COURT FILE NO.: 582/06

DATE: 20070123

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CHAPNIK, SWINTON AND LINHARES DE SOUSA JJ.

B E T W E E N:

WEST POINTE GREENHOUSES LTD.

Applicant

• and -

MINISTER OF AGRICULTURE AND FOOD (ONTARIO) AND THE REVIEW COMMITTEE OF THE ONTARIO FARM INCOME DISASTER PROGRAM

Respondents

John Mill, for the Applicant

Owen Young and Tamara Barclay, for the Respondents

HEARD at Toronto: December 14, 2006

SWINTON J.:

1The applicant, West Pointe Greenhouses Ltd., has brought an application for judicial review of a decision of the Administrator of the Ontario Farm Income Disaster Program (“OFIDP”) made February 26, 2004 with respect to its claim under a federal-provincial income disaster assistance program for farmers. The central issue in this application is whether the applicant has been denied procedural fairness.

Background Facts

2OFIDP is an income assistance program that was available to farmers across Canada from 2000 to 2002. It was created by a federal-provincial agreement dated June 1, 2001, the Federal-Provincial Agreement Establishing the Canadian Farm Income Program (“the Agreement”). Provision for the administration of the program in Ontario was made in a provincial Annex to the Agreement. In Ontario, the program was administered by the Ontario Ministry of Agriculture, Food and Rural Affairs (“OMAFRA”).

3The Agreement required the provincial Administration to establish guidelines on program eligibility and payment calculation “and any other interpretation or clarification required for the proper interpretation of the Program on a consistent basis with the Agreement and across Provinces” (Article 3.6).

4OFIDP assistance was made available to farmers whose farm profit or “margin” (that is, sales less eligible expenses) dropped more than 30 per cent in a given production year. Whether such a drop had occurred was determined by comparison with a benchmark, described in the Agreement as a “reference margin”. The reference margin was calculated by using the average financial experience of an applicant farm business over the previous three years.

5The applicant submitted claims to OFIDP in respect of the years 2001 and 2002. Normally, the reference margin for an applicant for assistance would be the average of margins for 1998 through 2000 for claim year 2001 and the average of 1999 through 2001 for claim year 2002. However, the applicant had started its hothouse tomato operation in 2001, so there was no real income and expense data available for the reference margin calculation.

6The Agreement contained a special provision for farmers whose business had not actually been in operation through the three reference years. In accordance with Article 2.9, figures to be used to calculate the reference margins for “beginning farmers” were to be developed by OFIDP on the basis of the experience of “like farms”:

2.9: Reference Period Margins for applicants who are beginning farmers in accordance with the Program guidelines shall be the margins for any years in which the applicants reported farm income for tax purposes. Margins for the other years in the Reference Period shall be developed by the Administration on the basis of like farms. (emphasis added)

7A published program guideline for OFIDP described its preferred approach of using standardized Ministry “enterprise budgets” in order to calculate reference margins for beginning farmers:

Beginning farmer reference margins are constructed using per-unit cost of production enterprise budgets produced by OMAFRA’s Agriculture and Rural Division. Each budget enables the user to produce a per-unit estimate of the revenue, variable and/or fixed cost, gross margin and net return of a given commodity. In addition, a budget is available for each commodity for 1998 through to 2000. Revenue in each budget is based on average Ontario market prices for the respective years. Variable and fixed costs use 1998 costs as a base and are adjusted for changes in the Ontario farm input price index for the various operating expenses relative to 1998 …

8Because of a lack of statistical data, no standardized enterprise budget was prepared by the Ministry for hothouse tomatoes. Therefore, when the applicant applied for assistance, the Administration developed a reference margin in the following manner. Income was calculated using crop yields actually realized by the applicant in 2001 and actual Ontario sales prices for tomatoes in 1998, 1999 and 2000. On the expense side, the Administration used the expenses incurred by the applicant in 2001. This method of calculation produced a negative value for the reference margin in 2001. As a result, the Administration determined that the applicant was not eligible for assistance for the 2001 year. A similar result followed when the same methodology was used to determine eligibility for assistance for the 2002 year.

9After the applicant’s request for reconsideration in June 2003, the Administration recalculated the reference margins by adjusting the notional expense figures for expected fluctuations in heating expenses in respect of the years in the reference period. However, the applicant remained ineligible for assistance.

10The applicant then applied to the Ontario Farm Income Disaster Program Review Committee. This Committee, created by the Agreement, is composed of both federal and provincial representatives. It has the power to make recommendations to the Administration. If the Administration does not accept a recommendation, the Administration must consult with the federal government prior to implementing its decision (Article 6.8 of the Agreement).

11In this case, the Committee received written submissions from the applicant and the Administration. It recommended a reassessment of both applications for assistance, because it was of the view that OFIDP should not have calculated the applicant’s reference margins using crop yields actually realized by the applicant in 2001. Rather, the Committee preferred an approach based on provincial average yields in each of the three reference years. Using its approach, the income side would be determined by the average crop yields and actual Ontario sales prices for tomatoes in the three years. On the expense side, the applicant’s adjusted expenses would be used.

