Agriculture, Food and Rural Affairs Appeal Tribunal

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West / 1, chemin Stone Ouest Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: appeals.tribunal.omafra@ontario.ca

APPEAL: Cayers vs Dairy Farmers of Ontario – Request for Review Cayers vs Dairy Farmers of Ontario (RE)– Request for Review 2008 ONAFRAAT 15

STATUTE: Ministry of Agriculture, Food and Rural Affairs Act

HEARING: April 21, 2008

DATE OF DECISION: June 9, 2008

2008-15

NEUTRAL CITATION: 2008 ONAFRAAT 15

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: An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal ("Tribunal") by John and Susanna Cayer, of Chesterville, Ontario, from a decision of the Dairy Farmers of Ontario ("DFO") to deny a request for exemption from the November 17, 2006 Quota Policy on Transfer Assessments.

AND IN THE MATTER OF: A request for review by the DFO of the decision of the Tribunal dated March 25, 2008 made by letter dated April 21, 2008 under Subsection 21.2(1) of the Statutory Powers Procedure Act and Rule 29 of the Rules of Procedure for the Tribunal.

Before: Marthanne Robson, Vice-Chair.

Appearances: None.

DECISION OF THE TRIBUNAL

Background

A written request for review was made by the DFO, dated April 21, 2008, supported by written submissions and documents. The Cayers made submissions in writing.

The DFO submit that Mr. Denis Perrault, one of the panel members who heard the appeal, has an actual conflict of interest in the matter as a result of a) his being an active dairy farmer; b) the company under which he carries on his dairy farming business (Perrodale Farms LTD) was subject to regulatory action by the DFO, specifically by George MacNaughton, Director of Regulatory Compliance for the DFO, one of the witnesses at the appeal hearing; and c) the findings of the Tribunal with respect to the granting of exemptions from the DFO transfer assessment policy place Mr. Perrault in the position of potentially personally benefiting from the Tribunal's ruling.

The DFO also submit that the Tribunal in its decision strayed into policy considerations and found that there was a policy to grant exemptions to short-term but not long-term producers, contrary to the evidence presented.

The DFO request that the decision of the Tribunal be set aside and that the matter be reheard by a new panel.

The Cayers submit that the request for review should be dismissed as a) the DFO did not object to the presence of Mr. Perrault at the hearing; b) the DFO were aware or ought to have been aware of the Mr. Perrault was an active dairy farmer; c) the DFO's own documents disclosed that Mr. George MacNaughton, Director of Regulatory Compliance and a witness for DFO at the hearing, had corresponded directly with Mr. Perrault and Perrodale Farms, or had been copied on correspondence to Mr. Perrault/Perrodale Farms; d) the Tribunal's comments with respect to policy were obiter, that is, not essential to the decision of the issue under appeal and should be deleted from the decision.

The Tribunal's Rule 29 provides in part:

Rule 29.01 The Tribunal may at any time correct a typographical error, grammatical error, error of calculation, misstatement, ambiguity, technical error or other similar error which appears in a decision or order of the Tribunal without recourse to this Rule and without prior notice to the parties to an appeal.

Rule 29.09 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 not 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; (c) the extent to which any party to the appeal or any other person has relied upon the final decision or order; (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 and finality of decisions is outweighed by the alleged prejudice to the requestor.

Rule 29 also sets out a two part procedure for requesting a review; firstly considering the request, and secondly, if granted, a hearing on the matter.

The purpose of the consideration is not to determine whether in fact there was an error in law or an actual conflict of interest. The matter to be determined in considering the request for the review is whether the DFO has demonstrated that there is sufficient merit in its request to be granted a hearing.

The issues of conflict of interest and reasonable apprehension of bias are questions of law which go to the jurisdiction of the Tribunal. Allegations of conflict of interest or reasonable apprehension of bias must always be considered seriously. The potential error in fact alleged is that the Tribunal found that there was a “policy” of allowing exemptions for short-term producers, but not long-term producers.

The decision in this case is not final as there remains a further consideration by the Minister of Agriculture, Food and Rural Affairs. The decision would appear to have a significant impact on all parties to the appeal, as an amount of $114,492.80 is in issue.

The DFO submitted documents and correspondence relating to Mr. Denis Perrault and Perrodale Farms Ltd. The documents confirm that Mr. Perrault is a shareholder in Perrodale Farms, originally with his parents and later with his brothers. Perrodale Farms has been shipping milk to the DFO since 1967. Mr. Perrault would be considered a long-term producer.

The documents also disclose that Mr. MacNaughton was copied on correspondence to Perrodale Farms or Mr. Perrault in 1995, 1996, 2000 and 2003. The DFO acknowledge that Mr. MacNaughton had access to the corporate holding information. The correspondence also discloses that monetary penalties were imposed by the DFO against Perrodale Farms in 1995, 1996, 1999, 2000, 2001 and September, 2003. There is no evidence or indication that these penalties were ever disputed, challenged or appealed.

The DFO also noted in its letter of submission of document dated May 2, 2008, that Mr. Perrault's corporation purchased quota effective April 1, 2008. The hearing of the matter was February 25, 2008 and the decision was issued March 25, 2008. This would mean that the bid (offer to purchase) was outstanding at or about the time of the hearing. The DFO did not raise any concern about a potential conflict of interest with respect to that transaction.

The DFO stated in its submissions that it "has no concern with Tribunal members having agricultural backgrounds and would normally have no difficulty with the milk producer of being on the panel. However, where regulatory proceedings have occurred, it is reasonable to expect that a producer could have some residual concerns in relation to the entity that took such regulatory action."

