Allan et al. v. Attorney General for the Province of Ontario et al.
[Indexed as: Allan v. Ontario (Attorney General)]
76 O.R. (3d) 616
[2005] O.J. No. 3083
Court File No. 708/03
Ontario Superior Court of Justice
Divisional Court
Lane, Jarvis and Swinton JJ.
July 19, 2005
Administrative law -- Judicial review -- Bias -- Minister of Agriculture and Food's prior involvement with parties prior to reviewing decision of Agriculture, Food and Rural Affairs Tribunal not giving rise to reasonable apprehension of bias.
Administrative law -- Judicial review -- Fairness -- Adequacy of reasons -- Minister of Agriculture and Food's reasons for rescinding decision of Agriculture, Food and Rural Affairs Tribunal adequate and not breaching duty of fairness.
Constitutional law -- Distribution of legislative authority -- Provincial regulation requiring that all milk be marketed to provincial regulatory body, even milk destined for export from province, not ultra vires -- Primary purpose of marketing scheme being regulation of intraprovincial trade.
The Dairy Farmers of Ontario ("DFO") is a marketing board constituted under the Milk Act, R.S.O. 1990, c. M.12 with authority to regulate the marketing of milk in Ontario. Specifically, DFO has been delegated the power to make regulations with respect to the production and marketing of milk within Ontario, and to exempt any persons from the requirements set out in those regulations, and has been authorized to require that milk be marketed on a quota basis and to regulate the fixing and allotment of quota. DFO made a regulation requiring that all milk producers be licensed by it, that all milk be marketed to it and that all milk be marketed on a quota basis. The Agriculture, Food and Rural Affairs Tribunal (the "Tribunal") ordered DFO to submit a proposed export plan for subsidized milk to the federal Department of Foreign Affairs and International Trade for an opinion. DFO sought review of the Tribunal's decision by the Minister of Agriculture and Food pursuant to s. 18 of the Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990, c. M.16 ("MAFRAA"). The Minister rescinded the Tribunal's decision. The effect of that decision was to require the applicants to hold quota and sell their milk to DFO. The applicants brought an application for judicial review of the Minister's decision. They challenged the decision on administrative law grounds and also alleged that the decision approving the DFO program was an ultra vires attempt by the Province of Ontario to regulate milk exports. As the applicants exported all of their product from the province, they argued that DFO had no authority under the Constitution to apply the milk marketing regulation to them. [page617]
Held, the application should be dismissed.
The province may regulate marketing in the province even if some of the produce is destined for export if the regulation, in pith and substance, is aimed at intraprovincial marketing. The primary purpose of the Milk Act and the DFO marketing scheme for milk was to regulate intraprovincial trade. The fact that the effect of the scheme was to prevent the sale of milk other than to DFO and thus to prevent exports from the province, unless through DFO, did not render the legislation or scheme ultra vires. The applicants could not avoid the application of the provincial marketing regulations by exporting their product. Regardless of the ultimate destination of the milk they produced, they were subject to the valid provincial regulatory scheme.
The language of s. 12(1)(b) of the federal enabling legislation, the Canadian Dairy Commission Act, R.S.C. 1985, c. C-15, permits the Governor in Council to require marketing of a dairy product in interprovincial and export trade through a designated body, authorized to market the product. The power to designate a provincial milk marketing board as the only agency which can market dairy products in interprovincial and export trade has been validly exercised in s. 8 of the Dairy Products Marketing Regulations, SOR/94-466 ("Federal Dairy Regulations"). That section designates a provincial marketing board to market milk in interprovincial and export trade where the board has authority under provincial legislation to regulate intraprovincial trade. Section 8 incorporates the Milk Act by reference and allows DFO to apply its regulatory scheme to the export trade in milk.
There is no inconsistency between s. 8 of the Federal Dairy Regulations and the provisions of the federal Ontario Milk Order, C.R.C., c. 215.
The standard of review of the Minister's decision was that of patent unreasonableness. The Minister's involvement with DFO prior to the review of the Tribunal's decision did not give rise to a reasonable apprehension of bias. Ministers of the Crown have a broad discretion concerning policy matters. It is among their functions that they consult with constituents and interested parties. It is implicit in any such exchange that policy options and alternatives will be discussed and considered. It was not established that the Minister approached the review with a closed mind.
While the Minister's reasons were brief, she explained that she believed that the Tribunal's order should not be implemented and that the time frame for implementation was inappropriate. Moreover, she indicated her preference for the development of a national dairy export system. Read in context, the reasons set out the basis of her decision and met the standard of procedural fairness.
The Minister did not take irrelevant considerations into account. She made a policy decision which indicated the government's preference to develop proposals for the export of milk through a federal-provincial process at the ministerial and bureaucratic levels, as opposed to having the applicants deliver their proposal to the federal government. That decision was not patently unreasonable.
APPLICATION for judicial review of a decision of the Minister of Agriculture and Food.
