British Columbia Chicken Marketing Board v. Reid

2002BCSC1451 Citation: British Columbia Chicken Marketing Board v. Reid et al. Date: 20021024 2002 BCSC 1451 Docket: L021509 Registry: Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN:

BRITISH COLUMBIA CHICKEN MARKETING BOARD

PETITIONER AND: BRAD REID, INDIVIDUALLY AND DOING BUSINESS AS

THOMAS REID ORGANIC CHICKEN FARM

RESPONDENT

REASONS FOR JUDGMENT

OF THE HONOURABLE madam JUSTICE lynn smith Counsel for the Petitioner: J. L. Hunter, Q.C. K. Leung (Articled Student) Counsel for the Respondent: C. Harvey, Q.C. C. Watson (Articled Student) Counsel for the Attorney General of British Columbia: G. Copley, Q.C. Place and Date of Hearing: Vancouver, BC July 10 and August 28, 2002 Introduction: [1] The petitioner seeks an injunction requiring the respondent to cease production of chicken until he has received a Grower's Licence and a permit. Facts: [2] Brad Reid has been producing organic chicken since 1994 under the name "Thomas Reid Farms". He currently produces about 2,000 chickens per week. The Certified Organic Association of British Columbia ("COABC") sets standards which Mr. Reid's chickens meet, entitling him to label them "organic". Mr. Reid deposed that, as an organic producer, he does not use synthetic inputs or the kinds of medications routinely given to conventionally raised chickens in Canada. He stated that organic production requires more humane methods and organic feeds and, for all of these reasons, entails huge risks and large production costs. [3] The British Columbia Chicken Marketing Board ("Chicken Board" or "BCCMB") is one of a number of marketing boards established for various agricultural sectors in accordance with the Natural Products Marketing (BC) Act, R.S.B.C. 1996, c.

330. The mandate of the BCCMB is to regulate the production and marketing of chicken, pursuant to the British Columbia Chicken Marketing Scheme, 1961, B.C. Reg. 188/61 (the "Scheme"). [4] Mr. Reid has refused to apply for a permit or to acquire a grower's licence from the BCCMB and has not been paying any of its fees or levies. The only other substantial growers of organic chicken in the province, Mr. and Mrs. Donaldson of Bradner Farms, are licensed and hold a permit from the BCCMB. They produce about 2000 chickens per week. Mr. Donaldson deposed that he considers organic chicken to be chicken. He pays permit fees and levies amounting to about 28 cents per bird and considers it unfair for a competitor to be producing organic chicken without paying the same fees and levies. [5] The B.C. Chicken Growers Association ("BCCGA") represents chicken growers in the province. Its President, Rick Thiessen, deposed that the position of the BCCGA is that a chicken is a chicken, and, whether or not a chicken is grown in a certified organic manner, it is still chicken regulated by the Chicken Board. The position of the BCCGA is that it is unfair to all other chicken growers if one grower does not have to comply with the scheme and pay the relevant permit fees and levies, while having the benefit of the supply-managed system. Mr. Thiessen deposed that, in his opinion, supply management of

chicken means that growers are paid a more consistent and probably higher price for chicken than otherwise would be the case. He stated that, because certified organic chicken commands a higher price in the market than non-organic chicken, what the other chicken growers are doing is effectively setting a floor price for Mr. Reid's chicken. Mr. Thiessen concluded his affidavit by stating that he has no desire to harm Mr. Reid's business, but wants the chicken industry in British Columbia to be fair to all participants and not allow one grower to have a free ride when all others must comply with the Chicken Board's regulations. [6] Mr. Reid deposed that when he started organic chicken production, the Chicken Board did not regulate that area at all, although it later began to regulate "specialty production" (which he says is different from organic production). He stated that he first had contact with the Chicken Board in 1996, then did not hear from them again until about 1998. At that time a series of discussions began. It flowed from a review of regulated marketing conducted by the British Columbia Marketing Board ("BCMB"), the body with overall responsibility for natural products marketing in the province. The nature of the issues and the debate at that time is revealed in an undated letter written in 1998 by the Honourable Corky Evans, then Minister of Agriculture, Fisheries

and Food, to the Chair of the British Columbia Egg Producers. He stated in part: Recently, I met with the Certified Organics Association of BC and organic producers and urged them to participate in the Review of Regulated Marketing. The review is an opportunity for a full consultation with all interested parties to propose and seek practical solutions to a variety of current challenges. I encourage you to consider organic producers and their organizations as part of your board's review and consultations. I want to be sure that regulated marketing schemes do not constrain the development of organic agricultural production and marketing. So much of the British Columbia market demand for organic foods is now being met by imported products - we can and should at least be able to supply our own market. With government support, British Columbia has implemented detailed standards for certified organic production and processing practices. I understand most organic producers currently operate outside the regulated marketing schemes, for a variety of reasons. A key issue for the review will be to consider whether organic producers can be accommodated in regulated marketing schemes today, or in the future. The ministry will be preparing policy option papers to stimulate discussions during the review by the BCMB and the various industry advisory committees. I look forward to the

deliberations and outcome of the review and to a new era for regulated marketing in this province. [7] After an unsuccessful mediation process in 1999 involving the Chicken Board and representatives of the COABC, in which Mr. Reid participated, the mediator recommended that the Ministry request a comprehensive proposal from the Chicken Board for integrating COABC organic production into the existing marketing system, that the Minister should then decide whether the proposal constitutes a fair and reasonable accommodation and, if not, that the Minister should recommend to the Lieutenant Governor in Council that a regulation be passed exempting COABC certified organic production from the chicken marketing board regime. The mediator further recommended that if the proposal was fair and reasonable in the Minister's opinion, the COABC and the Chicken Board should be so advised, with the understanding that full implementation would follow. Mr. Reid deposed that there were further meetings, new regulations and a request by the COABC to the BCMB for the establishment of a "British Columbia Certified Organic Marketing Commission" under the terms of the Natural Products Marketing (BC) Act. The material before me does not disclose what responses there were to the mediator's recommendation or the COABC request. [8] Mr. Reid deposed that he heard from the BCCMB again in February, 2002 when

