COURT FILE NO.: Divisional Ct. 270/04
(St. Catharines 45,323/04)
DATE: 20050914
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Chicken Farmers of Ontario Appellant (Plaintiff)
-and-
Chuck Drost, Peter Drost, et al. Respondents (Defendants)
-and-
Chicken Farmers of Canada Intervenor
HEARD: At Toronto, March 3 and 4, 2005; written submissions May, 2005.
BEFORE: Lane, Jarvis and Swinton JJ.
COUNSEL: Geoffrey Spurr, for the Appellant;
James McIlroy, for the Respondents;
David Wilson for the Intervenor.
R E A S O N S F O R J U D G M E N T
LANE J.:
[1] Chicken Farmers of Ontario (“CFO”) appeals from the Order of Dandie J. dated May 10, 2004 dismissing its motion to prohibit the defendants from producing and marketing chicken until the trial of this action. The appeal is by leave granted by Whalen J.
[2] The appellant CFO is a “local board” created under the Farm Products Marketing Act, R.S.O. 1990, c. F.9 (“FPMA”), which exercises delegated authority from the Province and, through other legislation, from Canada, to control and regulate the producing and marketing of chicken within Ontario, interprovincially and for export. The cornerstone of CFO’s regulatory authority is the requirement that all production and marketing of chicken must be undertaken pursuant to a quota. CFO constitutes the Ontario agency acting within a federal-provincial scheme pertaining to the producing and marketing of chicken in Canada. “Federal quotas”, which permit producers to market chicken in interprovincial and export trade, are derived specifically from provincial quotas fixed and allotted to chicken producers by provincial boards, such as CFO.
[3] The intervenor, Chicken Farmers of Canada (“CFC”), operates under federal legislation and is charged with the responsibility of regulating and administering the federal aspects of the federal-provincial scheme for chicken. Through the dovetailing of federal and provincial legislation CFO and CFC administer an integrated cooperative federal-provincial scheme that regulates all chicken produced by Ontario producers whether destined for intraprovincial, interprovincial or export trade.
[4] The respondents are collectively engaged in the production and marketing of chicken from farms owned by them and located in the Niagara peninsula. All of their chicken is shipped directly to the United States, for sale there through a broker. Previously, four of the personal respondents operated their chicken businesses within the marketing scheme administered by CFO, but they sold their quotas in 1995 and no longer hold any quota from CFO. Since mid-2002, the respondents have produced and marketed chicken on a daily basis, and currently ship 8,000-10,000 live chickens per week to a wholesaler in New York State.
[5] Despite being advised by CFO of the requirement to hold quotas in order to legally produce chicken, and despite being ordered by CFO, through formal Directions, to cease and refrain from engaging in any new and additional production of chicken, the respondents have continued unabated. They have neither complied with the Directions nor appealed them through the administrative appeal system established by the legislation. The respondents’ position is that the appellant, CFO, lacks the necessary authority to restrict the respondents’ export of live chickens to the United States.
[6] Faced with this situation, CFO brought this action and moved for an interlocutory injunction to prohibit the respondents from producing chicken without quota until the trial of the action.
Outline of the Legislative Framework of the Chicken Marketing Scheme
[7] The legislation is conveniently summarized in the appellant’s factum on which I have based this part of the reasons.
[8] The Farm Products Marketing Act, R.S.O. 1990, c. F.9 (“FPMA”) provides for the establishment and empowerment of local boards created and charged with responsibility in respect of farm products. “Farm products” become “regulated products” when a local board is given jurisdiction over a farm product. “Chicken” is a regulated product and the appellant is a “local board”.
[9] Pursuant to the FPMA, the Ontario Farm Products Marketing Commission has delegated to CFO certain enumerated powers necessary for CFO to carry out its functions. The Ontario Farm Products Marketing Commission is established by the Ministry of Agriculture, Food & Rural Affairs Act, R.S.O. 1990, c. M.16 (“MAFRA”). Commission members are appointed by the Ontario Minister of Agriculture and Food.
[10] Included in the authority delegated to CFO is the authority to make regulations in relation to chicken. Various provisions of the FPMA, the provisions of Regulations 402 and 403 made under the FPMA and the regulations made by CFO, when taken together, constitute a comprehensive scheme regulating the production and marketing of chicken within Ontario.
