2011 FCA 69, 2011 FCA 69

[2012] 4 F.C.R. 499 A-456-09 2011 FCA 69 Saputo Inc. and Kraft Canada Inc. ( Appellants ) v . The Attorney General of Canada ( Respondent ) and St-Albert Cheese Cooperative Inc. and International Cheese Company Ltd. ( Interveners ) Indexed as: Saputo Inc. v. Canada (Attorney General) Federal Court of Appeal, Létourneau, Nadon and Mainville JJ.A.—Ottawa, February 9 and 28, 2011. Food and Drugs –– Appeal from Federal Court decision dismissing appellants’ judicial review application challenging, on various constitutional, administrative law grounds, Food and Drug Regulations , ss.

B.08.033(1)(a)(i.1), (i.2), B.08.033(1.2), B.08.034(1)(a)(i), (i.1), (i.2), B.08.034(1)(c)(i), B.08.034(1.2); Dairy Products Regulations , ss. 6(3) (c), 6(3)(d)(i), 6(5) , 28(1) (a)(i.1), (i.2), 28(4) — Impugned Regulations modifying compositional standards for cheese imported into Canada or produced in Canada, marketed in international or interprovincial trade — Federal Court finding purpose of impugned Regulations, in pith, substance, to establish compositional standards for cheese marketed in interprovincial or international trade; impugned regulations adopted to harmonize federal regulations regarding cheese products — Whether Federal Court wrongly finding impugned Regulations valid exercise of regulation-making authority of Governor in Council under Canada Agricultural Products Act , Food and Drugs Act — Dominant purpose of impugned Regulations not to effect economic transfer in favour of dairy producers as claimed — Pith, substance of impugned Regulations falling within federal power to regulate trade, commerce — Federal Court correctly finding impugned Regulations valid exercise of Governor in Council’s regulation-making authority under parent statutes — Regulations not beyond legislative purview of parent statutes; not meaningless or constituting impermissible subdelegation of regulation-making authority — Appeal dismissed.

Constitutional Law — Distribution of Powers — Whether Federal Court wrongly finding that amended Food and Drug Regulations , Dairy Products Regulations validly adopted under federal trade, commerce power set out in Constitution Act, 1867, s. 91(2) — Pith, substance of impugned Regulations falling within federal power to regulate trade, commerce — Essential character thereof to set compositional standards for cheese marketed in import, export or interprovincial trade; not prima facie seeking to control production or manufacturing of dairy products — Adopted under parent statutes pursuant to legislative provisions clearly limited in scope to interprovincial, international trade — While impugned Regulations may incidentally affect production, not doing so more than any other compositional standard; therefore, validly adopted.

This was an appeal from a Federal Court decision dismissing the appellants’ judicial review application seeking declaratory relief and challenging on various constitutional and administrative law grounds subparagraphs B.08.033(1)( a )(i.1) and (i.2), subsection B.08.033(1.2), subparagraphs B.08.034(1)( a )(i), (i.1) and (i.2), B.08.034(1)( c )(

i) and subsection B.08.034(1.2) of the Food and Drug Regulations as well as paragraph 6(3) ( c ), subparagraph 6(3)( d )(i), subsection 6(5) , subparagraphs 28(1) ( a )(i.1) and (i.2) and subsection 28(4) of the Dairy Products Regulations . These provisions were adopted pursuant to the Regulations Amending the Food and Drug Regulations and the Dairy Products Regulations .

The impugned Regulations prescribe that cheese imported into Canada or produced in Canada and marketed in international or interprovincial trade must, in particular, have a certain percentage of casein content derived from liquid milks and a whey protein to casein ratio that does not exceed the whey protein to casein ratio of milk. The appellants asserted that the essential purpose of the impugned Regulations is to effect an economic transfer in favour of dairy producers to the detriment of dairy processors by requiring the use of additional liquid milk in the production of cheese.

Therefore the impugned Regulations, they claim, have little or nothing to do with international or interprovincial trade; are beyond the constitutional and legislative authority of the federal government; seek to control the production of cheese, a matter of provincial authority, and are ultra vires their enabling statutes.

The Federal Court found that the purpose of the impugned Regulations was, in pith and substance, to establish compositional standards for cheese marketed in interprovincial or international trade and that they were adopted to address consumer expectations and interests as to the composition of cheese; ensure the harmonization of the federal regulations respecting cheese products; and provide greater consistency with international food standards.

The issues were whether the Federal Court erred in finding that the impugned Regulations were validly adopted under the federal trade and commerce power set out in subsection 91(2) of the Constitution Act, 1867 ; and, if not, whether it erred in finding that the impugned Regulations were a valid exercise of the regulation-making authority of the Governor in Council under the Canada Agricultural Products Act and the Food and Drugs Act . Held , the appeal should be dismissed.

It had to be determined whether the impugned Regulations, “in pith and substance” fall under the federal power over the regulation of trade and commerce. The dominant purpose of the impugned Regulations is not to effect an economic transfer in favour of dairy producers. In light of new technological advances allowing for an increase in protein products from milk derivatives in cheese content, the impugned Regulations are concerned with ensuring a balance between these “new technologies” proteins and traditional liquid milk protein in the contents of cheese marketed in import, export or interprovincial trade.

They were adopted with a view to (

a) harmonizing existing federal regulations concerning the use of such protein products; (

b) enhancing consumer interests by protecting the traditional organoleptic, chemical and physical properties of cheese; (

c) allowing for technological advances in cheese production through compositional requirements which permit to a limited extent new technologies proteins in cheese content; and (

d) providing consistency with certain international food standards.

The pith and substance of the impugned Regulations fall within the federal power to regulate trade and commerce. The essentialcharacter thereof is to set compositional standards for cheese marketed in import, export or interprovincial trade and they do not primafacie seek to control the production or the manufacturing of dairy products such as cheese. They were validly adopted under the CanadaAgricultural Products Act and the Food and Drugs Act pursuant to legislative provisions that are clearly limited in scope tointerprovincial and international trade.

While the impugned Regulations may incidentally affect production, they do not do so more thanany other compositional standard. Therefore, federal legislative authority to establish standards for food products marketed in export,import or interprovincial trade and which has an incidental effect on local production does not, on that account alone, become invalid. The Federal Court correctly found that the impugned Regulations were a valid exercise of the regulation-making authority of theGovernor in Council under the Canada Agricultural Products Act and the Food and Drugs Act.

The Regulations are not beyond thelegislative purview of their parent statutes, and in particular of the Food and Drugs Act, which, while relating to public health and publicsafety, has important incidental trade and commerce aspects. Moreover, the Regulations are not meaningless and do not constitute animpermissible subdelegation of regulation-making authority: the standards set out thereunder are clear and unambiguous. Finally, theappellants’ attack relating to the enforceability and policing of the impugned Regulations was not properly before the Federal Court norbefore this Court.

Nonetheless, it was found that the casein ratios and whey ratio could be objectively enforced. STATUTES AND REGULATIONS CITED Canada Agricultural Products Act, R.S.C., 1985 (4th Supp.), c. 20, ss. 17, 32(f),(k). Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.),

Schedule to the Constitution Act,1982, Item 1) [R.S.C., 1985, Appendix II, No. 5], ss. 91(2),(27), 92(13),(16), 121. Dairy Industry Regulation, Alta. Reg. 139/1999, ss. 43, 63. Dairy Manufacturing Plant Regulations, Sask. Reg. 53/79, ss. 22, 23, 24, 25, 26, 27.

Dairy Products Regulations, SOR/79-840, ss. 2 “milk product” (as am. by SOR/2007-302, s. 5), “milk solids” (as am. idem), 2.1 (asenacted by SOR/91-558, s. 2), 2.2 (as enacted idem; 95-548, s. 35, 2004-80, s. 6), 6(3)(c) (as enacted by SOR/2007-302, s. 6), (d)(i) (asenacted idem), (5) (as enacted idem), 28(1)(a)(i.1) (as enacted idem, s. 11), (i.2) (as enacted idem), 28(4) (as enacted idem). Dairy Regulation, Man. Reg. 203/87R, ss. 58, 59, 60, 61, 62. Federal Courts Act, R.S.C., 1985, c.