he received a phone call from a Mr. Brian Hoven. Mr. Reid stated: I told him that I was not interested in talking since the BCCMB was not doing anything for the organic industry and the Regulations did not address the organic industry. [9] Mr. Reid deposed that he has incurred about $1.2 million in capital expenditures since 1994, on the understanding that organic chicken production was unregulated by the Chicken Board and that he did not require quota to produce organic chickens. [10] In response to Mr. Reid's affidavit, James Beattie, the General Manager of the Chicken Board, deposed that the Chicken Board has long had a program governing all "specialty" (non-conventional) production and that it has always considered organic chicken to be specialty chicken. Brian Hoven deposed that he is a Service and Inspection Representative of the BCCMB and that he began to try to contact Mr. Reid by attending at his farm on January 30, 2002. He returned again on February 2 and 8, 2002, called on February 10, 2002 and finally spoke on the telephone with someone he believed to be Brad Reid on February 12, 2002. Mr. Hoven stated that he told Mr. Reid that the Chicken Board was advising growers who did not currently hold permits or licences about the August 15, 2000 "Regulations" and about how the growers could become compliant with them. According to Mr. Hoven, Mr. Reid replied that he was

not interested in hearing anything further or having a meeting because he had seen the new "Regulations" and in his opinion the Chicken Board did not have the right to regulate his chicken, as it was organic chicken. Mr. Hoven deposed that he advised Mr. Reid that the "Regulations" applied to all chicken and that the Chicken Board intended to proceed with enforcement action against those growers who refused to become compliant with the "Regulations", and encouraged him to meet and discuss the matter, but that Mr. Reid refused. Mr. Hoven swore that at the end of the conversation he advised Mr. Reid that if he refused to meet or discuss the issue further or become compliant with the "Regulations", the Board would have to take the necessary legal steps to halt his production. [11] On April 8, 2002, solicitors for the BCCMB wrote to Mr. Reid as follows: Dear Mr. Reid: Re: Cease and Desist Chicken Production and Marketing We are the solicitors for the B.C. Chicken Marketing Board (the "Board"). The Board has knowledge that you and the Thomas Reid Organic Chicken Farm are engaged in the production of chicken and that you do not hold Board-issued quota or a Board-issued permit for this production. The Regulations of the Board, made effective August 15, 2000, provide, in some of their relevant parts, as follows: "All chickens shall be produced on a Board quota unless otherwise

determined by the Board" (Regulation 2). "Only persons to whom a valid quota has been allotted and who currently hold a valid quota shall produce any chicken" (Regulation 3). "No person shall commence or continue to engage in the production of chicken except under the authority of a Board license as a grower of chicken" (Regulation 23). "Chicken" is defined in Regulations as "any class of chicken under six months of age not raised or used for egg production, grown in British Columbia " (Part 1 - Definitions). These and numerous other requirements under the Regulations apply to the chicken grown on the Thomas Reid Organic Chicken Farm. Neither you nor the Thomas Reid Organic Chicken Farm has a licence, quota or a permit from the Board for this production and, as a result, you and your farm are seriously in breach of the Board's Regulations. As you are no doubt aware, staff of the Board have attempted to make contact with you on several occasions in the past to discuss with you how the Thomas Reid Organic Chicken Farm could become compliant with the Board's Regulations through Part 43 of the Regulations, which create a New Entrant, Niche Market and Specialty Program. This Part of the Regulations allows those who were producing chicken at the time of the entry into force of the new Regulations to become compliant with the new Regulations by receiving a permit, on application to

the Board. I enclose a copy of Part 43 of the Regulations. We are advised that you have refused to discuss this Program or your farm's participation in it with Board staff. You have also refused to become compliant with the Board's Regulations. Accordingly, in the circumstances and pursuant to, among others, s. 4.01(a), (c), (c.1) and (c.2) of the British Columbia Chicken Marketing Scheme, 1961, B.C. Reg. 188/61, we are instructed to advise you that the Board has ordered that you and Thomas Reid Organic Chicken Form [sic] immediately cease production and marketing of chicken, as defined in the Regulations. For your information, you have the opportunity to appeal this order to the British Columbia Marketing Board. Notice of the appeal must be received by the B.C.M.B. within thirty days after you first receive notice of this Order. [12] Mr. Reid has appealed this cease and desist order to the BCMB. The Pre-Hearing Conference Report with respect to the appeal sets out the following: ISSUE(S) TO GO TO HEARING: 6. Did the Chicken Board err in applying its August 15, 2000 regulations to the chicken grown by Brad Reid doing business as Thomas Reid Organic Chicken Farm?

7. If the August 15, 2000 regulations do apply to that chicken, whether Part 43 of the regulations was improperly passed?

GROUNDS 8. The Appellant is a certified organic farm that has been in the business of producing, marketing and distributing organic chicken since 1994.

9. The Appellant is not in the regulated system in any way.

10. There was limited consultation with non-conventional producers in the development of the regulations and organic producers (the Appellant and organic organizations more generally) were not invited into the consultation process at all.

11. Nothing in the regulations applies to organic production and there is no reason for the Appellant to believe he is subject to the regulations.

12. The Ministry of Agriculture, Food and Fisheries has stated that certified organic production will be dealt with (regulated) in a different way.

13. The regulations are unfair in that they do not take into consideration how organic products are produced and marketed to the consumer.

