Chicken Farmers of Ontario v Farm Products Marketing Commission, 2000 ONAFRAAT 23

Agriculture, Food and Rural Affairs Appeal Tribunal

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL: Chicken Farmers of Ontario v Farm Products Marketing Commission

Chicken Farmers of Ontario v FPMC [Decision on Preliminary Motions] 2000 ONAFRAAT 23

STATUTE: Ministry of Agriculture, Food and Rural Affairs Act

HEARING: September 8 and 15, 2000

DATE OF DECISION: September 25, 2000

2000-23

NEUTRAL CITATION: 2000 ONAFRAAT 23

Chicken Farmers of Ontario v Farm Products Marketing Commission [Decision on Preliminary Motions]

IN THE MATTER OF the Farm Products Marketing Act and section 16 of the Ministry of Agriculture, Food and Rural Affairs Act;

AND IN THE MATTER OF: an appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) by the Chicken Farmers of Ontario (“CFO”) from the December 1st, 1999 decision of the Farm Products Marketing Commission (the “Commission”) following a hearing under Section 3(1)(a) of the Farm Products Marketing Act for the purpose of allocating live chicken to Ontario Processors;

DECISION

The CFO appeal comes to the Tribunal from a decision of the Commission pursuant to subsection 16(1) of the Ministry of Agriculture, Food and Rural Affairs Act. Subsection 16(1) provides as follows:

16. (1) Subject to subsection (4), if a person is aggrieved by an order, direction, policy or decision of the Commission or Director, made under the Farm Products Marketing Act or the Milk Act, that person may appeal to the Tribunal by filing with the Tribunal and sending to the Commission or Director written notice of the appeal.

Subsection 16(4) deals with the dismissal of an appeal on the basis that it is trivial, frivolous, vexatious or is not made in good faith or that the appellant does not have a sufficient interest in the subject matter of the appeal. Despite the suggestions of Mr. McIlroy to the contrary on behalf of The Canadian Restaurant and Foodservices Association, the Tribunal is satisfied that subsection 16(4) is irrelevant to the Tribunal’s jurisdiction under subsection 16(1) in this case. Clearly the CFO has a substantial interest in the Commission’s decision which has a material impact upon the way it operates.

The decision of the Commission was issued on December 1st, 1999 and was made after several days being heard under clause 3(1)(a) of the Farm Products Marketing Act. The purpose of the hearing was to determine a process for allocating live chicken to Ontario processors. Clause 3(1)(a) of the Farm Products Marketing Act provides as follows:

3. (1) The Commission may,

(a) subject to the regulations, investigate, adjust or otherwise settle any dispute relating to the marketing of a regulated product between producers and persons engaged in marketing or processing the regulated product;

In the course of a pre-hearing conference held on June 9th, 2000, CFO raised three grounds upon which the December 1st, 1999 decision of the Commission should be set aside and sent back to the Commission for a re-hearing. The Tribunal decided to have these questions argued as a preliminary motion. The CFO motion was argued on September 8th and September 15th, 2000.

At the conclusion of the submissions, the Tribunal dismissed the preliminary motion. The reasons for that decision were summarized for those then present. That summary was substantially in accordance with the following formal decision.

In this decision the Tribunal will address the three preliminary issues raised in the CFO motion in the following order:

• the Commission’s jurisdiction to make the decision it did,
• the adequacy of the notice given to CFO about the subject matter of the Commission’s hearing and
• the propriety of Mr. Dover sitting on the Commission panel hearing the case in the circumstances of his association with one of the parties appearing before the Commission at its hearing.

Jurisdiction

CFO asserts that the Commission had no authority to make the decision it did.

This submission is advanced on the basis that the Commission’s jurisdiction is bounded by the “dispute” that is before it under clause 3(1)(a). In its Notice of Hearing the Commission said it was dealing with a process for allocating live chicken to Ontario processors. Because, it seems, there were concerns about the scope of such hearing, i.e. a process for allocating live chicken to Ontario processors, the Commission Chairman, at the opening of the hearing, clarified that the Commission would not be dealing with supply management.

Because the Commission’s jurisdiction under clause 3(1)(a) depends upon a dispute, the scope of the Commission’s decision-making jurisdiction depends upon the scope of the dispute. In this case the dispute has to do with a process for allocating live chicken to Ontario processors but not the supply management authority of CFO.