F-7, ss. 1 (as am. by S.C. 2002, c. 8, s. 14), 18 (as am. by S.C. 1990, c. 8, s. 4; 2002, c. 8, s. 26),18.1 (as enacted by S.C. 1990, c. 8, s. 5; 2002, c. 8, s. 27). Food and Drug Regulations, C.R.C., c. 870, ss. B.08.001.1 “milk product” (as am. by SOR/2007-302, s. 1), B.08.033(1)(a)(i.1) (asenacted by SOR/2007-302, s. 2), (i.2) (as enacted idem), (1.2) (as enacted idem), B.08.034(1)(a)(i) (as am. idem, s. 3), (i.1) (as enactedidem), (i.2) (as enacted idem), (c)(i) (as enacted idem), (1.2) (as enacted idem). Food and Drugs Act, R.S.C. 1970, c. F-27. Food and Drugs Act, R.S.C., 1985, c.

F-27, ss. 6(1) (as am. by R.S.C., 1985 (3rd Supp.), c. 27, s. 1), (3) (as am. idem), 30(1)(b)(iv),(c),(d). Regulation respecting food, R.R.Q. 1981, ch. P-29, r. 1, s. 11.8.6. CASES CITED applied: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 D.L.R. (4th) 577, [2002] 7 W.W.R. 1; Ward v. Canada (AttorneyGeneral), 2002 SCC 17, [2002] 1 S.C.R. 569, 211 Nfld. & P.E.I.R. 125, 210 D.L.R. (4th) 42; King, The v. Eastern Terminal ElevatorCo., (SCC), [1925] S.C.R. 434, [1925] 3 D.L.R. 1; Labatt Breweries of Canada Ltd. v.

Attorney General of Canada, (SCC), [1980] 1 S.C.R. 914, (1979), 110 D.L.R. (3d) 594, 9 B.L.R. 181; Fédération des producteurs de volailles duQuébec v. Pelland, 2005 SCC 20, [2005] 1 S.C.R. 292, 251 D.L.R. (4th) 577, 332 N.R. 201. considered: Canadian Council for Refugees v. Canada, 2008 FCA 229, [2009] 3 F.C.R. 136, 74 Admin. L.R. (4th) 79, 73 Imm. L.R. (3d) 159, leaveto appeal to S.C.C. refused [2009] 1 S.C.R. vi; Re: Anti-Inflation Act, (SCC), [1976] 2 S.C.R. 373, (1976), 68 D.L.R.(3d) 452, 9 N.R. 541; Reference respecting the Agricultural Products Marketing Act, R.S.C. 1970, c.

A-7 et al., (SCC),[1978] 2 S.C.R. 1198, (1978), 84 D.L.R. (3d) 257, 19 N.R. 361; R. v. Wetmore et al., (SCC), [1983] 2 S.C.R. 284,(1983), 2 D.L.R. (4th) 577, [1984] 1 W.W.R. 577. referred to: Novopharm Ltd. v. Eli Lilly Canada Inc., 2009 FCA 138, 81 C.P.R. (4th) 4, 393 N.R. 38; Moktari v. Canada (Minister of Citizenship andImmigration), (FCA), [2000] 2 F.C. 341, (1999), 70 C.R.R. (2d) 133, 12 Imm. L.R. (3d) 12 (C.A.); Dunsmuir v. NewBrunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, 329 N.B.R. (2d) 1, 291 D.L.R. (4th) 577; United Taxi Drivers’ Fellowship of SouthernAlberta v.

Calgary (City), 2004 SCC 19, [2004] 1 S.C.R. 485, 346 A.R. 4, 236 D.L.R. (4th) 385; Sunshine Village Corp. v. Canada(Parks), 2004 FCA 166, [2004] 3 F.C.R. 600, 238 D.L.R. (4th) 647, 16 Admin. L.R. (4th) 242; Mercier v. Canada (CorrectionalService), 2010 FCA 167, [2012] 1 F.C.R. 72, 320 D.L.R. (4th) 429, 404 N.R. 275; Consolidated Fastfrate Inc. v. Western CanadaCouncil of Teamsters, 2009 SCC 53, [2009] 3 S.C.R. 407, 469 A.R. 50, 313 D.L.R. (4th) 285; CHC Global Operations

(2008) Inc. v.

Global Helicopter Pilots Assn., 2010 FCA 89, 4 Admin. L.R. (5th) 251, [2010] CLLC 220-028, 401 N.R. 37; Canadian Western Bank v.Alberta, 2007 SCC 22, [2007] 2 S.C.R. 3, 409 A.R. 207, 281 D.L.R. (4th) 125; Chatterjee v. Ontario (Attorney General), 2009 SCC 19,[2009] 1 S.C.R. 624, 304 D.L.R. (4th) 513, 242 C.C.C. (3d) 129; Reference re Assisted Human Reproduction Act, 2010 SCC 61, [2010] 3S.C.R. 457, 327 D.L.R. (4th) 257, 263 C.C.C. (3d) 193; Canada – Measures Affecting the Importation of Milk and the Exportation ofDairy Products – Second Recourse to

Article 21.5 of the DSU by New Zealand and the United States, Appellate Body Report, AB-2002-6, WT/DS103/AB/RW2, WT/DS113/AB/RW2, 20 December 2002; Les Produits Laitiers Advidia Inc. v. Commissioner of the CanadaCustoms and Revenue Agency and Dairy Farmers of Canada, Appeal No. AP-2003-040, March 8, 2005 (C.I.T.T.); Reference as to theValidity of

Section 6 of the Farm Security Act 1944 of Saskatchewan, (UK JCPC), [1949] 2 D.L.R. 145, [1949] 1W.W.R. 742, [1949] A.C. 110 (P.C.); R. v. Morgentaler, (SCC), [1993] 3 S.C.R. 463, (1993), 125 N.S.R. (2d) 81, 107D.L.R. (4th) 537; Attorney General of Alberta v. Attorney General of Canada and others, (UK JCPC), [1939] A.C. 117(P.C.); R. v. Big M Drug Mart Ltd. et al., (SCC), [1985] 1 S.C.R. 295, (1985), 60 A.R. 161, 18 D.L.R. (4th) 321; RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199; (1995), 127 D.L.R. (4th) 1, 100 C.C.C.(3d) 449; Black v.

Law Society of Alberta, (SCC), [1989] 1 S.C.R. 591, (1989), 96 A.R. 352, 58 D.L.R. (4th) 317;Attorney-General for Manitoba v. Manitoba Egg and Poultry Association et al., (SCC), [1971] S.C.R. 689, (1971), 19D.L.R. (3d) 169; Dominion Stores Ltd. v. The Queen, (SCC), [1980] 1 S.C.R. 844, (1979), 106 D.L.R. (3d) 581, 55C.C.C. (2d) 277; Citizens Insurance Company of Canada v. Parsons (1881), 7 App. Cas. 96 (P.C.); Carnation Company Limited v.Quebec Agricultural Marketing Board et al., (SCC), [1968] S.C.R. 238, (1968), 67 D.L.R. (2d) 1; Caloil Inc. v.

AttorneyGeneral of Canada, (SCC), [1971] S.C.R. 543, (1970), 20 D.L.R. (3d) 472, [1971] 4 W.W.R. 37; Standard SausageCo. v. Lee (1933), (BC CA), 47 B.C.R. 411, [1933] 4 D.L.R. 501, [1934] 1 W.W.R. 81 (C.A.); C.E. Jamieson & Co.(Dominion) v. Canada (Attorney General), (FC), [1988] 1 F.C. 590 (abridged), (1987), 46 D.L.R. (4th) 582, 37C.C.C. (3d) 193 (T.D.); Canadian Generic Pharmaceutical Assn. v. Canada (Minister of Health), 2010 FCA 334, [2012] 2 F.C.R. 618,90 C.P.R. (4th) 223, 413 N.R. 89. AUTHORS CITED Canada. Library of Parliament. Parliamentary Information and Research Service.

Compositional Standards for Cheese in Canada, PRB07-41E, December 26, 2007, online: <http://www.parl.gc.ca/Content/LOP/ResearchPublications/prb0741-e.pdf>. Codex Alimentarius Commission. International Food Standards. Codex General Standard for Cheese, Codex Stan 283-1978, Rev. 1-1999, online: <http://www.codexalimentarius.net/download/standards/175/CXS_283e.pdf>. Monahan, Patrick J. Constitutional Law, 2nd ed. Toronto: Irwin Law, 2002. O’Rouke, Raymond. European Food Law, 3rd ed. London: Sweet & Maxwell, 2005. Regulatory Impact Analysis Statement, SOR/2007-302, C. Gaz. 2007.II.2787.

