Ontario Quota Rights Organization v. Dairy Farmers of Ontario, 2009 ONAFRAAT 27

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: appeals.tribunal.omafra@ontario.ca

Guelph (Ontario) N1G 4Y2 Tél. : (519) 826-3433, Téléc. : (519) 826-4232 Courriel : appeals.tribunal.omafra@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Ontario Quota Rights Organization v. Dairy Farmers of Ontario

OQRO v. DFO 2009 ONAFRAAT 27

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

DATE OF DECISION:

November 9, 2009

2009-27

NEUTRAL CITATION:

2009 ONAFRAAT 27

IN THE MATTER 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 the Ontario Quota Rights Organization, Jean-Marie Menard, of Embrun, Ontario, Jacques Lamarche, of Lefaivre, Ontario, and Doyle Harrigan, of Curran, Ontario (OQRO, et al.), of a decision of the Dairy Farmers of Ontario (DFO), to deny their request for reconsideration of the DFO quota policy of March 2009;

AND IN THE MATTER OF: a Pre-Hearing Conference pursuant to Rule 24 of the Tribunal’s Rules of Procedure;

AND IN THE MATTER OF: the hearing of a motion by OQRO, et al., pursuant to Rule 25 of the Tribunal’s Rules of Procedure;

Before:

Frank Handy, Vice Chair

Appearances:

Kurtis Andrews, articling student with the firm of Donald R. Good & Associates, counsel to the appellants, OQRO, et al.

Geoffrey Spurr, counsel to the respondent, DFO

MOTION DECISION OF THE TRIBUNAL

This is a decision on a motion brought by an unincorporated association, the Ontario Quota Rights Organization, and by three individuals (in these reasons reference to the OQRO includes reference to the individual appellants) within an appeal brought by the OQRO against policies enacted by the Dairy Farmers of Ontario (DFO).

The Background

OQRO is an organization that includes about 75 active dairy producers and a number of former producers. OQRO has consistently challenged DFO policies that the OQRO thinks have or will have negative impact on the value or quality of perceived equity in dairy production quotas. DFO policies established in 2006 (2006 Policies) were appealed to this Tribunal by OQRO; for a variety of reasons no decision in that appeal has yet been rendered.

In addition, the DFO denied certain individual (not the OQRO) requests for exemption from aspects of the 2006 Policies, and these individuals appealed the denial to this Tribunal. The Tribunal decision granted the exemptions. This matter will be referred to in these reasons as the Denby case. The DFO sought judicial review of the Tribunal’s decision in the Denby case at the Divisional Court; that court set aside the Tribunal’s decision. In its decision dated October 16, 2009, the Divisional Court sent the exemption requests back to this Tribunal, to be heard by a differently constituted panel. However, the individual appellants in Denby have requested leave to appeal to the Court of Appeal, and that request is outstanding at this time.

The DFO decided to establish a new set of policies regarding milk quota pricing and the quota exchange on March 27, 2009 (the 2009 Policies). OQRO and three individuals appealed the 2009 Policies to this Tribunal in their entirety. The 2009 Policies were to be effective in time for the August 2009 quota exchange.

On July 20, 2009, a pre-hearing conference was held, at which a number of procedural issues in the appeal were dealt with. An order was issued July 20th dealing with these issues, including timing for the delivery of documentation and the production of expert reports by August 31, 2009.

On July 27, 2009, the Tribunal heard a motion by the DFO to lift or amend the statutory stay that automatically flows from launching an appeal. The OQRO did not argue that the decision in the motion would have any impact on the issues dealt with by the procedural order generated from the July 20 pre-hearing, including timing of production of materials, preparation, or the scheduling of the hearing of the appeal.

The scope of the stay was defined in my decision of August 6 2009, which applied the stay only to the appellant members of the OQRO who were active dairy producers and dealt with other matters arising as a consequence of this finding. As a result of the August 6 decision, the DFO and most producers apply the 2009 Policies for most quota transactions, while the appellant producers are able to purchase or sell using the 2006 Policies or the 2009 Policies without prejudice to their appeal rights.