Fédération des producteurs de volailles du Québec v. Pelland, [2005] 1 S.C.R. 292, [2005] S.C.J. No. 19, 2005 SCC 20; Reference re Agricultural Products Marketing Act, 1970 (Canada), 1978 10 (SCC), [1978] 2 S.C.R. 1198, 84 D.L.R. (3d) 257, 19 N.R. 361, apld [page618] Other cases referred to Assn. of Ontario Chicken Processors v. Ontario (Agriculture, Food and Rural Affairs Appeal Tribunal) (2003), 2003 22805 (ON SCDC), 63 O.R. (3d) 284, [2003] O.J. No. 330, 168 O.A.C. 31, 48 Admin. L.R. (3d) 173 (Div. Ct.); Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39, 174 D.L.R. (4th) 193, 243 N.R. 22; Central Canada Potash Co. v. Saskatchewan, 1978 21 (SCC), [1979] 1 S.C.R. 42, 88 D.L.R. (3d) 609, 23 N.R. 481, [1978] 6 W.W.R. 400, 6 C.C.L.T. 265; Hodge v. R. (1883), 9 App. Cas. 117, 50 L.T. 301, 53 L.J.P.C. 1 (P.C.); Imperial Oil Ltd. v. Quebec (Minister of the Environment), [2003] 2 S.C.R. 624, [2003] S.C.J. No. 59, 231 D.L.R. (4th) 577, 310 N.R. 343, 2003 SCC 58; Leth Farms Ltd. v. Alberta Turkey Growers Marketing Board, [2000] A.J. No. 59, 2000 ABCA 32, 75 Alta. L.R. (3d) 215, [2000] 3 W.W.R. 149 (C.A.); Manitoba (Attorney General) v. Burns Foods Ltd., 1973 194 (SCC), [1975] 1 S.C.R. 494, 40 D.L.R. (3d) 731, 1 N.R. 147, [1974] 2 W.W.R. 537; Manitoba (Attorney-General) v. Manitoba Egg and Poultry Assn., 1971 135 (SCC), [1971] S.C.R. 689, 19 D.L.R. (3d) 169, [1971] 4 W.W.R. 705; Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), [2001] 2 S.C.R. 281, [2001] S.C.J. No. 43, 2001 SCC 41, 200 D.L.R. (4th) 193, 271 N.R. 104; Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), 1990 31 (SCC), [1990] 3 S.C.R. 1170, [1990] S.C.J. No. 137, 69 Man. R. (2d) 134, 75 D.L.R. (4th) 385, 116 N.R. 46, [1991] 2 W.W.R. 145, 2 M.P.L.R. (2d) 217; R. v. Hauser, 1979 13 (SCC), [1979] 1 S.C.R. 984, 98 D.L.R. (3d) 193, 26 N.R. 541, [1979] 5 W.W.R. 1, 16 A.R. 91, 46 C.C.C. (2d) 481, 8 C.R. (3d) 89, 8 C.R. (3d) 281 Statutes referred to Agricultural Products Marketing Act, R.S.C. 1985, c. A-6 Canadian Dairy Commission Act, R.S.C. 1985, c. C-15, ss. 11 [as am.], 12 Competition Act, R.S.C. 1985 c. C-34 Constitution Act, 1867, ss. 91, 92 Farm Products Marketing Act, R.S.O. 1990, c. F.9, s. 9 Milk Act, R.S.O. 1990, c. M.12, ss. 1, 2, 7 [as am.] Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990, c. M.16, ss. 4, 16, 18 Rules and regulations referred to Dairy Products Marketing Regulations, SOR/94-466, ss. 2 "Board", 2.1 [as am.], 3 [as am.], 4, 5, 6 [as am.], 7 [as am.], 8, 9 Milk and Farm-Separated Cream -- Marketing, O. Reg. 354/95, ss. 5 [as am.], 6 [as am.] Ontario Milk Order, C.R.C., c. 215, ss. 2, 3
Peter R. Greene, W. Michael G. Osborne and Paul D. Emerson, for applicants. Shannon Chace-Hall, for Attorney General of Ontario. Dennis Brown, Q.C. and James Kendik, for Minister of Agriculture and Food. Geoffrey P. Spurr and David K. Wilson, for Dairy Farmers of Ontario. [page619]
1BY THE COURT: -- The applicants seek judicial review of a decision of the Minister of Agriculture and Food dated July 23, 2003, in which she rescinded a decision of the Agriculture, Food and Rural Affairs Tribunal (the "Tribunal") pursuant to her statutory authority under s. 18 of the Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990, c. M.16 ("MAFRAA"). The Tribunal decision had ordered the Dairy Farmers of Ontario ("DFO") to submit a proposed export plan for subsidized milk to the federal Department of Foreign Affairs and International Trade ("DFAIT") for an opinion and exempted producers selling to the applicant Georgian Bay Milk Company ("Georgian Bay") from holding quota for production and marketing until November 30, 2003. In their application, the applicants have raised several administrative law issues bearing on the decision of the Minister, including an apprehension of bias, consideration of irrelevant factors and the inadequacy of the reasons given by the Minister. As well, they have challenged the decision of the Minister and the milk marketing regulation of DFO on constitutional law grounds.
Factual Background
2This case can only be understood within the context of Canada's federal and provincial legislation governing the production and marketing of milk and the impact of several years of litigation conducted before the World Trade Organization ("WTO").
3The individual applicants are a group of licensed, non-quota holding dairy farmers who produce milk and ship it through the applicant Georgian Bay. In 2003, they represented 23 of 5,330 licensed milk producers in Ontario. The applicants assert that they market two streams of milk: the first stream is raw milk exported directly to the United States; the second stream is raw milk shipped to a Canadian dairy processor and processed into another dairy product, which is then exported. In both cases, the individual applicants sell their milk to Georgian Bay, which, in turn, sells it to processors in Ontario or the United States.
4The Canadian dairy industry operates within a supply-managed system, whereby the supply of milk from licensed milk producers is controlled to match the domestic needs of dairy processors and consumers. DFO is a marketing board constituted under provincial legislation with authority to regulate the marketing of milk in Ontario.
The legislative framework
5The production and marketing of milk in Canada is subject to a complex federal and provincial regulatory scheme. An effective [page620] national regime of milk supply and price management requires intergovernmental co-operation, because constitutional competence over marketing is divided between the federal and provincial governments pursuant to ss. 91 and 92 of the Constitution Act, 1867. The federal government has authority to regulate interprovincial and international trade pursuant to s. 91(2), the regulation of trade and commerce, while the provinces have authority over local, intraprovincial trade pursuant to s. 92(10), local works and undertakings, and s. 92(13), property and civil rights in the province.
6Through a series of interlocking federal and provincial regulations, the amount of milk required to supply the domestic market is set at the national level and then allocated to the provinces. In order to match their provincial allocations, the provinces, in turn, allocate quotas to individual producers and, thus, control the volume of milk marketed within their respective jurisdictions. The price paid to producers of milk is regulated and determined, in part, by DFO, based on prices announced by the Canadian Dairy Commission or in accordance with agreements reached in regional pools.
7At the federal level, the Canadian Dairy Commission Act, R.S.C. 1985, c. C-15 ("CDC Act") and the Dairy Products Marketing Regulations, SOR/94-466, as amended ("Federal Dairy Regulations") currently govern the marketing of industrial and fluid milk in export trade, as well as the marketing of industrial milk in interprovincial trade. "Industrial milk" is raw milk sold to dairy processors for use in dairy products, such as cheese and ice cream. Raw milk processed for consumer use in liquid form is called "fluid milk". Section 3(1) provides that the regulations apply in respect of the production for marketing or the marketing, in interprovincial or export trade of dairy products, although s. 3(2) provides that they do not apply to the production for marketing or the marketing in interprovincial trade of milk or cream in liquid form for consumer use.
8The Federal Dairy Regulations provide for the annual calculation of the Canadian requirements for milk and cream for use in dairy products, which includes milk used in dairy products exported from Canada (s. 4). The Canadian Milk Supply Management Committee, a body made up of representatives of the CDC and provincial marketing boards, then allocates the amount to be produced in each province. The decisions are made on the basis of unanimity (Federal Dairy Regulations, s. 5(1)). The regulations authorize a provincial marketing board to allocate federal quota for interprovincial and export trade in the same manner as the provincial quota for intraprovincial trade (ss. 5 and 6). As well, [page621] they incorporate by reference provincial licensing requirements as one of the bases for issuing federal licences for the export of dairy products (s. 7), and they designate provincial marketing boards as the agencies through which dairy products shall be marketed in interprovincial and export trade (s. 8).