APPEAL from a Federal Court decision (2009 FC 1016, [2010] 4 F.C.R. 274, 353 F.T.R. 67) dismissing a judicial review applicationchallenging, on various constitutional and administrative law grounds, a number of provisions in the Food and Drug Regulations and theDairy Products Regulations, which prescribe certain compositional standards for cheese marketed in import, export or interprovincialtrade. Appeal dismissed. APPEARANCES Patrick Girard for appellant Saputo Inc. Timothy M. Lowman and Patrick J. Cotter for appellant Kraft Canada Inc. Alexander Gay and Brian Harvey for respondent. David K.

Wilson and Adam Huff for interveners. SOLICITORS OF RECORD Stikeman Elliott LLP, Montréal, for appellant Saputo Inc. Sim Lowman Ashton & McKay LLP, Toronto, for appellant Kraft Canada Inc. Deputy Attorney General of Canada for respondent. Fasken Martineau LLP, Ottawa, for interveners.

The following are the reasons for judgment rendered in English by [1] Mainville J.A.: This is an appeal from the judgment of Martineau J. cited as 2009 FC 1016, [2010] 4 F.C.R. 274 (reasons) whichdismissed the appellants’ judicial review application seeking declaratory relief and challenging on various constitutional andadministrative law grounds subparagraphs B.08.033(1)(a)(i.1) and (i.2), subsection B.08.033(1.2), subparagraphs B.08.034(1)(a)(i), (i.1)and (i.2), B.08.034(1)(c)(

i) and subsection B.08.034(1.2) of the Food and Drug Regulations, C.R.C., c. 870 as well as paragraph 6(3)(c),subparagraph 6(3)(d)(i), subsection 6(5), subparagraphs 28(1)(a)(i.1) and (i.2) and subsection 28(4) of the Dairy Products Regulations,SOR/79-840 (collectively referred to herein as the “impugned Regulations”). [2] These provisions were adopted pursuant to the Regulations Amending the Food and Drug Regulations and the Dairy ProductsRegulations, SOR/2007-302 [ss. 2, 3, 6 and 11], published in the Canada Gazette,

Part II, Vol. 141, No. 26, at page 2778 ff. onDecember 26, 2007, and came into force on December 14, 2008.

[3] The impugned Regulations prescribe that cheese imported into Canada or produced in Canada and marketed in international orinterprovincial trade must have: a. a certain percentage of casein content derived from liquid milks, and not from other milk products such as whey cream or milk powder(the casein ratios); and b. a whey protein to casein ratio that does not exceed the ratio of whey protein to casein ratio of milk (the whey ratio). [4] The appellants assert that the essential or dominant purpose of the impugned Regulations is to effect an economic transfer infavour of dairy producers to the detriment of dairy processors by requiring the use of additional liquid milk in the production of cheese,with resulting substantial impacts on milk supply costs for dairy processors.

Consequently, for the appellants, the impugned Regulationshave little or nothing to do with international or interprovincial trade, and were adopted by the Governor in Council for an impropereconomic purpose, and are consequently beyond the constitutional and legislative authority of the federal government.

The appellantsadd that the impugned Regulations seek to control the production of cheese, a matter of provincial authority, are ultra vires their enablingstatutes, and do not set objective and uniform standards. [5] The respondent, supported by the interveners, asserts that the impugned Regulations are in pith and substance in relation tointerprovincial and international trade, fall within the federal authority over the regulation of trade and commerce, and were properlyadopted pursuant to explicit regulation-making authority under the Food and Drugs Act, R.S.C., 1985, c.

F-27 and the CanadaAgricultural Products Act, R.S.C., 1985 (4th Supp.), c. 20. [6] The applications Judge properly defined the issues at paragraph 9 of his reasons. For the purposes of this appeal, I restate theseissues as follows: a. Did the applications Judge err in finding that the impugned Regulations were validly adopted under the federal trade and commercepower set out in subsection 91(2) of the Constitution Act, 1867 [30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11(U.K.),

Schedule to the Constitution Act, 1982, Item 1) [R.S.C., 1985, Appendix II, No. 5]]? b. If the answer to the first question is no, did the applications Judge err in finding that the impugned Regulations were a valid exercise ofthe regulation-making authority of the Governor in Council under the Canada Agricultural Products Act and the Food and Drugs Act? [7] For the reasons further set out below, I would answer “no” to both questions, conclude that the applications Judge committed noreviewable error in his findings, and consequently dismiss this appeal.

Standard of review [8] An application for judicial review under sections 18 [as am. by S.C. 1990, c. 8, s. 4; 2002, c. 8, s. 26] and 18.1 [as enacted byS.C. 1990, c. 8, s. 5; 2002, c. 8, s. 27] of the Federal Courts Act, R.S.C., 1985, c. F-7 [s. 1 (as am. idem, s. 14)] is the proper procedurefor challenging the validity of a regulation made by the Governor in Council: Novopharm Ltd. v. Eli Lilly Canada Inc., 2009 FCA 138,81 C.P.R. (4th) 4, at paragraph 10; Canadian Council for Refugees v.

Canada, 2008 FCA 229, [2009] 3 F.C.R. 136 (Canadian Councilfor Refugees), at paragraphs 55–63 (leave to appeal refused [[2009] 1 S.C.R. vi]); Moktari v. Canada (Minister of Citizenship andImmigration), (FCA), [2000] 2 F.C. 341 (C.A.), at paragraph 4.

Accordingly, the appellants brought an applicationfor judicial review in the Federal Court seeking declaratory relief (notice of application, appeal book, Vol. 1, at pages 69–89). [9] Understanding what is in issue assists in determining the standard of review: Canadian Council for Refugees, at paragraph 57.Like in Canadian Council for Refugees, this is an attack on the impugned Regulations per se, not the Governor in Council’s “decision” topromulgate them. In substance, therefore, the Court is not dealing with judicial review of administrative action, to which the principlesestablished in Dunsmuir v.

New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 apply, but with appellate review of the decision of a judgeof first instance deciding both a constitutional challenge to subordinate legislation as well as an administrative law challenge to thevalidity of regulations brought by way of an application. In these circumstances, the principles of appellate review established in Housenv. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 apply. [10] The

interpretation of the scope and extent of federal powers under the Constitution Act, 1867 is subject to the correctnessstandard: Housen v. Nikolaisen, above at paragraphs 8–9; Dunsmuir v. New Brunswick, above, at paragraph 58. Likewise, thedetermination of the validity of regulations on administrative law grounds is also subject to the correctness standard: United TaxiDrivers’ Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19, [2004] 1 S.C.R. 485, at paragraph 5; Sunshine Village Corp. v.Canada (Parks), 2004 FCA 166, [2004] 3 F.C.R. 600, at paragraph 10; Mercier v.

Canada (Correctional Service), 2010 FCA 167,[2012] 1 F.C.R. 72, at paragraphs 78–79. [11] However, where it is possible to treat the constitutional analysis separately from the factual findings that underlie it, deference isowed to the initial findings of fact: Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53, [2009] 3 S.C.R.407, at paragraph 26; CHC Global Operations

(2008) Inc. v. Global Helicopter Pilots Assn., 2010 FCA 89, 4 Admin. L.R. (5th) 251, atparagraph 22. Question No. 1: Did the applications Judge err in finding that the impugned Regulations were validly adopted under the federal tradeand commerce power set out in subsection 91(2) of the Constitution Act, 1867? [12] In order to answer this question, it must be determined if the impugned Regulations, “in pith and substance”, fall under thefederal power over the regulation of trade and commerce.

This “pith and substance” analysis asks two questions: first, what is theessential character of the impugned Regulations; second, does that character relate to an enumerated head of federal power? (Ward v.Canada (Attorney General), 2002 SCC 17, [2002] 1 S.C.R. 569 (Ward), at paragraph 16; Canadian Western Bank v. Alberta, 2007 SCC22, [2007] 2 S.C.R. 3, at paragraphs 25–27; Chatterjee v. Ontario (Attorney General), 2009 SCC 19, [2009] 1 S.C.R. 624, at paragraphs16–23.)

The Essential Character of the Impugned Regulations [13] In determining the essential character of the impugned Regulations, what must be determined is their true meaning or dominantfeature. This is resolved by looking at their purpose and legal effect. In Ward, at paragraphs 17 and 18, the Supreme Court of Canadaproposed that the following considerations be taken into account: The first task in the pith and substance analysis is to determine the pith and substance or essential character of the law. What is the truemeaning or dominant feature of the impugned legislation?