On August 27, 2009, the DFO filed its material as required under the procedural order.

The OQRO did not produce additional documentation or expert reports on August 31 as required by the procedural order. On the evidence available for the November 2 motion, the OQRO does not appear to have formally retained an expert, prepared documentation or made secure arrangements to retain counsel for the appeal even as of November 2.

Having received no productions, Mr. Spurr, counsel for the DFO, sought confirmation from Mr. Good, counsel to the OQRO, that the record was complete. There was a subsequent exchange of correspondence with Mr. Spurr and the Tribunal in which Mr. Good advanced arguments and a request for another pre-hearing conference and an opportunity to revise the hearing schedule, and in which Mr. Spurr sought an opportunity to argue for sanctions for the OQRO’s failure to comply with the procedural order.

This exchange resulted in my Order by letter dated October 2 2009, in which the OQRO was found to be in breach of the procedural order and ordered to either bring a motion for revisions to the order to which the DFO could reply and argue for sanctions, or to rely on the existing record.

The motion brought as a result of the October 2 ruling was heard on November 2, 2009. The only evidence filed was an affidavit by Mr. Harrigan, along with the record of decisions in this proceeding and some transcript extracts from the hearing of the 2006 Policies appeal.

Preliminary Issue: Allegation of Bias

The OQRO‘s notice of motion indicated that the OQRO was concerned that my decision of October 2 suggests the Tribunal had prejudged the request of the OQRO, and encouraged the DFO to request sanctions, particularly costs. Counsel for the OQRO indicated there was no other reason to make this allegation than paragraph 8 of the decision. Counsel for the DFO indicated that he had been the first to raise the issue of sanctions in his correspondence, and that the decision quotes directly from his request. He argued that the allegation of bias was raised by the OQRO because the decision had gone against it.

I indicated that the decision left open the opportunity for all the parties to make the arguments they wanted to make in one proceeding, rather than two, and that the opportunity for all parties to argue all issues was not to my mind an indication of bias.

Mr. Andrews for the OQRO indicated he was content to proceed with the motion, and the allegation of bias was not pursued.

Issues in Motion

Should the scheduling of the hearing be adjourned

1. pending receipt of the decision in the 2006 Policies Appeal;
2. pending receipt of the result in the Denby case;
3. as a result of the finding in the stay motion;
4. because of the difficulty in raising funds?

If so, what adjournment should be granted and on what terms?

If not, on what schedule and under what terms should the hearing proceed?

Should the OQRO be subject to costs or other sanctions?

Findings

The OQRO has requested an adjournment that on its face arises from its inaction and failure to prepare for the hearing, despite having agreed to do so in the pre-hearing conference and then being required to do if it wished to comply with the pre-hearing conference order. The evidence of Mr. Harrigan simply restates the argument in the notice of motion, and does not show diligence on the part of OQRO in making preparations, an appropriate effort to deal with the consequences of not preparing diligently, or proper communication of OQRO’s change in position.

The OQRO states that it has had difficulty raising money to fund the hearing process and has therefore not made any real progress in retaining an expert or confirming counsel will be available. This is the only factual evidence on which it relies.

The OQRO at this motion also advances the argument that other matters relevant to the determination of the 2009 Policies appeal should be decided first. In particular, the 2006 Policies appeal and the Denby case, says OQRO, will have an impact on this appeal. The Denby case may or may not come before the Tribunal, depending on the outcome of the leave to appeal request. None of these arguments was raised at the pre-hearing conference.

The OQRO also argues that the decision on the stay motion changed the urgency of the matter and that the request to the Minister for reconsideration obviated the need for preparation, despite the clear language of the pre-hearing conference order. The potential for such an outcome was known to the OQRO at the time of the motion, since that outcome was the focus of Mr. Spurr’s argument, but no mention of this impact was raised in the stay motion nor was the potential impact of the reconsideration request communicated to the DFO or the Tribunal at the time it was made.

Mr. Spurr pointed out that the issue originally raised for this motion was a request to revise and extend the schedule for the appeal, thus allowing the OQRO to file documentation, and arose only because the OQRO felt that their request to the Minister to reconsider the stay decision created an opportunity to ignore the procedural order.

