N.R. 582; 7 N.B.R. (2d) 526;
16 C.C.C. (2d) 297; Goodman v. Criminal Injuries
Comp. Bd., [1981] 2 W.W.R. 749 (Man. C.A.); Attor-
ney-General for Canada v. Hallet & Carey Ltd., [1952]
A.C. 427 (P.C.); Murphy v. Canadian Pacific Railway
and The Attorney General of Canada, [1958] S.C.R.
626; 15 D.L.R. (2d) 145; The Queen v. Klassen (1959),
20 D.L.R. (2d) 406 (Man. C.A.); Oatway v. Can. Wheat
Board, [1944] 3 W.W.R. 337 (Man. C.A.).
AUTHORS CITED
Driedger E. A. Construction of Statutes, 2nd ed.
Toronto: Butterworths, 1983.
COUNSEL:
Aaron A. Fox for plaintiffs.
Duff F. Friesen, Q.C. for defendant.
SOLICITORS:
McDougall, Ready, Regina, for plaintiffs.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
JOYAL J.: The plaintiffs seek declaratory relief
from this Court with respect to certain sums
allegedly owing to them from the sales of their
wheat to the Canadian Wheat Board during the
crop year 1985-1986.
The plaintiffs contend that upon a proper inter
pretation of the Canadian Wheat Board Act,
R.S.C. 1970, c. C-12, now R.S.C., 1985, c. C-24,
the Canadian Wheat Board (the "Board") owes
them the sum of $54,300,000. This sum is the
balance allegedly earned by the Board on the
plaintiffs' sales of their particular grades of wheat.
The Board took this amount to offset losses suf
fered on the sale of other grades of wheat and
ruled that no further sums were owing to the
plaintiffs.
The Canadian Wheat Board is an agent of Her
Majesty the Queen in right of Canada. Losses
suffered by the Board in its operations from year
to year are covered by Parliamentary appropria
tions. In the year 1985-1986, the total wheat oper
ations of the Board resulted in a deficit of
$23,000,000. This was the net deficit amount on
all sales after accounting for a $54,300,000 surplus
on sales of the plaintiffs' grades of wheat and a
$77,300,000 loss on sales of other grades of wheat.
That net deficit of $23,000,000 was accordingly
paid to the Board by the Crown.
It is the plaintiffs' position that the Board's
losses, according to law, must be calculated on a
grade by grade basis and that the surplus enjoyed
on the sales of their own grades of wheat cannot be
absorbed by the losses suffered through the sales
of other grades of wheat. Plaintiffs submit that the
Crown is therefore bound to pay to the Board the
total deficit of $77,300,000 so that their own
surplus may become available for distribution.
This, the Crown has refused to do.
After an exchange of pleadings both parties
agreed to have the issue determined on the basis of
an Agreed Statement of Facts and the trial pro
ceeded accordingly.
The claim by the plaintiffs for declaratory relief
cannot be defined as a simple action for debt. It
involves an interpretation of certain provisions of
the Canadian Wheat Board Act. These provisions
must be read in relation to the complex operations
of the Canadian Wheat Board which is entrusted
by Parliament to market and sell Western grain on
behalf of grain producers. For a better understand
ing of the issues, therefore, it might be appropriate
to outline the background of this multi-billion
dollar marketing agency which has been a part of
the Western landscape for many years.
HISTORICAL BACKGROUND OF THE CANADIAN
WHEAT BOARD
The marketing of Western grain by a public
agency goes back to 1917 [Order in Council P.C.
1917-1604, C. Gaz. 1917.51.1581] with the
appointment of the Board of Grain Supervisors [of
Canada] to meet wartime exigencies and to exer
cise monopoly power over Canadian wheat.
In 1919, Parliament adopted the Canadian
Wheat Board Act [S.C. 1919-20, c. 40] with its
own self-destruct system as of August 15, 1921
[section 15].
A new Act [Canadian Wheat Board Act, 1922],
S.C. 1922, c. 14, followed in 1922. It was expressly
provided in section 16 of this statute that the
Government of Canada was not responsible for
any deficits in the Board's operations. This Act
also had a similar sunset clause [section 17].
Prairie wheat pools developed at about this time.