This is resolved by looking at the purpose and the legal effect of the regulationor law: see Reference re Firearms Act, [2000 SCC 31, [2000] 1 S.C.R. 783], at para. 16. The purpose refers to what the legislaturewanted to accomplish. Purpose is relevant to determine whether, in this case, Parliament was regulating the fishery, or venturing into theprovincial area of property and civil rights.

The legal effect refers to how the law will affect rights and liabilities, and is also helpful inilluminating the core meaning of the law: see Reference re Firearms Act, supra, at paras. 17–18; Morgentaler, [ (SCC),[1993] 3 S.C.R. 463], at pp. 482–83. The effects can also reveal whether a law is “colourable”, i.e. does the law in form appear toaddress something within the legislature’s jurisdiction, but in substance deal with a matter outside that jurisdiction?: see Morgentaler,supra, at p. 496. In oral argument, Ward expressly made clear that he is not challenging the law on the basis of colourability.

The pith and substance analysis is not technical or formalistic: see P. W. Hogg, Constitutional Law of Canada (loose-leaf ed.), vol. 1, atp. 15-12. It is essentially a matter of

interpretation. The court looks at the words used in the impugned legislation as well as thebackground and circumstances surrounding its enactment: see Morgentaler, supra, at p. 483; Reference re Firearms Act, supra, at para.17. In conducting this analysis, the court should not be concerned with the efficacy of the law or whether it achieves the legislature’sgoals: see RJR-MacDonald Inc. v.

Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199, at para. 44, per La Forest J.;Reference re Firearms Act, supra, at para. 18. [14] In circumstances such as here, where the subject of the challenge is discrete amendments to a comprehensive legislative andregulatory scheme, the analysis must take into account and be informed by the comprehensive scheme, since the essential character ofthe amendments may be otherwise lost if they are not properly understood as part of the integral scheme to which they belong: Ward, atparagraphs 19–23; Reference re Assisted Human Reproduction Act, 2010 SCC 61, [2010] 3 S.C.R. 457, at paragraphs 16–18. [15] Prior to the adoption of the impugned Regulations, cheese products marketed in import, export or interprovincial trade werealready subject to detailed regulation under the Dairy Products Regulations and the Food and Drug Regulations as to their compositionalstandards, notably through standards concerning the maximum percentage of moisture and the minimum percentage of milk fat forvarious cheese products, and standards related to other ingredients which may be contained in various cheese types.

These standards havenot been challenged in the past, and are not now challenged by the appellants in these proceedings. The impugned Regulations now addto these compositional standards by requiring that cheese contain a minimum percentage of milk protein derived from liquid milk, thecasein ratios, and by also requiring that the whey protein to casein ratio in cheese not exceed the ratio of whey protein to casein of milk,the whey ratio. [16] The casein ratios vary with types of cheese.

Thus, as an example, Pizza Mozzarella cheese must now have a minimum caseincontent of 63 percent derived from liquid milk products, and this minimum increases to 83 percent for Cheddar, Brick and otherenumerated cheese varieties, to 95 percent for most other enumerated cheeses such as Asiago, Blue, or Camembert, and to 100 percentfor “aged” Cheddar. [17] The appellants argue that the sole or dominant purpose of these impugned Regulations is to favour Canadian dairy producers byensuring an increased demand for liquid milk products to the detriment of other products such as whey cream and milk powder.

Theappellants’ evidence on this matter rests largely on the affidavit of Kempton L. Matte, sworn October 17, 2008 (the Matte affidavit), alobbyist for the Canadian dairy processing industry employed with the appellant Saputo Inc. [18] The appellants’ view, as set out in the Matte affidavit, can be briefly stated as follows: a. a ruling of December 2002 by the World Trade Organization unfavourable to exports of liquid milk from Canada [Canada – MeasuresAffecting the Importation of Milk and the Exportation of Dairy Products – Second Recourse to

Article 21.5 of the DSU by New Zealandand the United States, Appellate Body Report, AB-2002-6, WT/DS103/AB/RW2, WT/DS113/AB/RW2], followed by a ruling in March2005 by the Canadian International Trade Tribunal lowering duties on certain powdered milk products [Les Produits Laitiers AdvidiaInc. v. Commissioner of the Canada Customs and Revenue Agency and Dairy Farmers of Canada, Appeal No.

AP-2003-040], had anoverall detrimental effect on Canadian dairy producers; b. as a result of these rulings, certain federal initiatives were launched in order to address the concerns of dairy producers, notably theformation of a Dairy Industry Working Group bringing together Canadian dairy producers and processors in an effort to address theimmediate concerns of dairy producers regarding the use of various ingredients, particularly milk protein concentrates, in the productionof dairy products; c. the Dairy Industry Working Group did not reach a consensus; nevertheless its moderator prepared a report for the concerned federalminister dated October 11, 2006 (moderator’s report) recommending regulatory modifications in order to establish a casein percentagecontent in cheese originating from liquid milk; d. the recommendation in the moderator’s report had no other purpose than to provide a unilateral economic benefit to Canadian dairyproducers at the expense of dairy processors; e. the impugned Regulations were adopted following the moderator’s report, and largely followed the recommendations contained in thatreport; f. the casein percentage content from liquid milk used in the impugned Regulations and proposed in the moderator’s report was chosensolely for economic reasons based on what was believed by the moderator to be the highest ratios technically achievable by Canadiandairy processors;

g. the impugned Regulations are not required for consistency with any international food standards, will not allow for technical advancesin cheese production, will not contribute to the organoleptic and physical properties of cheese, and will have an adverse financial impacton Canadian dairy processors. [19] The appellants thus submit that the activities of the Dairy Industry Working Group (Working Group) and the moderator’s reportresulting from the activities of this Working Group are clear proof that the intended purpose of the impugned Regulations was to bringabout an economic transfer in favour of dairy producers to the detriment of dairy processors. [20] The factual findings of the applications Judge seriously undermine the appellants’ assertions.

Indeed, the applications Judgediscarded the appellants’ evidence, including the Matte affidavit, as unpersuasive (reasons, at paragraphs 28, 42 and 57 to 79). Theapplications Judge rather found that the purpose of the impugned Regulations was, in pith and substance, to establish compositionalstandards for cheese marketed in interprovincial or international trade (reasons, at paragraphs 27 and 85). He also found that theimpugned Regulations were adopted in order to: (

a) address consumer expectations and interests as to the composition of cheese(reasons, at paragraph 46); (

b) ensure the harmonization of the federal regulations respecting cheese products (reasons, at paragraphs 51to 53); and (

c) provide greater consistency with international food standards (reasons, at paragraphs 54 to 56). Did the applications Judgeerr in making these findings? The economic transfer argument [21] The applications Judge discarded the appellants’ evidence as unpersuasive and adopted an alternative view as to how and why theimpugned Regulations were developed and eventually adopted.

The appellants argue that in rejecting their evidence showing that thedominant purpose of the impugned Regulations was to carry out an economic transfer in favour of dairy producers to the detriment ofdairy processors (reasons, at paragraphs 42 and 57 to 79), the applications Judge committed reviewable errors by discarding what theyqualify as an “uncontested evidentiary record”.

For the reasons which follow, I find that the applications Judge made no such reviewableerrors. [22] The appellants asked the applications Judge, and are now asking this Court, to confuse the pith and substance of the impugnedRegulations with their incidental economic effects. The applications Judge correctly distinguished between the purposes of the impugnedRegulations and the incidental impacts resulting from their implementation.

The impugned Regulations will result in additional use ofliquid milk products in the fabrication of cheese with consequent economic impacts on certain dairy processors, particularly thoseprocessors who relied on the prior Dairy Products Regulations rather than on the prior Food and Drug Regulations.

However, saveexception, the economic impacts of legislation or regulations usually have little bearing on their constitutionality, since “[i]t is the ‘truenature and character of the Legislation’—not its ultimate economic results—that matters”: Re: Anti-Inflation Act, (SCC),[1976] 2 S.C.R. 373, at page 389, adopting the Privy Council’s statement in Reference as to the Validity of

Section 6 of the FarmSecurity Act 1944 of Saskatchewan, (UK JCPC), [1949] 2 D.L.R. 145; see also R. v. Morgentaler, (SCC), [1993] 3 S.C.R. 463, at pages 485–487. [23] Though the practical effect of a statute or regulation may be considered in determining its constitutional validity, it is only whenthe effects of the statute or regulation so directly impinge on another subject-matter as to reflect some alternative or ulterior purpose thatthe effects themselves take on analytic significance: Attorney General of Alberta v. Attorney General of Canada and others, (UK JCPC), [1939] A.C. 117 (P.C.); R. v.

