Federal Court Decisions

 

 

Date: 20061116

Docket: T-105-06

Citation: 2006 FC 1390

Ottawa, Ontario, November 16, 2006

PRESENT:     The Honourable Barry Strayer

 

 

BETWEEN:

D. JOHN HUSBAND

Applicant(s)

and

 

THE CANADIAN WHEAT BOARD

Respondent(s)

 

REASONS FOR JUDGMENT AND JUDGMENT

 

Introduction 

[1]               This is an application for judicial review in respect of a letter from the Canadian Wheat Board (CWB) to the Applicant of January 12, 2006 which the Applicant characterizes as “denial of an export licence requested by the applicant for a feed barley grown and owned by the applicant”.

 

Facts

[2]               The Applicant is an organic grain grower in the province of Saskatchewan.  He grows an unregistered variety of barley named “Arabian Blue”.  He wanted to export some of this barley to the United States where he says he had a potential buyer.  On January 4, 2006, he wrote to the CWB requesting “no buy-back export licence for feed barley in the United States”.  He described the barley simply as an “unregistered variety known as ‘Arabian Blue’” that he grew on his farm.  On January 12, 2006 the CWB sent him a letter in response.  That letter, signed by David Watt, Export Licensing Administrator of the CWB, began by interpreting the Applicant’s letter as a request “under the CWB Ancient Grains Policy to export an additional unknown variety of barley”.  The letter went on to set out three criteria by which the CWB would determine whether the barley would come within the Ancient Grains Policy.  The import of these criteria was as to whether the grain physically resembled other grains sold by the CWB and whether it would be competitive with the regular Canadian varieties if sold abroad.  The letter requested that the Applicant provide further information on these matters and provide the CWB with a sample.  The letter concluded by saying that if the Applicant was unable to provide such documentation he could export the barley by “doing the Producer Direct Sale and as a feed barley”.

 

[3]               The advantage of being able to sell the barley under the Ancient Grains Policy would be that he could get an export licence for the barley without going through the Producer Direct Sales (PDS) process otherwise knows as “buy-back”.  As I understand it, under the Ancient Grains Policy the CWB would issue an export licence without itself buying the barley and reselling it to the exporter.  If on the other hand he was obliged to go through the PDS or buy-back program because his barley physically resembled regular Canadian varieties and could affect the market for those varieties in the United States, then the CWB would normally buy the barley at the price it would pay for other barley in Canada and then sell it back to the Applicant for export charging a mark-up equivalent to the estimated selling price of similar barley sold by the CWB in the United States. 

 

[4]               The Applicant did not respond to the request by the CWB in the January 12, 2006 letter for the information he would have to provide to satisfy the CWB that his Arabian Blue barley would come within the Ancient Grains Policy.  He says that he knew from an earlier exchange with the CWB in August, 2002, that a similar barley would not qualify for the Ancient Grains Policy.  He says that for that reason he did not pursue the matter further.  He regarded the letter of January 12, 2006 as a refusal of an export licence by which he really meant that it was a decision that he would have to export his barley through the PDS or buy-back process.  This he refuses to do and so within a week of the writing of the letter by Mr. Watt of the CWB the Applicant filed this application for judicial review.

 

[5]               It is necessary to set out the most relevant legislation and regulations.  The Canadian Wheat Board Act (the Act), R.S. 1985, c. C-24 provides as follows:

 

[6]               The Canadian Wheat Board Regulations (the regulations), C.R.C., c. 397 provide as follows:

 

[7]               The position of the CWB is that the buy-back program is provided for by Section 14 of the regulations which in turn is authorized by para. 46(d) of the Act.

 

[8]               The Applicant contends that:

1.             the buy-back or PDS program is not mandated by section 14 of the regulations and/or that regulation is not authorized by the Act;

2.             this program is in violation of Article 309 of the North American Free Trade Agreement (NAFTA) which by section 61 of the Act the CWB is required to comply with; and

3.             section 14 of the regulations is arbitrarily applied in a discriminatory fashion based on the province of production, in violation of section 6 of the Canadian Charter of Rights and Freedoms

 

[9]                In his oral submissions, it was unclear as to whether the Applicant was still pressing points 2 and 3.  As I understand it, he does not challenge the validity of any law or regulation but thinks the policies of the CWB are contrary to NAFTA or the Charter.