14. The Chicken Board's order amounts to an expropriation of the Appellant's business.

15. The regulations do nothing to serve the consumer, which the Chicken Board is responsible for doing. [13] Counsel advised that the appeal is set to be heard in mid-November. Mr. Reid has not sought a stay of the order pending the appeal. He has, however, continued to produce organic chicken. Statutory Provisions: [14] As authority for the injunction which it seeks to enforce its cease and desist order, the petitioner relies on the Natural Products Marketing (BC) Act sections 15 and 17: 15 (1) On application by the Provincial board, a marketing board or commission and on being satisfied that a provision of this Act or the regulations or a provision of a marketing scheme made by the Provincial board, marketing board or commission under this Act or the regulations or an order, rule, determination or decision of the Provincial board, marketing board or commission made under this Act or made under powers exercisable, with the approval of the Lieutenant Governor in Council, under the federal Act, is not being complied with, the Supreme Court may (a) order and require a person to do promptly or within or at the time specified in the order, an act or thing that the court considers necessary for the purpose of compelling that person to comply with this Act, the regulations, the marketing scheme or the order, rule, determination or decision of the Provincial board, marketing board or

commission, and (b) forbid, restrain or enjoin the doing or continuing of an act or thing that is contrary to this Act, the regulations, the marketing scheme or the order, rule, determination or decision of the Provincial board, marketing board or commission. (2) If special circumstances require, on an application under subsection (1) made without notice to anyone, the court may make an interim order but the order must not be for a longer period of time than the court considers necessary for the purpose of enabling the matter to be heard and determined. 17 (1) An order, rule, determination or decision made by the Provincial board, a marketing board or commission or under this Act or the regulations or made under a power exercisable under the federal Act, may be enforced, and the breach of an order, rule, determination or decision may be restrained, without proof of damage and whether or not a penalty is imposed for the breach, by action or proceeding in the Supreme Court. (2) An action or proceeding under subsection (1) may be brought or taken by and in the name of the Provincial board or a marketing board or commission, and neither the government nor the Attorney General is a necessary party to the action or proceeding. [15] The petitioner also relies on the Scheme which states: 1.02 In this scheme, unless the context otherwise requires: "regulated product" means any class of

chicken under 6 months of age not raised or used for egg production and any article of food or drink wholly or partly manufactured or derived from the regulated product; ... 4.01 Subject to section 4.02 (2), the board shall have power within the Province to promote, regulate and control in any and all respects, to the extent of the powers of the Province, the production, transportation, packing, storing and marketing, or any of them, of the regulated product, including the prohibition of such transportation, packing, storing and marketing, or any of them, in whole or in part, and shall have all powers necessary or useful in the exercise of the powers hereinbefore or hereinafter enumerated, and without limiting the generality thereof shall have the following powers: (a) to regulate the time and place at which, and to designate the agency through which, any regulated product shall be packed, stored or marketed; to determine the manner of distribution, the quantity and quality, grade or class of the regulated product that shall be produced, transported, packed, stored or marketed by any person at any time; to prohibit the production, transportation, packing, storage or marketing of any grade, quality or class of any regulated product; and to determine the charges that may be made for its services by any designated agency; I to require any or all persons engaged in the production,

transportation, packing, storing or marketing of the regulated product to register with and obtain licences from the board; (c.1) to establish, issue, permit transfer, revoke or reduce quotas to any person as the board in its discretion may determine from time to time, whether or not the same are in use, and to establish the terms and conditions of issue, revocation, reduction and transfer of quotas, but such terms and conditions shall not confer any property interest in quotas, and such quotas shall remain at all times within the exclusive control of the board; (c.2) to issue permits upon such terms and conditions as to issuance and revocation as is deemed necessary; (d) to fix and collect yearly, half-yearly, quarterly or monthly licence fees from any or all persons producing, transporting, packing, storing or marketing the regulated product; and for this purpose to classify such persons into groups and fix the licence fees payable by the members of the different groups in different amounts; to fix and collect from such persons fees for services rendered or to be rendered by the board; and to recover such licence and other fees by suit in any court of competent jurisdiction; (l) to make such orders, rules and regulations as are deemed by the board necessary or advisable to promote, control and regulate effectively the production, transportation, packing, storage or marketing

of the regulated product, and to amend or revoke the same [16] In the letter of April 8, 2002 setting out the cease and desist order, there is extensive reference to the Chicken Board's new set of "Regulations" dated August 15, 2000. Mr. Hoven deposed that his approach to Mr. Reid in February, 2002 was to discuss compliance with the new "Regulations". The validity of these "Regulations" is the subject of the constitutional question raised by the respondent which will be discussed below. At the hearing, Mr. Hunter argued that those "Regulations" are valid but that even if they are not, the petitioner's authority to issue the cease and desist order flows from the Natural Products Marketing (BC) Act and the Scheme, the validity of which are not contested. [17] The relevant portions of the "Regulations" of August 15, 2000 state: Part 1 Definitions "chicken " means any class of chicken under six months of age not raised or used for egg production, grown in British Columbia, and includes any article of food or drink wholly or partly manufactured or derived therefrom.. Part 2 Exemptions 1) These Regulations apply to all chicken except: a. chicks, pullets, and cockerels marketed for the purpose of being used for the production of eggs; b. chicks that are sold to a grower for production of chicken by the grower on the grower's premises and for consumption by the grower on the grower's

premises; c. chicks that are sold to a person for production of chicken by that person on that person's premises and for consumption by that person on that person's premises; d. chicken used for the production of eggs or hatching eggs that have completed a normal useful laying cycle or breeding cycle for the production of eggs or hatching eggs; and e. chicken used for home consumption in the amount not exceeding 200 birds per calendar year. Part 3 Production of Chicken 2) All chicken shall be produced on a Board quota unless otherwise determined by the Board.

3) Only persons to whom a valid quota has been allotted and who currently hold a valid quota shall produce any chicken. Part 4 Marketing of Chicken 6) All chicken shall be marketed on a Board quota unless otherwise determined by the Board.

7) Only persons to whom a quota has been allotted and who currently hold a valid quota shall market any chicken. Part 6 Licence As A Grower 22) No person shall commence or continue to engage in the production of chicken except under the authority of a Board licence as a grower of chicken. Part 12 Fees and Levies 48) Every grower shall pay to the Board levies and over production levies at rates set periodically by the Board on the basis of cents per kilogram, live weight, of chicken sold. Part 43 New Entrant, Niche Market and Specialty Program* 205) The Board hereby establishes a 12 year permit program which replaces current specialty permits, allows for new entrants and includes any production of chicken which is currently unregulated.

