Andrew Peller Ltd. v. Grape Growers of Ontario, 2012 ONAFRAAT 3

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

Andrew Peller Ltd. v Grape Growers of Ontario

Andrew Peller v Grape Growers of Ontario 2012 ONAFRAAT 3

Ministry of Agriculture, Food and Rural Affairs Act

February 10, 2012

DATE OF DECISION:

February 28, 2012

2012-03

2012 ONAFRAAT 3

Andrew Peller Ltd. v Grape Growers of Ontario

IN THE MATTER OF SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT, R.S.O. 1990, CHAPTER M.16, AS AMENDED.

AND IN THE MATTER OF: An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Andrew Peller Limited, of Grimsby, Ontario, from the decision of the Grape Growers of Ontario in which the board decided to continue with its process of appointing an inspector.

Before:

Nicholas Richter, Vice-Chair, Robert Scouller, Member, and Tim Mousseau, Member

Appearances:

Mr. Terrence H. Hill, Counsel on behalf of Andrew Peller Limited, Appellant

Mr. Howard Goldblatt, Counsel on behalf of the Grape Growers of Ontario, Respondent

Mr. Irvin Schein, Counsel on behalf of Mr. Don Troup, Respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on, Friday, February 10, 2012. Andrew Peller Limited (“APL”) appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the “Tribunal”) from the decision of the Grape Growers of Ontario (the “GGO”) in which the GGO decided to continue with its process of appointing an inspector. Don Troup was added as a respondent to the appeal by order of the Tribunal dated December 28, 2011.

Background Facts

The parties called no witnesses, but the Tribunal was provided with certain background facts at the hearing of the appeal which did not appear to be in issue. The parties also filed certain documents with the Tribunal, which were admitted into evidence on consent.

Don Troup is a producer of grapes under a long-term supply agreement with APL (the “Agreement”). The Agreement incorporates by reference the provisions of the GGO’s regulations in effect from time to time. In this case, the parties are agreed that the applicable regulations are the GGO’s Regulations – 2010 (the “2010 Regulations”).

Pursuant to the Agreement, Mr. Troup supplied 6 bins of merlot grapes to APL on September 26, 2010. Those grapes were tested at APL’s premises and were rejected by APL on the basis that the level of volatile acids in the grapes exceeded the maximum of .020 grams/100 ml. APL alleges that the level of volatile acids in the grapes was .021 grams/100 ml. Mr. Troup alleges, based on subsequent testing carried out at Brock University, that the level was .019 grams/100 ml and that the grapes were therefore improperly rejected by APL.

Sometime after the grapes were rejected, Mr. Troup invoked his rights under the 2010 Regulations to have the GGO appoint a third party inspector to resolve the dispute between Mr. Troup and APL. On June 13, 2011, Mr. Goldblatt, on behalf of the GGO, wrote to APL advising that the dispute had been referred to the GGO. In his letter, Mr. Goldblatt advised that the GGO was prepared to appoint a third party inspector, at the request of Mr. Troup, who would schedule an adjudication, the result of which would be final and binding on both Mr. Troup and APL.

APL objected to the appointment of an inspector on the basis that the grapes had been dumped and that there was nothing left to inspect. APL also objected to the adjudication process proposed in Mr. Goldblatt’s letter because, APL alleged, that process would turn an inspection into an adjudication. APL requested and was granted a hearing by the GGO, which took place on September 20, 2011. By written decision dated October 6, 2011, the GGO rejected APL’s request that the GGO reverse its decision to appoint an inspector under the 2010 Regulations.

The 2010 Regulations do not place any time restrictions on the referral of a dispute to an inspector. In contrast, the GGO’s Regulations – 2011 (the “2011 Regulations”) require the dispute to be referred by either the producer or the buyer within 48 hours of when the dispute first arises. The GGO acknowledges that this time limit was added to the 2011 Regulations in response to this dispute. The GGO is not aware of any inspections under the 2010 Regulation or its predecessors prior to this dispute.

The Issue

The sole issue on this appeal is whether the GGO’s decision to appoint an inspector should be overturned. This decision was made pursuant to section 22(d) of the GGO’s 2010 Regulations, which provides:

. . .

(d) Where a dispute respecting the quality, condition or fitness for processing of the grapes arises between a producer and a buyer the dispute shall be referred to a third party inspector appointed by the Grape Growers of Ontario whose decision shall be final and binding upon the producer and buyer.

The Positions of the Parties

APL’s position is that, while the wording of section 22(d) of the 2010 Regulations may be mandatory on its face, implicit in that provision is that an inspection will occur in a timely manner, while there are still grapes for the inspector to inspect. This is confirmed, APL submits, by the 2011 Regulations, which specifically require disputes to be referred to an inspector within 48 hours.

