Stetler, 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board, 2006 ONAFRAAT 11

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, chemin Stone Ouest

Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email:appeals.tribunal@omaf.gov.on.ca

Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: appeals.tribunal@omaf.gov.on.ca

Stetler, 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board

Stetler, 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board 2006 ONAFRAAT 11

Ministry of Agriculture, Food and Rural Affairs Act

April 27, 2006

DATE OF DECISION:

April 28, 2006

2006-11

2006 ONAFRAAT 11

IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT:

A decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board dated October 23, 2001, a decision of the Agriculture, Food and Rural Affairs Appeal Tribunal dated April 25, 2002 and a decision of the Ontario Superior Court of Justice (Divisional Court) dated December 18, 2003 regarding appeals/applications by Wyatt Stetler, LaSalette, Ontario and 934671 Ontario Limited regarding their alleged participation in unlawful sales of tobacco and the penalty to be imposed on the tobacco growers.

An order of the Court of Appeal for Ontario that the matter be remitted to the Agriculture, Food and Rural Affairs Appeal Tribunal to reconsider, as it deems appropriate, the issue of penalty.

A request by Wyatt Stetler and 934671 Ontario Limited that the Tribunal order the Ontario Flue-Cured Tobacco Growers’ Marketing Board to disclose all documents, including cheques, which document the quantities and proceeds of the sale of the applicants' 2005 tobacco crops.

Before: Rod Stork, Chair; John Rudics, Member

Appearances:

Burton Tait, representing the applicants, Wyatt Stetler and 934671 Ontario Limited

Barry Bresner, representing the respondent, the Ontario Flue-Cured Tobacco Growers’ Marketing Board

INTERLOCUTORY DECISION OF THE TRIBUNAL

This motion was heard by way of teleconference call on Thursday, April 27, 2006. Mr. Wyatt Stetler and 934671 Ontario Limited applied to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) for an order that the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB) release documents in its possession related to the disposition of the applicants’ 2005 tobacco crops.

Statutory Context

This matter comes to the Tribunal by way of Subsection 16.(2) of the Ministry of Agriculture, Food and Rural Affairs Act which states:

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).

Subsection 4 outlines conditions under which the Tribunal may refuse to hear an appeal. Subsection 5 requires that appellants first apply to the local board for a hearing, unless both parties waive their right to a hearing.

The Evidence and Argument

Mr. Burton Tait told the Tribunal his clients and the OFCTGMB had been involved in a series of court proceedings spanning a number of years. He said that Mr. Stetler and 934671 Ontario Limited held basic production quota (BPQ) and marketing quota (MQ) in 2005 and arranged with a sharegrower – Mr. Dennis Hare – to grow the crop. He said that the OFCTGMB subsequently rescinded his client’s tobacco marketing instructions, refused to provide Mr. Stetler and Mr. Dennis Hare its customary pre-payment for the 2005 tobacco crop and locked the tobacco in the barn.

Mr. Tait testified that there are five rounds of tobacco marketing and explained that it was essential that tobacco be marketed in early rounds as the price tended to drop at the end of the marketing season. He said the parties agreed that the OFCTGMB would allow the applicants’ tobacco to be marketed on the following conditions:

Any proceeds of sale from the Stetler tobacco shall be held in escrow by the Board until released by further agreement between Stetler and the Board or pursuant to the direction of the Court or the Agriculture, Food and Rural Affairs Appeal Tribunal;
Prior to the first shipment, Stetler must co-operate with and grant access to the Board’s inspector so that the Stetler tobacco can be inventoried. The tobacco, other than that being shipped in the first round pursuant to this arrangement, shall remain in detention on the Stetler farm until otherwise directed by the Board, the Tribunal or the Court. Stetler shall grant access to the tobacco to the Board’s inspector during the course of the detention;
This arrangement is entirely without prejudice to the positions of the parties on Stetler’s application for leave to appeal to the Supreme Court of Canada, on the potential re-attendance before the Court of Appeal to settle the terms of its order and on the pending re-attendance before the Tribunal to address the penalty issue. More particularly, it is without prejudice to the Board’s position that Stetler currently has no tobacco quota and is not entitled to market any tobacco and to Stetler’s position to the contrary.

Mr. Tait submitted this agreement contemplated that either the Court or the Tribunal would decide the issue of the disposal of the proceeds of the sale of the applicants’ tobacco.

Mr. Tait said the applicants will contend the OFCTGMB had no power to do anything and the whole thing should be thrown out. He said the Court of Appeal order did not set aside a ruling of the Divisional Court regarding the penalty.

Mr. Tait also argued that it was fundamental to their approach to the re-assessment of the penalty at the hearing before the Tribunal that they look at the effect of the penalty. He said the 2005 crop was worth approximately $170,000 but he needed the actual documents related to the sale of the Stetler tobacco so that he could prove this, as he wanted to use it in making penalty submissions. Mr. Tait said that Mr. Stetler had been informed by the OFCTGMB that it had these documents in its possession and that he understood the documents usually included cheques, and make-up payments that accrue at the end of the year.