206) The permit issued will allow for the production of any class of chicken.

207) A permit grower is subject to these Regulations unless specifically otherwise provided.

208) Part 25 does not apply to this permit program.

209) Permit growers will receive a permit allotment on a prescribed form and will be charged Board levies.

210) Permits will not be issued to persons who own quota or who have transferred quota.

211) An application for a permit must provide a business plan acceptable to the Board, and the Board reserves the right to refuse a permit to any applicant.

212) Permits will not be issued to applicants who plan to sell production to processors who are not in compliance with these Regulations.

213) Permits shall be for a 12 year term and shall not be transferable.

214) The grower will pay a permit administration fee of 18 cents per 1.929 kilograms live weight bird per 8 week period which is to be received by the Board by the tenth (10th) working day into the month following the month in which slaughter occurred.

215) On the expiration of the 12 year term, and provided the grower is in full compliance with these Regulations and all Board orders and directives, the grower shall be entitled to apply to the Board for an allotment of quota in an amount equal to the production allowed under the permit. The quota allotted will be identical to primary quota.

216) A permit shall be for a maximum of 500 birds per week. If a grower receives a permit for less then 500 birds, the grower may apply for an increase in permit, and the Board may, in its discretion, increase the permit to a maximum of 500 birds per week.

217) The aggregate level of production under the 12 year permit program shall remain at all times within the discretion of the Board, and the Board may increase, decrease or cancel any permit issued. Each permit is subject to cancellation or suspension for violation of these Regulations, the Act, the Scheme, or any order or direction of the Board.

218) If a grower wishes to exceed the production stipulated in the permit, the grower must acquire quota on the market. Any purchase of quota beyond industry growth will result in the reduction of the level of the permit in an equal amount.

219) The production stipulated in the permit shall be allotted at 100% every period, but allotments of permits shall not increase through pro-rata industry growth.

220) To accommodate growers currently producing chicken under the former specialty program, transitional rules as set forth in Schedule 14 shall apply. * The New Market, Niche and Specialty Program will: allow new growers to more easily come into the industry; provide incentives to develop niche markets; make monitoring of all chicken production in BC more easily achievable; provide flexibility in defining a "specialty" product; and remove from the Board the task of accrediting "specialty" production. Positions of the Parties: [18] The petitioner seeks a statutory injunction to prevent the continuing breach of the cease and desist order. The position of the petitioner is that organic chicken is chicken and has always fallen within the BCCMB scheme. It concedes that historically it did not trouble itself with organic chicken growers. However, it contends that when a new Board was appointed in 2000 and undertook an overhaul of the system, produced a new set of Regulations and decided to bring organic chicken producers under the BCCMB umbrella, it was fully entitled to do so. In effect, the petitioner's position is that, although it let the organic chicken producers operate outside the scheme while they were smaller, at any time it could have enforced the legislation against them and it is entitled to do so now. Its position is that it is unfair for one producer to be compliant

with the scheme and the other not. Finally, the petitioner's position is that there is a clear breach of the cease and desist order in that Mr. Reid has simply disobeyed the order and continued to produce chicken. [19] Mr. Reid's position is that organic chicken is not the subject of the Chicken Board's authority. He contends that organic production, recently developed, is very different from conventional chicken production in its costs, which are about three times higher, its consumers, and its pricing, which is set by the market. Mr. Harvey, on his behalf, argued that although the Chicken Board, beginning in about 1996, has talked about bringing organic chicken under its aegis it has not in fact done so; accordingly, the cease and desist order is invalid. He pointed to various ways in which, he alleged, the Chicken Board has in the past accepted that organic chicken does not fall under the chicken marketing scheme. The respondent's position is that the Chicken Board is making a sudden change of direction which is unfair and unsupported by the legislation or regulations, none of which explicitly mentions "organic chicken". [20] Mr. Harvey emphasized that the respondent does not seek to avoid inspection, pointing to evidence that organic production requires even more rigorous standards than those imposed by the BCCMB, and that Mr. Reid's birds meet those higher standards. [21]

In his Outline, Mr. Harvey set out the following arguments against the granting of the relief sought. [22] First, Mr. Harvey argued that the petitioner by deliberate choice has left organic chicken unregulated for many years. During the "review of the regulated marketing system" in 1998 and the later mediation process, he urged, there were discussions about integrating organic production into the existing marketing system but the step recommended by the mediator to "provide a detailed and comprehensive proposal for integrating COABC organic production into the existing marketing system" has never been taken. Despite the new "Regulations" which purport to regulate various types of chicken, including "specialty" chicken, he said that nothing was done to bring organic chicken under the scheme. Thus, the respondent's position is that the history of the matter (including eight years of chicken production by Mr. Reid, with the knowledge of the Chicken Board) shows delay and acquiescence on the part of the BCCMB such that it is disentitled to an injunction in the circumstances. Mr. Harvey referred to M.(K.) v. M.(H.), [1992] 3 S.C.R. 6 and to I.C.F. Spry, The Principles of Equitable Remedies, 6th ed. (Agincourt: Carswell, 2001) at 488 in support of his position. [23] Second, the respondent's position is that the petitioner has not exhausted its administrative remedies, its application

for an injunction is premature and the matter should await the decision of the BCMB on the respondent's appeal from the cease and desist order. Mr. Harvey cited Turnbull v. Canadian Institute of Actuaries (1995), 129 D.L.R. (4th) 42 (Man. C.A.) and argued that complex issues such as this one should be determined by the BCMB, a specialized tribunal. Given that s. 9 of the Natural Products Marketing (BC) Act provides for an appeal on a question of law to the Supreme Court, he argued that there could be bifurcated proceedings with potentially inconsistent results, a consequence that should be avoided. The respondent's position is that the intent of the Natural Products Marketing (BC) Act is that this court should not interfere with the administrative process until this court has had the benefit of the views of the administrative tribunal: Hallmark Poultry Processors Ltd. V. British Columbia( Marketing Board), [1999] B.C.J. No. 2980 (Q.L.)(S.C.). Mr. Harvey pointed out that the BCMB has the power to make interim orders and "stand down" orders where warranted (Primary Poultry Processors Association of British Columbia v. BCCMB, Decision of BCMB, November 13, 1997 and Klaas Korthuis dba Try Poultry Farms v. BCCMB, Decision of BCMB, June 26, 2000) and urged that the administrative appeal process which is underway could provide the petitioner with the remedies which it seeks from this

