A-518-79
Saskatchewan Wheat Pool (Appellant) (Defend-
ant)
v.
The Queen (Respondent) (Plaintiff)
Court of Appeal, Heald and Urie JJ. and Kelly
D.J.—Regina, September 18, and 19; Ottawa,
November 13, 1980.
Crown — Appeal from Trial Division decision that appel
lant was liable to respondent in damages for breach of statu
tory duty — Trial Judge concluded that par. 86(c) of Canada
Grain Act, which prohibits discharge of infested grain, created
a litigable duty — Whether Trial Judge erred in finding that
the duty was imposed to protect a particular class of persons
— Appeal allowed — Canada Grain Act, S.C. 1970-71-72, c.
7, ss. 11, 32, 33, 45, 46, 51, 53, 55, 56, 64, 68, 69, 70, 71, 86(c)
— Canadian Wheat Board Act, R.S.C. 1970, c. C-12, ss. 4(2),
13(1).
Appeal from the judgment of the Trial Division in favour of
plaintiff respondent. Appellant operates licensed terminal
elevators where grain is received, weighed, graded and placed
in bins pending shipment. When grain is received, a receipt is
issued to The Canadian Wheat Board or its agents, entitling
the holder to delivery of grain of like grade and quantity. The
appellant loaded insect-infested wheat onto a ship which subse
quently had to be diverted, unloaded and fumigated. The
infested wheat was replaced with clean wheat. The Trial Judge
awarded the plaintiff respondent the total cost of the diversion,
based on his conclusion that the appellant had a litigable duty
to respondent pursuant to paragraph 86(c) of the Canada
Grain Act, which prohibits the discharge of infested grain. He
assumed that the objectives of the statute are those of the
Canadian Grain Commission as specified in section 11 of the
statute. The question is whether the Trial Judge erred in
interpreting section 11 so as to confine the objectives of the
Commission to establishing and maintaining standards of qual
ity for Canadian grain, and to regulating the grain handling in
Canada to ensure a dependable commodity for domestic and
export markets.
Held, the appeal is allowed. The Trial Judge erred in holding
that paragraph 86(c) imposed a litigable duty on appellant. The
objectives of the statute cannot be restricted to the objectives
set out in section 11. The primary and overall object of the
Canada Grain Act would appear to be to maintain and improve
the quality of grain grown in Canada and to regulate grain
handling in Canada in furtherance of the general public pur
pose. It is not intended to benefit any particular class of
persons.
Canadian Pacific Air Lines, Ltd. v. The Queen [1979] 1
F.C. 39, referred to.
APPEAL.
COUNSEL:
E. John Moss, Q.C. and B. Shourounis for
appellant (defendant).
H. B. Monk, Q.C. and D. S. Sagoo for
respondent (plaintiff).
SOLICITORS:
Balfour, Moss, Milliken, Laschuk, Kyle,
Vancise & Cameron, Regina, for appellant
(defendant).
Deputy Attorney General of Canada for
respondent (plaintiff).
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal from a decision of
the Trial Division [[1980] 1 F.C. 407] in which
judgment was awarded in favour of the plaintiff
respondent against the defendant appellant, in the
sum of $98,261.55 with costs. This award is for
damages incurred by The Canadian Wheat Board,
an agent of the federal Crown, because it received
infested wheat from the appellant. The total item
of $98,261.55 contains two items detailed as
follows:
(a) costs of unloading and fumigating the infested
wheat $22,824.05
and
(b) costs to the owner of the vessel carrying the
infested wheat in respect of the delay occasioned to
the vessel by the unloading and fumigating 75,437.50
The evidence at trial established the following
factual situation:
The appellant is a large and substantial grain
company which operates numerous primary coun
try grain elevators in Saskatchewan. It also oper
ates eight licensed terminal elevators at the Port of
Thunder Bay, Ontario where grain is received
from Western Canada for export or shipment fur
ther east. Its activities as an elevator operator are
subject to the provisions of the Canada Grain Act,
S.C. 1970-71-72, c. 7, which set out in consider
able detail the duties of elevator operators. At the
material time in 1975, the appellant, so far as its
country elevator operations in Western Canada
were concerned, was operating under a "handling
agreement" with The Canadian Wheat Board (Ex.