These were based on cooperative marketing princi
ples and through them a Central Selling Agency
was established. Through voluntary contract pool
ing of grain, direct selling and the establishment of
overseas selling agencies, the marketing arm for
the three grain producing provinces marketed
slightly over half of all wheat produced during its
years of operation. The Central Selling Agency,
however, encountered great difficulties during the
depression years and this forced the government to
intervene. A stabilization operation was estab
lished and this in turn led directly to the Canadian
Wheat Board legislation of 1935 [The Canadian
Wheat Board Act, 1935, S.C. 1935, c. 53].
The current Board structure derives from that
legislation. Like its predecessor, it was intended to
have a temporary existence and participation in it
was optional. Yet it remained in existence through
the war years and in 1943 [S.C. 1942-43, c. 4], the
Board was granted its current marketing monopo
ly.
It may be said that it was only in 1967 that the
Board took on the character of "permanent" insti
tution. It was in that year that the provisions of the
Canadian Wheat Board Act calling for a review of
the Board's mandate every five years were
repealed [S.C. 1967-68, c. 5, ss. 3, 6].
CURRENT OPERATIONS OF THE BOARD
The current mandate of the Board involves the
marketing of Western grain at the best possible
price under existing market conditions for both
domestic and export markets. Grain is not stored
to await an up-turn in world prices but is contin
uously moved. The cornerstone of the system is
price pooling among producers to offset price fluc
tuations within any crop year. This price pooling
has all the characteristics of the farmer-led co
operative movement during the 1920s and 1930s.
Central to the pooling idea is the delivery quota
system used by the Board to draw forward the
specific types and grades of grain for which there
is an immediate market.
There is no control over production. Neither are
there restrictions or incentives for the production
of any type or grade of grain. Producers are free to
produce what they will but delivery quotas give
access to the delivery system in relation to the
assigned acreage in the producer's permit book.
The Board's transportation division recommends
delivery quotas to control the flow of grain from
the farmers in the kinds and grades required to
meet sales commitments. The Board owns no
elevators or other handling facilities because, from
its inception as the modern Canadian Wheat
Board in 1935, the Board was enjoined to employ
existing facilities of the trade. The Board therefore
acts through agents involved in elevator storage,
processing and handling of Board grains.
The Board sells grain to virtually every grain
importing nation in the world. Approximately 90%
of the total volume of grain exported from western
Canada is negotiated and coordinated by the
Board. All Prairie grown wheat, oats and barley,
for either domestic or export markets, is handled
by the Board. If one remembers that in 1986 there
were over 145,000 grain farmers in the Board's
designated areas, handling some four types of
grains and with each type classified into any
number of grades carrying price spreads, the
scope, complexity and sheer size of the Board's
operations from year to year become evident.
The Board's duties and functions sometime
include the administration of programs unrelated
to the marketing of grain. For instance, since
1957, the Board has been responsible for the run
ning of the Prairie Grain Advance Payment Act,
R.S.C., 1985, c. P-18. This program ensures a cash
flow for producers with farm-stored grain due to
storage congestion in elevators. Their cost
advances afford the Board greater latitude in
establishing delivery quotas to meet market needs
without having to worry as much over the cash
requirements of producers.
The objective of income or price stabilization, as
far as my authorities are concerned, does not fall
within the purview of the Board. The Board's
mandate does not encompass a price support
system as that expression is commonly defined.
Pooling of returns, as well as the equalization of
delivery opportunities, may of course result in a
limited form of stabilization within a given crop
year. The year to year price, however, is governed
by world market forces.
The Federal Government has nevertheless
adopted some form of subsidization through the
Western Grain Stabilization Program introduced
in 1976. That program operates independently of
the Board. It is funded jointly by the producers
and by the government. Payments from the fund
are triggered when the net cash flow to producers
falls below the average received over the previous
five years. In the 1988 crop year, some 89% of
western producers participated in the program.
With all this in the background, it is necessary
now to focus the issue before me on the underlying
facts of the case and on which the parties have
agreed.
SUMMARY OF AGREED STATEMENT OF FACTS
As we have seen, the plaintiffs are engaged in
the production of wheat in western Canada.
The Canadian Wheat Board is, for all purposes
relevant to this trial, an agent of Her Majesty the
Queen in right of Canada. Also for purposes of
this trial and to avoid confusion, I should refer to
the Board's governing statute in terms of R.S.C.
1970, c. C-12.
