The operator has full access to the fare codes available and can advise you on what's available or not available. As I understand it - and I'm happy to be proved wrong as I haven't experienced it personally - a paid upgrade is a different code to paying a full-fare J ticket. They will also know if any full fare J tickets are available and can advise accordingly.

In this case, it seems like business class was full and they saved you a lot of huffing and puffing as the only ticket you can guarantee is a full-fare economy as a Gold member.