Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West
Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca
Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Georgian Bay Milk Company Ltd v Dairy Farmers of Ontario
Georgian Bay Milk Company Ltd v DFO [May 6 Pre-Hearing Decision] 2003 ONAFRAAT 12
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
April 24, 2003
DATE OF DECISION:
May 6, 2003
2003-12
NEUTRAL CITATION:
2003 ONAFRAAT 12
Georgian Bay Milk Company Ltd v Dairy Farmers of Ontario [May 6 Pre-Hearing Decision]
IN THE MATTER OF THE MILK ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE AND FOOD ACT.
AND IN THE MATTER OF:
An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Georgian Bay Milk Company, Barrie, Ontario from:
A decision of Dairy Farmers of Ontario dated March 28, 2003 by which it refused to change its plan for complying with the World Trade Organization ruling related to Canada’s milk export practices, which was released February 25, 2003;
A decision of Dairy Farmers of Ontario dated January 30, 2003 and clarified January 31, 2003 by which it required that any milk delivered to an Ontario plant on behalf of Georgian Bay Milk Company will have to be through the fungible milk supply with milk pickup and delivery organized by DFO.
A decision by the Ontario Farm Products Marketing Commission dated February 24, 2003 by which it chose to hear only one interested party – the Dairy Farmers of Ontario – before deciding to allow the Dairy Farmers of Ontario to shut down Georgian Bay’s export business.
AND IN THE MATTER OF:
A motion by Dairy Farmers of Ontario for an Order pursuant to subsection 16(6) of the Ministry of Agriculture, Food and Rural Affairs Act to limit or define the scope of the stay in effect by virtue of the appeal of Georgian Bay Milk Company.
AND IN THE MATTER OF:
A request by Georgian Bay Milk Company that the Tribunal determine whether or not all relevant by-laws, documents or other materials, of any kind whatsoever, in its possession have been provided to the Tribunal by Dairy Farmers of Ontario.
AND IN THE MATTER OF:
A request by Canada Milk Inc. that it be added as a party to the proceeding. AND IN THE MATTER OF:
A request by Georgian Bay Milk Company that the date by which parties much exchange copies of all documentary evidence and other materials intended to be filed at the hearing as an exhibit, and provide copies of these documents and materials to the Tribunal be changed.
Before:
Terry Denison, Vice Chair; Mary Field, Member.
Appearances:
Geoffrey P. Spurr, counsel to the respondent, Dairy Farmers of Ontario.
James P. McIlroy, counsel to the appellant, Georgian Bay Milk Company.
Robin Parish, Canada Milk Inc.
DECISION OF THE TRIBUNAL
These pre-hearing motions were heard at Mississauga, Ontario on April 24th 2003. They relate to appeals to be heard by the Tribunal, with a different panel, commencing on Monday, May 5, 2003. The Dairy Farmers of Ontario (“DFO”) brought a motion to limit or define the stay resulting from the appeals by Georian Bay Milk Company (“GBMC”), and GBMC brought a motion to require DFO to produce all relevant by-laws, documents and other material to the Tribunal. The Tribunal was also asked to decide whether or not another entity, Canada Milk Inc., should be made a party to these proceedings.
Statutory Context
Subsection 16.(6) of the Ministry of Agriculture, Food and Rural Affairs Act states:
Effect of appeal
- (6) Where, by virtue of subsection 25 (1) of the Statutory Powers Procedure Act, an appeal under subsection (1) or (2) operates as a stay in the matter, the Tribunal may limit or define the scope of the stay.
Subsection 25. (1) of the Statutory Powers and Procedures Act, states:
Appeal operates as stay, exception
- (1) An appeal from a decision of a tribunal to a court or other appellate body operates as a stay in the matter unless, another Act or a regulation that applies to the proceeding expressly provides to the contrary; or (b) the tribunal or the court or other appellate body orders otherwise. 1997, c. 23, s. 13 (21).
Subsection 16. (7) of the Ministry of Agriculture, Food and Rural Affairs Act states:
Persons entitled to notice
- (7) Upon receipt of a notice under subsection (1) or (2), the Tribunal shall forthwith notify the Commission, the local board, the marketing board or the Director where any such body or the Director has an interest in the subject-matter of the appeal and such body or the Director, as the case may be, shall thereupon forthwith provide the Tribunal with all relevant by-laws, documents or other materials, of any kind whatsoever, in its or his or her possession.
Background
Prior to January 1, 2003 there existed a system in Ontario whereby milk producers could export milk and sell milk to processors who then exported dairy products. Producers were not required to hold marketing quota for these shipments. Some milk producers held no milk quota and did not ship any milk to the domestic market. GBMC dealt only with non-quota holding producers. The DFO participated in the export system under the Milk Act, only to the extent that it enforced the regulations for milk quality and its contracted transporters shipped milk to processors.