The object of the Board is to market Canadian
grain both for export and for domestic consump
tion. The marketing of this grain is according to
grades. These different grades of grain are fixed
by the Canadian Grain Commission which is
established pursuant to the Canada Grain Act,
R.S.C. 1970, c. G-16, now R.S.C., 1985, c. G-10.
The Board is required by the Act to buy all
wheat and certain other grains produced in
Manitoba, Saskatchewan, Alberta and certain
parts of British Columbia referred to in the Act as
"designated area" and offered by a producer for
sale and delivery to the Board at an elevator or in
a railway car.
The operations of the Board in that regard are
carried on in part under agreements between the
Board and companies which own and are licensed
to operate primary elevators in western Canada.
The applicable agreements prohibit the operators
from purchasing wheat, barley or oats except for
the account of the Board, when the quality or
grade is higher than that for "feed grain".
Part III of the Act authorizes and requires the
Board to undertake the marketing of wheat pro
duced in the designated area in interprovincial and
export trade and establishes rights and obligations
of the Board in respect of its transactions and
accounting with respect to such wheat. By virtue
of section 35 [as am. by S.C. 1972, c. 16, s. 5;
1976-77, c. 55, s. 2] of the Act, Part III, as
necessarily modified, can be made to apply to oats
and barley as well.
Subsection 5(3) of the Act provides:
5....
(3) Losses, if any, sustained by the Board
(a) from its operations under Part III in relation to any pool
period fixed thereunder, during such pool period, or
(b) from its other operations under this Act during any crop
year,
for which no provision is made in any other Part, shall be paid
out of moneys provided by Parliament.
A crop year or "pool period" (as defined by the
Act) runs from August 1 to July 31. The Board
purchases wheat or other grains and then sells
them on the domestic or international markets.
Subsection 26(5) [as am. by S.C. 1976-77, c. 55,
s. 2] states in part:
26... .
(5) ... each producer shall receive, in respect of wheat sold
and delivered to the Board during each crop year for the same
grade thereof, the same price basis Thunder Bay or Vancouver
and that each such price shall bear a proper price relationship
to that for each other grade.
In determining the net market return to be
attributed to each grade of grain marketed the
Board uses a "price pool" method of accounting
which (i) pools the grades of grain, to which it
considers Part III of the Act applies, separately;
and (ii) maintains the price relationships of each
grade to the others established by transactions in
domestic and international markets throughout the
crop year.
This method of accounting also takes into
account (i) all sales of all grades of grain in each
pool and (ii) all direct and indirect costs of sales of
all grades of grain in a pool so that any payment to
producers will further the objective expressed in
subsection 26(5).
The price pool method of accounting used by the
Board does not take into account risks or rewards
of short term fluctuations in market prices, or of
unusual incidents affecting costs of sales. The risks
and rewards are not charged or credited only to
the account of the particular grade of grain affect-
ed but are absorbed by and distributed amongst
the accounts of all grades of grain in a pool.
Subsection 26(1) of the Regulations [Canadian
Wheat Board Regulations, C.R.C., c. 397 (as am.
by SOR/85-413, s. 1)] fixes the sum certain per
tonne to be paid to producers selling and delivering
wheat of a base grade (No 1 Canada Western Red
Spring-CWRS, is used as the reference point for
all other grades of wheat) produced in the desig
nated area. This payment is called an initial pay
ment and may be increased during the crop year if
the Governor in Council sees fit.
At the time of initial payment a producer is
issued a Producer's Certificate indicating the
number of tonnes of grain purchased and delivered
and the grade thereof. This certificate entitles him
"to share in the equitable distribution of the sur
plus, if any, arising from the operations of the
Board with regard to the wheat produced in the
designated area sold and delivered to the Board
during the same pool period" (paragraph 25(1)(c)
of the Act).
The Board subsequently has an obligation to
distribute on or after the 1st day of January of the
year commencing after the end of any pool period
the "appropriate sum determined by the Board as
provided in this Act for each tonne of wheat
referred to therein according to grade" (subsection
26(2) [as am. by S.C. 1974-75-76, c. 27, s. 1;
1976-77, c. 55, s. 2] of the Act). A payment made
under this provision is considered to be a final
payment.
All the grades of wheat to which initial prices
are set are treated as a pool called the "wheat
pool" by the Board. Furthermore, Part III of the
Act is to apply separately to the various designated
grades of grain in accordance with subsection
26(2) and subsection 25(1) [as am. by S.C. 1972,
c. 16, s. 3; 1974-75-76, c. 109, s. 2] of the Act.