[11] The CFO General Regulations enumerate the specific requirements that must be met in order to produce and market chicken. Chicken must be produced on a quota basis. Chicken may not be produced by any person unless that person has been fixed and allotted a quota. Chicken must be marketed on a quota basis. Chicken cannot be marketed by any person unless that person has been fixed and allotted a quota. Producers, transporters and processors of chicken are licenced by CFO to engage in the producing and marketing of chicken as the case may be.
[12] Through its quota authority, CFO operates a supply management system. CFO controls the amount of chicken produced and marketed so that these activities occur in an orderly manner. This enables chicken producers over time to receive a reasonable return and provides stability in the marketplace. The price for all chicken marketed by Ontario chicken producers is established through a negotiation process involving CFO and licenced chicken processors.
[13] There are approximately 1,100 licenced chicken producers in Ontario producing in excess of 60,000,000 kilograms of chicken every eight weeks of the year.
[14] Regulations made under the Farm Products Agencies Act, R.S.C. 1985, c. F-4 require that persons engaging in interprovincial and export trade must be licenced by CFC. Producers of chicken in each province are allottees of federal quotas which are quotas determined with reference to the size of each producer’s provincial quota. Therefore, all CFO licenced producers, as well as holding quotas fixed and allotted by CFO, are the allottees of federal quota and have the right to market chicken in interprovincial and export trade. The scheme pursuant to which federal quotas are allotted is administered by CFO and CFO is authorized to establish the rules relating to such allotment, including the following:
• The entitlement to a quota.
• The basis on which the amount of a quota is determined.
• An increase in or a reduction of a quota.
• The allotment of quotas to producers.
• The period during which a quota is valid.
• Maximum and minimum quota sizes.
• The cancellation, suspension or variation of quotas for breach of the orders, regulations and rules in relation to quotas or for non-payment of levies imposed by the Appellant or CFC.
• Marketing arrangements with processors.
• The information, documents and reports to be submitted by producers.
[15] For the supply management system for chicken to function effectively, a national system was established in 1978 pursuant to a Federal-Provincial Agreement (the “FPA”). The Minister of Agriculture and Agri-Food Canada, each provincial agricultural minister, each provincial supervisory board (in Ontario, the Ontario Farm Products Marketing Commission) and each provincial chicken commodity board (in Ontario, the CFO) as well as the CFC are signatories to the FPA. The purpose of the FPA is to provide for an orderly marketing system for chicken in Canada.
[16] The national scheme contemplates that in advance of each eight week quota period, each signatory province submits an estimate of its provincial market requirements for chicken production to CFC. CFC then establishes the provincial allocation. Upon receipt of the provincial allocation, CFO ensures that its producers grow their respective portion of the provincial allocation. Each individual producer’s portion is determined based on the size of the quota fixed and allotted to that producer.
[17] Separate and apart from the CFC regulations and the delegation of authority over federal quotas to CFO, CFO is empowered pursuant to the Agriculture Products Marketing Act, R.S.C. 1985, c. A-6 (“APMA”) to regulate the marketing of chicken in interprovincial and export trade with respect to persons situated in the Province of Ontario. Regulations made by CFO pursuant to its APMA authority require that persons engaging in the marketing of chicken in interprovincial and export trade must do so on a quota basis and persons are prohibited from being so engaged in the absence of being fixed and allotted a quota for that purpose by CFO.
[18] All licenced chicken producers are allowed to produce and market chicken for export. Pursuant to CFO’s Market Development Policy, producers can grow and deliver chicken to Ontario processors that are authorized to engage in the export of processed chicken. Such processors are authorized under the provisions of CFC’s Market Development Policy.
[19] CFC’s licensing authority pertains to interprovincial and export trade. CFO’s licensing authority is concerned with intraprovincial trade. However, in the context of its authority to administer the scheme of federal quotas for CFC, CFO regulates the terms pursuant to which chicken is sold by quota-holding producers in interprovincial and export trade. Ontario producers are permitted to enter into contracts to sell chickens to out-of-province processors. Producers marketing chicken in interprovincial or export trade must also meet the terms of CFO’s interprovincial and export regulation made under the APMA.
[20] All licenced chicken producers in Ontario pay licence fees to CFO on every kilogram of chicken sold and marketed by them at the rate of $ 1.05 per 100 kilograms, live weight and additional charges when producers market chicken in excess of their crop quota allotments.
[21] As a signatory of the FPA, CFO is obliged to ensure that its producers do not collectively exceed their quotas so that Ontario chicken is not marketed in excess of the provincial allocation established by the CFC. The CFC audits whether the provincial allocation of a province has been exceeded on a four quota period basis.