P-10 at trial). There was no contract or agreement
in existence between The Canadian Wheat Board
and the appellant relating to its operation of termi
nal elevators. At all relevant times, grain owned by
The Canadian Wheat Board was shipped from
primary country grain elevators in Western
Canada owned by the appellant and other primary
country elevator companies to the terminal facili
ties of the appellant and other licensed terminal
elevator operators. The quantities of grain received
at the appellant's eight terminal elevators at Thun
der Bay are very large indeed, varying from 100
carloads a day to 700 carloads a day. Each car-
load, upon arrival at the terminal elevator has a
sample taken from it by inspectors employed by
the Canadian Grain Commission. These samples
are visually scrutinized for insect infestation.
Adult rusty beetles can sometimes be detected by
visual inspection but not always. A berlase funnel
test is performed to reveal infestation from rusty
beetle larvae. This test takes from four to six hours
to perform. It is only performed on about 10% of
the grain cars entering the terminal elevator. It
cannot be performed on the spot. It is performed
at the headquarter offices of the Canadian Grain
Commission in Thunder Bay. The results are not
known for two or three days. By the time the
results of the test are known, the grain could be
either in the terminal elevator or on a ship. The
grain, when received at appellant's terminal eleva
tors is weighed, graded and placed in bins. In
exchange therefor a terminal elevator receipt is
issued and delivered to The Canadian Wheat
Board or its agents. The terminal elevator receipt
is in a form prescribed by the Canada Grain Act
and contains the following provisions:
Received in store in our terminal named above, subject to the
order of the above named consignee, Canadian grain of grade
and quantity as shown hereon. Like grade and quantity will be
delivered to the holder hereof upon surrender of this receipt
properly endorsed and on payment of all lawful charges due to
above named terminal company.
Pursuant to section 93 of the Canada Grain Act,
the terminal elevator receipt is a negotiable instru
ment and passes from hand to hand by endorse
ment and delivery.
Prior to September 19, 1975, The Canadian
Wheat Board was the holder of a number of
terminal elevator receipts for wheat which had
been issued by the appellant. On that day, the
Board directed that a cargo of wheat be shipped on
board the vessel Frankcliffe Hall. A portion of this
wheat was graded No. 3 Canada Utility. Upon
delivery of the appropriate elevator receipts, the
appellant caused No. 3 Canada Utility Wheat to
be loaded into holds 1, 3, 5 and 6 of the vessel.
Loading began on September 22, 1975. Some of
the wheat discharged from the appellant's terminal
No. 8 into holds 5 and 6 was infested with rusty
grain beetle larvae. This wheat was loaded under
the scrutiny of the Canadian Grain Commission's
inspectors as well as the scrutiny of the appellant's
representatives. At the loading no one had any
knowledge that the grain was infested with rusty
beetle larvae. The vessel sailed from Thunder Bay
on September 23, 1975. The berlase funnel tests
were only completed after the vessel had left port
and disclosed rusty grain beetle larvae in the wheat
in holds 5 and 6 of the vessel. As a result, and at
the direction of the Canadian Grain Commission,
the vessel was diverted to Kingston, Ontario where
the infested wheat was unloaded, fumigated and
replaced by other clean wheat of the same grade.
In the result, the vessel was detained at the Port of
Kingston for over 6 days. The amount awarded by
the learned Trial Judge represents the total costs
to The Canadian Wheat Board of this diversion as
detailed at the outset of these reasons.
The appellant's attack on the judgment of the
Trial Division is twofold. Firstly, it alleges error in
the conclusion of the learned Trial Judge that the
appellant became liable to the respondent in dam
ages for breach of paragraph 86(c) of the Canada
Grain Act. Secondly, the appellant submits that no
damages have been sustained or in the alternative
that no damages have been proven, or in the
further alternative, that the damages found are
excessive.
I will deal initially with appellant's first
submission.
Section 86 of the Canada Grain Act reads as
follows:
86. No operator of a licensed elevator shall
(a) issue a cash purchase ticket acknowledging the purchase
of any grain or an elevator receipt or other document pur-
porting to acknowledge the receipt of any grain if the grain
has not been purchased or received into the elevator;
(b) permit to be outstanding in respect of a quantity of grain
in the elevator more than one cash purchase ticket or more
than one elevator receipt or other document acknowledging
receipt of the grain;
(c) except under the regulations or an order of the Commis
sion, receive into or discharge from the elevator any grain,
grain product or screenings that is infested or contaminated
or that may reasonably be regarded as being infested or
contaminated; or
(d) except with the permission of the Commission, mix with
any grain in the elevator any material other than grain.
