The Rural Voice, 1996-11, Page 17Agrilaw
Attacking production quota,
The British Columbia Court of
Appeal has recently held that a
provincial marketing board estab-lished
for the purpose of regulating
interprovincial trade and the production
quota requirements
imposed by such a
marketing board
are unlawful.
In the case of
British Columbia
(Milk Marketing
Board) v. Bari
Cheese Ltd., the
British Columbia
Milk Marketing
Board had sued Bari Cheese Limited
and approximately 100 defendant milk
producers who had entered into written
agreements with Bari for the
processing of milk and marketing of
cheese outside of British Columbia.
The Board was attempting to enforce
orders for levies against the defend-
ants on milk deliveries and for an
injunction to prevent the defendants
from producing and selling dairy
products without licences and quota
from the Board. In upholding the trial
judgment dismissing the action, the
Court of Appeal confirmed that a
provincial regulation establishing the
Board and milk market sharing quota
are beyond the power of the Province
because they purport to regulate
interprovincial trade.
The Court noted that, while the
impugned regulation did not restrict the
amount of milk or dairy products that
could be imported to, or exported from,
B.C., the regulation and certain federal
legislation bestowed power on the
Board to regulate the marketing of milk
in interprovincial and export trade and
for the purpose of the National Milk
Marketing Plan. This Plan is an
agreement between the federal
government and nine prov-inces to
regulate milk production in Canada. It
provides for market sharing quota
representing an individual producer's
share of the estimated Canadian
requirements for industrial milk (i.e.,
used to make, process or manufacture
dairy products such as butter, cheese,
ice cream and milk powder) as
allocated between the provinces in any
year. The regulation authorized the
B.C. Court
decides
marketing
board's
powers
limited
Board to collect levies from producers
who produced milk in excess of quota,
which approximated the producers'
entire retum on this milk, and
purported to prohibit production of
milk or dairy products without quota.
The Board argued that, while there
was some effect on interprovincial
trade, the power of the Board to allot
quota for industrial milk and to impose
levies on milk produced over quota or
without quota was aimed at production
of that milk and not at interprovincial
trade. In rejecting this argument, the
Court determined that the provincial
power to control production cannot be
used for the purpose of supporting an
extra -provincial marketing scheme.
The Court noted that:
"The Chairman of the Milk Board
said in evidence that the Board docs
not have the statistical information to
determine market demand within
British Columbia. The relevant
market is the Canadian market, not
the provincial market. All relevant
statistical data referred to the
Canadian market. All aspects of the
scheme examined in detail by the
learned trial judge looked to
marketing in the national
marketplace."
The Court similarly rejected the
Board's argument that the authoriz-
ation of over -quota levies was for the
promotion, control and regulation of
the provincial dairy industry in British
Columbia. The Board's position was
that, because the levies took effect
upon the delivery of milk from
producers to processors within the
Province, they could be supported by
provincial authority. The Court adopted
the statement of the trial judge that:
"The guiding principle that emerges
from the modem cases is that no one
factor alone determines
constitutionality ... Canadian courts
have taken a more flexible and
analytical approach to determining
the 'pith and substance', `true
character' or `dominant
characteristics' of marketing
legislation. A wide variety of factors,
including the wording of the scheme,
the factual background of its
enactment, the nature of the affected
market, the manner in which the
scheme is administered in the field,
and its practical effects, is
considered."
The Court concluded that, through
the Milk Marketing Board, the
Province could not use its licencing and
quota powers to control directly an
interprovincial marketing scheme. The
Court held that a provincial legislature
cannot regulate interprovincial trade in
a given product because this appears
desirable for the effective control of
trade within the Province.°
Agrilaw is a syndicated column
produced by the full service London law
firm of Cohen Ilighley Vogel and
Dawson. Paul G. Vogel, a partner in the
firm, practises in the area of commercial
litigation and environmental law.
Agrilaw is intended to provide
information to farmers on subjects of
interest and importance. The opinions
expressed are not intended as legal
advice. Before acting on any information
contained in Agrilaw, readers should
obtain legal advice with respect 10 their
own particular circumstances.
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NOVEMBER 1996 13