Motion for Injunction Pending Trial
[22] On May 10, 2004, Dandie J. dismissed CFO’s motion for an injunction. He found that CFO had not established irreparable harm, as the common law remedy of damages was sufficient to deter others from embarking on similar enterprises. He also found that no public interest issue was involved, as CFO and CFC are not to be distinguished as anything but private litigants. The balance of convenience therefore favoured the respondents, as an injunction would in effect destroy their business.
Motion for Leave to Appeal
[23] Whalen J. granted CFO’s motion for leave to appeal. Although the motion judge had found no public interest issue involved in this case, Taliano J., when granting intervenor status to the CFC, had concluded that the claim involved a substantial public interest. There was thus a fundamental conflict between two judgments of this court, and an appeal was merited to clarify the issue of the public/private nature of the case. In addition, he found that the motion judge had failed to address the statute-based injunction that is available under the FPMA where there has been marketing contrary to the regulation. This led the Court to doubt the correctness of the order dismissing the request for an injunction. Whalen J. wrote:
“The legislation in question involves an integrated, co-operative, federal-provincial approach that has been established and accepted in Canada for decades. Because of this, I conclude there is good reason to doubt the correctness of Dandie J.’s decision that this case was one of private rather than public interest. He gave little or no consideration to the legislative issues in concluding as he did.
Public law was also a basis of claim for interim injunction under section 13 of the Farm Products Marketing Act. Statute-based injunction is available where there has been marketing contrary to regulation. Dandie J. did not address this. In failing to do so, he likely erred. This is another basis to question the correctness of his decision both in direction and result. There is strong evidence that the respondents were marketing in contravention of the legislation. Yet none of this was addressed in Dandie J.’s reasons.
The likely presence of a public interest combined with my concerns about the correctness of Dandie J.’s decision elevates the importance of the matter before me considerably. The public interest in a stable marketing system and the potential negative impact of a breach of that system on other producers and marketers makes it worthy of attention by appeal.”
The Standard of Review
[24] This is an appeal from the refusal of an interlocutory injunction and is governed by the principles set out in RJR MacDonald Inc. v. Canada (Attorney-General) 1994 117 (SCC), [1994] 1 S.C.R. 311 and by the deference to be accorded to the decision of the motion judge. As to the latter, the decision is ultimately a discretionary one and we should not interfere unless there has been an error in the principles applied by the motion judge. In Friends of the Oldman River Society v. Canada (Minister of Transport) 1992 110 (SCC), [1992] 1 S.C.R. 3, the Court (Stevenson J. dissenting) held at paragraph 104:
The principles governing appellate review of a lower court's exercise of discretion were not extensively considered, only their application to this case. Stone J.A. cited Polylok Corp. v. Montreal Fast Print (1975) Ltd., 1983 4999 (FCA), [1984] 1 F.C. 713 (C.A.), which in turn approved of the following statement of Viscount Simon L.C. in Charles Osenton & Co. v. Johnston, [1942] A.C. 130, at p. 138:
The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such [page77] as those urged before us by the appellant, then the reversal of the order on appeal may be justified.
- That was essentially the standard adopted by this Court in Harelkin v. University of Regina, 1979 18 (SCC), [1979] 2 S.C.R. 561, where Beetz J. said, at p. 588:
Second, in declining to evaluate, difficult as it may have been, whether or not the failure to render natural justice could be cured in the appeal, the learned trial judge refused to take into consideration a major element for the determination of the case, thereby failing to exercise his discretion on relevant grounds and giving no choice to the Court of Appeal but to intervene.
Analysis
[25] In the present case, I am satisfied that the learned motion judge erred in principle in failing to recognize the public law element in the case. He wrongly characterized CFO as no more than a private litigant and treated the matter as a private law dispute where damages would be an adequate remedy. He failed to take into consideration a major element in the case: that the appellant and the intervenor are publicly designated bodies administering a public scheme of market organization on behalf of the federal and Ontario governments pursuant to statutes of both Parliament and the Legislature. He also did not deal with the regulatory scheme, which includes in section 13 of the Farm Products Marketing Act (R.S.O. 1990, c. F.9) specific provision for the granting of an injunction enjoining the continued marketing of a regulated product contrary to the Act or regulations.
[26] I agree with the language of Whalen J. in granting leave:
The impact of the presence of a public interest on the application of the legal tests and exercise of discretion in an application for injunctive relief … operates at the level of principle. It is not merely a question of exercise of discretion. If Dandie J. was incorrect in failing to recognize the public law nature of the claim, as I believe he was, then the principles operating on the exercise of discretion would be significantly different and a different result might well ensue.