9The Agricultural Products Marketing Act, R.S.C. 1985, c. A-6 provides for delegation by the federal government to provincial boards of authority to regulate the marketing of agricultural products, such as milk, in interprovincial and export trade. However, the Ontario Milk Order, C.R.C., c. 215, as amended, made pursuant to that Act, currently applies only to the marketing of fluid milk and cream for interprovincial trade and is not applicable to the present case (see s. 3). At issue in this case is industrial milk destined for export trade.
10At the provincial level, the governing legislation in Ontario is the Milk Act, R.S.O. 1990, c. M.12, as amended, and related regulations. The purpose of the Milk Act is set out in s. 2:
(a) to stimulate, increase and improve the producing of milk within Ontario;
(b) to provide for the control and regulation in any or all respects of the producing or marketing within Ontario of milk, cream or cheese, or any combination thereof, including the prohibition of such producing or marketing in whole or in part; and
(c) to provide for the control and regulation in any or all respects of the quality of milk, milk products and fluid milk products within Ontario.
11The objectives of the provincial Act are carried out by the Ontario Farm Products Marketing Commission ("OFPMC") and the Dairy Farmers of Ontario. The OFPMC is a body appointed by the Lieutenant-Governor in Council, which is empowered to make regulations with respect to the production and marketing of milk in Ontario (s. 7(1) of the Milk Act). It is also authorized to delegate its power to make regulations to a marketing board like DFO, including regulations requiring that milk be marketed by, from or through the marketing board (ss. 7(8) and 7(1)[35])). "Marketing" is defined broadly in s. 1:
"marketing" includes advertising, assembling, buying, distributing, financing, offering for sale, packing, processing, selling, shipping, storing and transporting and "market" and "marketing" have corresponding meanings.
The provincial Act also permits the OFPMC to authorize a marketing board to exercise certain powers, including the power to require that milk be marketed on a quota basis (s. 7(1) [14]). Where the marketing board is authorized to exercise such powers, it may make regulations, orders, policies and decisions or [page622] issue directions (s. 7(9)). Pursuant to s. 7(11) of the Act, where the OFPMC delegates powers to a marketing board or authorizes a marketing board to exercise powers under the Act, the OFPMC may, at any time,
(a) limit the powers of the marketing board in any or all respects; and
(b) require the marketing board to revoke any regulation, order or direction that it has made under the powers.
12DFO has been delegated the power to make regulations with respect to the production and marketing of milk within Ontario, and to exempt any persons from the requirements set out in those regulations (s. 5 of O. Reg. 354/95, Milk and Farm-Separated Cream -- Marketing; see also s. 7(1) of the provincial Milk Act, particularly subsections 7(1)[11] and 7(1) [35-37]). The application of the regulation is set out in s. 2:
This Regulation provides for the control and regulation in any or all respects of the producing or marketing within Ontario of milk and farm-separated cream, including the prohibition of that producing or marketing in whole or in part.
DFO has been authorized to require that milk be marketed on a quota basis and to regulate the fixing and allotment of quota (s. 6 of O. Reg. 354/95, and s. 7(1) of the provincial Milk Act, particularly s. 7(1)[14-16]).
13DFO has made the regulation in issue in this case, DFO Milk General Regulation 11/04 pursuant to the powers granted to it. Again, s. 2 deals with the application of the regulation:
This Regulation provides for the control and regulation in any or all respects of,
(a) the producing and marketing within Ontario of milk, including the prohibition of that producing or marketing in whole or in part, and
(b) the quality of milk in Ontario.
The regulation requires that all milk producers be licensed by it, and that all milk produced meet Grade A standards. DFO also requires that all milk be marketed to it (s. 3) and that all milk be marketed on a quota basis (s. 7). Appointed transfer agents of DFO receive milk from the bulk milk tanks of licensed producers and arrange for its transportation as part of the fungible milk supply to milk processors. Licensed milk producers are allotted a marketing quota calculated on a kilogram of butterfat basis. Quota represents the right to sell milk, whether it is ultimately to be used intraprovincially or for interprovincial or export trade, to the provincial marketing board. DFO sells the raw milk to dairy processors for further [page623] processing, either for consumer use in liquid form ("fluid milk") or for use in dairy products like cheese or ice cream ("industrial milk").
14The Ministry of Agriculture, Food and Rural Affairs Act, supra ("MAFRAA"), sets out the powers of the Minister of Agriculture and Food in s. 4. Essentially the Minister has the direction and control of "the administration of the law relating to agriculture and food in all their branches".
15Pursuant to s. 16 of the Act, there is a right of appeal to the Tribunal, both from a decision of the OFPMC and from a decision or regulation of a local board under the Farm Products Marketing Act, R.S.O. 1990, c. F.9 or a marketing board under the Milk Act. Subsection 16(6) provides for an automatic stay on an appeal. The Tribunal has the authority to substitute its own decision for that of the board (s. 16(11)).
16Pursuant to s. 18 of the Act, the Minister may conduct a review of a decision of the Tribunal. Section 18 provides:
18(1) Within thirty days after receipt by the Minister of a decision of the Tribunal under this Act and the reasons therefor, if any, or within such longer period as may be determined by the Minister within such thirty-day period, the Minister may,
(a) confirm, vary or rescind the whole or any part of the decision;
(b) substitute for the decision of the Tribunal such decision as the Minister considers appropriate; or
(c) by notice to the Tribunal require the Tribunal to hold a new hearing of the whole or any part of the matter appealed to the Tribunal and reconsider its decision.
(2) Subject to subsection (3), a decision of the Tribunal is final after the expiration of the period or periods mentioned in subsection (1) unless, under subsection (1), the decision is varied or rescinded or a decision is substituted for the decision of the Tribunal or a new hearing is required.
(3) A decision of the Tribunal that has been confirmed, varied or rescinded under clause (1)(a) or that has been substituted for the decision of the Tribunal under clause (1) (b) is final.
(4) The Minister shall give notice, together with written reasons therefor, of any variation, rescission, substitution or requirement of a new hearing under subsection (1) to all parties to the appeal and to the Tribunal.
De-regulation of exported milk
17In the context of the WTO Agreement, Canada had committed to specified levels of subsidized exports, commonly referred to as "allowable subsidized export limits". However, Canada's export levels were significantly beyond its allowable subsidized export limits, which led to a WTO challenge by New [page624] Zealand and the United States. Central to the challenge was the argument that the regulated price obtained by Canadian dairy farmers domestically enabled them to absorb lower prices on the world market, which put Canada's competitors at an unfair disadvantage.
18In response to prior findings by panels established under the WTO, Canada implemented the Commercial Export Milk ("CEM") Program in August 2000. It purported to disconnect the CEM program from the domestic supply management system by allowing producers and processors to make contracts for the sale of milk without any involvement of a provincial milk marketing board. Producers could participate in the CEM Program without holding quota. Milk quality requirements continued unchanged, regardless of whether the product was marketed domestically or through an export contract.