 

Analysis

Preliminary Considerations

[10]           It is certainly arguable that this application is premature since the CWB did not deny the Applicant an export licence by its letter of January 12, 2006.  It simply told him how to obtain a licence under the Ancient Grains Policy or in the alternative told him that he could pursue the PDS program in order to obtain an export licence.  Instead, he chose to litigate.  With some hesitation I have concluded that I should consider the application for judicial review.  As the Applicant explains it, he knew from previous correspondence (see Applicant’s Record page 19) that barley like his Arabian Blue would not be acceptable in the Ancient Grains program.  He therefore regarded the letter of January 12, 2006 as a direction from the CWB that he would be obliged to seek an export licence through the PDS program.  As he regards that program as invalid he was entitled to regard the letter of January 12, 2006 as a “decision” of the CWB that he was obliged to seek an export permit through that program.

 

[11]           Having said that, I am obliged to limit my considerations to issues that this Applicant is entitled to raise: namely issues that are pertinent to his particular situation and this particular decision.  These are limited to the validity of the PDS program in relation to the selling of grain produced within the “designated area” (the provinces of Manitoba, Saskatchewan, Alberta and the Peace River area of British Columbia), the area in which the CWB is sole marketer (with minor exceptions) of wheat and barley intended for export from that area.  The only relevant export question is the intended export of barley from Saskatchewan to the United States.  I therefore need not consider the many and varied attacks which the Applicant makes on the whole CWB marketing system. 

 

[12]           Section 57 of the Federal Courts Act, R.S., 1985, c. F-7, requires that notice be given to the Attorney General of Canada and the Attorney General of each province before this Court can judge an Act or regulation to be constitutionally invalid, inapplicable or inoperable.  No such notice was given in this case to the provincial Attorneys General.  The Applicant insists that he is not attacking the “constitutional validity, applicability or operability” of any Act of Parliament or regulation.  But he is attacking, he says, the policy of the CWB.  I accept that to the extent that he is arguing that such policy is not authorized by the Act or the regulations he is not raising a constitutional issue.  But when he argues that such policy is contrary to the Charter, in my view he is arguing that the Act cannot be applied in this way consistently with the constitution.  To my mind that is an issue of “constitutional operability” and cannot be addressed without proper notice under section 57.  See Canada (Information Commissioner) v. Canada (Prime Minister), [1993] 1 F.C. 427 at paras. 90-92.)  In spite of his insistence that he is not attacking the constitutional validity of any law, the Applicant’s various submissions are also replete with suggestions that various provisions of the Act are not within the powers of Parliament under section 91[2] of the Constitution Act, 1867, in respect of the regulation of trade and commerce.  Such speculations, if they are relevant in any way to the issues before me, cannot be entertained because of the lack of notice under section 57.

 

Is the Producer Direct Sales Program Legally Authorized?

[13]           The issue here is whether the PDS or “buy-back” program is authorized by section 14 of the regulations and whether the Governor in Council was authorized by section 46(d) of the Act to make such a regulation.

 

[14]           Taking the second question first, I am at a loss to understand the Applicant’s argument that the Governor in Council was not empowered by paragraph 46(d) of the Act to adopt section 14.  Paragraph 46(d) enables the Governor in Council “to prescribe the terms and conditions on which licences [for export from Canada] may be granted” including a requirement for the recovery from the exporter of a sum of money.  The nature of that sum is described in virtually identical terms in the regulations as in the Act, with minor changes which I find to be immaterial.  The major innovation by the Governor in Council in the exercise of its delegated power was to add the condition in paragraph 14(a) of the regulations that to issue an export permit the CWB should be satisfied that such export licence would not adversely affect the CWB’s own marketing.  It appears to me that this is well within the statutory power of the Governor in Council to prescribe terms and conditions upon which licences may be issued.

 

[15]           Turning to the first question as to whether paragraph 14(a) of the regulations authorizes the buy-back program, I have tried, through repeated review of the Applicant’s written and oral submissions, to understand his argument that paragraph 14(a) does not sustain the buy-back program.  In effect he says the language is not apt because it nowhere refers to “buy-back” or purchase and sale by the CWB of grain intended for marketing abroad by its producer.