[27] In the light of the existence of an error in principle, it is the duty of this court to review the case and make the order which ought to have been made below. In so doing, we have regard to the principles in RJR, supra. In conducting this review and analysis, we do not discard the possibility that it will lead us, by a different route, to the same result as was reached by the motion judge.
Serious Issue to be Tried
[28] The first requirement of the three-fold test in that case is the existence of a serious issue to be tried. The motion judge considered that there was such an issue raised by the appellant’s motion and I see no error in that conclusion. The activities of the respondents are clearly contrary to the chicken marketing scheme administered by CFO and CFC and to the Directions which have been issued to them to cease the marketing of chicken without a quota and there is a serious issue as to their right to continue to do so. Federal-provincial agreements, statutes and dove-tailed regulations of the sort which form the basis of the authority of CFO and CFC have been found to be constitutional in several cases, including the judgment of the Supreme Court in the “Egg Reference”, (Reference re Agricultural Products Marketing Act, 1978 10 (SCC), [1978] 2 S.C.R. 1198) where Pigeon J. observed that “no operator can claim exemption from provincial control by electing to devote his entire output to extraprovincial trade.”
[29] On April 21, 2005, after this case was argued, the Supreme Court released its decision in Fédération des producteurs de volailles du Québec v. Pelland, 2005 20 SCC 20, which dealt with the Quebec legislation implementing the national scheme in that Province and re-affirmed the constitutionality of the scheme. Counsel were invited to make submissions as to the impact of Pelland on this case and did so in May 2005.
[30] Mr. Pelland, a chicken farmer holding a quota, produced far more than his quota and the Federation took action against him, reducing his quota to zero and seeking an interlocutory injunction. The Superior Court of Quebec granted the injunction. The motions judge found that Mr. Pelland produced and sold about 29 times his quota, representing almost 50 percent of the surplus produced in Quebec for the relevant periods. The Court of Appeal of Quebec dismissed Mr. Pelland’s appeal on the grounds that the Supreme Court’s decision in the Egg Reference was determinative of the constitutional issue raised by the appellant: [2003] Q.J. No. 3331 (QL). The Supreme Court dismissed Mr. Pelland’s appeal.
[31] Beginning at paragraph 2, Abella J. described the Plan before the Court:
In a landmark 1978 case which has come to be known as the “Egg Reference” 1978 10 (SCC), [1978] 2 S.C.R. 1198, this Court unanimously affirmed the constitutional validity of a national agricultural marketing scheme collaboratively crafted by Parliament and the provinces in response to the Court’s evolving jurisprudence. The Egg Reference has since become the blueprint for federal-provincial marketing schemes.
- After the release of the Egg Reference, the federal and provincial governments entered into the 1978 Federal-Provincial Agreement with respect to the establishment of a Comprehensive Chicken Marketing Program in Canada (“Federal-Provincial Agreement”).
4 To ensure effective marketing and a dependable supply of chicken to Canadian consumers, the Federal-Provincial Agreement was designed to weave together the legislative jurisdiction of both levels of government in order to ensure a seamless regulatory scheme.
[32] She continued with a detailed description of the way in which the federal and provincial legislation is integrated and concluded at paragraph 10 of the reasons:
10 In this way, the federal-provincial scheme combines in one body, the Fédération, provincial jurisdiction over production and intraprovincial marketing, and federal jurisdiction over extraprovincial marketing. The federally and provincially assigned quotas dovetail so that the total quantity of chicken produced in Canada does not exceed the agreed-upon national marketing total.
[33] Later in her judgment, Abella J. concluded at paragraphs 37 and 38:
The core character of the provincial legislative component of the federal-provincial chicken marketing scheme is not to set quotas or fix prices for exported goods or to attempt to regulate interprovincial or export trade. As in the Egg Reference, its purpose is to establish rules that allow for the organization of the production and marketing of chicken within Quebec and to control chicken production to fulfill provincial commitments under a cooperative federal-provincial agreement. Any impact of this legislation on extraprovincial trade is incidental.