Within that framework, CFO contends that the Commission exceeded its authority by eliminating CFO’s discretion to establish the amount of live chicken to be produced in any quota period. This volume setting is said by CFO to be a fundamental aspect of CFO’s supply management authority. Because the Commission, through the Chairman’s remarks at the opening of the hearing, had excluded supply management from the scope of the dispute, CFO asserts that the issue of volume setting was excluded from the scope of the dispute and, therefore, from Commission’s jurisdiction under clause 3(1)(a) in this case.

To advance this proposition CFO reviewed its submission to the Commission that the live chicken allocation system should be a “bottom-up” system that involves CFO taking orders from the processors. CFO proposed that CFO would set a price for live chicken. The price would be based on producer cost, plus a reasonable return to the producers. With the price thus established by CFO, processors would place orders and, by doing so would become committed to purchasing the ordered volume at the established price for the quota period. The placing of orders, being sensitive proprietary information, would be cloaked in procedures to preserve confidentiality but, with that information, CFO would aggregate the orders placed to determine the live chicken volumes to be produced. CFO would then have in reserve a discretion to adjust the aggregate amount if, in CFO’s judgement, the aggregate volume was inappropriate. CFO said before the Commission that CFO would exercise such discretion only in extreme situations.

The Commission’s decision has, in effect, eliminated CFO’s residual discretion and it is the removal of that discretion that CFO argues goes beyond its jurisdiction in the circumstances of this case.

CFO claims that this discretion is a necessary element of supply management which was not before the Commission. CFO relies upon the statements made at the beginning of the Commission’s hearing for the proposition that supply management was not part of the dispute. Furthermore, because volume setting is a part of supply management, given the way the Commission Chairman prescribed the scope of the “dispute”, volume setting was not part of the dispute, which is the foundation of the Commission’s jurisdiction under clause 3(1)(a).

CFO also submits that the volume setting issue was not part of the “dispute” because there was agreement between the relevant parties on the issue. The basis of this contention is that CFO and those representing the processors were in agreement that CFO should have a residual discretion to adjust the final live chicken volume. The contention is that CFO and the processors are the only parties to any dispute about the allocation of live chicken and that, with respect to issues which have been resolved between them, there is no “dispute” and the Commission jurisdiction under clause 3(1)(a) to alter that consensus.

Other parties contend that volume setting is a fundamental aspect of the allocation system and that they have the necessary status to put that volume setting issue in dispute before the Commission regardless of any deal that may have been made between the processors and CFO.

As to the question of whether volume setting is a part of the allocation system or part of the supply management system, the Tribunal has, by way of evidence, the affidavit of Mr. Geoffrey Spurr filed in support of the Motion and the affidavit evidence of Mr. Henry Bos filed in reply. Mr. Spurr says that volume setting is part of the supply management system. Mr. Spurr does not say that supply setting is not part of the allocation system, he merely says that it is part of the supply management system. Mr. Bos says that “supply setting mechanisms were understood to form an integral part of the allocation system.”

Based on the evidence, the Tribunal is satisfied that supply setting is an essential element of both supply management and allocation to processors. Volume setting is the product of supply management and is the foundation of the allocation process. It is where the two processes meet and is essential to both. The Tribunal is satisfied that volume setting comprised a significant part of the “dispute” before the Commission.

With respect to CFO’s contention that only CFO and the parties representing processors could create a dispute for the purposes of clause 3(1)(a) of the Farm Products Marketing Act, that issue turns upon a consideration of clause 3(1)(a) and the definition of “marketing” as found in the Farm Products Marketing Act. Clause 3(1)(a) is repeated here and the definition of “marketing” is reproduced below:

3. (1) The Commission may,

(a) subject to the regulations, investigate, adjust or otherwise settle any dispute relating to the marketing of a regulated product between producers and persons engaged in marketing or processing the regulated product;

"marketing" includes advertising, assembling, buying, financing, offering for sale, packing, processing, selling, shipping, storing and transporting and "market" and "marketed" have corresponding meanings;

In the Tribunal’s view, the definition of marketing is cast very broadly and is not exhaustive. The Tribunal is therefore satisfied that, for the purposes of clause 3(1)(a), “persons engaged in marketing” include not only processors but also all down-stream stakeholders who are affected. Whatever the processors and CFO might have devised about volume setting, it was within the right of other persons engaged in marketing to put it in dispute for the purposes of clause 3(1)(a). They did so, and the result, in the Tribunal’s opinion, is that the Commission’s jurisdiction is not constrained by what the processors and CFO may have agreed upon amongst themselves.

In the view of the Tribunal, the Commission decision was within the scope of the “dispute” before the Commission under clause 3(1)(a) of Farm Products Marketing Act and the Commission was therefore within its jurisdiction in this case.