19In order to carry out the CEM program, changes were made to both federal and provincial regulations. At the federal level, the Federal Dairy Regulations contained a definition of "Commercial Export Milk" in s. 2.1(1):
2.1(1) In these Regulations, "commercial export milk or cream" is milk or cream that is
(a) produced and marketed under a sales contract between the producer of the milk or cream and a buyer in which any dairy product that is, or is manufactured from, the milk or cream is destined for export;
(b) marketed in a province set out in the schedule and in a manner that is consistent with exclusions from the dairy product marketing laws in that province;
(c) marketed in export trade or is manufactured into a dairy product that is marketed in export trade; and
(d) not subject to a program established by the Commission under paragraph 9(1)(i) of the Act.
(Emphasis added)
The regulation also added s. 3(3) to the application section of the regulation. It provides that ss. 4 to 7 and 8 and 9 do not apply to commercial export milk or cream, thus exempting these products from the provisions dealing with a federal quota, federal licensing, delegation to a provincial board, and federal levies.
20As part of the export de-regulation process at the federal level, Directions were issued to the CDC by the federal Minister of Agriculture and Agri-Food pursuant to s. 11 of the CDC Act. These included a Direction that the Commission was not to act in any manner or influence directly or indirectly the terms, conditions, or formation of contracts for the sale of commercial export [page625] milk or cream. The Commission was not to request pricing or other information relating to commercial export milk or cream.
21The provincial marketing boards then engaged in a process known as "de-regulation". In its Milk General Regulation 03/03, DFO included a definition of "export contract milk", and provided that export contract milk was exempt from the requirement that producers marketing it be fixed and allotted a quota for the marketing of milk. The regulation also provided that this milk was exempt from the requirement that every producer was to sell or offer to sell milk produced by the producer to DFO (ss. 3, 8). DFO also exempted export contract milk from its pricing regulations, so that it had no authority over the price of export contract milk. It also established the Export Contract Exchange ("ECE") jointly with the Ontario Dairy Council and in consultation with the OFPMC. The ECE was an electronic billboard system, administered by Deloitte and Touche without involvement of DFO, which provided a mechanism for matching buyers and sellers of milk. Milk was sold through the ECE both by producers holding quota and shipping to the domestic market and those without quota who only sold in export trade.
22From approximately June 2002 to December 2002, Georgian Bay sold milk to U.S. buyers from a group of Ontario producers who did not hold quota (although a majority of these producers were former quota holders).
The regulatory response to the decision of the WTO Appellate Body
23On December 20, 2002, WTO's Appellate Body ("WTOAB") decided that the milk exported under the CEM Program was subsidized because of Canada's supply management system, and this milk, together with other dairy exports, put Canada over the allowable subsidized export level. In reaching its decision, the WTOAB refused to make any findings with respect to the 100 producers who were exporting milk without participating in the domestic market. In its reasons, the Appellate Body stated that Canada may act inconsistently with its export subsidy commitments "as we have found, even if some producers never make payments financed by virtue of governmental action". As a result of this decision, Canada was required to terminate the CEM Program in order to comply with its WTO obligations. If it failed to do so, it was exposed to trade retaliation by New Zealand and the United States.
24As a result of the WTOAB decision, DFO proposed rescinding the exemption from certain provisions of the DFO marketing [page626] regulation and requiring all producers to hold quota. On January 24, 2003, OFPMC held an industry stakeholders meeting at the request of the Ontario Minister of Agriculture and Food to consider DFO's plan to withdraw the exemption. On February 13, 2003, DFO recommended its proposal to the OFPMC. On February 24, 2003, the OFPMC acknowledged the DFO proposal and wished DFO success in its implementation.
25On February 25, 2003, DFO rescinded the exemption, thus restoring the blanket application of the DFO Regulation. DFO Milk General Regulation 11/04 removed the definition of export contract milk and the exemption from marketing through DFO and holding quota. According to the revised regulation, all milk must be marketed to DFO by producers holding a minimum of five kilograms of marketing quota commencing on May 1, 2003.
26On May 9, 2003, Canada committed, through agreements with the United States and New Zealand, to end the CEM program. Canada confirmed that the provinces had amended their respective regulations and had thereby eliminated the CEM Program at the provincial level.
27The applicants objected to the blanket application of the DFO Regulation to all Ontario milk producers and appealed the DFO decision to the Agriculture, Food and Rural Affairs Tribunal pursuant to s. 16 of the Ministry of Agriculture, Food and Rural Affairs Act, supra. In their appeal, the first issue raised was whether the Tribunal should order DFO and OFPMC to facilitate the presentation of Georgian Bay's Program for Unsubsidized Export Milk to the Department of Foreign Affairs and International Trade ("DFAIT"). DFO argued that there was a risk of further trade challenges if the applicants were allowed to continue to export milk, although the Tribunal held that there was no longer a risk of retaliation.
28The applicants were successful in part on their appeal, as the Tribunal, in a 24-page decision, ordered that the Georgian Bay Program for Unsubsidized Export Milk be submitted to DFAIT for an opinion, as modified in discussions between Georgian Bay, DFO and OFPMC, no later than August 1, 2003 (p. 23 of its reasons). DFO and OFPMC were ordered to request DFAIT officials to provide an opinion as to whether the proposed program is compliant with Canada's international trade obligations. The Tribunal also ordered DFO to exempt those producers selling milk to Georgian Bay as of May 15, 2003 from the requirements to hold quota and to transfer their milk production through the fungible milk supply until November 30, 2003, or until the Government of Canada and the Province of Ontario had made a determination on the viability of the Georgian Bay Proposed [page627] Program for Unsubsidized Export Milk, whichever occurred first. DFO was given the discretion to extend the period of exemption if steps were underway to implement a program for unsubsidized milk exports. However, the Tribunal refused to order the implementation of a specific program for the export of unsubsidized milk (at p. 21). It also upheld the constitutional validity of DFO's regulation (at p. 22).
29DFO then sought review of the tribunal decision by the then Minister of Agriculture and Food, the Honourable Helen Johns, pursuant to s. 18 of the MAFRAA. After receiving written submissions from affected parties, including DFO and Georgian Bay, the Minister rescinded the Tribunal's decision in a four paragraph letter dated July 23, 2003. It reads:
After carefully considering the submissions made in this matter, I have decided to rescind the Tribunal's decision of June 4, 2003.
I have the highest concern for the continued well being of Ontario's supply managed dairy industry. To proceed in the manner and within the time frame ordered by the Tribunal would create anxiety and uncertainty in an industry that has just concluded a round of protracted trade challenges.