Big M Drug Mart Ltd. et al., (SCC), [1985] 1 S.C.R. 295, at page 358; R.v. Morgentaler, at page 487; RJR-MacDonald Inc. v. Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199, atparagraph 44.

Here, as found by the applications Judge, the evidence simply does not support the appellants’ claims that the dominantpurpose or raison d’être of the impugned Regulations is to effect an economic transfer in favour of dairy producers. [24] Though the World Trade Organization and Canadian International Trade Tribunal rulings may have been of concern to dairyproducers, the record does not show that they played any important or dominant

part in the development and adoption of the impugnedRegulations. As found by the applications Judge, the record rather shows that other concerns were at issue. [25] The RIAS [Regulatory Impact Analysis Statement, SOR/2007-302, C.

Gaz. 2007.II.2787] sets the adoption of the impugnedRegulations within the historical development of national standards for the production of dairy products (RIAS, at pages 2791–2792) andin the context of new technological advancements in the production of cheese which have resulted in the more extensive use of powderedmilk products, with a consequent impact on the traditional or typical organoleptic, chemical and physical properties of various cheeses(at page 2790): Technological advances in cheese making have enabled the inclusion of higher levels of other milk solids in the manufacture of cheese,providing flexibility in achieving higher yields and economic savings.

Furthermore, the standards of the DPR [Dairy ProductsRegulations] were broad and the varietal name of the cheese was at risk of losing the organoleptic, chemical and physical propertiestypical for the variety. [26] Mr. Matte himself acknowledged these technical advances in his testimony of October 17, 2008 to the House of CommonsStanding Committee on Agriculture and Agri-Food and set out as Exhibit KM-3 to his affidavit (page 301 of appeal book): “So we’vebeen able, through the use of technology, to reintroduce the whey protein concentrate into cheese-making to the benefit of the industry.

Itreduces costs, and there are more efficiencies, and so on.” [27] Beyond their economic impacts, the technological advances allowing for “new technologies” proteins to be introduced intocheese raise two fundamental questions: first, what do these new technologies do to the organoleptic, chemical and physical properties ofcheese; and second, does the current federal regulatory environment allow for the introduction of these products into cheese?

As regardsthis last matter, it is useful to note that prior to the establishment of the Working Group, the dairy producers were relying on the terms ofthe Food and Drug Regulations to assert that these “new technologies” protein products were not contemplated by the existingregulatory regime and could not therefore be included in cheese, while the dairy processors were relying on the terms of the DairyProducts Regulations to assert the exact contrary. [28] The Working Group was established by the concerned federal minister in order to encourage the industry to reach a consensus.

The terms of reference for the Working Group were very broad and went beyond simply dealing with pricing and profitability issues.

As noted in the news release issued by minister Strahl’s office on April 15, 2005 announcing the formation of the Working Group (record book, at page 318), the mandate of the Working Group included not only the development of a strategy for growth in the industry, but also the development of “common positions on compositional standards for milk utilization and ingredients” in the dairy industry, in order notably to resolve the regulatory inconsistencies. [ 29 ] The moderator’s report also acknowledged that the Working Group’s mandate was “comprehensive, ranging from resolving the immediate challenge of ingredient usage in dairy products to establishing collaboratively a long-term strategy for the industry that would be of benefit to dairy farmers, dairy processors and their customers” (appeal book, at page 321). [ 30 ] Moreover, the moderator’s report indicated that the main stumbling block to reaching a consensus by the Working Group was the divergent views as to the current and likely future usages of ingredients in cheese making, an issue closely related to technical advances: “The main stumbling block on cheese was the great divergence between what producers thought was the current and likely usage of ingredients in cheese making and what processors claimed was the current and likely future usage” (appeal book, at page 322). [ 31 ] In light of the failure to reach an industry consensus on compositional standards for cheese within the Working Group, the moderator made a recommendation to “[l]aunch the regulatory process to harmonize the regulations of the Act [ Canada Agricultural Products Act ] and Food and Drug[s] Act” (appeal book, at page 322).

He proposed that the regulatory harmonization between the conflicting regulations be achieved through allowing the casein content in cheese to be derived both from liquid milk and from other derivative milk products through a percentage system based on the casein content from liquid milk.

The recommended system determined by the moderator was meant to reflect the actual usage in the industry of liquid milk and of derivative milk products. [ 32 ] Consequently, it is abundantly clear from the record that the evidence submitted by the appellants, including the Matte affidavit, did not properly describe either the history leading to the promulgation of the impugned Regulations or their true purposes. Rather, the Matte affidavit reflects the particular views and beliefs of an industry lobbyist. The applications Judge made no reviewable error in finding this evidence to be unconvincing.

Consumer expectations and interests [ 33 ] The RIAS specifically refers to consumer expectations and interests as factors for the adoption of the new harmonized federal cheese composition standards. As explained in the RIAS, cheese standards describe the basic requirements for cheese, so that cheese available to consumers has a consistent composition and characteristics so as to provide a system through which consumer interests are protected and consumer expectations are met: RIAS, at pages 2787–2788; reasons, paragraph 46.

As already noted, the RIAS goes on to state that with the technological advances in cheese making, allowing for the inclusion of higher levels of other milk solids in the manufacture of cheese, and the broad standards under the Dairy Products Regulations , the varietal name of the cheese was at risk of losing the organoleptic, chemical and physical properties typical for the variety: RIAS, at page 2790; reasons, at paragraph 47. [ 34 ] The appellants dispute that consumer expectations and interests are at issue by asserting that the inclusion within cheese of proteins derived from new technologies does not in fact affect the organoleptic qualities of cheese products.

Again, the evidence accepted by the applications Judge does not support the appellants’ assertions. [ 35 ] Indeed, after considering the expert evidence submitted to him, the applications Judge found that cheese smell, taste and texture may be affected by the use of substitutes to liquid milk products, even in small quantities. He accepted the abundant evidence submitted by the interveners concerning this matter, and notably the evidence of Mr. Wathier, an experienced master cheese maker and cheese judge (reasons, at paragraph 49): Mr.

Wathier, a master cheese maker at St-Albert with four decades of experience in the industry, including experience as a cheese judge and as a consultant to the applicant Parlamat, gave evidence concerning the impact of using milk derivatives on cheese quality. His evidence was that even small quantities of milk derivatives (up to 5 percent) could affect the taste, texture, and consistency of cheese compared to cheese made with fresh milk.

The process of converting fresh liquid milk into a powdered milk derivative has an immediate impact on the taste, which is one of the reasons why, for example, consumers gravitate away from skim milk powder. [ 36 ] The applications Judge made no reviewable error in so finding. Harmonization of the federal regulatory environment respecting cheese products [ 37 ] The RIAS refers to the elimination of inconsistencies between the Food and Drug Regulations and the Dairy Products Regulations as one of the principal purposes for the adoption of the impugned Regulations.

The applications Judge agreed that this was indeed one of the principal purposes of these Regulations (reasons, at paragraphs 51–53). The appellants dispute this finding by asserting that the impugned Regulations “harmonize nothing” as the casein ratios and whey ratio they set out are new (appellants’ memorandum, at paragraph 44).

Again, I cannot accept the appellants’ contentions, which run counter to the evidence submitted to and accepted by the applications Judge and to the terms of the Food and Drug Regulations and the Dairy Products Regulations as they read prior to the adoption of the impugned Regulations. [ 38 ] For example, prior to the coming into force of the impugned Regulations, the Dairy Products Regulations allowed the use of “other milk solids” as an ingredient of cheese, while the Food and Drug Regulations required that cheese be made only with milk, skim milk, partly skimmed milk, buttermilk, whey cream, or these same ingredients in their concentrated, dried or reconstituted form, without reference to “milk solids”.

