Dairyland Transport Co-Operative v. Dairy Farmers of Ontario, 2006 ONAFRAAT 33

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

Dairyland Transport Co-Operative v Dairy Farmers of Ontario

Dairyland Transport Co-Operative v Dairy Farmers of Ontario [Request for Review] 2006 ONAFRAAT 33

Ministry of Agriculture, Food and Rural Affairs Act

DATE OF DECISION:

September 1, 2006

2006-33

2006 ONAFRAAT 33

IN THE MATTER OF THE MILK ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT:

AND IN THE MATTER OF: A request that the Agriculture, Food and Rural Affairs Appeal Tribunal review its decision of June 20, 2006 with regard to an appeal by Dairyland Transport Co-operative, Caledon, Ontario from a decision of the Dairy Farmers of Ontario (DFO) dated October 28, 2005.

Before: John O’Kane, Vice Chair

DECISION OF THE TRIBUNAL

Dairyland Transport Co-Operative (“Dairyland”) of Caledon, Ontario seeks to review a decision of the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) issued on June 20, 2006 in the matter of an appeal by Dairyland to the Tribunal from a decision of the Dairy Farmers of Ontario (“DFO”) dated October 28, 2005. The DFO decision of October 28, 2005 was to affirm an earlier DFO decision not to adopt Dairyland’s proposal pertaining to displaced milk volume.

Statutory Jurisdiction for a Review:

Section 21.2 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”), as amended, grants to the Tribunal a discretionary power to review all or part of its own decisions and as part of such a review, the power to confirm, vary, suspend or cancel a decision.

The exercise of that power is conditional upon the Tribunal having provided for such a review in its own rules of procedure. The exercise of that power is also conditional upon the Tribunal determining that such a review is advisable.

The Tribunal’s Rules of Procedure:

Pursuant to section 25.1 of the SPPA the Tribunal has established Rules of Procedure that includes Rule 29 which is entitled “Review of A Decision”.

A request for review of this nature must comply with the requirements of Rule 29.07 which is reproduced below.

29.07 A request for review of a final decision or order of the Tribunal shall,

(a) be in writing;

(b) state the interest of the requester in the subject matter of the appeal;

(d) state the desired outcome of the review;

(e) attach any documents which support the request;

(f) state the full name, mailing address, telephone number and facsimile number (if any) of the requester;

(g) if the requester has counsel or an agent, state the full name, mailing address and facsimile number (if any) of the counsel or agent; and

(h) be signed by the requester.

Additionally, in the determination whether it is advisable that the Tribunal conduct a review, guidance is provided by Rule 29.09 which provides as follows:

29.08 In deciding whether it is advisable to conduct a review of all or any part of a final decision or order, the Tribunal may consider any relevant circumstances including,

(a) whether there is significant new evidence which was no available at the time of the original appeal;

(b) whether the Tribunal made a material error of law or fact such that the Tribunal would likely have reached a different decision;

(d) the extent to which any party to the appeal or any other person will be affected by the review process; and

(e) whether the public interest in finality of decisions is outweighed by the alleged prejudice to the requester.

The Request for Review Process:

I have been designated by the Chair to consider the Dairyland request for a review and determine if it is advisable that a review be conducted.

In the consideration of the Dairyland request for review I received from the Tribunal office and considered the following materials:

(a) The Dairyland request for review signed by William T. Reid and dated July 18, 2006;

(b) The Decision of the Tribunal signed by Chair Rod Stork and dated June 20, 2006;

(d) The DFO document brief from the hearing marked as Exhibit 2;

(e) The Dairyland appeal outline marked as Exhibit 3.

For the purposes of this request for review I will describe items (b) through (e) as the “Record” of the Tribunal proceedings.

I did not seek the submissions of DFO in respect of Dairyland’s request for review as is permitted under Rule 29.17 of the Tribunal’s Rules of Procedure. I found that I was able to reach my decision on the request for review based entirely on the materials listed above.

Although provided for in the Tribunal’s Rules of Procedure, I did not consult with any member of the Tribunal panel as part of the consideration of the request for review.

Dairyland’s Request for Review - Generally:

Dairyland appealed to the Tribunal from a decision of DFO of October 28, 2005. The specific relief that Dairyland sought in its appeal letter of March 7, 2006 (Exhibit 1, Tab 1) was that DFO change its Assignment Policy (Exhibit 1, Tab 10) to incorporate a mechanism to address an alleged unfairness and competitive disadvantage faced by milk transporters arising when their milk producers quit being milk producers or reduce their milk quota holding. This loss of milk volume faced by transporters has been described by Dairyland as “displaced milk volume”. As the appellant before the Tribunal it was for Dairyland to substantiate its case on appeal on a balance of probabilities.