The learned Trial Judge found that the defendant
had committed a breach of paragraph 86(c) of the
Act, and, considering the statute as a whole, con
cluded that paragraph 86(c) "points to a litigable
duty on the defendant, enforceable by persons
injured or aggrieved by a breach of that duty" (at
page 413). He also concluded that, (at page 417):
"... while the taking of reasonable care might
possibly be a defence to a criminal charge under
paragraph 86(c), it does not follow it would be a
defence to a civil breach of the paragraph. To put
it another way, the possibility of a good answer to
a criminal charge does not reduce the civil onus of
an absolute duty to one of a qualified duty."
In deciding the first issue referred to supra, the
learned Trial Judge relied on the judgment of my
brother Le Dain J. in the case of Canadian Pacific
Air Lines, Ltd. v. The Queen'. The passage relied
on by the learned Trial Judge reads as follows (at
pages 412-413):
Whether a breach of statutory duty gives rise to a civil right
of action in persons injured by it has been said to be a question
of statutory construction that depends on "a consideration of
the whole Act and the circumstances, including the pre-existing
law, in which it was enacted": Cutler v. Wandsworth Stadium
Ld. [1949] A.C. 398 at page 407. There would appear to be
two questions involved: (a) Was the duty imposed, at least in
part, for the benefit or protection of the particular class of
persons of which the appellant forms part? (b) If this be the
case, is a right of action excluded by the existence of other
sanction or remedy for a breach of the duty, or on general
grounds of policy? It would appear to be, in the final analysis, a
question of policy, particularly where the liability of the Crown
is involved. A distinction is to be drawn between legislation very
clearly directed to the benefit or protection of a particular class
of persons, such as that which imposes safety standards for the
benefit of workmen, of which the case of Groves v. Wimborne
1 [1979] 1 F.C. 39, at pages 47-48.
(see note 6 below) is an example, and legislation which imposes
a general duty to provide a public service or facility. The
opinion has been expressed that in the latter case the courts will
be more reluctant to recognize a private right of action.
The learned Trial Judge then went on to state that
in his view, the objectives of the statute are sub
stantially those of the Canadian Grain Commis
sion as set out in section 11 of the statute which he
quoted. Said section 11 reads as follows:
11. Subject to this Act and any directions to the Commission
issued from time to time under this Act by the Governor in
Council or the Minister, the Commission shall, in the interests
of the grain producers, establish and maintain standards of
quality for Canadian grain and regulate grain handling in
Canada, to ensure a dependable commodity for domestic and
export markets.
With respect, I am unable to agree that the objec
tives of the statute can be restricted to the objects
of the Commission as set out in section 11 of the
statute. In arriving at the conclusion that the
appellant had a litigable duty to the respondent,
the learned Trial Judge proceeded on the assump
tion that the objectives of "the Canada Grain Act
are . .. substantially those of the Canadian Grain
Commission as specified in section 11 of the
statute".
In my opinion the learned Trial Judge was in
error in interpreting section 11 so as to confine the
objectives of the Commission to establishing and
maintaining standards of quality for Canadian
grain and to regulating the grain handling in
Canada to ensure a dependable commodity for
domestic and export markets. He was led into this
error by considering that the heading "Objects of
the Commission" was an integral part of section
11 for the purpose of its interpretation.
The appropriate rule of interpretation, as I
understand it, is that only the words enacted in the
body of the statute are to be looked at unless they
are of ambiguous or uncertain meaning in which
event the heading may be looked at as an aid to
interpretation.
In the instant case I find no ambiguity or uncer
tainty in the operative words of section 11; they
impose on the Commission a clear duty to do
certain things and to take certain action, in doing
which they are to act in the interest of the grain
producers. It is not necessary to take into consider
ation the heading in order to arrive at the only
interpretation of which this section is susceptible.
In imposing these duties on it, Parliament has
not restricted the Commission from the perform
ance of other duties set out in the statute.
Interpreted, as I do, section 11 sets out one
object of the Commission but not all the objects of
the Commission and leaves the Commission free to
act in compliance with the other requirements of
the Act and in the interests of classes of people
other than those of the grain producers.
It goes without saying that I view the interests
of the grain producers and the ensuring of a
dependable commodity for domestic and export
market to be at all times compatible because it
must at all times be in the interest of grain pro
ducers that there be assured a dependable com
modity for domestic and export markets. It seems
to me that section 11 directs the Canadian Grain
Commission to pursue its objectives and exercise
its powers "in the interests of the grain producers".