As already noted above, the dairy processors favoured the definition used in the Dairy Products Regulations which they interpreted as allowing them to use all milk solids, including those resulting from new technological advances, while the dairy producers favoured the definition in the Food and Drug Regulations which set out a more restrictive list of permitted ingredients. [ 39 ] These regulatory inconsistencies were recognized in the dairy industry, were identified in Parliamentary research documents ( Compositional Standards for Cheese in Canada , 26 December 2007, Parliamentary Information and Research Service [PRB 07-41E, available online], page 680 ff. of the appeal book), were one of the principal reasons leading to the creation of the Working Group, which

had a specific mandate to address these inconsistencies, and were recognized by the Governor in Council (RIAS, at page 2789). [40] The Regulations Amending the Food and Drug Regulations and the Dairy Products Regulations not only introduced theimpugned Regulations, but also provided for new

definitions.

Section 1 of the amending regulations replaced the definition of “milkproduct” in

section B.08.001.1 of the Food and Drug Regulations, while

section 5 thereof replaced the

definitions of “milk product” and“milk solids” in

section 2 of the Dairy Products Regulations. These amendments eliminated the prior inconsistencies between the tworegulations by allowing cheese to be composed of any constituent of milk—other than water—singly or in combination with otherconstituents of milk. [41] Consequently, the appellants’ submissions that the new Regulations did not seek to harmonize federal regulations concerning thecomposition of cheese are simply untenable, and the applications Judge made no reviewable error in rejecting these submissions.

Greater consistency with certain international food standards [42] The applications Judge also found that one of the important purposes of the impugned Regulations was to ensure greaterconsistency with certain international food standards as stated in the RIAS. The appellants dispute this finding. Again, I find that theapplications Judge committed no reviewable error in so finding. [43] The appellants are challenging two new standards for cheese composition set out in the impugned Regulations: (

i) therequirement for a certain percentage of casein content derived from liquid milks, and not from other milk protein sources such as wheycream and milk powder (the casein ratios); and (ii) a whey protein to casein ratio that does not exceed the ratio of whey protein to caseinratio of milk (the whey ratio). [44] The Codex Alimentarius Commission was established in 1962 by the United Nations Food and Agricultural Organization and theWorld Health Organization to prepare international food standards, recommendations and guidelines with a view to protecting consumerhealth, ensuring fair trade practices and facilitating international trade: Raymond O’Rourke, European Food Law, 3rd ed. (London:Sweet & Maxwell, 2005), at paragraph 14-019.

This Commission has notably developed a Codex General Standard for Cheese (CodexStan 283-1978, Rev.1-1999, amended 2006 [available online], reproduced at page 372 ff. of the appeal book). This international standardprovides for the following regarding a whey ratio in cheese: 2.1 Cheese is the ripened or unripened soft, semi-hard, hard, or extra-hard product, which may be coated and in which the wheyprotein/casein ratio does not exceed that of milk …. [Emphasis added.] [45] This is precisely the new whey ratio referred to in the impugned Regulations and which the appellants challenge.

Indeed,subsections 3(1), 6(1) and 11(1) of the Regulations Amending the Food and Drug Regulations and the Dairy Products Regulationsintroduce a new subparagraph B.08.033(1)(a)(i.2) in the Food and Drug Regulations and new subparagraphs 6(3)(c)(ii) and 28(1)(a)(i.2)into the Dairy Products Regulations which provide that cheese must “have a whey protein to casein ratio that does not exceed the wheyprotein to casein ratio of milk.” [46] It is thus abundantly clear that the impugned Regulations do indeed seek to achieve greater consistency with certain internationalfood standards, and the applications Judge consequently made no reviewable error in so finding. [47] Moreover, as noted by the applications Judge, with regard to the casein ratios, there is a great deal of variation in variousjurisdictions, and though the casein ratios adopted under the impugned Regulations may be more stringent than those of certaincountries, they allow more flexibility for the use of milk derivatives than many other jurisdictions (reasons, paragraph 56; RIAS, at page2788 and at page 2790 in fine).

Conclusion on pith and substance [48] I therefore conclude that, in light of new technological advances allowing for an increase in protein products from milkderivatives in cheese content, the impugned Regulations are concerned with ensuring a balance between these “new technologies”proteins and traditional liquid milk protein in the contents of cheese marketed in import, export or interprovincial trade, and that theywere adopted with a view to (

a) harmonizing existing federal regulations concerning the use of such protein products, (

b) enhancingconsumer interests by protecting the traditional organoleptic, chemical and physical properties of cheese, (

c) allowing for technologicaladvances in cheese production through compositional requirements which permit to a limited extent new technologies proteins in cheesecontent, and (

d) providing consistency with certain international food standards. Do the pith and substance of the impugned Regulations fall within the federal power to regulate trade and commerce? [49] Having determined the pith and substance of the impugned Regulations, it must now be asked whether they fit within the federalpower to regulate trade and commerce. The appellants contend that they do not since, in their view, they concern the regulation of cheeseproduction, a matter falling under provincial authority.

It should be noted here that only the first branch (the international andinterprovincial branch as opposed to the second or “general” branch) of the federal trade and commerce power is at issue in this appeal. [50] One of the fundamental purposes of the Canadian federation was, and still is, to facilitate trade and commerce among the variousprovinces and territories, and to ensure continued and improved access to international markets for Canadian businesses. Thisfundamental purpose is reflected in

section 121 of the Constitution Act, 1867 which effectively provides for the free trade of all articlesof growth, produce or manufacture among all the provinces. Moreover, this fundamental purpose is also reflected in subsection 91(2) ofthe Constitution Act, 1867, which entrusts Parliament with the important responsibility of regulating international and interprovincialtrade and commerce. [51] Consequently,

section 121 and subsection 91(2) of the Constitution Act, 1867 are two interrelated facets of Canada’sConstitution, and they both seek to facilitate Canada’s economic union and prosperity through an effective and efficient Canada-widefree and common market for all products of growth, production or manufacture: Black v. Law Society of Alberta,

(SCC), [1989] 1 S.C.R. 591, at pages 608–609. [52] A Canadian common market requires that interprovincial and international trade regulations that support it be adopted at thefederal level.

I hold no doubt that this includes the ability to regulate standards for products, including compositional characteristics forfood products, marketed for international or interprovincial trade. [53] Indeed, great economic benefits can be achieved by regulating the compositional characteristics of the products of trade,allowing producers, manufacturers and consumers to rely on a uniform quality standard for such products, thus increasing consumerconfidence and ensuring fair and efficient market competition between industrial players, while increasing available markets.

Thus, aconsumer in Vancouver may buy a food product processed in Quebec with the confidence that the product meets the same compositionalcharacteristics and standards as a competing product processed in Ontario.

Likewise, processors in Alberta can produce a similar foodproduct meeting standardized characteristics in order to enter into competition on a level-playing field with rivals in other provinces.Moreover, composition and quality regulations can boost Canadian exports by assuring foreign purchasers that they are being suppliedwith products purchased anywhere in Canada that meet minimum quality and consistency standards.

These are but some of the importanteconomic benefits resulting from composition and quality standards set at a central economic and political regulatory level. [54] Though the jurisprudence concerning the authority to regulate trade and commerce in Canada has developed somewhathaphazardly, it now appears incontestable that federal legislation may validly regulate the compositional characteristics of food productsdestined for international or interprovincial trade: Attorney-General for Manitoba v. Manitoba Egg and Poultry Association et al., (SCC), [1971] S.C.R. 689; Dominion Stores Ltd. v.

The Queen, (SCC), [1980] 1 S.C.R. 844, at pages 865–866 (upholding the validity of the interprovincial and international trade program aspects of a grading system while striking down itspurely intra-provincial aspects). As early as in The King v.

Eastern Terminal Elevator Co., (SCC), [1925] S.C.R. 434,Duff J. recognized the overriding federal authority to regulate food product standards to protect external trade, at page 446: It is undeniable that one principal object of this Act is to protect the external trade in grain, and especially in wheat, by ensuring theintegrity of certificates issued by the Grain Commission in respect of the quality of grain, and especially of wheat; and the beneficenteffect and the value of the system provided by the legislation as a whole is not in dispute by anybody.

I do not think it is fairlydisputable, either, that the Dominion possesses legislative powers, in respect of transport …; in respect of weight and measures; inrespect of trade and commerce, interpreted as that phrase has been interpreted; which would enable it effectively, by properly framedlegislation, to regulate this branch of external trade for the purpose of protecting it, by ensuring correctness in grading and freedom fromadulteration, as well as providing for effective and reliable public guaranties as to quality. [55] Canadian courts have had to struggle with the difficult interrelation between the federal authority under subsection 91(2) of theConstitution Act, 1867 concerning the regulation of trade and commerce and the provincial authorities over property and civil rights andmatters of a merely local or private nature in a province under subsections 92(13) and 92(16).