With respect, I see no principled basis for disentangling what has proven to be a successful federal-provincial merger. Because provincial governments lack jurisdiction over extraprovincial trade in agricultural products, Parliament authorized the creation of federal marketing boards and the delegation to provincial marketing boards of regulatory jurisdiction over interprovincial and export trade. Each level of government enacted laws and regulations, based on their respective legislative competencies, to create a unified and coherent regulatory scheme. The quota system is an attempt to maintain an equilibrium between supply and demand and attenuate the inherent instability of the markets. To achieve this balance, it cannot exempt producers who seek to avoid production control limits by devoting all or any of their production to extraprovincial trade.
[34] The scheme described by Abella J. is very similar to the scheme before us. In submissions made to us after the original hearing as to the impact of the Pelland case on this one, counsel for the respondents sought to distinguish Pelland because Mr. Pelland owned quota and received benefits, including price protection, from being a member of the Federation. Pelland, it was submitted, did not deal with such a situation. Rather, it was a case without an international dimension, whereas the present respondents deal only in international sales. There is no reasoning in Pelland as to the restriction of international sales.
[35] In my view, these arguments do not distinguish the Pelland case, which clearly upholds the right of the federal and provincial governments to co-operatively create an agricultural supply management program for an agricultural product under which no production of that product for any purpose can take place without a quota. It still remains the case that, as Pigeon J. put it: “No operator can claim exemption from provincial control by electing to devote his entire output to extraprovincial trade.” The case before us is not, as the respondents submit, a matter of CFO seeking to extend its “cartel” to chicken farmers who produce for the international trade; rather it is the respondents seeking to evade a constitutionally valid scheme which provides for limiting the total production of chicken within Ontario, without regard to the intentions of individual farmers as to where it will be sold, in order to create an orderly market in the product.
[36] In my view, the serious issue to be tried is not so much the constitutional validity of the scheme, but whether there are international obligations which impact upon the scheme. The respondents defend upon the basis that CFO and CFC are conducting a “domestic cartel” which they are attempting to expand beyond the Canadian market which is beyond their delegated powers and contrary to Canada’s international trade obligations. They base this position on certain provisions of NAFTA and of the NAFTA Implementation Act, S.C. 1993 c. 44, including article 309 of NAFTA, which they assert prevents the imposition of any restriction upon the export of goods destined for the U.S. The motion judge doubted whether such a defence would survive a summary judgement motion, and so do I. The constitutionally valid imposition of controls upon the production of a product, without reference to where it might be sold, seems unlikely to meet the test of restriction upon the export of goods. But it was not his task, nor is it mine, to determine the issue; only to decide that it exists. Its apparent strength may need to be considered at a later stage of the analysis.
Irreparable Harm
[37] The second element in the analysis is whether the applicant for the injunction has demonstrated that, in its absence, he will suffer irreparable harm. The motion judge found that CFO would be adequately compensated by damages after trial if it was successful. It is in this analysis that the decision appealed from fell into error. The action is to enforce the public right in the enforcement of a chicken marketing scheme enacted by co-operative federal and provincial legislation which created and empowered CFO and CFC to administer that scheme. One function of CFO under the scheme is to ensure that the total production of chicken in Ontario for internal, extraprovincial or export use does not exceed the quota allocated to Ontario.
[38] Pursuant to that scheme, CFO issued Directions to the respondents to cease and desist in their production and marketing of chicken without having the necessary quota. The respondents did not appeal these Directions through the administrative appeal system provided in the legislation; they simply ignored them. As a result, the orderly marketing scheme contemplated by Parliament and the Legislature is frustrated. In my view, the authorities show that this is not a situation where monetary damages at the end of the day address the impact of the actions of the respondents.
[39] In RJR, supra, at paragraph 64, the Supreme Court stated:
The decision in Metropolitan Stores, 1987 79 (SCC), [1987] 1 S.C.R. 110 at p. 149, made clear that in all constitutional cases the public interest is a 'special factor' which must be considered in assessing where the balance of convenience lies and which must be "given the weight it should carry." This was the approach properly followed by Blair J. of the General Division of the Ontario Court in Ainsley Financial Corp. v. Ontario Securities Commission (1993), 1993 5552 (ON SC), 14 O.R. (3d) 280, at pp. 303-4:
Interlocutory injunctions involving a challenge to the constitutional validity of legislation or to the authority of a law enforcement agency stand on a different footing than ordinary cases involving claims for such relief as between private litigants. The interests of the public, which the agency is created to protect, must be taken into account and weighed in the balance, along with the interests of the private litigants.