court. Arguing that since the governing legislation places all aspects of the production and marketing of chicken under the control of the petitioner and the BCMB, and given the complex issues of facts, law and policy at stake in this case, this court should defer to their expertise. In support, Mr. Harvey referred to United Brotherhood of Carpenters and Joiners of America, Local 579 v. Bradco Construction Ltd., [1993] 2 S.C.R. 316 at 335 and Carriere v. British Columbia (Labour Relations Board), [1995] B.C.J. No. 2927 (Q.L.)(S.C.). In short, he argued, the appeal process presently underway before the BCMB should be allowed to run its course: the petitioner should not be permitted to make an "end run" which would pre-empt that process. [24] Third, Mr. Harvey pointed out that the cease and desist letter did not state that an injunction would be sought if Mr. Reid did not comply, and argued that it was unfair to apply for an injunction immediately rather than go through the administrative process. [25] In addition, Mr. Harvey made the constitutional argument which I will review separately. [26] The petitioner's responses to the respondent's submissions are as follows. [27] First, on the question of laches or acquiescence, the petitioner's position is that this application does not rest on the equitable jurisdiction of the court but instead is an application for a statutory

injunction to enforce valid legislation. Mr. Hunter submitted that the courts are diffident about imposing equitable doctrines in such circumstances, referring to Maple Ridge (District) v. Thornhill Aggregates Ltd. (1998), 47 M.P.L.R. (2d) 249 (B.C.C.A.) ("Maple Ridge") and Prince George (City) v. Rahn Bros. Logging Ltd. (2000), 13 M.P.L.R. (3d) 308 (B.C.S.C.) ("Prince George"). In any event, Mr. Hunter argued, the petitioner has acted reasonably and in a measured way, and did not "turn on a dime"; instead, after a good deal of time and consultation, it decided to try to bring some order to the industry and enforce the legislation with respect to all chicken. The Part 43 "New Entrant, Niche Market and Specialty Program" in the August 15, 2000 "Regulations", he argued, is meant to allow former non-participants to enter the supply-managed scheme through a transition which permits them to grow chicken without first having to purchase "quota". Further, despite the restriction to 500 birds per week, Regulation 220 provides for "grandfathering" previous levels of production, according to Mr. Hunter. He stated that, if the respondent applies, he will obtain a permit and will be able to maintain his previous level of production, and submitted that the petitioner is acting reasonably in simply seeking to enforce the legislation. [28] Second, Mr. Hunter argued that in these circumstances

the principles requiring deference and exhaustion of administrative remedies are not relevant, given that the application is to enforce an order made by authority of statute, citing British Columbia (Mushroom Marketing Board) v. Money's Mushrooms Ltd. (13 April, 1995), Vancouver Registry, A950901 (B.C.S.C.) ("Mushroom Board"). He submitted that this case is different from those in which exhaustion of administrative remedies is required, in that the Chicken Board is in fact taking the only route provided by the legislature for it to enforce its orders, and that it is not comparable to a situation in which, for example, an unsuccessful applicant for a permit tries to come to court before appealing the board's decision through the route provided in the legislation. [29] I turn to the constitutional question. The Notice of Constitutional Question to the Attorney General sets out the following: 1. The Regulations purportedly made on August 15, 2000 by the British Columbia Chicken Marketing Board under the Natural Products Marketing (BC) Act, 1996 and the British Columbia Chicken Marketing Scheme, 1961 are ultra vires and invalid for lack of authority in the said Act and Scheme to make regulations.

2. It will be submitted at the hearing of the appeal that the repeal by the Regulations Act, 1983 of the authority formerly given to the Lieutenant Governor in Council by s. 13(1)(m) of the Natural Products Marketing (BC) Act to vest in a marketing board the power to make regulations has the effect of repealing the power to make regulations conferred on the BC Chicken Marketing Board by s. 4.01(1) of the British Columbia Chicken Marketing Scheme, 1961. [30] The respondent's position is that, insofar as the petitioner relies on the August 15, 2000 "Regulations" it lacks authority for its cease and desist order because they were passed without authority. There was no authority, Mr. Harvey argued, because the power to make regulations formerly conferred on the BCCMB by s. 4.01(l) of the Scheme was removed in 1983 when the Regulations Act, S.B.C. 1983, c. 10 was passed. This flowed from the consequential amendment to the Natural Products Marketing (BC) Act at that time. Prior to 1983, the relevant section read: 13 (1) Without limiting the generality of other provisions of this Act, the Lieutenant Governor in Council may vest in a marketing board or commission any or all of the following powers: (m) to make orders, rules and regulations considered by the marketing board or commission necessary or advisable to promote, control and regulate effectively the production, transportation,

packing, storage or marketing of the regulated product, and to amend or revoke them; [emphasis added] The current equivalent section reads: 11(1) Without limiting other provisions of this Act, the Lieutenant Governor in Council may vest in a marketing board or commission any or all of the following powers: (q) to make orders and rules considered by the marketing board or commission necessary or advisable to promote, control and regulate effectively the production, transportation, packing, storage or marketing of a regulated product, and to amend or revoke them; [emphasis added] [31] The Scheme, s.4.01(1) provides: : 4.01 Subject to section 4.02 (2) the board shall have power within the Province to promote, regulate and control in any and all respects, to the extent of the powers of the Province, the production, transportation, packing, storing and marketing, or any of them, of the regulated product, including the prohibition of such transportation, packing, storing and marketing, or any of them, in whole or in part, and shall have all powers necessary or useful in the exercise of the powers hereinbefore or hereinafter enumerated, and without limiting the generality thereof shall have the following powers: (l) to make such orders, rules and regulations as are deemed by the board necessary or advisable to promote, control and regulate effectively the production, transportation,