Notice

The second and third issues raised by CFO are more procedural matters and are founded upon the principles of natural justice.

It is an essential aspect of the principles of natural justice that a party such as CFO in a proceedings such as this, which deals with their mandated jurisdiction, should have ample notice of the matters which are in issue and a full opportunity to address those matters.

CFO contends that, when the Chairman of the Commission excluded considerations of supply management, CFO understood that volume setting was not an issue with respect to which they needed to be concerned. CFO submits that there was a denial of natural justice because CFO was not given notice of and, therefore, a fair opportunity to prepare for and to address the issues upon which the Commission ultimately made its decision.

The Tribunal believes that CFO could possibly have misunderstood the extent of the issues with which the Commission was prepared to deal. Whether it was reasonable for CFO to have misinterpreted the scope of the Commission’s hearing in 1999, the Tribunal need not decide because, even if there was a procedural defect which amounted to a denial of natural justice, as to which the Tribunal expresses no opinion, the Tribunal is satisfied that any such procedural defect can be cured by a de novo hearing of the merits on this appeal.

In this connection, the Tribunal was referred to the Supreme Court of Canada decision in Harelkin v. University of Regina, 1979 CanLII 18 (SCC), [1979] 2 S.C.R. 561. This leading case was first brought to the attention of the Tribunal by Commission counsel and was discussed by him and by counsel for CFO. The case involved a student who was required by University authorities to discontinue his studies. Within the University there were internal processes and appeals procedures for dealing with such matters. These processes and procedures culminated in a statutory final right of appeal by way of a hearing before the University Senate. Serious procedural errors were made in the early stages of these internal processes. Without taking recourse to an appeal hearing before the University Senate, the student went to Court to quash the decision-making process on the basis of that he was denied procedural natural justice. While the Court found that the student had been denied natural justice by the lower echelons of the University procedures, the Court determined that the student ought to have gone to the University Senate with his appeal rather than to the Courts.

For the majority, Beetz, J., adopts portions of the decision of the Supreme Court of Canada in King v. University of Saskatchewan, 1969 CanLII 89 (SCC), [1969] S.C.R. 678, by quoting Spence J., for a unanimous Court:

Any possible failure of natural justice before the special appeal committee, the executive committee, or the full faculty council, is quite unimportant when the senate, the appeal body under the provisions of The University Act, and also the body in control of the granting of degrees, has exercised its function with no failure to accord natural justice. If there where any absence of natural justice in the inferior tribunals, it was cured by the presence of such natural justice before the senate appeal committee.

Beetz, J., continues with a discussion of the legal effect of a denial of natural justice and, in particular, whether the impugned decision is void ab initio, a nullity or voidable, after which he says the following:

In the case at bar, it cannot be doubted that the committee of the council had jurisdiction to hear and decide upon appellant’s application or memorial. There was no want of jurisdiction. In the exercise of this jurisdiction, the committee of the council erred in failing to observe the rules of natural justice. While it can be said in a manner of speaking that such an error is “akin” to a jurisdictional error, it does not in my view entail the same type of nullity as if there had been a lack of jurisdiction in the committee. It simply renders the decision of the committee voidable at the instance of the aggrieved party and the decision remains appealable until quashed by a superior court or set aside by the senate.

To hold otherwise would produce undesirable practical effects. For instance, an aggrieved student who had less time than appellant and who cared more about the expenditure could not appeal directly to the senate; he would have to seek relief in the courts, go back before the committee of the council, and from there to the senate, if need be. A purely conceptual view of absolute nullity which would, in this type of case, cause such inconvenient and impractical results cannot, in my view, be theoretically sound.

Comparable to the University Senate in the Harelkin case, the Tribunal’s jurisdiction in this matter is de novo. The Tribunal’s function is not to review the Commission’s decision in the way that an appellate Court reviews the correctness, or otherwise of a lower Court’s decision. On an appeal under subsection 16(1) of the Farm Products Marketing Act the Tribunal is to hear the case afresh and, based on the evidence and submissions before the Tribunal, the Tribunal may substitute its decision for that of the Commission pursuant to subsection 16(11). Subsection 16(11) is as follows:

16(11) Upon an appeal to the Tribunal under subsection (1) or (2), the Tribunal may by order direct the Commission, the local board, the marketing board or the Director, as the case may be, to take such action as it or he or she is authorized to take under the Farm Products Marketing Act or the Milk Act and as the Tribunal considers proper, and for this purpose the Tribunal may substitute its opinion for that of the Commission, the local board, the marketing board or the Director.