The DFO seem to indicate that Mr. Perrault has or could have some negative perspective toward the DFO as a result of regulatory action. The time elapsed between the regulatory action and the hearing is relevant in assessing conflict of interest or reasonable apprehension of bias.

The DFO submit in their request for review that at the beginning of the hearing, Mr. Perrault was identified by the Chair of the Panel as having been a dairy farmer. The typed notes taken by the recording secretary for the Tribunal were provided to the parties upon request of the DFO. They do not reflect that Mr. Perrault was introduced as a dairy farmer. They reflect that Ron Versteeg, a Director of DFO, was also present.

The Tribunal governs itself according to the Members' Code of Professional and Ethical Responsibilities. The Code sets out in some detail definitions of conflict of interest and bias and a procedural protocol for determining conflict or bias issues. No reference was made to this document in the submissions of either party. A copy is appended to these reasons.

Consistent with the Code, it is the Tribunal's practice to ask every member who is considered for appointment to a panel to disclose any potential conflict of interest or knowledge of the parties prior to assignment of the case. Members of the Tribunal are appointed for their expertise and experience in agricultural matters, so it is not unusual for members to have some knowledge or dealings with parties who appear before the Tribunal. In appropriate circumstances members recuse themselves, without any objection having been made by a party.

Who is responsible for raising a concern a conflict of interest and at what point in time? It is evident by the Tribunal's practice outlined in the paragraph above, that each member makes a personal assessment in terms of potential conflict of interest prior to accepting appointment to a hearing panel. Parties are not normally informed prior to appearing at the hearing which panel members are assigned to their case, so would not have an opportunity to research or raise an objection prior to the day of the hearing.

It appears that at some point on the date of the hearing, the DFO became aware that Mr. Perrault is a dairy farmer. It is not clear whether this was by introduction of the Chair, even though not reflected in the non-official notes of the proceeding, or through identification by Mr. Perrault himself or by one or other DFO witnesses or observers. What is important is that the DFO indicate they knew on the date of the hearing.

The DFO could have raised an objection to Mr. Perrault’s participation at any time on the day of the hearing. Had they done so, the practice of the Tribunal, as reflected in the Code, is to consider any allegation, and decide whether to accept submissions and argument from all parties. The Member or panel would then retire to deliberate any allegations of a potential conflict of interest. A two-person panel could have heard this matter, so if the objection had been valid, a member could have withdrawn and the hearing could have proceeded.

The decision and supporting reasons were issued one month after the date of the hearing. The DFO did not raise any concern to the Tribunal during that time. It was not until some three weeks after the decision was issued that the DFO for the first time alleged a conflict of interest. A party who does not raise the issue of conflict of interest in a timely manner, may waive the right to do so later.

The DFO submit that they didn’t realize that there was a conflict of interest until the decision was issued. They suggest that Mr. Perrault, as a long-term producer, could benefit from the approach the Tribunal took in this case, should he ever be in a position to request an exemption on compassionate grounds.

It is arguable whether a corporation could apply for exemption based on compassionate grounds, or whether the DFO would consider the medical condition of a shareholder of a corporate producer in considering such a request.

Generally, a conflict of interest or reasonable apprehension of bias exists or not regardless of the outcome of the case. It does not seem logical that a reasonable apprehension of bias or actual conflict of interest could only arise after decision made, if it didn't exist at the outset.

In my opinion, it would have been advisable of Mr. Perrault to inform the parties that his closely held farm corporation had an outstanding bid to purchase quota from the DFO at the outset of the hearing. Whether or not that places him in an actual or potential conflict of interest need not be determined here. It would however reflect the desired transparency in the Tribunal's process. Had he done so, the DFO would have been alerted to his identity as an active dairy farmer.

To reiterate, the purpose of this consideration is not to determine whether or not there is an actual conflict of interest or to determine the merits of the argument. It is to determine whether the DFO has made a sufficient case to warrant a review. It is my opinion that there are sufficient allegations of conflict of interest, notwithstanding the delay in bringing them forward, to merit a review.

Finally, the DFO argued that the Tribunal had erred in fact by finding that there was a “policy” to grant exemptions to short-term producers and not long-term producers. Both witnesses for the DFO, according to the unofficial notes of the hearing, clearly indicated that there was no policy about granting exemptions on compassionate grounds. What the Tribunal found, though perhaps did not express as clearly as it might have, was that the DFO had an “unwritten” policy (or call it rationale), clearly outlined by both witnesses, that long-term producers who had had time to recoup their capital investment would not be granted exemption on compassionate grounds. This is not an error in fact; it is a finding of fact, notwithstanding the characterization by the DFO’s witnesses that there was no “policy”.

Order of the Tribunal

The request for review is accepted in part. This decision will be made available to the panel hearing the appeal, should they wish to avail themselves of Rule 29.01 to correct any misstatement or ambiguity in their written reasons.

The review will be limited to the question of conflict of interest or reasonable apprehension of bias of Mr. Denis Perrault raised in the request for review. The matter shall be heard at an oral hearing by one member or a panel selected by the Chair, different from the original panel. The hearing shall be in the form of a motion as contemplated under Rule 25 of the Rules of Procedure. The Tribunal shall consult with the parties to set a mutually convenient date with at least seven business days’ prior notice. In accordance with practice in these matters, the Tribunal will request that Mr. Perrault provide a statement to the parties prior to the hearing.

Dated at Borden, this 9th of June, 2008