packing, storage or marketing of the regulated product, and to amend or revoke the same; The Scheme was not amended in 1983 but neither party suggested that it could continue to provide powers beyond those in the current Natural Products Marketing (BC) Act, which is the Scheme's foundation. [32] Thus, Mr. Harvey argued, although the Chicken Board since 1983 has had the authority to make orders or rules, it has not had the power to make regulations. Accordingly, he argued that the August 15, 2000 document, headed "Regulations" and replete with uses of the verb "regulate", is ultra vires and invalid. [33] With respect to the constitutional question, Mr. Hunter argued that, despite the title "Regulations", the August 15, 2000 document in fact contains orders or rules and was validly made by the BCCMB. In the alternative, Mr. Hunter argued that the petitioner does not need the August 15, 2000 "Regulations" as a foundation for the order it seeks, because it can rely simply on the Natural Products Marketing (BC) Act and the Scheme. [34] The position of the Attorney General is that the "Regulations" are valid and intra vires. Mr. Copley argued that the new Regulations Act in 1983 was made to implement a Uniform Law Conference recommendation to cure a problem with existing Regulation Acts across the country. Previously, the Regulation Act, R.S.B.C. 1979, c. 361 had required every

regulation of a "legislative nature" to be published in the Gazette in order to have legal force and effect. The problem identified by the Uniform Law Conference was described in Mr. Copley's submission as follows: [T]he test for identifying whether a regulation had to be published, whether it was of a "legislative nature", led to uncertainty and regulations were being published which did not have to be published and vice versa. The decision as to whether or not a regulation has to be published in order to have legal effect no longer depends on whether or not it is of a legislative nature. Rather, the decision is now one of policy for the drafters of legislation and for the Legislative Assembly to decide. If one of the keywords is used [variants of "regulation" or "prescribes"] the regulation has to be published to have legal effect. [35] The Attorney General's position is that there are now two types of regulations. There are regulations broadly defined in the Interpretation Act, R.S.B.C. 1996, c. 238, s. 1 and regulations defined in the 1983 Regulations Act, s. 1, a narrower category of statutory instruments which must be published in the Gazette in order to have legal effect. [36] The definition in s. 1 of the Interpretation Act is: "regulation" means a regulation, order, rule, form, tariff of costs or fees, proclamation, letters patent, commission, warrant, bylaw or other

instrument enacted (a)in execution of a power conferred under an Act, or (b)by or under the authority of the Lieutenant Governor in Council, but does not include an order of a court made in the course of an action or an order made by a public officer or administrative tribunal in a dispute between 2 or more persons; In s. 1 of the 1983 Regulations Act, the definition is: "regulation" means a regulation, as defined in the Interpretation Act, (a)made under a power in an Act where the word "regulation", "regulations", "prescribe", "prescribes" or "prescribed" is used in conferring the power, or (b)identified in Schedule 1, but does not include (c)a regulation adopted by reference, and (d)a regulation, as defined in the Interpretation Act, of a corporation unless the regulation is identified in Schedule 1; The Regulations Act goes on to provide: in s. 3(1) that a regulation has no effect unless it or a copy of it is deposited with the registrar; in s. 5(1) that the registrar shall publish in the Gazette each regulation deposited with him; and in s. 7(1) that no person shall be convicted of an offence against a regulation that is not published in the Gazette unless it is shown that reasonable steps had been taken by bring the substance of the regulation to the notice of the public or the person affected. [37] Mr. Copley argued that the power to make orders or rules under the Natural

Products Marketing (BC) Act as amended in 1983 is to make a regulation as defined in the Interpretation Act, as opposed to a regulation under the Regulations Act; thus, the only change made by the consequential amendment in 1983 is that regulations now made under s. 11(1)(q) of the Natural Products Marketing (BC) Act do not have to be published in the Gazette to have legal effect. [38] Further, Mr. Copley argued, as a practical matter the courts do not concern themselves with whether or not a statutory agency has correctly or incorrectly identified the source of its statutory power to act and what matters is whether jurisdiction exists under statute, citing British Columbia (Milk Board) v. Grisnich (c.o.b. Mountainview Acres) ("Grisnich"), [1995] 2 S.C.R.

895. Mr. Copley submitted that there is no question that the Chicken Board has jurisdiction to make orders or rules it considers necessary or advisable and that since the impugned Chicken Board "Regulations" are also orders and rules, it does not matter in law that those orders or rules have been called "regulations". Issues: [39] The issues to be determined are: (1) Does organic chicken fall within the regulatory scheme set up by the BCCMB? (2) Is the petitioner disentitled, by reason of laches or acquiescence, from the remedy of an injunction? (3) Is the petitioner's application premature and should the court await the determination of the respondent's appeal from the cease and desist order to the BCMB? (4) Should the court exercise its discretion against the petitioner's application because the respondent was not given sufficient opportunity to comply, or for other reason? (5) Are the BCCMB August 15, 2000 "Regulations "ultra vires and invalid? Analysis: (1) Does organic chicken fall within the regulatory scheme set up by the BCCMB? [40] That organic chicken is grown using different methods, with greater air circulation and space per bird and without the routine use of antibiotics or other synthetic inputs, may be commendable but it does not change the fact that the product is chicken. On their face, the provisions of the British Columbia Chicken Marketing Scheme, 1961,