Thus the various grades of amber durum wheat,
oats and barley are treated as three separate pools
by the Board namely, the "amber durum" the
"oat" and the "barley" pools.
During the 1985-1986 crop year (commencing
August 1, 1985 and ending July 31, 1986) the
Board fixed and the Governor in Council approved
an initial price of $160 per tonne for the base
grade wheat (No. 1 CWRS) pursuant to subsec
tion 26(1) of the Regulations and subsection 25(1)
of the Act. Accordingly, the Board was also
authorized and required to make initial payments
with respect to the other grades of wheat on "a
sum certain per tonne basis in storage Thunder
Bay or Vancouver".
As it turned out, world grain prices generally
fell sharply in the 1985-1986 crop year. There
were, however, periods throughout that year when
the selling price for high grade and high protein
wheat was not as depressed as the other grades.
However, in general, the net market return per
tonne, for a number of grades of wheat, after
deduction of the expenses incurred in connection
with the operations of the Board attributable to
the "wheat pool", was less than the initial payment
in respect of those grades.
In utilizing the "pooling method of accounting"
it was determined that a "surplus" of approxi
mately $54,300,000 was realized by the higher
grades of wheat while a "loss" in the approximate
amount of $77,300,000 was incurred by the lower
grades of wheat in the pool. Thus the Board
determined that the "wheat pool" had sustained a
deficit of $22,994,777 from its operations thereto
and, pursuant to subsection 5(3) of the Act, that
amount was paid with respect to the pool's net
losses by monies provided by Parliament.
The Board determined that in those circum
stances there was no surplus arising from the
operations of the Board in respect of the wheat
pool to be distributed to the producers. According
ly, the Governor in Council did not authorize a
final payment to the producers pursuant to subsec
tion 26(5) of the Act in respect of any grades of
wheat included in the wheat pool.
The plaintiffs were producers of the higher qual
ity wheat. They claim that the Government setting
off the profits made from their high grade wheat
against the losses of the lower grade wheat was
particularly inequitable on the producers of high
quality wheat since the higher quality grades not
only in effect subsidized the lower grades of wheat,
but the producers of this better wheat generally
also had lower crop yields than the producers of
lower quality wheat.
THE PLAINTIFFS' POSITION
The plaintiffs submit that the defendant is
required pursuant to subsection 5(3) of the Act to
reimburse the Board for any losses sustained with
respect to each and every grade of wheat, calculat
ed on a grade-by-grade basis. The plaintiffs con
tend that, as the defendant failed to pay the Board
the approximately $77 million lost on the sale of
all grades of wheat on which the Board incurred a
loss, the Board was forced to apply the surplus of
$54,300,000 realized from the sale of higher
grades of wheat against the loss incurred on the
sale of the lower grades of wheat and thus this
money was not available as a final payment to the
producers of those grades of wheat. In essence, the
plaintiffs' position is that if profits are to be dis
tributed according to grade, it follows logically
that losses are to be similarly treated.
THE DEFENDANT'S POSITION
The defendant submits that the reference to
subsection 5(3) of the Act to the operation a l of the
Board under Part III of the Act is directed to all of
the operations of the Board to which Part III
applies. The defendant submits that the operations
of the Board in respect of wheat (and other grains)
are governed by Part III of the Act without distin
guishing on a grade-by-grade basis amongst the
various grades of grain. Thus for the purposes of
subsection 5(3) of the Act the financial results of
the operations of the Board are to be determined
separately for each pool for all the grades of each
of the grains to which Part III of the Act applies
separately.
THE ISSUE
Subsection 5(3) of the Act provides that "losses,
if any, sustained by the Board from its operations
under Part III ... shall be paid out of moneys
provided by Parliament".
Subsection 26(5) provides that each producer is
to receive for his wheat of a particular grade "the
same price whether at Thunder Bay or Vancouver
and such price shall bear a proper price relation
ship to that for each other grade".
Subsection 26(2) of the Act provides that after
the end of any pool period, the Board is to distrib
ute the balance remaining in its account in respect
of wheat it has purchased an appropriate sum for
each tonne of wheat according to grade.
At first blush, there is an appearance of conflict
or ambiguity in these provisions. On the one hand,
the Act in subsection 5(3) speaks of losses incurred
from its operations under Part III in relation to
any pool period, inferring of course that the wheat
pool is to be regarded as a unit in the determina
tion of losses.