The Tribunal’s decision set out the issue on appeal at page 2 of the decision as follows:

Should the DFO assignment policy be amended to incorporate “displaced milk” volume as defined by Dairyland?

The Tribunal heard evidence from five witnesses presented by Dairyland and two witnesses presented by DFO.

The Tribunal issued a written decision that denied the Dairyland appeal based on the following three reasons from page 15 of its decision:

The DFO assignment policy was prepared to govern the most efficient cost effective transport of milk for DFO producers.

Dairyland’s proposal is not fair and equitable to all transporters.

There was no clear indication of transporter support for this proposal.

The Tribunal’s written decision also contained five findings which are not reproduced in these reasons.

Dairyland has challenged each of the Tribunal’s five findings as well as each of the three reasons from the Tribunal’s written decision.

My first observation about the Dairyland request for review is that it does not contain any suggestion:

that there is any new evidence significant or otherwise which was not available at the time of the original appeal (Rule 29.08(a));
that any party to the appeal or any other party has relied upon the appeal decision to some prejudice (Rule 29.08(c));
of the extent to which any party to the appeal or any other person will be affected by the review process (Rule 29.08(d));
concerning the public interest in finality of decisions versus alleged prejudice to the requester (Rule 29.08(e)).

The entire focus of the Dairyland request for review was that the Tribunal made “many material errors and omissions”.

Accordingly, in considering this request for review I determined that the operative rule to be Rule 29.08(b) and that to be successful on their request, Dairyland must satisfy me that the Tribunal made material errors of fact or law such that the Tribunal would have reached a different conclusion.

Material Error of Fact or Law:

The Tribunal Rules do not assist with any definition of “material error of fact or law”. The Canadian Law Dictionary defines the word “material” as an adjective meaning “important, going to the merits, having to do with matter as distinguished from form”.

In the context of this request for review I am satisfied that in order to be a material error of fact or law it must be related in an important way to the ultimate reasons why the Tribunal decided as they did.

I am mindful that I was not present for the testimony of the seven witnesses and that the Tribunal was present to hear that evidence. Accordingly, I am unable to second guess the Tribunal on the weight it attached to any particular piece of evidence from the hearing. In that regard I do not consider it to be a material error of fact or law where the Tribunal weights evidence differently than I might have, if I had been hearing the appeal.

Dairyland’s Issues with the Tribunal Findings and Reasons:

Dairyland’s request for review only particularized alleged material error of fact in respect of the Tribunal’s findings #1 and #2. With respect to the balance of the Tribunal’s findings #3, #4 and #5 Dairyland asserted that they were irrelevant or incomplete and should therefore be disregarded.

In respect of the Tribunal’s reasons Dairyland asserted reason #1 was incorrect; that reason #2 was not the issue Dairyland brought to the Tribunal; and, that reason #3 was incorrect and irrelevant.

Given the scope of Rule 29.08 I considered all of the issues raised by Dairyland using the yardstick of material error of fact or law.

At this point I also express a cautionary note about Dairyland’s approach to deconstruct the Tribunal’s findings and reasons by parsing each sentence. Reasons for decision ought to be considered as an integrated whole and any particular sentence should not be considered in a vacuum but rather in the context of the entire reasons for decision.

Tribunal Finding #1:

The essence of Dairyland’s assertion is that the Tribunal was wrong to conclude that the OMTA membership and Board of Directors did not support Dairyland’s proposal.

As I read the Record it appeared that the Tribunal heard evidence that:

Dairyland asked the OMTA to review its proposal for displaced volume in June, 2004. The OMTA decided to retain its compensation agreement; it rejected Dairyland’s proposal in February 2005. (Evidence of Bill Reid)

The OMTA decided not to accept Dairyland’s proposal. It recommended that its board not accept the proposal either. (Evidence of Doug Endicott)

The OMTA Board of Directors rejected Dairyland’s proposal. The proposal was not circulated among the OMTA membership at large. (Evidence of Doug Endicott)

The OMTA Board of Directors has the authority to make decisions on behalf of its transporter membership. (Evidence of Doug Endicott)

The four points of evidence noted above is not all the evidence heard by the Tribunal however, based on the above four points it appeared to me that the Tribunal had evidence before it (as noted above) that supported their finding that the OMTA membership and Board of Directors did not support Dairyland’s proposal.

