DOCKET:C38027
COURT OF APPEAL FOR ONTARIO
CARTHY, CHARRON AND SHARPE JJ.A.
B E T W E E N:
ONTARIO CATTLEMEN’S ASSOCIATION
David B. Williams and Allison M. Webster for the appellant Thames Sales Yard Limited
Plaintiff
(Respondent)
Paul J. Trudell
- and -
for the respondent
Ontario Cattlemen’s Association
THAMES SALES YARD LIMITED
Defendant (Appellant)
Michel Y. Hélie for the respondent Intervenor
Attorney General
- and -
ATTORNEY GENERAL OF ONTARIO
Intervenor in the Motion
(Respondent)
Heard: May 30, 2003
On appeal from the order of Justice R. J. Flinn of the Superior Court of Justice dated February 26, 2002.
1The appellant, Thames Sales Yards Limited is an Ontario cattle dealer who challenges the obligation to pay $2.25 per head of cattle to the respondent Ontario Cattlemen’s Association as a license fee on sales to an American slaughter and packinghouse. By a judgment of February 26, 2002, Flinn J. dismissed a motion by the appellant for a declaration that the license fee is an indirect tax and thus beyond the powers of the Province of Ontario, or is a direct tax that is invalid, finding its source in a regulation rather than a statute, and is ultra vires the province to the extent that it purports to apply to export sales. Flinn J. also granted judgment in favour of the respondent’s motion that it was entitled to recover the arrears of fees and future assessments in respect of export sales. The Attorney General of Ontario has intervened on the constitutional issues.
2The respondent association was established under the terms of the Agricultural and Horticultural Organizations Act, R.S.O. 1990, c.A.9, the objects of which include the promotion of the sale and export of agricultural products. The association’s board of directors is composed of representatives elected by 49 local cattlemen’s associations. The Beef Cattle Marketing Act, R.S.O. 1990, c.B.5, which applies specifically to this association, expands upon the description of its objects and powers, and provides a funding mechanism through licence fees on cattle sales. These are fixed by Regulation 54, amended to O/Reg. 291/96, at $2.25 for each head of cattle sold.
3Sections 3, 4 and 5 of the Regulation read:
The licence fees payable by a person who sells cattle shall be $2.25 for each head of cattle sold. O. Reg. 291/96, s. 1.
Subject to section 5, every person who sells cattle shall pay the licence fees referred to in section 3 to the association. R.R.O. 1990, Reg. 54, s. 4.
(1) Every plant operator, public auction sale operator and livestock dealer who receives cattle from a seller thereof shall deduct, from the money payable to the seller, the licence fees payable by the seller to the association respecting the cattle. R.R.O. 1990, Reg. 54, s. 5(1); O. Reg. 154/92, s. 3(1).
(2) On or before the 15th day of each month, every plant operator, public auction sale operator and livestock dealer shall forward to the association,
(a) all licence fees deducted by the operator or dealer under subsection (1) during the preceding calendar month; and
(b) a statement showing the number of head of cattle sold and full name, address and postal code of each seller from whom licence fees were deducted during the preceding calendar month. R.R.O. 1990, Reg. 54, s. 5(2); O. Reg. 154/92, s. 3(2, 3).
4This is very plain wording setting the amount of the fee, making it payable by the seller, and directing that it be collected and remitted by the purchaser. The fact that the purchaser is outside the jurisdiction does not alter the obligation upon the seller imposed by s. 3.
5The cattle industry is composed of producers, auction yards, dealers and packinghouses. The appellant is a dealer and sells most of its cattle to a packinghouse in Illinois. Some of the cattle it sells have been sold previously and thus attract more than one license fee. In addition, and this undoubtedly annoys the appellant, it pays a similar fee in Illinois on the same sales attracting the fees in dispute in this proceeding.
6We are of the view that this appeal should be dismissed. The focus of the appeal was very different from that before the applications judge. There, the main issue was the question whether the licence fee in this case was a fee or was a disguised tax in order to be intra vires the Legislature of the Province. Further, it could not be authorized by mere regulation. If a fee, it must be imposed under a provincial head of power other than the taxing power.
7On all of these issues we agree with the applications judge’s finding that this was a properly authorized fee, and not a tax, for the reasons he gave.
8The focus on appeal was whether the regulation in question should be read down so as not to apply to the sale of cattle outside the province. In our view, the answer to that question is “no”. We have to look at the pith and substance of the legislation in question to determine its purpose. This association is incorporated under the Agricultural and Horticultural Organization Act. Section 28 of that Act sets out the purposes of the association as expanded by s. 2 of the Beef Cattle Marketing Act, generally to stimulate and promote the sale of cattle and to disseminate information concerning the industry. The purpose of the fee is to fund this association. It is clear that the association is for the benefit of all cattlemen in Ontario. The appellant is without a doubt carrying on business in Ontario. It resides in Ontario. It raises cattle in Ontario. It benefits from the services of the association. The fact that the quantum of the fee is defined in terms of the number of sales is simply a method of assessing the size of each business and thus the contribution to the fund. The license is payable by the seller pursuant to s. 3 of Regulation 54 as amended to O/Reg. 291/96. The appellant is a seller of cattle carrying on business in Ontario. It is irrelevant whether cattle are sold to people residing in the United States, in Quebec or elsewhere, who are not subject to s. 5 of Regulation 54 as that section serves merely to enforce the licence fee that is imposed by s. 3. The extra territorial effect, if any, is minimal and does not affect the constitutional validity of this legislation. Hence, we would dismiss the appeal. The respondent has not asked for costs and none will be awarded.
Released: August 28, 2003 “JJC”
“J.J. Carthy J.A.”
“Louise Charron J.A.”
“Robert J. Sharpe J.A.”