On the other hand, subsection 26(5) seems to
provide to any producer an assurance that what
ever price he receives for his particular grade, it
will bear a proper relationship to that for each
other grade.
To add to the problem, there is the provision
contained in subsection 26(2) which, in entitling a
producer to share in any surplus according to
grade, implies that each grade should be treated as
a separate unit.
An analysis of those provisions and the infer
ences which might be drawn from them require, in
my view, the application of any number of alterna
tive or concurrent rules of statute interpretation so
as to determine whether the foregoing provisions
are veritably in conflict or ambiguous, and if so,
how can they be rationally reconciled in accord
ance with the scheme of the whole statute.
THE INTERPRETATION OF THE STATUTE AND THE
CASE FOR THE PARTIES
E. A. Driedger's Construction of Statutes, 2nd
ed. Toronto: Butterworths, 1983, has become the
vade-mecum of anyone involved in statute inter-
pretation. The author, after reviewing the history
of the various doctrines propounded from time to
time states at page 87 that:
Today there is only one principle or approach, [to the
interpretation of a statute or statutory provision,], namely the
words of an- Act are to be read in their entire context and in
their grammatical and ordinary sense harmoniously with the
scheme of the Act, the object of the Act, and the intention of
Parliament.
The author adds that this principle is expressed
repeatedly by modern judges, as for example, Lord
Reid in Westminster Bank Ltd. v. Zang, [1965]
A.C. 182 (H.L.) and Culliton C.J., in R. v. Mojel-
ski (1968), 65 W.W.R. 565 (Sask. C.A.).
Apart from doctrine, many maxims have been
adopted over the years, i.e., "that special words do
not derogate from the general" or the reverse
"general words do not derogate from the special".
There is also the maxims "expressio unius est
exclusio alterius" as well as "abundans cautela
non nocet". In Jones v. A.G. of New Brunswick,
[1975] 2 S.C.R. 182; 45 D.L.R. (3d) 583; (1974)
1 N.R. 582; 7 N.B.R. (2d) 526; 16 C.C.C. (2d)
297, the late Chief Justice Laskin observed, how
ever, that maxims provide at most merely a guide
to interpretation and do not pre-ordain conclu
sions. In Goodman v. Criminal Injuries Comp.
Bd., [1981] 2 W.W.R. 749 (Man. C.A.), Hall J.A.
stated that no matter how useful a tool a maxim
may be, it cannot displace the duty to look at the
statute as a whole.
To apply the current rules of interpretation to
the case at bar, one must view whatever conflict or
ambiguity which arises between subsection 5(3)
and subsection 26(5) in the light of the words used
and of Parliament's intention in adopting them. In
this regard, Driedger at page 106 sets up a method
of construction to deal with this, stressing however
that the intention of Parliament usually denotes
the intention of a statute as a whole rather than
the intention of a particular provision. The author
then divides Parliamentary intention into the fol
lowing elements namely:
(1) the expressed intention, i.e., the intention
expressed by the enacted words;
(2) the implied intention, i.e., the intention that
may legitimately be implied from the enact
ed words;
(3) the presumed intention, i.e., the intention
that the Courts, in the absence of an indica
tion to the contrary, impute to Parliament;
and
(4) the declared intention, i.e., the intention
that Parliament itself has said may be or
must be or must not be imputed to it.
The "presumed" intentions of Parliament are
often the inventions of courts. For example, a
statute will be presumed not to derogate from the
common law except to the extent that it is essential
for its purposes. Another presumption is that the
liberty or property of a citizen against interference
by the state is to be protected. Counsel for the
plaintiffs in this regard argues that the Act should
be interpreted in a fashion more favourable to the
plaintiffs on the grounds that the compulsory fea
ture of the scheme encroaches upon the rights of
subjects. Counsel quotes in support the Privy
Council decision in Attorney-General for Canada
v. Mallet & Carey Ltd., [1952] A.C. 427 (P.C.).
Furthermore, according to plaintiffs' counsel, a
court should not be guided in the matter of statute
interpretation by what any board or agency
administering it believes it to be. The true test is
the Act itself.
Counsel advances the proposition that on a
proper reading of section 26 of the Act, the grade
by grade approach to profits and losses is a neces
sary inference to be drawn and makes clear Parlia
ment's intention in that respect. The statute clear
ly states that surpluses are to be distributed
according to grades. It follows, says counsel, that
losses should be similarly treated.
