Georgian Bay Milk Company Ltd v Dairy Farmers of Ontario, 2003 ONAFRAAT 36

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 [December 11 Pre-Hearing Decision] 2003 ONAFRAAT 36

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

November 25, 2003

DATE OF DECISION:

December 11, 2003

2003-36

NEUTRAL CITATION:

2003 ONAFRAAT 36

Georgian Bay Milk Company Ltd v Dairy Farmers of Ontario [December 11 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 decisions of Dairy Farmers of Ontario to revoke the licences of milk producers currently shipping to Georgian Bay Milk Co., effective December 1, 2003; and to deny a request that the transition period to allow milk producers currently shipping to Georgian Bay Milk Co. be extended beyond November30, 2003 to such time as a national dairy export system is up and running, and the BSE border closures affecting culled dairy cows and replacement heifers have been resolved.

AND IN THE MATTER OF:

A motion by the Dairy Farmers of Ontario for an Order dismissing the appeal, or aspects of the appeal or a finding and determination that he appellant is estopped in law from proceeding with the appeal or aspects of it, and an order lifting the stay in effect by virtue of the appeal, in the event the appeal cannot be heard by the Tribunal before November 30, 2003.

Before:

Terry Denison, Vice Chair; John Taylor, Vice Chair

Appearances:

Geoffrey P. Spurr, counsel to the respondent, Dairy Farmers of Ontario.

James P. McIlroy, counsel to the appellant, Georgian Bay Milk Company.

DECISION OF THE TRIBUNAL

These pre-hearing motions were heard at Guelph, Ontario on Tuesday, November 25, 2003. They relate to an appeal that was scheduled to be heard by the Tribunal, with a different panel, commencing two days later on Thursday, November 27, 2003. The appellant, Georgian Bay Milk Co. (GBMC) asked the Dairy Farmers of Ontario (DFO) to extend the date on which its exemptions from DFO regulations were to end. This motion by the respondent, DFO, asked the Tribunal to dismiss the appeal. As the outcome of this motion impacted on the scope of the proceeding to be heard on November 27, 2003, the Tribunal gave an oral decision at the conclusion of the motion and this decision provides the reasons for that ruling.

Statutory Context

This appeal comes to the Tribunal by way of the Ministry of Agriculture, Food and Rural Affairs Act. The relevant subsections of the Act are reproduced below:

Idem

16 (2) Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal. R.S.O. 1990, c. M.16, s. 16 (2).

Tribunal may refuse to hear appeal

16 (4) The Tribunal may refuse to hear the appeal or, after a hearing has commenced, refuse to continue the hearing or make a decision if it relates to any order, direction, policy, decision or regulation of which the appellant has had knowledge for more than one year before the notice is filed under subsection (1) or (2) or, if in its opinion,

(a) the subject-matter of the appeal is trivial;

(b) the appeal is frivolous or vexatious or is not made in good faith; or

(c) the appellant has not a sufficient interest in the subject-matter of the appeal. R.S.O. 1990, c. M.16, s. 16 (4).

Conditions for appeal

16 (5) No appeal may be taken from an order, direction, policy, decision or regulation of a local board or a marketing board unless,

(a) the appellant has first applied to the local board or marketing board for a hearing and the local board or marketing board has refused to grant, in whole or in part, the relief requested by the appellant or has not decided the matter within sixty days of the application for a hearing; or

(b) the appellant and the local board or marketing board have waived their respective rights under clause (a) in writing. R.S.O. 1990, c. M.16, s. 16 (5).

Background

Effective December 31, 2002, an Export Contract Exchange (ECE) that had allowed Ontario milk producers to enter contracts to supply milk to processors and brokers operating on the export market was discontinued. When it was operating, producers contracting through the ECE were not required to hold quota in order to produce this milk, and were exempt from a requirement that they hold a minimum 5 kg of quota in order to be a licensed to produce and market milk. All industry stakeholders were allowed to continue to fill export milk contracts made before December 31, 2002, until April 30, 2003.

Georgian Bay Milk Co. (GBMC) was a milk broker that had contracted only with non quota holding milk producers. It appealed decisions of the Dairy Farmers of Ontario (DFO) and the Ontario Farm Products Marketing Commission (OFPMC) which removed its ability to contract for export milk to the Agriculture, Food and Rural Affairs Appeal Tribunal. The Tribunal decision, which allowed GBMC and its suppliers to continue to operate in the export market for a period of time, was released on June 04, 2003. That decision was rescinded by the Honourable Helen Johns, Minister of Agriculture and Food (the Minister) on July 23, 2003. The Minister substituted her own decision on the same date.

The date which the regulatory exemptions affecting GBMC and its suppliers was due to expire was November30, 2003.

The Issues

The issues before the Tribunal were:

1. Does the Tribunal have the jurisdiction to hear the appeal?

2. If it does have the jurisdiction to hear the appeal, should the Tribunal dismiss the appeal on the grounds that it is frivolous or vexatious?