The solution, which has stood the test oftime, has been to recognize that the federal authority under the first branch of the trade and commerce power is restricted to internationaland interprovincial trade and commerce: Citizens Insurance Company v. Parsons (1881), 7 App. Cas. 96 (P.C.); The King v. EasternTerminal Elevator Co.; Carnation Company Limited v. Quebec Agricultural Marketing Board et al., (SCC), [1968]S.C.R. 238; Caloil Inc. v.

Attorney General of Canada, (SCC), [1971] S.C.R. 543; Labatt Breweries of Canada Ltd. v.Attorney General of Canada, (SCC), [1980] 1 S.C.R. 914, at pages 942–943 (Labatt Breweries).

This solution hasfostered federal-provincial co-operation in the field of trade and commerce, while recognizing the lead role played by the federalgovernment in regulating both a common Canadian market (interprovincial trade and commerce) and the flow of Canadian products intoforeign markets and of foreign products into Canada (international trade and commerce). [56] This federal-provincial co-operation has been particularly strong in the field of food products standards, notably as concerns dairyproducts.

A National Dairy Code has been developed by federal, provincial and territorial governments to provide national standards forthe production of milk and processing of dairy products. This federal-provincial co-operation is also clearly evidenced by numerousprovincial regulatory schemes which refer to the Food and Drug Regulations or the Dairy Products Regulations as the primary standardsfor dairy products, notably in Quebec, Manitoba, Saskatchewan and Alberta: Regulation respecting food, R.R.Q. 1981, c. P-29, r. 1,section 11.8.6; Dairy Regulation, Man.

Reg. 203/87R, sections 58–62; Dairy Manufacturing Plant Regulations, Sask. Reg. 53/79,sections 22–27; Dairy Industry Regulation, Alta. Reg. 139/1999, sections 43 and 63. [57] The appellants correctly state that the regulation of production, including where primary agricultural products are transformedinto other food products, is prima facie a local matter of provincial jurisdiction: Reference respecting the Agricultural ProductsMarketing Act, R.S.C. 1970, c. A-7 et al., (SCC), [1978] 2 S.C.R. 1198 (Egg Reference), at pages 1293–1294.

Thisposition in the Egg Reference was however qualified by Pigeon J., writing for the majority in that case, by noting that the control ofinterprovincial trade fell under federal authority, and that federal-provincial co-operation was often important in ensuring proper traderegulations (at page 1296): This does not mean that such power is unlimited, a province cannot control extraprovincial trade, as was held in Manitoba Egg Reference( (SCC), [1971] S.C.R. 689) and in the Burns Food case ( (SCC), [1975] 1 S.C.R. 494).

However,“Marketing” does not include production and therefore, provincial control of production is prima facie valid. In the instant case, theprovincial regulation is not aimed at controlling the extraprovincial trade. In so far as it affects this trade, it is only complementary to theregulations established under federal authority.

In my view this is perfectly legitimate, otherwise it would mean that our Constitutionmakes it impossible by federal-provincial cooperative action to arrive at any practical scheme for the orderly and efficient production andmarketing of a commodity which all governments concerned agree requires regulation in both intraprovincial and extraprovincial trade. [58] The constitutional validity of a trade statute or regulation depends on whether the pith and substance or primary objective of thestatute or regulation is related to the heads of power of the legislative authority in question.

In determining this matter, Estey J. in LabattBreweries, at pages 942–943 stated that incidental effects on the powers of the other level of government will not necessarily lead to theconclusion that the statute or regulation is unconstitutional: With respect to legislation relating to the support, control or regulation of the various levels or components in the marketing cycle of

natural products, the provincial authority is prima facie qualified to legislate with reference to production ( vide Pigeon J. in the Reference Re Agricultural Products Marketing Act, supra , at p. 1296), and the federal Parliament with reference to marketing in the international and interprovincial levels of trade. In between, the success or failure of the legislator depends upon whether the pith and substance or primary objective of the statute or regulation is related to the heads of power of the legislative authority in question.

Incidental effect on the other legislative sphere will no longer necessarily doom the statute to failure. Several indicia of the proper tests have evolved. For example, if contractual rights within the province are the object of the proposed regulation, the province has the authority. On the other hand, if regulation of the flow in extraprovincial channels of trade is the object, then the federal statute will be valid. Between these spectrum ends, the shadings cannot be foretold in anything approaching a constitutional formula. [ 59 ] In Fédération des producteurs de volailles du Québec v.

Pelland , 2005 SCC 20 , [2005] 1 S.C.R. 292, at paragraph 31 , Abella J., writing for a unanimous Supreme Court, reiterated this approach by concluding that a reviewing court is required to focus on the core character of the impugned legislation, particularly where laws enacted under the jurisdiction of one level of government overflow or have an incidental impact on the jurisdiction of the other level of government. [ 60 ] If the essential character of the impugned legislation falls within federal legislative authority, merely incidental effects on provincial jurisdiction will not invalidate the legislation: Canadian Western Bank v.

Alberta , above, at paragraphs 28–30 ; Chatterjee v. Ontario (Attorney General) , above, at paragraphs 2, 29–30 ; Caloil Inc. v. Attorney General of Canada , above, at pages 549–550. [ 61 ] The essential character of the impugned Regulations is to set compositional standards for cheese marketed in import, export or interprovincial trade, and they do not prima facie seek to control the production or the manufacturing of dairy products such as cheese.

The impugned Regulations were adopted under the Canada Agricultural Products Act and the Food and Drugs Act pursuant to legislative provisions which are clearly limited in scope to interprovincial and international trade. [ 62 ]

Section 17 of the Canada Agricultural Products Act is strictly limited to import, export and interprovincial trade: Prohibition 17. No person shall, except in accordance with this Act or the regulations, (

a) market an agricultural product in import, export or interprovincial trad e; (

b) possess an agricultural product for the purpose of marketing it in import, export or interprovincial trade ; or (

c) possess an agricultural product that has been marketed in contravention of this Act or the regulations. [Emphasis added.] [ 63 ] The Governor in Council adopted the Dairy Products Regulations under the Canada Agricultural Products Act in order to regulate dairy products, including cheese, strictly for purposes of international and interprovincial trade.

Sections 2.1 [as enacted by SOR/91-558, s. 2] and 2.2 [as enacted idem ; 95-548, s. 35; 2004-80, s. 6] of these Regulations are instructive: 2.1 Where a grade or standard is established under these Regulations for a dairy product, no person shall market any product in import, export or interprovincial trade in such a manner that the product is likely to be mistaken for the dairy product. 2.2

(1) Subject to subsections (2) and (3), no person shall market a dairy product in import, export or interprovincial trade as food unless the dairy product (

b) is not contaminated; (

c) is edible; (

d) is prepared in a sanitary manner; and (

e) meets all other requirements of the Food and Drugs Act and the Food and Drug Regulations with respect to the dairy product. [Emphasis added.] [ 64 ] Subsections 6(1) [as am. by R.S.C., 1985 (3rd Supp.), c. 27, s. 1] and (3) [as am. idem ] of the Food and Drugs Act use similar language by restricting the scope of a standard adopted for food to imports and interprovincial trade: Importation and interprovincial movement of food 6.

(1) Where a standard for a food has been prescribed, no person shall (

a) import into Canada , (

b) send, convey or receive for conveyance from one province to another, or (

c) have in possession for the purpose of sending or conveying from one province to another any

article that is intended for sale and that is likely to be mistaken for that food unless the

article complies with the prescribed standard. …

Labelling, etc., of food that is imported or moved interprovincially

(3) Where a standard for a food has been prescribed, no person shall label, package, sell or advertise any

article that (

a) has been imported into Canada , (

b) has been sent or conveyed from one province to another , or (

c) is intended to be sent or conveyed from one province to another in such a manner that it is likely to be mistaken for that food unless the

article complies with the prescribed standard. [Emphasis added.] [ 65 ] It is noteworthy that

section 6 was amended by Parliament to ensure that the regulatory scheme for compositional standards for food established under the Food and Drugs Act and its regulations applied only to food products which fall within the limited scope of federal constitutional powers as found by the Supreme Court of Canada in the Labatt Breweries case:

An Act to amend the Food and Drugs Act , R.S.C., 1985 (3rd Supp.), c. 27,

section 1 [amending

section 6 of the Food and Drugs Act ]; Patrick J. Monahan, Constitutional Law , 2nd ed. (Toronto: Irwin Law, 2002), at page 283. [ 66 ] Consequently, the effects of the impugned Regulations are strictly limited to cheese products marketed for export, import or interprovincial trade. The impugned Regulations may incidentally affect production, but not more than any other compositional standard. Product standards almost always invariably incidentally affect how the concerned product will be produced, yet this does not mean that the standard is directed to production rather than to trade and commerce.