"Grain producers" clearly means the farmers of
Canada who produce the various types of grain set
out in the Schedules and Regulations. The Canadi-
an Wheat Board, under the Canadian Wheat
Board Act, R.S.C. 1970, c. C-12, is an agent of the
federal Crown for all purposes (see Canadian
Wheat Board Act, subsection 4(2)). Under the
scheme of the Canadian Wheat Board Act, The
Canadian Wheat Board administers the system of
orderly marketing of grain grown by western grain
producers. Every grain elevator is required to be
operated for and on behalf of The Canadian
Wheat Board (Canadian Wheat Board Act, sub
section 13(1)). Thus, while The Canadian Wheat
Board is an agent of the federal Crown, and while
the primary country elevator operators are agents
of The Canadian Wheat Board, it cannot be said
that The Canadian Wheat Board is an agent of the
grain producers. On the contrary, it is The
Canadian Wheat Board which purchases the farm
ers' grain from them, in most cases through their
agents, the primary country elevator companies.
Accordingly, even if section 11 sets out substan
tially the objectives of the statute, The Canadian
Wheat Board must fail in its submission that as a
holder of terminal elevator receipts, it is a member
of the particular class of persons for whose benefit
or protection this legislation has been enacted. As
stated earlier however, I do not agree that the
objectives of the statute, when the whole Act is
considered, can be restricted to the objectives set
out in section 11 supra. After a perusal of the
entire statute, I am persuaded that the view of this
statute as submitted by counsel for the appellant,
is the better view. I agree with them that the
Canada Grain Act "is a statute to regulate the
grain industry and protect the public interest since
that industry is an important matter to Canada as
a whole" (appellant's memorandum of fact and
law, page 11). The Canadian public has a vital
interest and concern in the maintenance of the
highest possible standards of quality for Canadian
grain so that the well-earned reputation of Canadi-
an farmers for producing a quality product, may
continue in so far as both domestic and foreign
customers are concerned. The primary and overall
object of the Canada Grain Act would appear to
be to maintain and improve the quality of grain
grown in Canada and to regulate grain handling in
Canada in furtherance of the general public pur
pose set forth supra.
Additionally, a perusal of the various provisions
of the statute convinces me that the Act affects
many different classes of persons who have obliga
tions and who receive benefits under the various
provisions of the Act. For example, section 32
establishes five different classes of elevator
licences, while section 33 provides for the estab
lishment of subclasses. There are many provisions
in the statute applicable to all of these classes,
some provisions imposing obligations on, others
providing protection to, these classes; i.e., section
45 imposes obligations on licensed elevators whilst
section 46 provides protection to them; section 53
provides protection to the operators of licensed
primary elevators; section 64 provides protection
and benefits to the operators of licensed terminal
elevators and licensed transfer elevators. On the
other hand, sections 51, 53, 55, 56, 68, 69, 70 and
71 grant benefits and provide protection to grain
producers. This list is by no means exhaustive but
it serves to underline my opinion that this statute
is not intended to benefit any particular class of
persons. It is rather, in my view, legislation impos
ing general duties and obligations in respect of the
production, marketing and quality control, of one
of Canada's most important primary products. It
is, in my view, in the same category as the legisla
tion which was considered by the Court in the
Canadian Pacific Air Lines, Ltd. case (supra).
Subject legislation is, likewise, in my view, legisla
tion that was enacted in the interests of the coun
try as a whole and while it necessarily affects, in
many different ways, many different classes of
persons, it cannot be said to have been passed for
the benefit or protection of any particular class. I
have therefore concluded that the learned Trial
Judge erred in holding that paragraph 86(c)
imposed on the appellant a litigable duty which is
enforceable by the respondent.
In view of this conclusion, it becomes unneces
sary to deal with the question as to whether or not
the respondent suffered damages and if so, the
proper quantum thereof. It is my opinion however
that there was ample evidence before the learned
Trial Judge from which he could conclude that the
respondent had suffered damages in the amount
awarded by him. Were it necessary to consider the
matter of damages, I would not disturb the award
of the learned Trial Judge in this regard.
For all of the foregoing reasons, I would allow
the appeal and dismiss respondent's action against
the appellant with costs both here and in the Trial
Division.
* * *
URIE J.: I agree.
* * *
KELLY D.J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.