However, I am mindful of the dairy export trade opportunities that appear to exist and believe strongly that these should be pursued. My preference would be to have a national dairy export system in place, operating in harmony with the national supply managed system. To achieve this I will instruct my officials, working in consultation with stakeholders and with their counterparts across the country, to seek to develop such a system that conforms to our international trade obligations.
Meanwhile, I am requesting that the Dairy Farmers of Ontario allow those milk producers currently shipping to Georgian Bay Milk Company a transition period ending November 30, 2003, to make the necessary business decisions.
The effect of her decision was to require the applicants to hold quota and sell their milk to DFO. However, she requested DFO to grant a transition period to milk producers currently shipping to Georgian Bay until November 30, 2003, to allow them to make the necessary business decisions.
30In November 2003, Georgian Bay again appealed to the Tribunal, after DFO refused to extend the transition period until a national dairy export system is in operation and BSE border closures had been resolved. The Tribunal rejected this request on March 28, 2004, although it extended the exemption until July 31, 2004. Its decision was reviewed by the then Minister of Agriculture and Food, the Honourable Steve Peters, who confirmed the second Tribunal decision on May 13, 2004.
31Georgian Bay and the producers selling milk to it have been able to continue to operate pursuant to an interim stay [page628] stemming from the application for judicial review made on November 18, 2003.
The Issues
32The applicants seek judicial review of Minister Johns' decision on administrative law grounds and also submit that her decision approving the DFO program is an ultra vires attempt by the Province of Ontario to regulate milk exports. With respect to the milk marketing program, the applicants raise the following issues:
(1) The provincial milk marketing scheme is, in pith and substance, regulation of international trade and is ultra vires.
(2) DFO lacks regulatory authority to enforce the federal milk regulations.
(3) The words "or export" in s. 8 of the Federal Dairy Regulations have been impliedly repealed, leaving Ontario and DFO incompetent to prohibit milk exports.
(4) DFO has no authority to enforce federal legislation.
(5) The delegation to DFO, a private, producer-owned cooperative, was impermissible.
With respect to the Minister's decision, they raise the following issues:
(1) The Minister's prior involvement in the matter raises a reasonable apprehension of bias.
(2) The reasons of the Minister were insufficient.
(3) The Minister erred in law in considering the WTO ruling.
The Constitutionality of the Milk Marketing Plan
33The applicants argued that the DFO decision to withdraw the exemption for export milk was in pith and substance regulation of export trade and ultra vires, because DFO was regulating international trade and commerce. As the applicants export all their product from the province, they argued that DFO has no authority under the Constitution to apply the milk marketing regulation to them. The respondents argued that the DFO Regulation falls within provincial jurisdiction under s. 92 of the Constitution Act, 1867, or, in the alternative, that there has been a [page629] valid delegation of authority from the federal government to DFO to control the export trade of milk.
34The determination of the scope of federal and provincial jurisdiction over marketing is a difficult task. The Supreme Court of Canada has considered this question in a number of cases over the course of many years. In Reference re Agricultural Products Marketing Act, 1970 (Canada), 1978 10 (SCC), [1978] 2 S.C.R. 1198, 84 D.L.R. (3d) 257 (the "Egg Reference"), Pigeon J., writing on behalf of himself and four other members of the court, stated that control of production of agricultural products is prima facie within provincial jurisdiction (pp. 1293 and 1296 S.C.R.). The fact that the product of a particular farm is destined for interprovincial or export trade does not take it outside provincial jurisdiction. At p. 1295 S.C.R., he stated:
No operator can claim exemption from provincial control by electing to devote his entire output to extraprovincial trade. I can find no basis for the view that there must be a division of authority at the stage of production between what will be going into intraprovincial trade and what will be going into extraprovincial trade.
35In the Egg Reference, Pigeon J. also concluded that the provinces could regulate marketing in the province, even if some of the product was destined for export. The task for a court, in determining the validity of a provincial marketing regulation, is to decide whether the regulation is, in pith and substance, aimed at intraprovincial marketing. Pigeon J. went on to say (at p. 1296 S.C.R.):
In the instant case, the provincial regulation is not aimed at controlling the extraprovincial trade. In so far as it affects this trade, it is only complementary to the regulations established under federal authority. In my view this is perfectly legitimate, otherwise it would mean that our Constitution makes it impossible by federal-provincial cooperative action to arrive at any practical scheme for the orderly and efficient production and marketing of a commodity which all governments concerned agree requires regulation in both intraprovincial and extraprovincial trade.
36In that case, the court determined that provincial regulations that affected extraprovincial trade did so only on a complementary basis to the applicable federal regulations. While provincial production control can not be used to regulate extraprovincial marketing, this does not prevent the use of provincial control to complement federal regulation of interprovincial or export trade. Again, Pigeon J. recognized this in the Egg Reference, when he stated (at p. 1297 S.C.R.):
In so far as the producer quotas are to be viewed as marketing quotas rather than as production quotas, it seems to me that their validity is established by the principle of the Willis case [1952 26 (SCC), [1952] 2 S.C.R. 392]. Those quotas are fixed by [page630] the provincial board so that the total will equal what the plan, established under the federal Act, provides for Ontario in respect of extraprovincial trade in addition to what comes under intraprovincial trade. The Board is properly empowered by provincial authority to regulate the intraprovincial trade and it has delegated authority from the federal in respect of the extraprovincial trade. I fail to see what objection there can be to overall quotas established by a board thus vested with dual authority, unless it is said that our constitution precludes any businesslike marketing of products in both local and extraprovincial trade except under a federal assumption of power, something which I think, is directly contrary to the basic principle of the B.N.A. Act.
37Following the hearing of this application, the Supreme Court of Canada released its decision in Fédération des producteurs de volailles du Québec v. Pelland, 2005 SCC 20, [2005] 1 S.C.R. 292, [2005] S.C.J. No. 19, a case involving the constitutionality of Quebec's chicken marketing plan. The parties to this application were then invited to provide written submissions on the effect of the decision.
38In Pelland, the court was asked to reject the statement of Pigeon J. in the Egg Reference that an operator could not escape provincial control by exporting his entire product from the province (at para. 26). The court declined to do so and went on to hold that the provincial marketing plan was constitutional, even though it required all producers to obtain a production and marketing quota from the provincial Fédération, even if their whole product was destined for export. At para. 37, Abella J. stated:
The core character of the provincial legislative component of the federal-provincial chicken marketing scheme is not to set quotas or fix prices for exported goods or to attempt to regulate interprovincial or export trade. As in the Egg Reference, its purpose is to establish rules that allow for the organization of the production and marketing of chicken within Quebec and to control chicken production to fulfill provincial commitments under a cooperative federal-provincial agreement. Any impact of this legislation on extraprovincial trade is incidental.