On December 20, 2002, in response to challenges by the United States and New Zealand, the World Trade Organization (WTO) ruled that the export of milk by Canadian producers was subsidized because producers participated in regulated marketing and this created a higher domestic price for milk. The WTO found this created an inequity for other milk producers in world markets.
As a result of the WTO ruling, the Canadian Department of Foreign Affairs and International Trade (DFAIT), recommended a program to 'wind down' the export marketing of Canadian Milk to comply with the WTO ruling.
The DFO, in accordance with the DFAIT recommendations for compliance with the WTO ruling, decided that only export contracts made before December 31, 2002 would be honoured.
The DFO decided that milk exports from non-quota holding producers would be discontinued effective April 30, 2003. As well, shipments of milk from GBMC would be required to be shipped through a co-mingled supply that is transported in DFO contracted trucks and that is arranged by the DFO.
The Ontario Farm Products Marketing Commission (FPMC) endorsed the DFO decision without holding a formal hearing to hear the concerns of other interested parties.
Position of Parties
Request for Party Status
The Tribunal dealt first with the determination as to whether additional parties should be added to the proceedings. By way of letter dated April 23, 2003, Donald Kubesh, of Stikeman Elliott on behalf of Canada Milk Inc. submitted that it wished to be added as a party to the hearing and to the pre-hearing motions before the Tribunal. Mr. Robin Parish was present on behalf of Canada Milk Inc. and submitted that the company had an interest in the matter as it represented some 15 milk producers who sold milk domestically and on the export market.
The Tribunal was advised that the method of operation of Canada Milk Inc. was not the same as that of GBMC. None of GBMC's producers hold quota. The producers represented by Canada Milk Inc. are mixed - some producers holding quota and some producers not holding quota. The parties to the appeal and the pre-hearing conference objected to the addition of Canada Milk Inc. as a party.
The Tribunal determined that while Canada Milk Inc. has some commonality with GBMC, it did not have sufficient interest in the matter or commonality to be added as a party to this hearing. It was not in the same position as GBMC as some of its producers were involved in the domestic market. Unlike GBMC, Canada Milk Inc. did not follow the procedure of bringing an appeal before the marketing board. It appeared that Canada Milk Inc. wished to be entitled to benefit from the stay that existed by virtue of the appeal by GBMC though it had not met the necessary procedural criteria of filing an appeal to the DFO.
The Tribunal decided that it would not be appropriate to add Canada Milk Inc. as a party to the proceedings, without prejudice to its right to commence its own appeal of the DFO decisions.
Staying of the DFO Decisions
Mr. Spurr, counsel to DFO, submitted that, in order to comply with the WTO ruling, it was necessary for DFO to re-regulate all non quota holding producers and require them to buy quota and market milk through the DFO. Mr. Spurr said that the decisions of the DFO with respect to honouring milk contracts in existence as of December 31, 2003 were made in the context of compliance with the WTO ruling. Mr. Spurr told the Tribunal that compliance with the WTO ruling enforced by a decision of the DFO supplanted any stay of these decisions.
Mr. McIlroy stated that the stay of the decisions of the DFO was the statutory right of GBMC through its appeal of the decisions of the DFO. Mr. McIlroy told the Tribunal that there were two streams of milk for export: one being the export of fluid milk and the other being the export of processed milk products. He said that the DFO decided to curtail GBMC's shipment of 'first stream' fluid milk effective April 30, 2003.
Mr. McIlroy submitted that the stay of the decisions of the DFO should remain in place and that the definition of the scope of the stay was to be found in the status quo, or current business arrangements of GBMC at the time the DFO decisions were made. Mr. McIlroy said that the DFO decided that GBMC could not continue to arrange for and transport its milk for export in separate trucks, to avoid the fungibility of the milk supply which inherently contravened the WTO ruling and adversely affected the GBMC's business.
Mr. McIlroy submitted letters dated prior to December 31, 2003 wherein GBMC advised the DFO that it was transporting milk by its own arrangement and to which processor and plant. Mr. McIlroy submitted invoices from Deloitte and Touche, the administrator of the defunct export exchange system, wherein the regulatory levies from the DFO were deducted but not the fee for milk transport. Mr. McIlroy explained that some of the GBMC letters to DFO described procedures for exporting milk for a period of up to 12 months. Mr. McIlroy submitted that the DFO did not object to this arrangement at any time prior to its January 30, 2003 decision to force GBMC to co-mingle shipments of milk that were to be arranged by the DFO only.