Mr. Spurr points out that the DFO has had to invest time and effort, has complied with the order, and is entitled to some certainty of conclusion. He suggests that neither the 2006 Policies appeal nor Denby will determine the 2009 Policies appeal, and that the 2009 Policies appeal is therefore simply tactical, a ‘placeholder” to provide a stay of the 2009 Policies and ensure the 2006 Policies appeal would still be significant. He also suggested that because of the number of active producers in the OQRO and the significance of the case to the OQRO (according to Mr. Harrigan’s affidavit) that the per person expenditure for the total budget set out in the affidavit of Mr. Harrigan is not prohibitive.

Notwithstanding that I find Mr. Spurr’s argument persuasive on many factual points, and that there has been an unjustified failure to meet the requirements of both the procedural order and the order of October 2, I am going to grant the request for an adjournment, but subject to conditions, failing which the appeal will be dismissed. The reasons for this conclusion in relation to each issue are set out below.

Adjournment pending receipt of the decision in the 2006 Policies Appeal

Although the matters must each be determined on their own merits, I think there is a sufficient relationship between the 2006 Policies and the 2009 Policies that it would be preferable to hear the result of the former appeal before deciding the latter. If the 2006 Policies are overturned, it may be that the 2009 Policies as a consequence require significant revision, so that the appeal of them becomes moot, and the parties would be better served by focusing on revising the policies. If they are not overturned, then the appeal of the 2009 Policies may become untenable for the OQRO, in which case it would best serve all parties to simply have the appeal withdrawn. Also, substantive findings in the 2006 Policies appeal may allow the 2009 Policies appeal to be amended and refined to allow for a more effective hearing.

Although Mr. Spurr would contend that this is a tactical appeal and inappropriate, in my view the appeal of the 2009 Policies was properly brought by OQRO, and deals with the merits of the 2009 Policies. Notwithstanding similarities to the 2006 Policies appeal, launching appeals concerning policies that in its view negatively affect quota value and equity in my view demonstrates OQRO’s consistent concerns. Also, OQRO is not responsible either for the timing of the release of the decision on the 2006 Policies appeal, or for the timing of the implementation of the 2009 Policies. It was necessary to launch the appeal of the 2009 Policies to challenge them, and appropriate to do so at the point of their implementation. Whether the 2006 Policies appeal had been determined at that time is a separate matter from that decision, and all parties are caught by the uncertainty of the 2006 Policies appeal being outstanding.

Any adjournment should not, however, be a reward for the delay in preparation that has occurred, and as a result the OQRO will be required to declare its position on the 2009 Policies appeal promptly after the 2006 decision is final, will be required to submit its material on a pre-arranged schedule without another pre-hearing conference, and if it fails to adhere to these conditions its appeal will be dismissed without further notice. These terms will be set out in the order below.

Adjournment pending receipt of the result in the Denby case

The Denby case does not in my view have the same level of significance for this appeal. Denby primarily concerns whether transfer assessment exemptions under the 2006 Policies were properly denied by the DFO. Leave to appeal will be considered by the Court of Appeal. Denby will either not be given leave or will be heard by the Court of Appeal; if heard, the appeal may either be denied or granted. If the appeal is successful, the exemptions will be granted, but the 2006 Policies may not be overturned. If the Divisional Court’s ruling stands, either by leave to appeal being denied or after argument, then the Tribunal, reconstituted, will have to decide whether the exemptions were improperly denied. Again, the 2006 Policies need not be overturned as a result. Therefore, the parties need not wait until determination of the Denby case.

Adjournment as a result of the finding in the stay motion

My reasoning and order concerning some of these issues is already set out in the October 2 decision. I have not yet addressed the issue of change of position, and in these reasons there will necessarily be some overlap between the points in the October 2 decision and these reasons.

First, in my view Mr. Good’s reasoning regarding the impact of the stay motion is contradictory. In addition, he has adopted this reasoning based on assumptions that were not valid: that he would be successful on the stay motion, that the decision in the 2006 Policies appeal would be released imminently (which the transcript record does not support), that Denby would be concluded, and later that the Minister would accept his view and reconsider the stay. Also, he assumed that his assessment of the impact of these other cases allowed him to decide on how the 2009 appeal should be managed.