Counsel for the plaintiffs also refers to certain
interpretative comments by the courts when deal
ing with the Act's scheme and purpose and with
the Board's duties and obligations thereunder.
Counsel cites the Supreme Court of Canada
decision in Murphy v. Canadian Pacific Railway
and The Attorney General of Canada, [1958]
S.C.R. 626; 15 D.L.R. (2d) 145, where the Act, in
substantially the same terms, was under review.
Locke J., at pages 630 S.C.R.; 156 D.L.R., said
this:
The Board is required to undertake the marketing of all the
grain delivered either to elevators or railway cars and the
producers receive their proportionate share of the moneys
realized from the sale of grain of the grade delivered by them
less the expenses of the operation of the Board. [Emphasis
added.]
Counsel also refers to another Canadian Wheat
Board case in The Queen v. Klassen (1959), 20
D.L.R. (2d) 406 (Man. C.A.) where it is stated at
page 414:
This submission ignores the other but equally essential feature
of the controls, the equitable rationing of delivery opportunity
and the ensuring that as nearly as may be all producers whose
freedom to trade is interfered with by the scheme will get the
same price at the same time for the like kind and quantity of
grain. [Emphasis added.]
Again relying on the scheme of the Act which
provides that all profits of the Board are to be
distributed to the producers, a position adopted by
MacPherson C.J.M., in Oatway v. Can. Wheat
Board, [1944] 3 W.W.R. 337 (Man. C.A.), plain
tiffs' counsel concludes that the interpretation sug
gested by the Crown would effectively generate a
benefit of some $54 millions to the Crown, a
benefit which has in fact been earned by the
plaintiffs. The intent of Parliament as disclosed in
section 25 and section 26 of the Act is to the
contrary: the grade by grade accounting method
for determining profits or losses is clearly indicat
ed in the language used. This interpretation, says
counsel, is made clearer by section 25(1.1) [as
enacted by S.C. 1974-75-76, c. 109, s. 2(2)] of the
Act which provides for a proper price relationship
to the base grade of wheat, i.e. No. 1 CWRS.
Such relationship requires that a producer receive
a payment in accordance with his grade and that
by implication this would apply not only to the
calculation of his initial payment but to his final
payment as well. Furthermore, the words used in
section 27 of the Act, i.e., "The Board shall main
tain separate accounts with regard to its operations
in respect of wheat" [emphasis added], clearly
indicates, according to counsel, that accounting by
grade is intended.
In reply, counsel for the Crown urges the Court
to adopt the comments of Gibson J. in Kiist v.
Canadian Pacific Railway Co., [1980] 2 F.C. 650
(T.D.), found at pages 655-656:
In carrying out such national policy however, the Board has
not and does not function as a price or income support agency.
Instead, the price paid to producers is that obtained by the
Board from both domestic and foreign customers.
As to the overall operations of the Board in carrying out its
statutory powers and duties, as I understand it however, it may
be said that the Board implements its national grain marketing
policy by employing five policy mechanics, namely: (1) by the
use of year long price pools; (2) by the use of marketing quotas;
(3) by the management of transportation; (4) by the use of the
Winnipeg Commodity Exchange; and (5) by the use of a
complex export selling system. [Emphasis added.]
Counsel for the Crown accordingly concludes
that to adopt the interpretation urged by the plain
tiffs, certain producers of certain grades of wheat
would be entitled to any surplus, unexpected or
not, while at the same time, other producers of
other grades, in a market downturn, would not
have to account for their losses. It would mean in
effect that producers would absorb all the sur
pluses and, taking into account the non-refundable
initial payment already received, would never have
to bear any losses. Such an approach would in
essence be a price and income support scheme
which is not Parliament's intention, and which the
statute does not create.
Counsel for the Crown further finds support in
the same provisions of the Act relied on by the
plaintiffs. He quotes subsection 26(2) which
imposes "a duty on the Board to distribute the
balance remaining in its account in respect of
wheat" [emphasis added]. He also quotes subsec
tion 26(5) which provides that the Board, with the
approval of the Governor in Council, fixes the
amounts to which producers are entitled per tonne
according to grade in order that all producers,
according to grade, receive the same price and that
such price bears a proper price relationship to that
for each other grade.