Tribunal Finding #2:

The essence of Dairyland’s complaint in respect of the finding was that the Tribunal made a material error related to the scope of DFO’s statutory mandate and the basis for the DFO Assignment Policy. Dairyland asserted that Finding #2 contained material error of fact however it also seemed to allude to an error by the Tribunal related to statutory provisions.

Since statutory interpretation is a question of law the misinterpretation of legislation by the Tribunal could give rise to an error of law. The Tribunal found that there was no statutory provision requiring the DFO to provide for the improvement, expansion or maintenance of business returns for milk transporters. Dairyland did not directly challenge that finding but rather asserted that since the legislation did not prohibit DFO in that regard the Tribunal’s Finding #2 was in error. With respect, I was unable to conclude that that amounts to an error of law. In my view that finding by the Tribunal was an accurate statement of the law.

From the Record it appeared that the Tribunal heard evidence that:

DFO has the authoritative jurisdiction to assign milk volume to transporters. (Evidence of Bill Reid)

DFO does not guarantee milk volume to transporters. (Evidence of Bill Reid)

Transporters have never been guaranteed volume by any agency. (Evidence of Roy Billialb)

There has never been an understanding that the DFO guarantees milk volume to milk transporters. (Evidence of Stan Pepper)

He has never understood that the DFO guarantees volume to transporters, however, he believes that the policies affecting transporters should be revised to reflect numerous changes within the dairy industry. (Evidence of Bill Siebarth)

He stated that DFO appoints milk transporters by way of a Transport Board Order. (Evidence of Dave Nolan)

At present the DFO has an assignment policy in place. The policy provides for the assignment of new and existing producers to milk transporters. (Evidence of Dave Nolan)

The OMTA Compensation Agreement governs how transporters will be remunerated for volume that is transferred to other transporters due to re-assignment. The DFO assignment policy and the OMTA Compensation Agreement have never attempted to address volume losses to transporters due to producers leaving the industry or the redistribution of milk volume due to quota sales. (Evidence of Dave Nolan)

The Dairyland proposal provides no increased benefits to the producers that DFO serves. (Evidence of Dave Nolan)

He was the DFO Transportation Manager at the time that rationalization was first introduced. He brought the issue of a need for greater efficiency to the Board’s attention. (Evidence of Dave Nolan)

Only the DFO can assign producers to transporters. (Evidence of Dave Nolan)

The DFO does not choose to apportion volume for the convenience of milk transporters; its mandate is to provide its producers with the most cost effective method of transporting milk. (Evidence of Dave Nolan)

It is not the DFO’s responsibility to negotiate fairness among transporters. The DFO’s mandate is to provide cost effective milk transportation for its producers. (Evidence of Dave Nolan)

DFO staff review all transport route purchase offers. Offers are evaluated for efficiency. Efficiency is evaluated at (sic) it pertains to cost effectiveness for producers, not milk transporters. (Evidence of Dave Nolan)

The Tribunal also had in evidence before it copies of the DFO Assignment Policy and the OMTA Compensation Guidelines.

It appeared clear from the evidentiary points listed above that there was ample evidence to support the Tribunal’s findings concerning the DFO’s mandate.

Tribunal Finding #3:

Dairyland contended that the Tribunal’s Finding #3 was irrelevant and should be disregarded.

Dairyland has not indicated if Finding #3 contained errors of fact or law.

It appeared to me that Dairyland disagreed with the Tribunal’s Finding #3. Disagreement with a finding is not a basis for a review. However, I took a liberal approach and looked at Finding #3 to see if there was either error of law or fact.

Contrary to Dairyland’s assertion the issue on appeal was not the right to haul milk, but rather, whether DFO policy should address “displaced milk volume” as identified by Dairyland.

It was also clear from the evidence received at the Tribunal that Dairyland’s concerns in bringing its appeal were driven by its bottom line. As noted in the first paragraph of its written materials (Exhibit 1) Dairyland contended that:

The displaced milk volume becomes a windfall for the transporters receiving it, and a huge financial loss for those losing it. (My underlining emphasis added.)

It was clear that the Tribunal received evidence concerning compensation (remuneration) of milk transporters in the following two different respects.

The first was compensation/remuneration paid by milk producers to milk transporters. Mr. Reid’s evidence confirmed that all producers in Ontario pay the same rate for milk transportation. That evidence does not appear to have been challenged or contradicted. The Tribunal was not asked to address compensation/remuneration as between the milk producer and the milk transporters.
The second was compensation/remuneration as among milk transporters for milk volume movements among transporters.