extend to all chicken including certified organic chicken. The "regulated product" is defined as "any class of chicken under 6 months of age not raised or used for egg production " The respondent could point to nothing in the Scheme indicating an intention to exclude organically grown chicken from the meaning of the word "chicken". I find that it is included. (2) Is the petitioner disentitled, by reason of its laches or acquiescence, from the remedy of an injunction? [41] Does the Chicken Board's failure, for about seven years, to move to bring Mr. Reid's organic chicken production under its control mean that it cannot now issue a cease and desist order and request an injunction to enforce it? [42] As counsel for the BCCMB pointed out, the analysis is different when a statutory injunction is sought than when the applicant relies on the equitable jurisdiction of the court. In Maple Ridge, supra, at 255-6, Cumming J.A. wrote: The source for the injunction in the case under appeal is statutory, and not equitable. Factors that might be considered by a court in an application for an equitable injunction will be of limited, if any, application to the grant of a statutorily based injunction . Where an injunction is sought to enforce a public right, the courts will be reluctant to refuse it on discretionary grounds. To the extent that the appellants may suffer hardship from the

imposition and enforcement of an injunction, that will not outweigh the public interest in having the law obeyed . Meiklem J. referred to the preceding authority when he wrote in Prince George, supra, at 311: [T]he authorities indicate that little discretion remains with the courts to deny an injunction sought to enforce a public right, and that hardship does not outweigh the public interest in having the law enforced. [43] However, that some discretion does remain is supported by the wording of the relevant statute. The Natural Products Marketing (BC) Act, s. 17, uses language requiring the exercise of discretion ("may be enforced may be restrained"): see Mushroom Board, supra, at paras. 2 and 8. I will consider below, under the fourth issue I have identified, whether there is anything about the circumstances in this case, including the history of non-enforcement, that would warrant an exercise of discretion against issuing the injunction. (3) Is the petitioner's application premature and should the court await the determination of the respondent's appeal from the cease and desist order to the BCMB? [44] The British Columbia Marketing Board is a senior administrative tribunal. In B.C. Chicken Marketing Board v. BC Marketing Board, 2002 BCCA 473, the Court of Appeal held that the British Columbia Marketing Board is not required to show deference to the Chicken Board. It

contrasted the two boards in the following passage at paras. 11 - 14: There is no adjudicative scheme in the Act or the Rules for the Chicken Board, or other such commodity boards. The Chicken Board is not authorized to function as an adjudicative body and it does not do so. In most cases it does not hear evidence or submissions from the parties, and it does not issue reasons for its decisions. The Marketing Board, on the other hand, in the exercise of its s. 8 jurisdiction, almost always conducts hearings with witnesses, sworn testimony, oral submissions, and provides the opportunity for parties to be represented by counsel. It issues reasons for its decisions in virtually every case it decides. In these two cases the Chicken Board did not hold hearings and did not give reasons for its decisions. The statutory regime created by this legislation clearly indicates that an appeal to the Marketing Board is to be in the nature of a full hearing into the merits of the case. There is nothing in the legislation to suggest that the Marketing Board must give any or any significant deference to the decision of a commodity board, such as the Chicken Board. Where the Chicken Board has heard no evidence, information or argument and has offered no reasons for its decision, the Marketing Board has little alternative under its statutory adjudication regime other than to determine the facts and

issues based on the evidence and argument presented to it. It has the power to conduct a full hearing into the merits. In my respectful opinion, the learned chambers judge erred in applying the decision of this Court in Dupras to the circumstances of this case. Dupras was an appeal from a specialized statutory office to a court, and not an appeal to a specialized administrative appeal board. The Marketing Board is not a generalist court, but a specialized tribunal expected to use its expertise. That expertise would be lost if it were required to grant deference to a commodity board and to conduct appeals limited as to their grounds. [45] The respondent's position is that: (1) the petitioner has not exhausted its administrative remedies; (2) the court should not issue a decision regarding this matter until the BCMB has heard and determined the respondent's appeal, given the policy issues involved, the nature of the Chicken Board's process and the BCMB's expertise in the matter; and (3) the court should not decide this application because there could be judicial review from the BCMB decision, with the potential for inconsistent findings from this court. [46] With respect to the first point, I do not think that there is an issue about failure to exhaust remedies. The petitioner is pursuing a statutory remedy, which is the only available means for enforcing its orders, through

applying to the court for an injunction under s. 17 of the Natural Products Marketing (BC) Act. This is a very different situation from that in the cases cited by the respondent, where parties affected by orders attempted to seek judicial review or injunctive relief from courts when they could have sought remedies through an administrative process. [47] With respect to the second argument, that this application is premature, although obviously there are important policy considerations at stake in connection with the optimal operation of the regulatory scheme for supply management of chicken, it does not follow that the respondent is entitled to ignore an order from the Chicken Board. In Mushroom Board, supra, the Mushroom Board had increased its levies on production. Money's Mushrooms Ltd. Initiated an appeal to the BCMB and took the position that the increase was not enforceable in any event. Lowry J. identified the issue before him as follows at para. 2: Section 17 of the Act provides that the court may order compliance with the Mushroom Board's determination; it is required to exercise a discretion. The question is whether, if the increase is enforceable, the discretion is to be exercised in favour of requiring immediate compliance. After referring to Money's Mushrooms Ltd.'s argument that it should be allowed to secure the amounts payable at the increased rate until the

appeal was heard, Lowry J. concluded at paras. 8 and 9: In any event, the Act contains a comprehensive procedure governing appeals to the Marketing Board and there is no provision from which any legislative intention to suspend the Mushroom Board's determination while the appeal is pending could be drawn. It appears to me that, under the Act, the determination of an inferior board is to be complied with until set aside on an appeal. Those affected can appeal in very short order. In the interim they must comply. There is in the Marketing Board no authority to dispense with compliance pending the hearing of an appeal and, in my view, apart from perhaps exceptional circumstances, this court ought not to exercise its discretion on an application under s. 17 to affect or dispense with compliance because an appeal is pending. The section has nothing to do with the legislative appeal process, nor the posting of security pending an appeal. Its purpose is enforcement. It appears to me the exercise of discretion afforded the court has little to do with pending appeals and more to do with questions relating to the scope of the regulatory process when the authority of an inferior board is challenged or otherwise resisted. It was not open to Money's to refuse to comply with the Mushroom Board's determination - refuse to pay any levies - and then to treat the board's application under s. 17