39In argument before this court, the applicants relied on two cases in which provincial marketing legislation was held to be ultra vires because of its impact on interprovincial trade: Manitoba (Attorney General) v. Burns Foods Ltd., 1973 194 (SCC), [1975] 1 S.C.R. 494, 40 D.L.R. (3d) 731 and the Manitoba Egg Reference (Manitoba (Attorney-General) v. Manitoba Egg and Poultry Assn., 1971 135 (SCC), [1971] S.C.R. 689, 19 D.L.R. (3d) 169.). In both cases, the provincial marketing scheme was established by the province alone, without federal dovetailing legislation. The Supreme Court of Canada held, in each case, that the provincial scheme applied to products from out of the province and aimed at bringing them into the provincial marketing scheme, thus creating [page631] barriers to interprovincial trade. Therefore, the marketing schemes were ultra vires.
40The applicants also relied on the decision of the Supreme Court of Canada in Central Canada Potash Co. v. Saskatchewan, 1978 21 (SCC), [1979] 1 S.C.R. 42, 88 D.L.R. (3d) 609. As the Supreme Court of Canada observed in Pelland, supra, the Province of Saskatchewan there sought to fix the minimum selling price of potash, a product which was destined for export from the province. Therefore, the legislation was ultra vires because it aimed at the regulation of extraprovincial trade.
41The Attorney General relies on the decision of the Alberta Court of Appeal in Leth Farms Ltd. v. Alberta Turkey Growers Marketing Board, 2000 ABCA 32, [2002] A.J. No. 59, [2000] 3 W.W.R. 149 (C.A.), where the court upheld provincial marketing legislation, despite the fact that the respondent, Leth Farms Ltd., exported all of its product from the province. In the court's opinion, the Act was aimed at intraprovincial marketing, regulating at the interface between producer and processor, which takes place in the province. On the facts, the court concluded that the respondent was engaged in marketing in the province, given the definition of marketing in the Act, and therefore, the legislation was valid (at pp. 177-78 W.W.R.).
42Turning to the Ontario legislation, one finds the purpose of the Milk Act set out in s. 2, which was quoted earlier in these reasons. The stated purpose is to control production and sale within Ontario. Moreover, DFO has been delegated the authority under provincial legislation to regulate the production and sale of milk in Ontario, and it has exercised this power in its regulations. Quota allocation and the requirement that milk be sold to the DFO ensure that a controlled volume of milk is produced and marketed in Ontario, consistent with the province's commitments under the national supply management regime. In our view, the primary purpose of the provincial legislation and the DFO marketing scheme for milk is to regulate intraprovincial trade.
43It is true that the effect of the scheme in place is to prevent the sale of milk other than to DFO and thus to prevent exports from the province, unless through DFO. Nevertheless, that does not render the legislation nor the scheme ultra vires. While a provincial marketing board like DFO can not use the powers granted to it by provincial legislation to control export trade directly, provincial regulations can affect interprovincial or export trade, if they do so on a complementary basis to federal regulation of interprovincial and export trade. Here, Ontario's market for milk is primarily intraprovincial. As in the Egg Reference and Pelland, supra, the provincial regulations [page632] affect export trade in milk, but they do so in a manner that dovetails with and is complementary to federal regulation, and thus they are valid.
44As was the case in Pelland, supra, the applicants can not avoid the application of the provincial marketing regulations by exporting their product. Regardless of the ultimate destination of the milk they produce, they are subject to the valid provincial regulatory scheme.
The Legality of the Federal Delegation to DFO
45The applicants argued that DFO has no authority to regulate export trade, unless there has been a valid delegation of regulatory authority to do so. They submitted that there has not been a proper delegation by the federal government to DFO which would allow DFO to apply its marketing regulation to export trade.
46Section 8 of the Federal Dairy Regulations deals with delegation to a provincial board, stating:
Where, pursuant to provincial law, a dairy product is required to be marketed in intraprovincial trade by or through a Board, or to a person designated by a Board, that dairy product shall only be marketed in interprovincial or export trade by or through that Board, or to the person designated by that Board.
"Board" is defined in s. 2 as
... a body that is constituted under the laws of a province for the purpose of regulating the production for marketing, or the marketing in intraprovincial trade of any dairy product, and that is a signatory to the federal-provincial agreement known as the National Milk Marketing Plan, as amended from time to time.
47The applicants argued that s. 8 of the regulation is not authorized by the federal enabling legislation, the Canadian Dairy Commission Act. Section 12(1)(b) of that Act reads, in English and French:
12(1) The Governor in Council may make regulations regulating the marketing of any dairy product, including regulations
(b) designating the agencies through which any regulated product shall be marketed; . . .
12(1) Le gouverneur en conseil peut prendre des règlements portant sur la commercialization des produits laitiers; ces règlements visent notamment :
b) la designation des organismes autorisés à commercialiser des produits réglementés; ... [page633]
48The applicants argued that s. 8 contains within it a prohibition on marketing milk to anyone other than a marketing board designated by the Governor in Council (or a person designated by a marketing board). They submitted that such a provision requires express authorization in the empowering legislation, given that the prohibition limits producers' freedom of contract and creates a monopoly inconsistent with the Competition Act, R.S.C. 1985, c. C-34. They submitted that nothing in s. 12 of the CDC Act expressly authorizes the Governor in Council to prohibit producers from marketing milk other than through a marketing board. Moreover, they relied on the French version of s. 12(1)(b), which allows the Governor in Council to designate agencies that are "authorized" to market a regulated product, which, they say, does not allow the Governor in Council to prohibit the marketing of a regulated product in other ways.
49In our view, the language of s. 12(1)(b) of the CDC Act, in both French and English versions, permits the Governor in Council to require marketing of a dairy product in interprovincial and export trade through a designated body, authorized to market the product. In the English version, the Governor in Council may make regulations designating the agencies through which a regulated product "shall" be marketed. The language allows the Governor in Council to designate a provincial marketing board as the only agency through which dairy products can be marketed for interprovincial and export trade.
50The French version is consistent with the mandatory wording in the English version. The word "autorisé", read in context, allows the Governor in Council to designate the agencies who may market dairy products in interprovincial trade. Where such an agency has been designated, the implication is that no other person or entity may market the product, absent authorization.
51The power to designate a provincial milk marketing board as the only agency which can market dairy products in interprovincial and export trade has been validly exercised in s. 8 of the Federal Dairy Regulations. That section designates a provincial marketing board to market milk in interprovincial and export trade where the board has authority under provincial legislation to regulate intraprovincial trade.