Mr. McIlroy submitted transcripts of meetings of the Standing Committee on Agriculture and Agri-Food and noted the Acting Chief Agriculture Negotiator stated that the WTO ruling was not intended to govern the activities of non-quota holding milk producers. Mr. McIlroy told the Tribunal that he had written to the DFAIT to request its specific policy governing the export of fluid first stream milk and processed product second stream milk exported by non-quota holding producers. Mr. McIlroy stated that he had only recently received a reply and that it was more salutational than definite in its address of his concerns.
Mr. Spurr told the Tribunal that it must consider the greater public interest and lift the stay of the DFO decisions. Mr. Spurr said that the winding down of the export market exchange was a response to the WTO ruling and it concurred with the DFO's re-regulation of milk produced in Ontario. Mr. Spurr stated that the DFO's interpretation of the DFAIT discussions on the WTO ruling were consistent with its subsequent decisions regarding the operation of GBMC.
Mr. Spurr stated that the export of milk by GBMC was to be for a limited term and that the DFO decisions sought to provide a transitional period extending to April 30, 2003. Mr. Spurr said that the DFO allowed GBMC to continue shipping milk for export as a temporary accommodation only, but that it was not incumbent on the DFO to allow GBMC to continue in its practices indefinitely.
Mr. Spurr referred to submissions regarding segregated trucking saying that it was understood by industry stakeholders and the FPMC that this would continue only until April 30, 2003 at which time all milk was to be transported as fungible supply from producers to processors.
Mr. Spurr said there has been no determination that GBMC producers were not subsidized, and they should be treated like every other producer and required to wind up their businesses by April 30, 2003.
Production of Relevant Documents and Dates for Submission
Mr. McIlroy told the Tribunal that he could not prepare his brief for the hearing without first seeing what further documents the DFO might have in its possession. He agreed to copy the DFO with his recently received letter from the DFAIT by the end of business April 24, 2003.
Mr. Spurr said that the DFO was pleased to review its materials and provide the appellant with them immediately.
Due to the volume of the materials, it was agreed by the parties that pending his receipt of the DFO submissions, Mr. McIlroy would provide a list of materials that he would be relying on for the hearing and then, within the space of two days provide his brief to the DFO.
It was agreed that the date for submission/exchange of documents to be relied on at the hearing was to be set for 12:00 p.m. April 30th, 2003.
Decision and Reasons
After careful consideration of the evidence filed and the submissions made the Tribunal orders:
The motion by the DFO to limit or define the scope of the stay is dismissed.
The DFO is to provide the appellant with all relevant documentary evidence by 5:00 p.m., Friday April 25, 2003.
The appellant is to return a list to the DFO of all materials upon which he will rely at the hearing by 5:00 p.m., Tuesday April 29, 2003.
The appellant and the DFO are to submit to the Tribunal and exchange with one another all materials to be relied on at the hearing by 12:00 noon, April 30th, 2003.
The reasons for this decision are:
The stay of the decisions of the DFO exist by virtue of the appeals of GBMC, subject to such limits or definition as may be imposed by the Tribunal. The onus is on the party seeking to lift the stay to prove that there would be serious and/or irreparable harm done to it should the stay remain in place pending the outcome of the appeals. The purpose of the stay is to maintain the status quo until the appeals have been determined.
In terms of the status quo, the evidence did not support the proposition that the respondent or the public interest would be harmed by the stay remaining in place without limit or variance. The law for determining whether or not a stay should be lifted or varied is set out in the decision of the Divisional Court in the matter of Schiller and Scarborough General Hospital (1974, 2.O.R. (2d) 324. The evidence did convince the Tribunal that to modify the stay as requested by the DFO would cause irreparable harm to GBMC.
The Tribunal dealt with extensive documentary evidence which gave a background on how the appellant dealt with his business before the decisions of the DFO which have been appealed to the Tribunal. The Tribunal was persuaded that the appellant’s business would suffer should the stay be lifted or narrowed. The Tribunal was concerned that granting the DFO motion would have the effect of implementing the DFO decisions before the appeals are heard and decided on their merits. In arriving at this decision, the this panel of the Tribunal is not making any evidentiary rulings beyond those necessary to decide the questions raised in the motions, and the parties will have ample opportunity to present more complete evidence and to make submissions during the hearing of the appeals by the Tribunal.
The Tribunal appreciates the agreement of the parties to produce and exchange documents as soon as possible given that the hearing of the appeals is scheduled for May 5th, 2003. The Tribunal also commends counsel for the thorough and professional presentations made during the hearing of these motions.
Because of the short time between the hearing of these motions and the commencement of the main appeals the parties were advised orally of the rulings made by the Tribunal prior to the release of these reasons and written decision.
Dated at Toronto, Ontario the 6th day of May, 2003.