These provisions, according to the Crown, make
it clear that it would be contrary to the scheme
and terms of the legislation to treat the Board's
operations under Part III as constituting distinct
and separate operations for each separate grade of
wheat for purposes of calculating losses recover
able under subsection 5(3).
Crown counsel finds that this interpretation
achieves the purpose of the statute which is to pool
all amounts realized from the sale of all grades of
wheat. This in turn provides price stability to
producers and ensures that each of them obtains a
fair share of the market. The price pooling method
of accounting permits the Board to make con
sidered decisions relating to initial price, purchas
ing, storage, transportation and marketing. It
enables it to minimize costs, to maintain price
spreads and to assure a fair and equitable
distribution.
CONCLUSIONS
Given the history of the Canadian Wheat
Board, it appears evident that the major purpose in
creating and maintaining an agency of that nature
is the continued orderly marketing of grain at the
best possible price under existing market condi
tions for both domestic and export trade. Grain is
not hoarded in the hopes of receiving higher prices
in the event of a market upturn. There is no rush
to fill the bins when the market is buoyant nor is
there the possibility that any major producer
would dump his grain at any particular time and
because of his economies of scale, still realize a
profit at depressed prices.
The cornerstone of the scheme to achieve an
orderly marketing of grain and to provide to all
producers equal access to the market is the concept
of price pooling among producers. Price pooling
offsets price fluctuations during any marketing
year. In this way, it matters not to the individual
producer whether he delivers early or late in the
crop year or whether, at time of delivery, grain
prices are up or grain prices are down.
The ramifications of this basic pooling approach
are many. The particular grade or quality of wheat
is set by the Canadian Grain Commission. Prior to
the crop year, the Board must make a calculated
estimate as to what price each of the several
grades will command, making sure that appropri
ate price spreads, based on market experience, are
maintained. The Board then fixes an "initial pay
ment" price for each grade, using No. 1 Canadian
Western Red Spring as a base from which the
spreads are calculated.
The initial payment must be approved by the
Governor in Council and in fact, the payment set
out for the year 1985-1986 is found in Order in
Council 1985-1466 [SOR/85-413] dated May 2,
1985. Such a payment is the sum certain for wheat
of the base grade to be paid. As I interpret the
scheme, this sum certain triggers off the price for
all the grades of wheat. In effect, therefore, each
producer, no matter the downturn in market prices
over the crop year, is assured of receiving no less
than the initial payment. It is in effect a scheme
which not only guarantees a floor price to the
producer but at the same time provides him with
the necessary cash flow pending final calculations
at the end of the crop year.
Board decisions in this respect involve the
balancing of delicate factors as well as the applica
tion of intricate mechanisms. The Board will not
consciously recommend to the Governor in Council
an unduly high initial price, thereby increasing the
risk of deficits which Parliament would have to
pick up. Nor will it fix an unduly low price, thus
depriving the producer of his necessary cash
requirements for his on-going expenses. The
experience of the Board in respecting these com
peting pulls and drags over its many years of
existence speaks highly of it: The year 1985-1986
is the only year over some twenty crop years that
the "wheat pool" suffered a loss which had to be
paid out of public monies.
The evidence before me is that Board expenses
are calculated on a pool basis. All expenses for the
wheat pool are charged to that pool, irrespective of
whether expenses in relation to any particular
grade of wheat or group of grades, might be
otherwise disproportionate. It matters not if han
dling, transhipment, derailments or other vagaries
impose additional cost burdens with respect to any
particular grade, the total expenses are shared by
all. The costs attributable to each grade are based
on quantities only.
The reasonable conclusion to be drawn from this
is that the scheme of the Act envisages a sharing
of risks and rewards between all wheat producers.
These producers, although entitled to returns
dependant upon the various grades of wheat they
sell, nevertheless submit their individual interests
to the experience of the group as a whole. No
producer has, of course, a choice in the matter,
even though any producer might have the acumen
and the clout to proceed independently. The stat
ute, however, does provide for equitable, if shared,
treatment of all of them. This is accomplished, at
least in statutory terms, by a system of price
pooling over the market experience of a whole crop
year so as to determine the average yield no matter
when individual deliveries and sales to the Board
are made. It is reflected in the maintenance of
price spreads between various grades of wheat so
that high volume, lower-priced wheat will be treat
ed in the same way as low-volume higher-priced
wheat. It is further accomplished by a system of
initial payments, essentially a guaranteed, non
refundable floor price, which again adopts the
principle of price spreads between various grades.