52Given the provincial regulatory scheme for marketing milk in Ontario established by the Milk Act and the regulations described earlier, s. 8 of the Federal Dairy Regulations incorporates the Ontario legislation by reference and allows DFO to apply its regulatory scheme to the export trade in milk. In this [page634] case, the DFO, exercising power delegated by the provincial government, has issued its General Milk Regulation 11/04, which provides in s. 3 that all milk producers must sell all of their milk to DFO and that no one else can buy milk from a producer. Because of s. 8 of the Federal Dairy Regulations, that provision of the DFO regulation applies to industrial milk destined for the export trade, which is the concern in this case.
The Implied Repeal Argument
53In the alternative, the applicants argued that there is a conflict between s. 8 of the Federal Dairy Regulations and the provisions of the federal Ontario Milk Order. Therefore, they submit that the reference to "export" in s. 8 must be read out on the basis of implied repeal in December 2000, or s. 8 must be read down in order to achieve a coherent interpretation of the federal regulations relating to dairy products.
54In fact, there is no inconsistency between the federal regulations. Pursuant to SOR/2001-16, the Ontario Milk Order, made under the federal Agricultural Products Marketing Act, was amended. Prior to the amendment, DFO had been delegated the power to regulate milk in both interprovincial and export trade. The amended regulation delegated the power to regulate milk only in interprovincial trade, with milk defined as "milk or cream from cows, produced for consumer use in liquid form in Canada" (s. 2). Section 3(2) stated explicitly that the regulation of milk in interprovincial trade did not include any power exercised by the Canadian Dairy Commission under the CDC Act in relation to the marketing of milk in interprovincial trade. Thus, the Ontario Milk Order does not apply to the marketing of milk or dairy products for export.
55Moreover, s. 3(2) of the Federal Dairy Regulations provides that the regulations "do not apply in respect of the production for marketing, or the marketing, in interprovincial trade of milk or cream in liquid form for consumer use". Thus, the two regulations dovetail. While the applicants seek to rely on the federal Milk Order here, the relevant regulation is actually the Federal Dairy Regulations, given that the milk shipped to Georgian Bay is industrial milk destined for export, not milk for consumer use in interprovincial trade.
56At the same time as the changes were made to the Ontario Milk Order, the Federal Dairy Regulations were amended to add the definition of Commercial Export Milk. The applicants argued that there is an inconsistency between the 2000 amendments and the delegation to a provincial marketing [page635] board in s. 8 to deal with export milk. In our view, there is no inconsistency, and a reading of the regulation as a whole demonstrates that s. 8 was not impliedly repealed by the enactment of the CEM provisions.
57The Federal Dairy Regulations created a category of CEM milk, which was to be exported free from provincial regulation, provided certain conditions were met -- including an exemption from provincial marketing legislation (s. 2.1(1)(b)). Section 3(3) of the regulation exempted CEM from ss. 4 through 7 and ss. 8 and 9. However, the fact that the exemption was created for CEM makes it clear that the federal government's intention was not to repeal ss. 4 through 7, 8 and 9 of the regulation.
58The removal of the exemption for Export Contract Milk in the provincial milk marketing plan effectively put an end to the CEM scheme, since currently in Ontario, no milk meets the criteria for CEM. As a result, s. 8 and the other provisions of the Federal Dairy Regulations apply. Section 8 delegates the power to the provincial board to apply the intraprovincial marketing scheme to interprovincial and export trade in industrial milk.
59The applicants also argued that DFO and the provincial Crown lack the regulatory authority to enforce federal milk regulations. They base this argument on the proposition that the federal government has the sole legislative authority over prosecutions for violations of federal laws, with the exception of criminal law (R. v. Hauser, 1979 13 (SCC), [1979] 1 S.C.R. 984, 98 D.L.R. (3d) 193, at pp. 986 and 1001 S.C.R.). This argument is without merit, as there is no effort on the part of DFO or any other provincial entity to enforce a federal law through a prosecution.
The Legality of the Provincial Delegation to DFO
60The applicants also argue that the provincial delegation of power to DFO to regulate the marketing of milk in Ontario is ultra vires, because the legislature can not delegate the power to pass laws of general application to a non-governmental body like DFO, which is a private, producer-owned co-operative. Its regulations are not published in the Ontario Gazette, nor do they require the approval of the Minister or Cabinet. The applicants argue that such a delegation is inconsistent with the principle of responsible government. No legal authority was cited for this proposition.
61A legislature has broad powers to delegate authority to a body of its own creation, such as DFO. The legislature also has broad discretion as to the scope of regulatory authority that it [page636] grants to a subordinate agency (Hodge v. R. (1883), 9 App. Cas. 117, 50 L.T. 301 (P.C.), at p. 132 App. Cas.).
62The provincial Milk Act expressly authorizes delegation by the OFPMC to a marketing board like DFO. Contrary to what the applicants argue, the powers exercised by DFO are subject to oversight by the OFPMC, which can revoke any regulation, order or direction of a marketing board made under a delegation of authority from the OFPMC (Farm Products Marketing Act, supra, s. 9). As well, a decision of DFO can be the subject of an appeal to the Tribunal pursuant to s. 16(2) of MAFRAA, and the decision of the Tribunal can be reviewed by the Minister of Agriculture and Food pursuant to s. 18. Therefore, the delegation to DFO was lawful.
The Validity of the Minister's Decision
63The applicants have attacked the Minister's decision on three grounds: that the Minister's prior involvement in the matter raises a reasonable apprehension of bias, that she failed to give adequate reasons and that she took into account irrelevant considerations.
The standard of review
64Pursuant to s. 18(1) of the MAFRAA quoted earlier, the Minister may confirm, vary or rescind the whole or any part of a decision of the Tribunal, substitute for the decision of the Tribunal such decision as the Minister considers appropriate, or require the Tribunal to hold a rehearing and reconsider its decision. While the applicants contend that s. 18 confers a right to "appeal" to the Minister, this court has held that the section provides for ministerial review if the Minister decides to intervene (Assn. of Ontario Chicken Processors v. Ontario (Agriculture, Food and Rural Affairs Appeal Tribunal) (2003), 2003 22805 (ON SCDC), 63 O.R. (3d) 284, [2003] O.J. No. 330 (Div. Ct.), at para. 45).
65The Tribunal has been described as "a supervisory body that engages in a polycentric balancing of competing interests with a managing and supervisory function" (Assn. of Ontario Chicken Processors, supra, at para. 37). In the instant case, the Tribunal was concerned with establishing the rights of the parties within a broad policy context.
66Viewed within the context of the MAFRAA, the Minister's role on review of the Tribunal's decision is to make a policy decision based on her view of the public interest. When a Minister exercises discretionary power in an administrative context, making a decision based on his or her appreciation of the public [page637] interest, courts have generally shown a great deal of deference on judicial review (Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281, [2001] S.C.J. No. 43, at para. 58).
67While the applicants submitted that the standard of review appropriate to this case is correctness, it is our view that the appropriate standard of review of the decision is patent unreasonableness, as in Mount Sinai, supra.