Mr. Tait said the agreement between the applicants and the OFCTGMB charged the Tribunal with determining what happens to the 2005 tobacco crop and he submitted the Tribunal had to know what happened to the quota itself and the loss of crops. He argued that it was axiomatic that where facts will be an issue they are entitled to the facts. He submitted the documents he requested do exist. He further stated that these documents were relevant to the point of view that the Tribunal will be asked to consider.

Mr. Barry Bresner told the Tribunal that the OFCTGMB and the applicants disagreed as to the scope of the proceeding before the Tribunal. He said the documents in question, which relate to tobacco grown in 2005, were not relevant to a reconsideration of the 2002 penalty decision. He said the Tribunal hearing was not a re-hearing or a hearing de novo, but rather a hearing to reconsider its decision with regard to the penalty it assessed to Mr. Stetler and 934671 Ontario Limited in 2002.

Mr. Bresner also argued that, because the arrangement regarding the marketing of the 2005 tobacco crop was made without prejudice it could not be raised by either party to the detriment of the other. He submitted that allowing the applicants access to the documents so that they could make submissions on penalty based on the agreement would prejudice the OFCTGMB’s position. He said that while the disposition of the proceeds of the 2005 crop would depend upon the Tribunal’s decision as to whether or not to vary the penalty it assessed in 2002, the OFCTGMB did not agree that the 2005 crop was relevant as to what the appropriate penalty in 2002 should have been.

Mr. Bresner argued that the OFCTGMB warned Mr. Stetler on June 15, 2004 that the ruling of the Divisional Court was under appeal and he grew a crop at his own risk. He said the OFCTGMB’s position was that the Court of Appeal decision had the effect of cancelling the Divisional Court ruling and as a result Mr. Stetler and 934671 Ontario Limited had no quota effective July 8, 2005. He said the OFCTGMB had attempted to have the matter of penalty reconsidered by the Tribunal in August, September and October 2005 but that the applicants wanted to wait until their application for leave to appeal to the Supreme Court of Canada had been heard. He argued that the delay in convening a hearing to reconsider the penalty was the result of actions of the applicants and it would be unfair to allow them access to documents that were created in that period of delay.

Mr. Bresner clarified that the terms of agreement between the parties with respect to the first round of tobacco sales were applied to subsequent shipments.

Mr. Tait replied that the panel convened to decide the penalty would make its own decisions as to what was relevant for it to consider. He asked the Tribunal not to exclude evidence from being placed before the panel that would make the penalty decision.

Mr. Tait said that ‘without prejudice’ was wording related to litigation privilege or negotiation privilege which applied when parties are attempting to negotiate an agreement. He submitted that if negotiations fail the information remains confidential, but if they succeed, as they did between the applicants and the OFCTGMB, then any communications between parties were no longer confidential. He also argued there was nothing in the agreement that suggests that it is confidential. He reiterated that he wanted the documents in question in order to demonstrate the magnitude of any potential penalty decided on by the Tribunal.

Mr. Bresner pointed out that it was the opinion of the Board that the entire arrangement regarding the marketing of the 2005 crop by Mr. Stetler was made without prejudice.

The Findings

There are two issues for this panel of the Tribunal to consider:

Are the requested documents relevant to the hearing of the Tribunal to reconsider the penalty assessed to Mr. Stetler and 934671 Ontario Limited?
If so, should disclosure of the requested documents be prevented due to the ‘without prejudice’ aspect of the agreement between the applicants and the respondent with regard to marketing the 2005 tobacco crop?

On the question of relevancy, Mr. Tait argues that the he wants to use the documents in question to prove the severity of the penalty ordered by the Tribunal in 2002. Mr. Bresner argues that events in 2005 have no bearing on the appropriate penalty in 2002. He also submitted that the Tribunal hearing was restricted to the reconsideration of its decision with regard to the penalty.

The Tribunal notes that the order of the Court of Appeal states “that the issue of penalty be remitted to the Tribunal for such reconsideration as it deems appropriate”.

The Tribunal is aware of the fact that the applicants will want to present evidence as to the financial impact of the proposed penalty at the hearing before the panel of the Tribunal that will reconsider the penalty. However, the Tribunal finds that the documents in question are not relevant because the order of the Court of Appeal relates to the issue of a penalty assessed for actions and circumstances in 2001 and 2002 and that should be the matter that comes to the Tribunal. The Tribunal accepts Mr. Bresner’s argument that the matter before the Tribunal is a reconsideration hearing, not a hearing de novo.

Decision and Reasons

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

The motion for an order directing the OFCTGMB to release any and all documents recording the sale of 2005 crop tobacco detained by the Board from Mr. Stetler and 934671 Ontario Limited is denied.

The reason for this decision is the Tribunal finds the documents in question are not relevant to the question of the appropriateness of the penalty set in 2002 as ordered by the Ontario Court of Appeal.

Dated at Guelph, Ontario this 28th day of April, 2006