3. Should the Tribunal order that the appellant, GBMC, is estopped in law from proceeding with the appeal?

4. Should the Tribunal order additional disclosure of documents, and/or order the parties to produce witness statements?

The aspect of the motion regarding the statutory stay resulting from the appeal was withdrawn by the DFO at the pre-hearing conference.

Position of Parties

Jurisdiction

Mr. Geoffrey Spurr, counsel to the DFO, told the Tribunal that the DFO declined to make a decision on a request by GBMC to extend the November 30, 2003 regulatory exemption deadline, as it believed that date was set by the Minister in her decision of July 23, 2003. Mr. Spurr submitted the Minister did three things in that decision:

1. Rescinded the Tribunal decision of June 4, 2003.

2. Instructed her officials to work to develop a national dairy export system.

3. Provided a transition period to allow GBMC milk suppliers to put their affairs in order.

He said the DFO position is that that a request by the Minister that the DFO provide this transition period is actually a direction. He said the wording of the Minister’s letter must be considered in the context of the Ministry of Agriculture, Food and Rural Affairs Act. He said there was a provision for the Tribunal to review decisions of the DFO, and the Minister to review decisions of the Tribunal, but no provision for the Tribunal to re-open the Minister’s decision.

Mr. Spurr also said:

• The definition of “require” in Black’s Law Dictionary included the word “request”.

• A DFO Minute in evidence was a formal recording of business to adopt the Minister’s deadline; but does not mean the DFO had any discretion to vary that deadline.

• There was no evidence that the Minister did not consider the November30, 2003 deadline part and parcel of her decision.

• The Tribunal decision that the Minister rescinded gave the DFO the discretion to extend the November 30, 2003 deadline; the Minister’s own decision did not provide that discretion.

• The Minister clearly delineated between the old export milk program and a new program, despite a request by GBMC that the process dovetail the two programs.

• A letter the Minister wrote to two GBMC suppliers on September 4, 2003 confirmed her November 30, 2003 deadline.

• GBMC could have appealed the DFO’s decision not to make a decision, rather than initiate the appeal it did.

Mr. Spurr clarified that the DFO did not contest the Tribunal’s jurisdiction to hear an aspect of the GBMC appeal related to producer licences.

Mr. James McIlroy, counsel to GBMC, told the Tribunal that his client had satisfied the conditions of the statutory authority in bringing this appeal to the Tribunal. He said that because the DFO declined to hold a hearing, or grant the relief requested, the next step was to appeal to the Tribunal.

Mr. McIlroy submitted that the key issue to be determined by the Tribunal was whose decision was under appeal. He said he agreed with Mr. Spurr that there was no opportunity for the Tribunal to review the Minsiter’s decision. But, he submitted that it was clear that the DFO had the discretion to extend the transition period due to end on November 30, 2003 , and that it had declined to do so. Mr. McIlroy said it was that decision, which was communicated to GBMC on October 14, 2003 that was under appeal, not the Minister’s decision of July 23, 2003.

Mr. McIlroy said that although the Minister rescinded the Tribunal’s June 4, 2003 decision, she incorporated parts of it in her decision. He submitted she agreed there was merit in investigating an export program for unsubsidized milk; she agreed that GBMC producers should stay in business for a reasonable amount of time and agreed that the DFO should continue to licence GBMC producers, without requiring them to hold marketing quota.

Mr. McIlroy also said:

• The affidavit and supporting documents submitted by the DFO did not support its case, so the motion must fail.

• The Minister clearly distinguished in her decision between an instruction, which she directed to her officials, and a request which she directed to the DFO.

• The September 4, 2003 letter from the Minister supported the GBMC position that the Minister had only asked the DFO to consider providing a transition period ending November 30, 2003 .

• A DFO minute of a meeting held July 24, 2003 and July 25, 2003 showed that the DFO made two distinct decisions – one to accept the Minister’s decision, the other to implement a transition period with the November 30, 2003 deadline.

• The November 30, 2003 deadline must be interpreted in light of producers’ ability to make business decisions, given the closure of the U.S. border to cull cows.

• A Minister letter dated August 8, 2003 clarified that in her view, her role in the matter was completed.

Mr. McIlroy said the jurisdictional question rested on the interpretation of the word “request” by the Minister in her July 23, 2003 decision. He said that the use of the word “request” gave the DFO the discretion to set a different deadline than November 30, 2003 , and to extend that deadline. The legal and common definitions of “request” were provided. Mr. McIlroy submitted that the DFO’s interpretation of the word “request” was patently unreasonable. He pointed out that the Minister has the same ability to direct the DFO that the Tribunal has, and could have ordered the DFO to use its authority in the way she wanted it to be used.