The Tribunal doubts that the manner in which the Commission gave CFO notice of and an opportunity to address issues at its hearing gave rise to a procedural defect that amounted to a denial of natural justice. Even if it did, on the authority of King and Harelkin, the Tribunal is satisfied that any such defects will be cure by its hearing of the CFOs appeal under subsection 16(1).

In this connection the Tribunal found to be persuasive the comments by the Court in Harelkin about considerations of timeliness and expense and about the balance of theoretical legal concepts against the inconvenience and impracticality of the results of applying them in practise. The Tribunal is convinced that sending the case back to the Commission for a re-hearing, as requested by CFO, will produce not only much expense and delay for all involved but also a further appeal to the Tribunal from the Commission’s decision on the re-hearing. The Tribunal is satisfied that CFO’s entitlement to procedural natural justice can be satisfied by an appropriate hearing by the Tribunal on the merits of the CFO appeal.

One final comment is warranted about the Harelkin decision. Counsel for CFO laid particular emphasis upon the following part of the above quoted decision of Beetz, J.:

the decision of the committee [is] voidable at the instance of the aggrieved party and the decision remains appealable until quashed by a superior court or set aside by the senate.

He says that, by analogy, the Tribunal in this appeal is the counterpart to the University Senate in Harelkin and, on that basis, he contends that, on this appeal, the only decision available for the Tribunal to make is to set aside the voidable decision of the Commission. With respect, the Tribunal does not agree. The gist of the Court’s decision was that, if the University Senate proceeded in accordance with the principles of natural justice in the course of its de novo hearing, the procedural failings of the lower echelons in the process would be cured. It is incomprehensible that the Supreme Court of Canada intended the Senate to hold a thorough and procedurally appropriate hearing and then tie its hands as to the result it could reach. The Tribunal’s jurisdiction is not so fettered. The Tribunal has all of the authority the Commission could have exercised after a procedurally correct hearing.

Appearance of Bias

The final submission made by CFO is that there was a reasonable apprehension of bias with respect to Mr. Bill Dover when he sat as a member of the panel of the Commission.

This matter has caused the Tribunal considerable concern.

The evidence is that, at the opening of the Commission hearing, the Chairman of the Commission advised those present that Mr. Dover had a relationship with one of the parties to the hearing, namely The Canadian Restaurant and Foodservices Association (CRFA). The Chairman continued that, insofar as Mr. Dover was engaged in the business of a food consultant, a relationship did exist between him and some members of CRFA. The Chairman distinguished between Mr. Dover being an “associate” member of CRFA, as opposed to an “active” member, and advised the hearing that associate status entitled Mr. Dover to attend meetings but not to vote. The Chairman then asked the parties if there was any objection to Mr. Dover continuing to participate in the hearing. Several of the significant parties to the hearing before the Commission, including CFO, objected to Mr. Dover’s continuing. Despite this, Mr. Dover continued as a member of the Commission panel.

The Tribunal is satisfied that the Commission Chairman acted entirely correctly in raising the matter of Mr. Dover’s involvement with CRFA. However, having raised matter and having invited any of the parties to the hearing to object to Mr. Dover’s continuing as a member of the panel, when faced with the objection of some of the parties, it would have been reasonable for the Commission to have concluded that some of the parties had an apprehension of bias in the circumstances.

While this is troublesome, the Tribunal need not make a decision as to whether the apprehension of bias was reasonable in the circumstances because, whether or not there was a denial of natural justice, the issue of bias is a procedural defect that is amenable to being cured by the Tribunal’s de nova hearing of CFO’s appeal under subsection 16 (1) of the Ministry of Agriculture, Food and Rural Affairs Act. In this connection the Tribunal again finds authority in the decisions of the Supreme Court of Canada in the King and Harelkin cases.

Following the delivery of these reasons, counsel for CFO sought clarification of the status of the Commission’s December 1st, 1999 decision and invited the Tribunal to indicate whether it was void ab initio, a nullity or voidable. The response was and is that the Tribunal has made no legal determination in that regard. From the Tribunal’s perspective, the status of the Commission’s decision is that it is under appeal by CFO under subsection 16(1) the Ministry of Agriculture, Food and Rural Affairs Act and will be dealt with as such.

A separate and subsequent decision will issue shortly in connection with the next pre-hearing conference scheduled for November 21st, 2000.

Dated at London, this day of 25th day of September, 2000.