None of these assumptions is well founded. First, one must always be prepared for a contrary outcome in a motion and consider its implications. Similarly, unless specifically promised by the adjudicator, one cannot predict the timing of delivery of a decision. Finally, regardless of the impact or influence of other cases, each appeal is at its root an independent matter and requires its own decision. Also, the appeal must be heard and decided whether or not a stay is in place. Finally, it is the Tribunal that has final jurisdiction over such issues, and concerns or arguments about these points must be presented for argument and consideration. Mr. Good seems to have thought that the presence of the other appeals and the debate over the stay meant he could ignore the procedural order of the Tribunal.

Regarding the stay, three potential outcomes existed:

a) If the stay had remained in the form Mr. Good requested, the urgent need on the part of the industry and the DFO for a decision--an urgent need that Mr. Good agreed existed when the stay motion was argued--would have continued to exist, so OQRO’s failure to prepare would have severely and knowingly prejudiced the DFO;

b) If the Minister had accepted Mr. Good’s request to reconsider the stay and had imposed it in the form he sought, the urgent need for a decision would have arisen again, and OQRO’s failure to prepare in the interim would have severely and knowingly prejudiced the DFO;

c) If the urgent need of the DFO for a decision was obviated by the decision to limit the application of the stay, then failing to prepare weakens the OQRO’s argument about the merits of the policies by giving the policies additional time to operate and demonstrate their merit, and by making it harder to reverse them. Alternatively, if the policies are harmful to the OQRO, then not preparing harms the industry and the OQRO by delaying their reversal.

In any of these situations, holding a prompt hearing would have been preferable, and in two of the situations, if the stay had not been in place there would have been severe and intentional prejudice to the DFO worthy of a costs award against the OQRO. The argument and conduct arising from the stay would not merit an adjournment.

Adjournment because of the difficulty in raising funds

Mr. Good did not advise that his client was having difficulty marshalling the resources to fund its appeal until three weeks after the case was to have been prepared. In order to be proper grounds for an adjournment, this point should have been made when it became clear that the deadline could not be achieved. Although the circumstance might be grounds for an adjournment, the manner in which the situation was raised and the lack of notice to the respondent and Tribunal do not support granting the request for an adjournment. Having been granted for other reasons, this point is set out to advise parties and counsel of the Tribunal’s expectations.

If the adjournment is not granted, on what schedule and under what terms should the hearing proceed?

Having reached the conclusion I have, there is no need to consider this issue.

Should the OQRO be subject to costs or other sanctions?

Rule 28 of the Tribunal’s Rules of Procedure deals with costs:

Rule 28.01 reads: Where a party believes that another party has acted clearly unreasonably, frivolously, vexatiously or in bad faith considering all of the circumstances, it may ask for an award of costs.

The applicable criteria, according to Mr. Spurr’s argument, would be contained in Sections 28.04 b) and c and d [sic, mis-numbered as c], which read as follows:

28.04 Clearly unreasonable, frivolous, vexatious or bad faith conduct can include, but is not limited, to:

(b) Failing to give notice or adequate explanation or lack of co-operation during pre-hearing proceedings, changing a position without notice, or introducing an issue or evidence not previously mentioned;

(c) Failing to act in a timely manner or to comply with a procedural order or direction of the Tribunal where the result was undue prejudice or delay;

(d) Conduct necessitating unnecessary adjournments or delays or failing to prepare adequately for hearing events;

In my view, the OQRO has:

a) changed its position on the procedural issues in the appeal;

b) failed to comply with the terms of the procedural order,

c) failed to provide prompt notice of its inability to comply with the order and of its change of position, and

as a result has caused delay and inconvenience to the respondent and to the Tribunal.

Although the status of the 2006 Policies appeal and the Denby case was mentioned at the motion, Mr. Good failed to raise any of the arguments that have now been brought forward until he had already, by some three weeks, missed the deadlines of the procedural order and had to respond to Mr. Spurr’s correspondence.