In this case, APL alleges, there was no timely referral to an inspector, and there are no grapes left for the inspector to inspect. APL submits that an inspector has to be able, in a timely fashion, to look at the product, gauge the product, test the product, and then determine who is right and who is wrong. If there are no grapes left to inspect, the inspector cannot carry out this function.

APL takes issue with the GGO’s suggestion, as set out in Mr. Goldblatt’s letter, that the inspector would carry out an adjudication. APL submits that the 2010 Regulations contemplate an inspection, not an adjudication, and that to have the inspector carry out an adjudication would be contrary to what was intended. APL concedes that it would expect to be treated fairly if there were an adjudication, but APL submits that, in this case, where there was no timely referral to an inspector, the dispute should be resolved through the courts.

Mr. Troup’s position is that the language in the 2010 Regulations is mandatory as to what recourse is available in the event of a dispute. While the 2011 Regulations may require a prompt referral to an inspector, this is not required by the 2010 Regulations. Mr. Troup submits that there is nothing in the 2010 Regulations that dictates any particular timeframe within which a dispute must be referred to an inspector. There is also nothing in the 2010 Regulations that requires the inspector to inspect or test the grapes. The inspector has complete discretion as to how to proceed.

Mr. Troup submits that there is no reason why this dispute cannot be dealt with in a thorough, fair, and judicious manner by an inspector. Both sides have their own test results, and the inspector can hear evidence regarding sampling protocols, as well as expert evidence, in order to come to a decision as to the quality of the grapes that Mr. Troup delivered to APL. Mr. Troup notes that a court would be in no different position from an inspector in this regard.

The GGO’s position is that a dispute of this type should not be decided unilaterally by one of the parties to the Agreement, in this case the winery. The GGO submits that its role is to provide a mechanism to facilitate the resolution of disputes. In the absence of wording similar to what is now found in the 2011 Regulations, the GGO submits that it would be inappropriate for the GGO under the 2010 Regulations to constrain the manner in which a dispute is to be resolved. The GGO appoints the third party inspector, and then leaves it to the inspector to determine how the process unfolds from there. All that the GGO was asked to do in this case, and what it attempted to do, was to make the necessary appointment.

Analysis

Section 22(d) of the 2010 Regulations provides that where, as in this case, there is a dispute between a producer and a buyer over the quality, condition, or fitness for processing of grapes, the dispute “shall” be referred to a third party inspector appointed by the GGO. The wording of the section is mandatory, and there is nothing in the section (or elsewhere in the 2010 Regulations) that would suggest that the referral to an inspector has to take place within any particular timeframe. While it may be preferable for the grapes to be available for inspection at the time of the referral, there is nothing in the 2010 Regulations that requires the inspector to carry out an inspection or that removes this form of dispute resolution if the grapes are no longer available for inspection. All that section 22(d) of the 2010 Regulations requires is that the GGO appoint an inspector to resolve the dispute.

While there is some appeal to APL’s argument that there cannot be an inspection if there is nothing left to inspect, the Tribunal finds that this interpretation of section 22(d) of the 2010 Regulations places too much emphasis on the word “inspector.” While it is natural to infer that an inspector will carry out an inspection, the actual role assigned to the inspector under section 22(d) is not to inspect but to make a “decision” which “shall be final and binding upon the producer and buyer.” In other words, the inspector’s role under section 22(d) is to decide the dispute between the parties. Deciding a dispute is a form of adjudication, which may or not involve an inspection, depending upon the specific circumstances of each case. In this case, while an inspection may no longer be possible, the inspector is still able to carry out his or her assigned role of deciding the dispute between the parties. There is nothing in the 2010 Regulations that would indicate otherwise.

The Tribunal is not persuaded that the inclusion of a time limit in section 22(d) of the 2011 Regulations reflects an intention on the part of the GGO to make explicit what APL alleged was implicit in section 22(d) of the 2010 Regulations. If the GGO had wanted to place time limits on the appointment of an inspector in the 2010 Regulations, it was free to include the appropriate wording in section 22(d) when the 2010 Regulations were passed. In the absence of any time limits, and given that the inspector’s assigned role is to decide rather than necessarily to inspect, the Tribunal finds that the appointment of an inspector is appropriate in this case. The Tribunal therefore declines to overturn the GGO’s decision.

Decision and Reasons

For all of the above reasons, the Tribunal orders that APL’s appeal is hereby dismissed.

Dated at Hamilton, Ontario, this 28th day of February, 2012.