[40] In Attorney General of Canada v. Fishing Vessel Owners' Association of B.C., 1985 5505 (FCA), [1985] 1 F.C. 791, the Federal Court of Appeal overturned an injunction restraining Fisheries Officers from implementing a fishing plan adopted under the Fisheries Act, R.S.C. 1970, c. F-14, for several reasons, including, at p. 795:
The Judge assumed that the grant of the injunction would not cause any damage to the appellants. This was wrong. When a public authority is prevented from exercising its statutory powers, it can be said, in a case like the present one, that the public interest, of which that authority is the guardian, suffers irreparable harm.
[41] In RJR, supra, at paragraph 72, the Supreme Court said:
A court should not, as a general rule, attempt to ascertain whether actual harm would result from the restraint sought. To do so would in effect require judicial inquiry into whether the government is governing well, since it implies the possibility that the government action does not have the effect of promoting the public interest and that the restraint of the action would therefore not harm the public interest. The Charter does not give the courts a licence to evaluate the effectiveness of government action, but only to restrain it where it encroaches upon fundamental rights.
[42] This second branch of the RJR test includes a consideration of the harm to the regulatory system when individuals are able to knowingly and deliberately ignore it. Such harm is irreparable as no one can measure in dollars the impact of continued defiance of the law. In the present case, no evidence was provided to show that there was any public interest to be served by not applying the scheme to the activities of the respondents. Only their private interests are so served. The appellant has shown that it, as guardian of the public interest in maintaining the integrity of the scheme which it and CFC administer, will suffer irreparable harm if the injunction is not granted.
Balance of Convenience/Inconvenience
[43] The third branch of the RJR test requires an assessment of the balance of convenience/inconvenience. At paragraphs 80-81 of RJR, the Supreme Court said:
When the nature and declared purpose of legislation is to promote the public interest, a motions court should not be concerned whether the legislation actually has such an effect. It must be assumed to do so. In order to overcome the assumed benefit to the public interest arising from the continued application of the legislation, the applicant who relies on the public interest must demonstrate that the suspension of the legislation would itself provide a public benefit.
We would add to this brief summary that, as a general rule, the same principles would apply when a government authority is the applicant in a motion for interlocutory relief. However, the issue of public interest, as an aspect of irreparable harm to the interests of the government, will be considered in the second stage. It will again be considered in the third stage when harm to the applicant is balanced with harm to the respondent including any harm to the public interest established by the latter.
[44] The major consideration urged on us by the respondents is that the proposed injunction would put them out of the chicken business without having had their day in court to challenge the marketing scheme. It is certainly a drastic step to take to enjoin the continuation of a business from which persons are earning some of their livelihood before there is a trial. There will likely be financial hardship involved. However, such hardship can be alleviated, should the respondents be successful in their action, by damages at the end of the day.
[45] On the other hand, as the appellant points out, the respondents are experienced commercial chicken producers, formerly quota holders, who have not inadvertently come to this position. They have at all times been aware of the rules of the marketing scheme and have chosen to defy them for personal gain. Although they submit that they spent months discussing their proposed activities with government, the evidence shows that they were consistently informed of the need for compliance with the rules and the need for quota. For example, the Special Assistant to Lyle Van Clief, Minister of Agriculture & Agri-Food wrote to them clearly setting out the requirement for quota well before they began their business without acquiring quota.
[46] The respondents have twice ignored Directions to cease, neither complying nor appealing. They have other lines of business not affected by the injunction sought; their damage is entirely financial and could be compensated for if they are ultimately successful.
[47] Finally, it is not without significance that under the scheme, the respondents have no right to produce or market chickens within Ontario without quota, because of the broad definition of marketing in the Ontario legislation. The control of the production of chickens is clearly a provincial power, even if trading in chickens extraprovincially is federally regulated, and the respondents’ NAFTA argument only attacks the delegation of federal power. The point is that no such delegation is necessary to enable a province to prohibit the production of chickens without quota. The contrary position has been untenable since the Egg Reference, as discussed above.
[48] Weighing all the factors discussed above, I am of the view that the appellant has demonstrated a serious issue to be tried as to the respondents’ right to do as they are doing, an irreparable harm to the integrity of the regulatory scheme if the respondents are permitted to continue to ignore it, and that the balance of convenience favours prohibiting the respondents from continuing to profit from their defiance of the legislation.
[49] I would allow the appeal and issue the injunction requested, with costs. I would make no order as to the future conduct of the trial as we are not in as good a position to do this as a judge in the place where the trial is to be held. The quantum of the costs may be addressed in written submissions.
_________________
Lane J.
Jarvis J.
Swinton J.
DATE: September, 2005