 

[16]           However, paragraph (d) does authorize the CWB to require the Applicant for an export licence to pay the corporation “a sum”.  It appears to me to be open to the CWB to administer the collection of the sum first by means of a notional purchase of the grain from the producer, in the same manner as the CWB purchases all other grains, and a notional resale to the producer at a mark-up equivalent to the sum which paragraph (b) authorizes it to collect; all of which without the grain in question actually changing hands. 

 

[17]           The Applicant argues that paragraph 14(b) implicitly requires that the price in the export market be higher than the domestic price.  He asserts (without producing any evidence to that effect) that there is no such difference today and that therefore the paragraph is a nullity.  What paragraph 14(b) requires is that the CWB collect a sum of money that in its opinion “represents the pecuniary benefit enuring to the applicant [arising from the licensing system that controls all sales of Canadian grain abroad]... and the then existing differences between the prices of that grain or those products inside and outside Canada”.  This language does not require that a sum be paid if the CWB concludes that there is no benefit to the Applicant or that there is no difference between the prices of that grain inside and outside Canada.  Therefore paragraph 14(b) is not a nullity but its practical application may change depending on market conditions.

 

[18]           Another argument which the Applicant pressed strongly was that there can be no buy-back system implicit in paragraph 14(b) in respect of export sales because section 14.1 of the regulations, above, authorizes the CWB to grant licences for transportation of grain from one province to another “but no fee shall be charged for such a licence”.  How, he asks, can there be a fee authorized for international sales when there can be none for inter-provincial sales?  But it is obvious that the two sections cover quite different regimes and there is no legal reason why they have to be the same.  It appears that section 14.1 is authorized by paragraph 46(e) of the Act which contains different conditions from those in paragraph 46(d) which authorizes section 14 of the regulations.

 

[19]           It is true that section 14 does not specifically require the PDS or buy-back system:  such a system is not spelled out specifically in section 14.  However, I can see no reason why it is not open to the CWB to collect appropriate sums in this manner and I see nothing special in the Applicant’s case which should exempt him from the operation of that system.  As counsel for the Respondent asserted, if the Applicant is right then this section is inapplicable to any would-be exporter.  If this were the case, the question would remain whether any grain could be exported since by section 45 of the Act, above, all export from Canada by anyone other than the CWB is prohibited except where permitted under the regulations. 

 

[20]           The Applicant made various assertions that, if relevant, appear to raise questions as to the constitutional validity of section 14 of the regulations.  He asserts in various places that it is not true trade and commerce legislation because it prohibits instead of regulates trade and commerce, that it is taxation legislation, or somehow impinges on the “agriculture” power.  While I think there is no substance to any of these arguments, they are precluded by the fact that no notice of a constitutional issue was given to the Attorneys General of the provinces. 

 

Does Paragraph 14(d) of the Regulations Violate NAFTA?

[21]           The Applicant relies on Article 309 of NAFTA which provides in part as follows:

Article 309: Import and Export Restrictions

 

1. Except as otherwise provided in this Agreement, no Party may adopt or maintain any prohibition or restriction on the importation of any good of another Party or on the exportation or sale for export of any good destined for the territory of another Party, except in accordance with Article XI of the GATT, including its interpretative notes, and to this end Article XI of the GATT and its interpretative notes, or any equivalent provision of a successor agreement to which all Parties are party, are incorporated into and made a part of this Agreement.

 

2. The Parties understand that the GATT rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.

 

3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, nothing in this Agreement shall be construed to prevent the Party from:

 

limiting or prohibiting the importation from the territory of another Party of such good of that non-Party; or

requiring as a condition of export of such good of the Party to the territory of another Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.

4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on request of any Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in another Party.

 

5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 301.3.

 

[22]           The Applicant relies on the language that “no Party may adopt or maintain any prohibition or restriction...on the exportation or sale for export of any good destined for the territory of another Party...”.  He then refers to section 61.1 of the Act which provides as follows:

 

Thus he concludes that the CWB must exercise its powers in such a way as not to prohibit or restrict the sale for export of any good destined for the United States. 

 

[23]           Counsel for the Respondent responded that pursuant to the North America Free Trade Agreement Implementation Act, S.C. 1993, c. 44, subsection 6(2), no person can take proceedings of any kind to enforce or determine any right or obligation under the agreement without the consent of the Attorney General of Canada.  The Applicant has no such consent.  That aside, Article 309 of NAFTA upon which the Applicant bases his case contains, after the proscription of restrictions on exports to member states, the words “except in accordance with Article XI of the GATT...”.  Article XI of the General Agreement on Tariffs and Trade (GATT) section 1 says that:

No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

 

 

Thus this section preserves the rights to have “charges...made effective through...import or export licences or other measures...”.  Paragraph 2(1) of Article XI says that:

The provisions of paragraph I of this Article shall not extend to the following:

 

...