to compel compliance effectively as its own application for a stay or suspension of the determination pending the hearing of its appeal. Money's was required to comply. I consider that in this instance the court's discretion is to be exercised in favour of immediate compliance. [48] The legislation has been amended since the Mushroom Board case was decided and there is now authority for the BCMB to stay the Chicken Board's and other marketing boards' orders pending the outcome of an appeal: s. 8(8.2) of the Natural Products Marketing (BC) Act. Mr. Reid has declined to apply for a stay, Mr. Harvey explained, because he disputes the jurisdiction of the Chicken Board in the first place. [49] Mr. Hunter argued that the Mushroom Board case is on all fours with the case before me, and that its persuasive force is strengthened by the fact that the legislation now allows for an application to the BCMB for a stay of the Chicken Board's order pending the outcome of Mr. Reid's appeal. On the other hand, Mr. Harvey argued that the case is distinguishable because of the nature of the order - the Mushroom Board order related to a straightforward levy, while the Chicken Board order requiring Mr. Reid to cease and desist production raises a fundamental question regarding whether the Scheme applies to organic production. [50] Once the Chicken Board issued its cease and desist order, Mr. Reid's

choices were either to obey it and appeal, or seek a stay and appeal. As in the Mushroom Board case, ignoring the order while appealing is not an option. In effect, Mr. Reid is seeking a stay from this Court without having first sought that relief from the BCMB. As well, insofar as the fundamental question he wishes to raise is whether organic chicken falls within the meaning of the word "chicken" in the Scheme, it is a question of statutory interpretation and the specialized expertise of the BCMB has less relevance than it might otherwise have. [51] I do not find that the petitioner's application is premature. [52] With respect to the third point, the potential for inconsistent findings if the BCMB appeal goes to judicial review, there does not seem to me to be a high risk of such an outcome, given the nature of the decision I am making. In any event, concern about that potential should not prevail over the petitioner's right to seek enforcement of its orders through the only means available to it. (4) Should the court exercise its discretion against the petitioner's application because the respondent was not given sufficient opportunity to comply, or for other reason? [53] Recognizing that the discretion of the court to refuse a statutory injunction is restricted, nevertheless there is such discretion. [54] It is apparent that the Chicken Board, the BCMB and the Ministry of

Agriculture, Fisheries and Food have struggled for some time with the question of organic chicken and other organic natural products. The Minister's letter in 1998 and other materials filed by the respondent show that there were difficult political and public policy issues at stake. Mr. Hunter in effect conceded that there had been acquiescence in Mr. Reid's previous de facto exemption from the Scheme. [55] I have concluded that the wording of the Scheme has always encompassed all chicken, whether certified organic or not. The BCCMB refrained from enforcing its rules against the respondent for several years, then changed its course. Did it do so too abruptly? Has there been unfairness to Mr. Reid in the BCCMB's course of action - contacting him in February 2002 and advising him of the Chicken Board's position that he should meet with their official to discuss coming into compliance, issuing a cease and desist order in April 2002 and then applying in May 2002 for an injunction to enforce that order when it was not obeyed? [56] I do not think that there has been unfairness to Mr. Reid in connection with this application to enforce the cease and desist order. In my opinion, the BCCMB has acted in a reasonably measured way. Further, its position is that Mr. Reid will not be required to reduce his level of production; he will simply be required to pay permit fees and levies

comparable to those of the other organic chicken producer. I do not find that the Chicken Board's timing warrants an exercise of discretion against enforcing its order in this case. [57] This is not an application for an interlocutory injunction pursuant to the equitable jurisdiction of the court, but if it were, I would consider that there is no triable issue whether organic chicken is chicken covered by the Scheme (although there may be some issue about the appropriate transitional measures to bring Mr. Reid's operation into compliance with it). As for the balance of convenience, immediate enforcement of the cease and desist order would abruptly end Mr. Reid's opportunity to earn a livelihood. I will take these considerations into account in setting the terms of the order. (5) Are the BCCMB August 15, 2000 "Regulations" ultra vires and invalid? [58] It appears that the attempt to clarify the law regarding regulations has resulted in a legislative scheme which requires considerable explanation: for example, a document labelled "Regulations" is said not to contain regulations within the meaning of the Regulations Act. [59] Be that as it may, I am satisfied that Mr. Hunter is correct that the Chicken Board's application pursuant to s. 17 for an injunction enforcing its order does not depend upon the validity of the "Regulations" of August 15, 2000. Instead, the Board can rely

solely on the provisions of the Natural Products Marketing (BC) Act and the Scheme. Further, the decision in Grisnich, supra, stands for the proposition that it is not required that, in the exercise of its jurisdiction, an administrative tribunal must always specify the exact source of that jurisdiction. [60] Therefore, I refrain from deciding the constitutional questions because it is unnecessary for me to do so. Conclusion: [61] There is nothing in the Scheme or the legislation to exclude organically grown chicken from the reach of the Chicken Board. Certified organic chicken is chicken. [62] The Chicken Board will have the order which it seeks, restraining and enjoining Mr. Reid from producing chicken unless or until he receives a Grower's Licence and a permit to produce chicken from the Board. [63] I am aware of the fact that chicken production is not the only sector in which there is a dispute between organic producers and marketing boards. The expertise of the BCMB, enabling it to take into account the economics of chicken production (certified organic and otherwise) and possibly to decide on practical transitional arrangements for bringing organic chicken producers into full compliance with the marketing regime, may be brought to bear when it hears the respondent's appeal in mid-November. [64] Mr. Hunter suggested that this court's order could be suspended for a few

weeks to allow the respondent to seek a permit or to pursue an appeal to the Court of Appeal and an application for a stay. It would be unfair for the order to be effective immediately, given the nature of Mr. Reid's ongoing operation. [65] The order will be effective on November 20, 2002, or such later date as is agreeable to the petitioner. The parties are at liberty to apply with respect to the terms of the order or the period of suspension. "Lynn Smith, J." The Honourable Madam Justice Lynn Smith