To decide otherwise would result in the absurd proposition that no federal compositional standards could be adopted for food products marketed for import, export or interprovincial trade since almost all such standards incidentally affect the production of food products. Consequently, federal legislative authority to establish standards for food products marketed in export, import or interprovincial trade and which has an incidental effect on local production does not, on that account alone, become invalid.

Question No. 2: Did the applications Judge err in finding that the impugned Regulations were a valid exercise of the regulation-making authority of the Governor in Council under the Canada Agricultural Products Act and the Food and Drugs Act ? [ 67 ] Though this is clearly not the thrust of their appeal, in addition to their constitutional arguments the appellants also challenge the impugned Regulations on various administrative law grounds. First, they assert that the Regulations are beyond the legislative purview of their parent statutes.

Second, they assert that the Regulations are meaningless in that they do not set out objective and uniform standards. [ 68 ] The appellants’ challenge concerning the legislative purview of the parent statutes raises issues similar to those raised in their constitutional challenge: since, in the appellants’ view, the “pith and substance” of the impugned Regulations is to effect an economic benefit to Canadian dairy producers at the expense of Canadian dairy processors, and since there is nothing in the Food and Drugs Act or in the Canadian Agricultural Products Act which purports to regulate profits or to transfer economic benefits from one sector of an industry to another, the impugned Regulations cannot fit within the regulation-making authority provided to the Governor in Council under those acts: appellants’ memorandum, paragraphs 120 to 122. [ 69 ] This argument can be dismissed for the same reasons that have led to the rejection of the constitutional arguments of the appellants.

The impugned Regulations seek in pith and substance to set compositional standards for cheese products marketed in import, export and interprovincial trade. Moreover, they have been validly adopted under clear regulation-making authority conferred notably by paragraphs 32 (

f) and (

k) of the Canada Agricultural Products Act (which empower the Governor in Council to make regulations establishing grades and standards for agricultural products and regulating the marketing of agricultural products in import, export and interprovincial trade), and by paragraphs 30(1) ( b ), (

c) and (

d) of the Food and Drugs Act which provide for similar regulation-making authority in regard to articles of food. For purposes of convenience, these legislative provisions are reproduced as follows: Canada Agricultural Products Act Regulations 32. The Governor in Council may make regulations for carrying out the purposes and provisions of this Act and prescribing anything that is to be prescribed under this Act and, without limiting the generality of the foregoing, may make regulations … (

f) establishing grades and standards, including standards of wholesomeness, for agricultural products and establishing standards for containers; … (

k) regulating or prohibiting the marketing of any agricultural product, other than a fresh or processed fruit or vegetable, in import, export or interprovincial trade and establishing terms and conditions governing that marketing; Food and Drugs Act

Regulations30.

(1) The Governor in Council may make regulations for carrying the purposes and provisions of this Act into effect, and,in particular, but without restricting the generality of the foregoing, may make regulations … (

b) respecting … (iv) the use of any substance as an ingredient in any food, drug, cosmetic or device, to prevent the purchaser or consumer thereof from being deceived or misled in respect of the design, construction,performance, intended use, quantity, character, value, composition, merit or safety thereof, or to prevent injury to the healthof the purchaser or consumer; (

c) prescribing standards of composition, strength, potency, purity, quality or other property of any

article of food, drug,cosmetic or device; (

d) respecting the importation of foods, drugs, cosmetics and devices in order to ensure compliance with this Act and theregulations; [70] In oral argument before us, the appellants added to their memorandum by arguing that since the impugned Regulations do notaddress any health or public safety concerns, their provisions would be beyond the legislative scope set out under the Food and DrugsAct.

I first note that even if this argument were correct, which it is not, it would be of little assistance to the appellants who would stillneed to contend with the terms of the Dairy Products Regulations, as amended by the impugned Regulations, and which were adoptedpursuant to the Canada Agricultural Products Act. [71] In any event, I acknowledge that the Food and Drugs Act is principally concerned with the protection of public heath and publicsafety in relation to food and drug products, and that its constitutional validity rests principally on the federal criminal law authorityunder subsection 91(27) of the Constitution Act, 1867: Standard Sausage Co. v.

Lee (1993), (BC CA), 47 B.C.R. 411(C.A.); R. v. Wetmore et al., (SCC), [1983] 2 S.C.R. 284; C.E. Jamieson & Co. (Dominion) v. Canada (AttorneyGeneral), (FC), [1988] 1 F.C. 590 (T.D.) (abridged); Canadian Generic Pharmaceutical Assn. v. Canada (Minister ofHealth), 2010 FCA 334, [2012] 2 F.C.R. 618. [72] Nevertheless, though the main thrust of the Food and Drugs Act is related to public health and safety, it also has importantincidental trade and commerce aspects. As noted by Laskin C. J. in R. v. Wetmore, above, at page 288, there are three categories ofprovisions in the Act [Food and Drugs Act, R.S.C. 1970, c.

F-27], and one of these, namely the marketing standards set out under thatact, invite the application of the trade and commerce power: An examination of the various provisions of the Food and Drugs Act shows that it goes beyond mere prohibition to bring it solely withins. 91(27) but that it also involves a prescription of standards, including labelling and packaging as well as control of manufacture. Theramifications of the legislation, encompassing food, drugs, cosmetics and devices and the emphasis on marketing standards seem to meto subjoin a trade and commerce aspect beyond mere criminal law alone.

There appear to be three categories of provisions in the Foodand Drugs Act. Those that are in s. 8 are aimed at protecting the physical health and safety of the public. Those that are in s. 9 are aimedat marketing and those dealing with controlled drugs in

Part III of the Act are aimed at protecting the moral health of the public. Onemay properly characterize the first and third categories as falling under the criminal law power but the second category certainly invitesthe application of the trade and commerce power. [73] Subsections 6(1) and 6(3) and paragraphs 30(1)(b), (

c) and (

d) of the Food and Drugs Act notably provide that prescribedstandards for food, including compositional requirements, may be adopted by the Governor in Council. In this case, no one asserts thatthe impugned Regulations seek to address a public health or public safety issue. Rather, the amendments brought to the Food and DrugRegulations by the impugned Regulations seek primarily to ensure their coherence with the amendments brought to the Dairy ProductsRegulations. Consequently, the constitutional authority for the impugned Regulations must be found elsewhere than in the criminal lawpower.

The constitutional validity of the impugned Regulations rather rests on the federal power to regulate trade and commerce. Theterms of paragraphs 30(1)(b), (

c) and (

d) of the Food and Drugs Act empower the Governor in Council to adopt the impugnedRegulations on the basis of concerns related to the regulation of international and interprovincial trade, irrespective of any health orpublic safety concerns. [74] Finally, I reject the appellants’ alternative argument set out in paragraphs 124 to 127 of their memorandum and by which theyassert that the impugned Regulations are meaningless, vest undue discretion in the Canadian Food Inspection Agency, and constitute animpermissible subdelegation of regulation-making authority since they do not set out objective and uniform standards.

I reject thesearguments for the same reasons they were rejected by the applications Judge, at paragraphs 34 to 37 of his reasons: the standards set outunder the impugned Regulations are clear and unambiguous, and there is no foundation, in fact or in law, to the appellants’ assertionsconcerning impermissible subdelegation. [75] Insofar as the appellants’ alternative argument is related to the enforceability and policing of the impugned Regulations, I agreewith the applications Judge that such an attack was not properly before the Federal Court (reasons, at paragraph 37) nor is it properlybefore us in this appeal.

Nevertheless, insofar as it is useful to answer this argument, I find that the casein ratios and the whey ratio canbe objectively enforced, the expert report of Dr. Goulet clearly concluding that there were a number of objective ways to ensurecompliance (appeal book, at page 202 ff.). Conclusion [76] For all of the above reasons, I would dismiss this appeal, with costs in favour of the respondent.

Létourneau J.A.: I agree. Nadon J.A.: I agree.