Frivolous and Vexatious

Mr. Spurr submitted that the Tribunal should decline to hear the GBMC appeal on the grounds that it is frivolous or vexatious. He said the matter of whether GBMC producers should be allowed to stay in business until a new export program was in place had been heard by the Tribunal in May 2003. He said that after rescinding that decision the Minister was asked to deal with the issue of ‘dovetailing’ the old system with the new and chose not to do so. He submitted that GBMC was trying to go through the DFO to effectively ask the Tribunal to review a decision of the Minister. He pointed out that both the DFO and the Tribunal were obliged to follow the Minister’s direction. Mr. Spurr cited a 1994 case where a Minister had rescinded a Tribunal decision in support of his argument.

Mr. McIlroy said the appeal was not frivolous to the two dozen milk producers shipping to GBMC. He reiterated that the purpose of the appeal was not to overturn the Minister’s decision, as he submitted that the Minister gave the DFO the discretion to vary the November 30, 2003 deadline, and it did not, and it was the DFO decision that was under appeal. He asked the Tribunal not to use its discretionary power to disallow the appeal. He suggested the case submitted by Mr. Spurr was not relevant.

Estoppel

Mr. Spurr argued that the Tribunal should not hear the GBMC appeal because it was seeking the same remedy – essentially to extend the transition period until a new export system is up and running – in an application before the Divisional Court. He said GBMC was seeking judicial review of the Minister’s decision and seeking a stay of that decision. He suggested the timing of GBMC’s appeal to the Tribunal was relevant, as it occurred only after the Minister declined to consent to a stay of the July 23, 2003 decision. Mr. Spurr submitted that, at the very least, the Tribunal should decline to hear the appeal until the matter before the Divisional Court was completed.

Mr. McIlroy submitted that the issues raised in the judicial review case were substantially different than those under appeal to the Tribunal. He pointed out that the judicial review related to a decision of the Minister, a decision of the Ontario Farm Products Marketing Commission, and two decisions of the DFO which were different than the one under appeal before the Tribunal. He also said the matter before the Divisional Court would deal with a constitutional question, the issues of bias and due process and a pecuniary interest of the DFO. He said that in contrast, the matters before the Tribunal were licence revocation and the DFO’s denial of GBMC’s request for an extension to the transition period.

Other Issues

The parties agreed that the Secretary to the DFO, John Karn, would provide a letter to GBMC indicating that he had searched the DFO documents and provided the relevant documents to the Tribunal and GBMC.

Mr. McIlroy asked the Tribunal to order the DFO to provide witness statements. Mr. Spurr objected to providing witness statements but provided Mr. McIlroy with his witness list.

Findings

1. In this motion the DFO seeks to have the Tribunal dismiss the appeal of GBMC without hearing the merits of their appeal. In other words it asks the Tribunal to rule that the appeal has no chance of succeeding. There is a substantial onus on a moving party in this type of matter. The Tribunal is not persuaded that the DFO has made such a Prima facie case, and finds that the appellants should be allowed to present the full facts and other evidence that they rely on to succeed in their appeal.

2. The hearing of the appeal is set to be heard two days from now, namely on Thursday, November 27, 2003. The same issues that this panel of the Tribunal has been asked to decide can all be placed before the panel that is scheduled to hear the appeal. Accordingly there is no urgency that right to appeal be predetermined.

3. On the question of jurisdiction, the Tribunal looked closely at the Minister’s decision of July 23, 2003 to determine whether the current appeal is from the Minister’s decision or a DFO decision. The Tribunal finds that the DFO was asked by the Minister to deal with the transition issue, that it had the discretion to vary the date stated in the Minister’s decision and that it declined to do so. The decision of the DFO is properly brought before the Tribunal pursuant to Sections 16(2) and 16(5) of the Ministry of Agriculture, Food and Rural Affairs Act.

4. On the question of whether the appeal is frivolous and/or vexatious and/or an abuse of process, having found that there was a decision by the DFO, the Tribunal notes that there is a statutory right of appeal. It is clear this appeal arises from a different decision of the DFO than the earlier appeal before the Tribunal so there is no abuse of process. The Tribunal notes that livelihood of producers may be affected by the outcome of this appeal and accepts that it is a serious matter to them. Because of the gravity of the consequences of this ruling, the Tribunal finds the appeal is not frivolous or vexatious.

5. On the question of estoppel, it was clear that there is some overlap between the case before the Divisional Court and that before the Tribunal, but there were also significant differences.

6. On the question of the provision of witness statements, the Tribunal notes that it is not its usual practice to require them to be produced. It was not persuaded by the arguments of Mr. McIlroy that there was a need for witness statements in this proceeding. The Tribunal notes that it is not expected to be a lengthy proceeding.

Decision and Reasons

After careful consideration of the evidence filed and the submissions made the Tribunal orders:

1. The motion by the DFO is dismissed in its entirety.

The reasons for this decision are evident in the findings above noted.

DATED at Toronto, this 11^th day of December 2003.