Mr. Good did not advise either the DFO or the Tribunal when he made the request that he was not intending to comply with the procedural order and schedule pending receipt of a response to his request for a reconsideration of the stay decision, nor did he advise how he intended to proceed if the response was negative. He brought these issues to the attention of the DFO and the Tribunal again only after the deadline had been missed, and did not clarify his position after the 30 day period for reconsideration by the Minister had passed.

Mr. Good also did not advise that his client was having difficulty marshalling the resources to fund preparation for its appeal until three weeks after the case was to have been prepared.

As soon as he realized his position needed to be revised, either as a result of:

a) the unanticipated decision in the stay motion,

b) the making of the request for reconsideration to the Minister,

c) not receiving the decision in the 2006 Policy appeal when anticipated,

d) failing to get a response to the reconsideration request, or

e) the difficulty his client was having raising funds,

Mr. Good should have notified the DFO and the Tribunal.

He should have stated, first, that his position had changed, and second, that he wished to revisit the procedural order and the schedule. Because he failed to do so, the DFO was required to immediately expend time, energy, and cost in having its documents prepared and submitted in accordance with the order, and then the Tribunal was required to expend its resources in dealing with the consequences of OQRO’s non-compliance and change in position.

Since virtually every breach listed in the Costs Rule will result in some prejudice or delay, the fact of prejudice or delay alone is insufficient to ground a costs award, especially when the general rule is that costs are not awarded in a public administrative hearing. The nature of undue delay or prejudice must be considered in all the circumstances.

In light of all of the circumstances, I have decided that the actions of the OQRO do not so clearly exhibit bad faith, nor has there been such undue prejudice and delay that costs or other sanctions as contemplated by Rule 28 of the Tribunal’s Rules of Procedure should be imposed as a consequence. I am mindful of the Commentary in the Rules that an order for costs “is very rare”, and that the public interest mandate of the Tribunal involves accommodating parties of differing capacity and should encourage participation and determination on the merits rather than creating a fear of costs.

The DFO as respondent has expended resources to be prepared for the hearing, but this preparation will be used whenever the hearing is held. Mr. Spurr confirmed that no additional experts have been retained beyond those who were consulted when the 2009 Policies were developed and, since the hearing had not been scheduled, final preparation had not taken place. Thus these resources have not been wasted, although they have been expended earlier than otherwise might be necessary.

Secondly, the circumstance which I have ruled is grounds for the adjournment is not one in control of the parties: the Tribunal will issue its decision in the 2006 Policies on its schedule, not that of the parties. The OQRO’s failure to adequately address this issue is regrettable, and earlier notice and consideration would have been preferable, but the impact would have been the same in terms of scheduling the hearing.

Finally, I do accept that there are challenges in organizing, fund raising and decision making for an unincorporated association where the primary work of members is not fighting policy decisions, and that adding to the burden of such organizations to manage their resources by requiring them to prepare for multiple hearings when one hearing may not turn out to be necessary is unreasonable. Had this issue been properly raised in a timely way, then the result again would likely have been an adjournment.

Order of the Tribunal

The Tribunal hereby Orders that:

1. The hearing of the appeal by the OQRO is adjourned until the decision of the Tribunal with regard to the 2006 Policies appeal is issued and the opportunity to file a request for review has expired. Any party that requests a review by the Minister shall provide a copy the Tribunal at the same time.
2. The Tribunal shall notify the DFO and counsel for the OQRO that the decision of the 2006 Policies appeal is final.
3. The OQRO shall have 7 days from the date of the Tribunal’s notice to advise the Tribunal and the DFO that it is either continuing with the appeal or withdrawing it.
4. If the appeal is continuing, the Tribunal will without further notice issue a revised Procedural order that mirrors the existing order regarding timing but adjusts the schedule based on the date of the OQRO’s notice of continuance.
5. If the OQRO does not provide notice of its intention to proceed, or if it does not submit its material on the revised schedule, the appeal will be dismissed without further notice or opportunity to make submissions.
6. There will be no order as to costs.

Dated at Guelph, Ontario this 9th day of November, 2009