12The Administration accepted the recommendation of the Committee and recalculated the applicant’s reference margins. As a result, the applicant became eligible for assistance in 2001, but not 2002, and it was mailed a payment on February 26, 2004.

13The applicant has brought this application for judicial review seeking an order in the nature of certiorari to quash the funding decisions on the basis that it was denied procedural fairness. More precisely, the applicant submits that the Administration’s failure to establish “like farm” margins for the hothouse tomato sector resulted in a denial of fair process to the applicant. As well, it relies on the doctrine of legitimate expectations.

The Issues

14There are two issues in this application:

1. Was the applicant denied procedural fairness?

2. Does the doctrine of legitimate expectations apply?

Issue No. 1: Was the applicant denied procedural fairness?

15As the applicant submits that there has been a denial of procedural fairness, there is no need to engage in an analysis of the appropriate standard of review. The question before this Court is whether the rules of procedural fairness have been adhered to (London (City) v. Ayerswood Development Corp., [2002] O.J. No. 4859 (C.A.) at para. 10).

16The Agreement is a contract between the federal and provincial governments. The applicant has no substantive rights under the federal-provincial Agreement, as it is not a party to the Agreement. Moreover, Article 4.8 expressly states that the Agreement does not create rights in OFIDP applicants:

No applicant is entitled to a payment under the Program by right, or by having applied for a payment under the Program. Payments to applicants shall be made on the basis of the Program eligibility and payment calculation provisions established under this Agreement, and any other adjustments or limitations as set out in this Agreement. Payments to applicants shall be made by the Administration where the applicants’ eligibility for payment has been confirmed and the amount of the payment has been calculated in accordance with the terms of this Agreement.

17Nevertheless, counsel for the respondents conceded that an application for judicial review seeking relief in the nature of certiorari may be available to challenge an administrative decision on the grounds of arbitrariness or denial of procedural fairness. Indeed, administrative decisions that are not legislative in nature and that affect an individual’s rights, privileges or interests attract a duty to act fairly (Martineau v. Matsqui Disciplinary Board, [1980] 1 S.C.R. 602 at p. 15 (Quicklaw); Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 at para. 20).

18However, the Supreme Court of Canada in Baker made it clear that the content of the duty of procedural fairness is variable and dependent on the circumstances of the case (at para. 21). The Court went on to outline factors that are relevant to the determination of the duty of procedural fairness (at paras. 22 to 28):

1. the nature of the decision being made,

2. the statutory scheme and the role of the particular decision within it,

3. the importance of the decision to the individual or individuals affected,

4. the legitimate expectations of the person challenging the decision as to the procedure that will be followed, and

5. the choice of procedures made by the agency and its institutional constraints.

19The Court also made it clear that the duty of procedural fairness confers participatory rights, and not substantive rights to a particular decision (at para. 28):

The values underlying the duty of procedural fairness relate to the principle that the individual or individuals affected should have the opportunity to present their case fully and fairly, and have decisions affecting their rights, interests or privileges made using a fair, impartial and open process, appropriate to the statutory, institutional, and social context of the decision.

20In this application for judicial review, the essence of the applicant’s argument is that the Administration and the Review Committee erred in their approach to the calculation of reference margins for beginning farmers because of their interpretation of “like farms”. This is not an argument based on procedural fairness, as discussed in Baker; rather, it is an attempt by the applicant to acquire a substantive right under the Agreement by asking the Court to interpret “like farms” in the manner suggested by it in circumstances where the applicant has no standing under the Agreement.

21Moreover, the applicant has not been denied procedural fairness, as that term is understood in Baker. It has participated in the application process and in the Review Committee process. It has had the opportunity to put forth its position in its written submissions. Indeed, it had some success before the Review Committee, which led to the payment of some assistance.

Issue No. 2: Does the doctrine of legitimate expectations apply?

22The applicant’s assertion of a “legitimate expectation” does not give rise to an enforceable right that its eligibility under the Agreement would be assessed in accordance with its interpretation of “like farms”. As the Supreme Court made clear in Baker, the doctrine of legitimate expectations may give rise to procedural rights, but it does not create substantive rights (at para. 26).

23In Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, the Supreme Court described the doctrine in this way (at p. 28 (Quicklaw)):

The principle developed in these cases is simply an extension of the rules of natural justice and procedural fairness. It affords a party affected by the decision of a public official an opportunity to make representations in circumstances in which there otherwise would be no such opportunity. The court supplies the omission where, based on the conduct of the public official a party has been led to believe that his or her rights would not be affected without consultation.

Thus, the doctrine of legitimate expectations is not applicable in this case.

Conclusion

24In its factum, the applicant also submitted that the Administration’s decision was unreasonable, as it failed to develop standards for like farms based on data from other provinces or the Canadian Farm Income Program. However, given the lack of industry data from Ontario about the expense experience of the hothouse tomato sector, the Administration’s approach to the calculation of the reference margin in accordance with the Review Committee’s recommendation was reasonable, and there is no basis for judicial intervention.

25Therefore, the application for judicial review is dismissed. If the parties are unable to agree on costs, they may make written submissions within 30 days of the release of this decision.

Swinton J.

Chapnik J.

Linhares De Sousa J.