As a result, it would be logical to conclude that
Parliament's intention in adopting the statute was
to create a wheat pool encompassing all grades of
wheat from which all profits realized on all sales,
minus expenses incurred on all sales, are distribut
ed to the producers as final payment.
If there should be found a logical structure to
this approach, it must nevertheless be measured
against the provisions of the Act itself. I should
find that these provisions are consonant with the
features I have outlined.
The statute states in subsection 5(3) that losses
in respect of the operations of the Board under
Part III in relation to any pool period, shall be
paid by Parliament. I believe it is a reasonable
construction to place on this provision that it refers
to operational losses covering the whole wheat
pool. This would mean of course that losses on
certain grades of wheat as well as profits on other
grades of wheat are pooled together to arrive at a
net surplus or net deficit position. I fail to see
where, in providing as it does in very specific
language for the recognition of price spreads be
tween grades and for the distribution of profits
according to grade, Parliament would not have
been equally specific in requiring that losses be
calculated on an identical basis.
I am furthermore of the view that an opinion
more favourable to the plaintiffs cannot be found
ed on subsection 26(2). The provision therein
speaks of a formula for distribution of the balance
remaining in the Board's account in respect of
wheat produced in the designated area. The
method imposed brings in of course the grade by
grade entitlement to different producers but
nowhere does the subsection speak of losses. It
only speaks of "balance remaining in its account in
respect of wheat ... purchased by it", or in the
French version "le solde demeurant à son compte
relativement au blé ... qu'elle a acheté". That
subsection, therefore, begs the question as to the
method of calculating losses. As a consequence,
one must go back to the more generic provisions of
subsection 5(3) to discern Parliament's intentions.
I should also observe that basic to the scheme of
the statute is that the operation of the Board must
be revenue neutral. I adopt the thinking of Gibson
J. in Kiist v. Canadian Pacific Railway Co.,
(supra), that the Board has not and does not
function as a price or income support agency. The
only element of price support is the amount of
initial payment set by the Governor in Council
which constitutes a sum certain which the Board
has to pay and which is unrecoverable no matter
the downturn in prices over the crop year. To
extend that support in the manner suggested by
the plaintiffs would, in my view, constitute a form
of price or income guarantee on a heads I win,
tails you lose basis. The producer would not have
to bear the risks of losses on his grade ofwheat but
would nevertheless be entitled to all profits real
ized on that grade. I should think that if such were
Parliament's intention, it would have expressed it
in more unmistakable terms. Actually, Parlia
ment's intention in respect of its price or income
support policy for western grain producers is found
in a discrete statute, namely the Western Grain
Stabilization Act of 1976, and which is found in
R.S.C., 1985, c. W-7.
Other indicia of the revenue-neutral stance
found in the statute before me may be found in
subsection 5(2) which provides that profits real
ized by the Board from its operations other than
operations under Part III are to be paid to the
Receiver General. I note also that subsection 26(3)
provides that, in addition to the initial payment
paid to a producer, the Governor in Council may
authorize a further "interim payment" if it deter
mines that such payment may be made without
loss.
I should also discern Parliament's intention in
the statutory provision dealing with the initial
payment. Were it not for its non-refundable fea
ture or were it simply an advance payment to be
debited to any producer's account, subject to final
debits and credits when all the accounts in respect
of each grade of wheat have been finally calculat
ed, a case might be made for the plaintiffs for the
calculation of both profits and losses on a grade by
grade basis. Such is not the situation before me.
Finally, I should find that there is no inherent
conflict between the calculation of losses pursuant
to subsection 5(3) of the Act and the grade by
grade system for the distribution of balances in the
wheat account under subsection 26(5). The two
processes, in my view, are quite distinct. The first
process is consonant with the formula assuring a
fair yet as high as possible non-refundable initial
payment to a producer without risking high losses
recoverable from the Crown. The second process is
to assure that, after all is said and done, there
should be a fair and equitable distribution of any
surplus according to grades. Certain it is, in my
view, of the kind of pooling arrangement contem
plated in the statute, that the situation which faced
the plaintiffs in 1985-1986 is an inherent risk
which all producers, irrespective of grades, sooner
or later, have to bear. It is, in essence, a statutory
quid pro quo.
The plaintiffs' action must accordingly be dis
missed, with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.