 

(b) Import and export prohibitions or restrictions necessary to the application of standards or regulations for the classification, grading or marketing of commodities in international trade;

 

 

[24]           Article 1502 of NAFTA also preserves the right of parties to designate monopolies in goods or services as long as they act in accordance with “commercial considerations”.  Such considerations presumably can include seeking the best price for the most Canadian producers through monopoly control of export sales.

 

[25]           It is also interesting to note that Article XVII of the GATT provides in paragraph 1(a) that if contracting parties establish a state enterprise with exclusive or special privileges such enterprise shall in its purchases or sales involving either imports or exports act in a non-discriminatory way as prescribed in the agreement for governmental measures affecting imports or exports by private traders.  Thus state trading enterprises are recognized for the purposes of GATT.  In March, 2003 the United States made a complaint to the World Trade Organization (WTO) against Canada under Article XVII, paragraph 1 of the GATT, in part because of “the CWB’s exclusive right to purchase and sell Western Canadian wheat for export and for domestic human consumption...”.  The matter came before the Appellate Body of the WTO in 2004 and in August 30, 2005 it issued a report to the effect that the United States had failed to establish that Canada has acted inconsistently with its obligation under Article XVII paragraph 1 of GATT.  See Canada – Measures Related to Exports of Wheat and Treatment of Imported Grain, August 30, 2004, WT/DS 276/AB/R at para. 215. 

 

[26]           As Article 309 of the NAFTA, cited by the Applicant permits a member state to impose restrictions on exportation in accordance with Article XI of the GATT, there would appear to be no violation of NAFTA in the export licence procedure of the CWB.  It is thus unnecessary for me to consider further the application of section 61.1 of the Act.

 

Does the CWB Export Licence Policy Contravene Section 6 of the Charter?

[27]           For reasons which I have already stated I will not address any issue as to the constitutional validity of the Act or the regulations.  Nor for the reasons I have already given will I consider whether the policy of the CWB is inconsistent with the Charter as that in my view would involve a question of the “constitutional operability” of the relevant legislation. 

 

[28]           By way of explanation, however, I will note that the Applicant’s argument seems to be that farmers within the designated area are discriminated against because to export grain they have to go through the buy-back process in order to get an export licence.  He asserts, however, (and I have no evidence to this effect) that grain producers in other provinces outside the designated area can readily get their export licences without any buy-back.  I will only note that the question of whether the different treatment of producers in the designated area as compared to those outside is a violation of section 6 of the Charter because of the difference of treatment based on province of residence has been carefully considered and rejected.  See, for example, Archibald v. The Queen, [2000] F.C.J. No. 857 (F.C.A.) (relying strongly on dicta by Justices Iacobucci and Bastarache in Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157). 

 

[29]           In closing I would observe, as many other courts have done in dealing with legal challenges to the Act and the policies of the CWB, that what seems to be at issue are the political and economic wisdom of Canada’s grain marketing scheme.  These are not matters for the Court to decide.

 

Disposition

[30]           I will therefore dismiss this application for judicial review with costs.

 

JUDGMENT

            THIS COURT ADJUDGES that this application for judicial review be dismissed with costs.

 

 

 

“ B. L. Strayer ”

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

 

DOCKET:                                          T-105-06

 

STYLE OF CAUSE:                          D. JOHN HUSBAND

                                                            v.

                                                            THE CANADIAN WHEAT BOARD

 

 

 

PLACE OF HEARING:                    Regina, SK

 

DATE OF HEARING:                      October 12, 2006

 

REASONS FOR JUDGMENT

AND JUDGMENT:                          STRAYER B.

 

DATED:                                             November 16, 2006

 

 

APPEARANCES:

 

Mr. D. John Husband	FOR THE APPLICANT (self-represented)
Mr. Thor Hansell	FOR THE RESPONDENT

 

SOLICITORS OF RECORD:

 

(not applicable)	FOR THE APPLICANT
Aikins, MacAulay & Thorvaldson LLP Winnipeg, Manitoba	FOR THE RESPONDENT