Bias
68The applicants argued that the Minister approached the review of the Tribunal's decision with a closed mind. Given her earlier involvement in the process leading to re-regulation, they argued that there was a reasonable apprehension of bias when she made her decision.
69In determining the extent to which a decision-maker has a duty of impartiality, one must look at the context of the decision-maker's activities and the nature of his or her functions (Imperial Oil Ltd. v. Quebec (Minister of the Environment), 2003 SCC 58, [2003] 2 S.C.R. 624, [2003] S.C.J. No. 59, at para. 31). Where a Minister's decisions are infused with policy making, the Supreme Court of Canada has held that the concept of impartiality expected of a court is not appropriate (ibid. at para. 39). In the context of a hearing by municipal councillors to determine an application for re-zoning, the Supreme Court of Canada held that the rules of procedural fairness required that "[t]he party alleging disqualifying bias must establish that there is a prejudgment of the matter, in fact, to the extent that any representations at variance with the view, which has been adopted, would be futile" (Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), 1990 31 (SCC), [1990] 3 S.C.R. 1170, [1990] S.C.J. No. 137, at para. 57).
70In this case, the Minister was asked to review the decision of the Tribunal, which had held that Georgian Bay's proposed program for the export of unsubsidized milk be submitted to the federal Department of Foreign Affairs and Trade, to determine whether it was compliant with Canada's international trade obligations. According to the applicants, her involvement with DFO prior to the review gives rise to a reasonable apprehension of bias. The record shows in the period between the WTOAB ruling and her review, the Minister was copied on correspondence relating to DFO's response to the WTOAB ruling by Georgian Bay. Her officials were present at a meeting on January 24, 2003 in which the OFPMC consulted stakeholders. There is also evidence that she asked DFO to speak to the Rural Caucus of her party [page638] about its proposed plan. As well, she wrote to a citizen on March 24, 2003 setting out the DFO plan.
71Ministers of the Crown have a broad discretion concerning policy matters. It is among their functions that they consult with constituents and interested parties. It is implicit in any such exchange that policy options and alternatives be discussed and considered.
72We are not satisfied that the Minister approached the review under s. 18(1) with a closed mind. The fact that she and her officials had some prior involvement in the discussion of the appropriate response to the WTOAB ruling did not create a reasonable apprehension of bias. Such prior involvement and consideration of the various interests is appropriate and necessary, given her overall responsibility for agricultural policy in the province. Moreover, she was presented with lengthy written submissions from Georgian Bay prior to her decision, and her reasons state that she considered them. She then made a decision that she preferred a different route from that selected by the Tribunal to develop an export policy for milk. Specifically, she preferred to have a national export system in place. In our view, the applicants have failed to show that she approached the review with a closed mind, and therefore, this ground of review fails.
Adequacy of the Minister's reasons
73The applicants argued that the Minister's letter of July 23, 2003 was so brief as to amount to a failure to give reasons contrary to the provisions of s. 18(4) of the MAFRAA, quoted earlier.
74In Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39, the Supreme Court of Canada held that the adequacy of reasons, if they are required, is to be addressed according to the principles of procedural fairness (at paras. 43-44). As the requirements of procedural fairness will depend on the nature and functions of the decision-maker, the adequacy of the Minister's reasons must be considered in context.
75The Minister had received written submissions from interested parties, including DFO and Georgian Bay. The material included a 292-page written submission from the applicants with responding materials from the DFO. The material submitted was extensive and comprehensive. Among the issues raised by DFO was the "significant and material risk" that the applicants' activity would damage the domestic market through displacement of [page639] milk supplied for further processing. As well, DFO submitted that the Tribunal had misunderstood the threat of retaliation and the severe negative consequences if this occurred. Specifically, DFO submitted that there was a risk of wider ranging and potentially more dangerous trade challenges either before the WTO or pursuant to the North American Free Trade Agreement.
76While the Minister's reasons were brief, she explained that she believed that the Tribunal's order should not be implemented and that the time frame for implementation was inappropriate, as it would create anxiety in an industry that had just been through a round of protracted trade challenges. Moreover, she indicated her preference for the development of a national dairy export system. In our view, read in context, the reasons set out the basis of her decision and meet the standard of procedural fairness.
77In any event, if the applicants required more detailed reasons, clarification was provided in a second letter dated May 13, 2004. In November 2002, Georgian Bay had appealed to the Tribunal seeking an extension of its marketing activities beyond the transition period which had been accorded. The Tribunal denied the appeal. In a letter dated May 13, 2004, the then Minister of Agriculture, Steve Peters, reiterated and, in effect, confirmed former Minister John's decision, discussing the issue of future trade challenges as follows:
I believe that allowing G.B.M.C. producers to continue to produce milk for export without quota would subject the domestic system to the risk of another trade challenge with our trading partners. Such a trade action could threaten the future stability of the domestic system not only for the current 5400 quota holding dairy producers, but also for producers across Canada. Such risks are unacceptable.
In order to minimize the threat of further trade action, it is critical that any consideration of a dairy export program be examined in the national context. Agriculture Agri-Food Canada is now leading a national export policy review, including the policy implications of exporting dairy goods above Canada's export subsidy reduction commitments established under the W.T.O. It is not clear when this process will be concluded or if it will ultimately be successful in leading to the implementation of a dairy export program.
78In our view, the reasons of the Honourable Helen Johns, Minister of Agriculture and Food, were adequate in the context in which they were given and were sufficient reasons within the meaning of s. 18(4) of MAFRAA.
Whether the Minister considered irrelevant factors
79The applicants argued that the Minister should not have considered the WTOAB ruling and, in doing so, she took into account irrelevant considerations. [page640]
80It can not be said that the WTOAB ruling was an irrelevant consideration. The record shows that there was a threat of further trade challenges if non-quota holders continued to operate. It was reasonable for the Minister to be mindful of the potential for retaliation and future trade challenges when determining the appropriate response to the WTOAB decision.
81In our view, the Minister did not misapprehend the WTOAB decision. While the applicants argued that the Georgian Bay producers' milk is unsubsidized within the meaning of the WTOAB ruling, there was no such express finding by that body. The WTOAB decision did not deal with non-quota holders.
82The Minister did not take into account irrelevant considerations. She made a policy decision, which indicated the government's preference to develop proposals for the export of milk through a federal-provincial process at the ministerial and bureaucratic levels, as opposed to having the applicants deliver their proposal to the federal government. That decision can not be said to be patently unreasonable. Therefore, this ground of review also fails.
Conclusion
83For these reasons, the application for judicial review is dismissed. If the parties are unable to agree on costs, the respondents may make brief written submissions within 21 days of the release of this decision, while responding material from the applicants shall be served within ten days thereafter.
Application dismissed.
