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36 THE RURAL VOICE
Agrilaw
Marketing boards - liability for tenants
By Paul G. Vogel
Many agricultural products are
required to be sold through
marketing boards. What liability
may a registered producer incur for a
tenant who sells produce to a
purchaser other
than a
designated
marketing
agency?
The British
Columbia Court
of Appeal was
recently
required to
consider this
issue in
connection with
the sale by a
tenant of
mushrooms grown under authority
of the landlord's licence. In British
Columbia, all persons producing or
selling mushrooms must be
registered with the British Columbia
Mushroom Marketing board. The
landlord, a registered producer,
leased its farm to another grower
under terms of a lease which
provided that the tenant would obey
all conditions of the landlord's
licence and, in return, would be
permitted to grow and sell
mushrooms to the designated
agency. An employee of the tenant
attempted to "bootleg" mushrooms
by selling mushrooms to a purchaser
other than the designated agency. A
lower court had refused to uphold a
decision of the B.C. Marketing
Board revoking the landowner's
licence and imposing a substantial
monetary penalty on the grounds
that there was no evidence that the
landlord licensee had engaged in the
prohibited conduct.
Upon an appeal from this lower
court decision, the Court of Appeal
considered the defence of the
landlord licensee that it should not
be held responsible for the
bootlegging activities of the tenant's
employee of which the landlord had
no knowledge and which the tenant
denied. While the Court determined
that there is no restriction on a
registered licensed producer
permitting a tenant without a licence
to grow and sell mushrooms, the
Court considered that th, liability of
the landlord in these circumstances
is absolute and does not depend
upon the landlord licensee having
knowledge of the impugned
conduct. However, the Court held
that, through application of the
doctrine of delegation, the licensee
landlord should have available to it
any defence available to the
unlicensed tenant.
In coming to this conclusion, the
court stated:
"The doctrine of delegation was
developed to prevent a licence
holder from avoiding the
knowledge component of an
offence by delegating authority
under the licence to another...
the doctrine is applied if a licence
holder delegates his duties under
a licence to another to preclude
him from relying on that
delegation to avoid the
responsibility implicit in the
prohibition requiring knowledge .
.. (The landlord's) delegation of
control was complete. If it is
accepted that a licence holder is
as responsible as its delegate...
then the only issue is whether (the
tenant) breached (the section
prohibiting sale to an
• undesignated purchaser) ... If an
employee sells mushrooms to a
non -designated purchaser against
the instructions and without the
knowledge of his employer, the
employer would have a good
defence to an absolute liability
offence ..."
Thus, landlord licensees bear
responsibility for the conduct of their
tenants. Where the regulatory
Landlord
licensees
responsible
for tenants'
conduct