It appeared to me from the evidence that issues in respect of milk volume movement among transporters had been addressed by the DFO Assignment Policy and that issues of compensation between transporters arising from the application of the DFO Assignment Policy had been addressed within the transporter industry at the OMTA by the OMTA Compensation Guidelines.

The Tribunals Finding #3 ought to be read in the context of the issues and evidence before it. Accordingly, it appeared to me that the Tribunal’s Finding #3 was directed at

a reality that ultimately, the Dairyland issue would translate into money compensation/remuneration and that the appropriate mechanism within the industry to address compensation/remuneration as between milk transporters was through co-operation between the DFO on behalf of the milk producer interests and the OMTA on behalf of the milk transportation industry interests.

I was unable to conclude that the Tribunal’s Finding #3 contained any material error or fact or law.

Tribunal Finding #4:

Dairyland challenged the Tribunal’s finding that trends in the industry such as herd and farm size, increased urbanization and decreasing milk transporters were normal changes that occur in business. The finding in respect of industry “trends” was supported by the following evidence:

The dairy industry has undergone major changes over time, including the move to fewer but larger farms. (Evidence of Bill Reid)

Mr. Billialb explained that years ago there were more farms with smaller herds, whereas today there are fewer farms with larger herds. (Evidence of Roy Billialb)

Routes located on the periphery of urban areas will continue to have declining volume as urban spread overtakes farmland. (Evidence of Dave Nolan)

The number of milk transporters has declined from 150 to 61. (Evidence of Dave Nolan)

This aspect of the Dairyland challenge focused on the fact that the supply managed milk industry is not a “normal” business structure. Without debating that issue it was clear to me that the Tribunal’s finding was not that the industry was a “normal” business structure but rather that certain transitional events or “trends” within the industry were “normal” changes that occur in business. Accordingly, there was no error of fact in the Tribunal’s finding.

Dairyland challenged the Tribunals’ finding that, notwithstanding a decline in milk volume a milk transporter could still expect to receive competitive bids on the sale of the milk transporter’s business. Dairyland alluded to an inconsistency in that Tribunal finding. It is clear that Dairyland does not dispute the evidence that was provided to the Tribunal by Mr. Siebarth that formed the basis of that finding. There was no inconsistency with that evidence and accordingly the finding was supported by evidence. Accordingly, there was no error of fact in respect of that finding.

Dairyland challenged the Tribunal’s finding about the reasons for the DFO introduction of its rationalization policy not as being in error factually, but rather as the finding being incomplete. Dairyland’s recitation of extracts from the DFO Assignment Policy in respect of rationalization of milk transport routes was not at odds with the Tribunal’s finding and accordingly does not amount to an error of fact.

Dairyland challenged, in part, the Tribunal’s finding that market fluctuations within the industry required that stakeholders adjust themselves to those fluctuations. I did not consider that finding to be a finding of fact as such but rather a conclusion reached by the Tribunal. Dairyland challenged that conclusion on their assertion that because the milk industry is regulated, milk transporters cannot adapt to market fluctuations without the involvement of the regulators. In the context of the evidence before the Tribunal and the entirety of the Tribunal finding #4, I was not persuaded that the Tribunal made any error of fact or law in respect of that conclusion.

Tribunal Finding #5:

Dairyland did not assert that Finding #5 contained any error of fact or law. It submitted that the finding should be disregarded because Dairyland did not, in the hearing before the Tribunal, argue that issue.

The essence of the Dairyland case was that the DFO, through its Assignment Policy, ought to revise that policy to address the issue that Dairyland identified as “displaced milk volume” to provide a mechanism whereby Dairyland could be compensated for that displaced milk volume.

The Tribunal’s conclusion, expressed in Finding #5 was that it remained unconvinced that the DFO had a responsibility to address the business risk in the milk transport industry of displaced milk volume as requested by Dairyland.

In the context of the evidence before the Tribunal and the entirety of the Tribunal finding #5, I was not persuaded that the Tribunal made any error of fact or law in respect of that conclusion.

Tribunal Reasons:

I was satisfied that all three reasons challenged by Dairyland were well supported by evidence before the Tribunal.

Disposition:

I find that there is no basis to grant Dairyland’s request for a review of the Tribunal decision dated June 20, 2006.

Dated at Brampton, Ontario this 1st day of September, 2006