Sunwold Farms Ltd. v. AgriCorp

CITATION: Sunwold Farms Ltd. v. AgriCorp, 2015 ONSC 6111

DIVISIONAL COURT FILE NO.: 13-484-JR

DATE: 20151106

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Swinton, Mullins and Fregeau JJ.

BETWEEN:

SUNWOLD FARMS LTD. Applicant

– and –

AGRICORP Respondent

COUNSEL:

Steven W. Pettipiere, for the Applicant Sunil Mathai and Judith Parker, for the Respondent

HEARD at Hamilton: September 30, 2015

Reasons for Judgment

Swinton J.:

Overview

[1] The applicant Sunwold Farms Ltd. (“Sunwold”) has brought an application for judicial review of a decision of the respondent AgriCorp awarding it compensation under the AgriStability program. Sunwold argues that the decision should be set aside because the participation of AgriCorp staff at multiple stages of the decision-making process gives rise to a reasonable apprehension of bias and thus results in a denial of procedural fairness.

[2] For the reasons that follow, the application for judicial review is dismissed.

Factual Background

The AgriStability Program

[3] AgriStability is a program designed to assist agricultural producers when their farming income drops below a threshold based on the previous five years’ production margins (allowable income minus allowable expenses). It is part of the Growing Forward Agreement (“the Agreement”) signed by Canada’s provincial, territorial and federal governments in 2008.

[4] The terms governing AgriStability are found in Annex A of the Agreement. The Agreement also provides for the development of Program Guidelines that set out eligibility requirements and payment calculations.

[5] The Agreement has been implemented in Ontario by two orders-in-council (“OIC”). Order-in-Council 200-2011 established the Growing Forward Program, which included various programs set out in the Agreement, including AgriStability. The OIC permits the Minister of Agriculture, Food and Rural Affairs (“the Minister”) to designate a third party to administer the AgriStability Program. The Minister designated AgriCorp, an Ontario Crown corporation, to do so.

[6] AgriCorp receives and reviews AgriStability applications in accordance with the AgriStability Program Guidelines (“the Guidelines”) and Technical Information Circulars (“TICs”). The TICs were established by the Ministry to provide more detailed information on the application of the national Program Guidelines in the province of Ontario.

[7] AgriCorp is the only body empowered to determine how much to pay program applicants. The Guidelines provide that income and expenses related to farming activities outside Canada are not eligible for benefits. All transactions must be at fair market value (“FMV”) to be considered allowable in the calculation of margins, and AgriCorp has the power to adjust transactions to reflect FMV.

[8] The Agreement and the Guidelines provide access to an internal and external review for an unsatisfied applicant. In Ontario, the external review body is called the Ontario AgriStability Review Committee (“OARC”). As provided in the Agreement and OIC 200-2001, OARC issues non-binding recommendations to AgriCorp.

Sunwold’s Application

[9] Sunwold carries on business in Ontario as a swine producer. It produces and sells Segregated Early Weaning (“SEW”) pigs to a related company in the United States for finishing. Sales were originally at a fixed contract price, but in 2008, the arrangement changed to a variable price approximating market prices.

[10] Sunwold received AgriStability benefits in 2007 and 2008. These applications were received by AgriCorp in early 2008 and 2009 respectively.

[11] In 2010, during the processing of the application for benefits for 2009, the claims department of AgriCorp became concerned that Sunwold’s income from the SEW pigs was not at FMV, and that pricing varied from year to year. AgriCorp’s Guidelines require it to assess income at FMV and to exclude out-of-country farming activities. Accordingly, in setting the benefit amount, AgriCorp had to determine the “at the border” FMV of Sunwold’s pigs, because they were sold to a related American company.

[12] After obtaining further information from Sunwold, the Claims Department reassessed the 2007 and 2008 payments and assessed a lower payment for 2009 than Sunwold had expected. In its decision letter dated April 23, 2010, AgriCorp established an “at the border” FMV for SEW pigs in the years in issue using United States Department of Agriculture (“USDA”) data on the SEW composite price from 2005 to 2008. From January to October 2009, it used price determinations from Phoenix AgriTec Inc. (“Phoenix”), a private firm.

[13] Sunwold requested an amendment in June 2010, seeking to have the assessment made using the USDA cash price for 10 pound pigs for all years. This triggered the internal review process, which involves the Quality Department of AgriCorp. As a result of the review, which included dialogue with Sunwold, AgriCorp changed its position in July, 2011. It decided to use the USDA composite price until March 2008 and USDA cash prices after April 2008.

[14] Sunwold was not satisfied with the response and, in October 2011, sought a review before OARC, the external review process. It agreed with the use of the USDA composite pricing until March 2008, but requested the use of data from the private market source, Phoenix, from April 2008 on.

[15] An OARC hearing was held before a panel of five producers who reflected various agricultural commodities. There were both written and oral submissions to OARC. AgriCorp was represented by two staff – Cathy Jones and Barbara Parker, both Senior Quality Advisors. On December 21, 2012, the OARC recommended that AgriCorp’s decision be overturned, as OARC believed the price of SEWs moving from Canada to the United States was lower post COOL [United States Country of Origin Labelling legislation] than the USDA cash price indicated. OARC concluded that there did not appear to be “an accurate, public transparent, price available.” It suggested that there be a discount to the USDA cash price - for example, by using data supplied by the client, or a WTO report, or by a reasonable discount off the USDA cash price.

[16] This recommendation was non-binding, as set out in s. 6.17 of the Agreement and s. J.7.1 of OIC 200-2011. It was considered by an Ad Hoc Committee of AgriCorp made up of representatives from the senior management team, and senior staff from the Program Delivery, Risk Management, Program Development and Legal Services divisions. Ms. Jones and Ms. Parker participated, and Ms. Jones prepared a brief for the committee. The committee reviewed the OARC recommendation and recommended that the Chief Executive Officer (“CEO”) not accept the OARC recommendation.

[17] Ms. Jones and Ms. Parker then prepared a briefing note for the CEO, setting out Sunwold’s position and the Ad Hoc Committee’s recommendation not to change the decision. As part of the CEO’s consideration, AgriCorp contacted the Ministry with respect to its policy choice of using USDA cash pricing to determine FMV. The Ministry indicated support for the position because USDA pricing was public, transparent and the best indicator of pricing for SEW pigs in Ontario.

[18] The CEO of AgriCorp decided to maintain the original position and not to accept OARC’s recommendation. The decision was communicated to Sunwold on February 22, 2013. Again, AgriCorp expressed the view that “[t]he average USDA cash price should be used since it is public, transparent, verifiable, and in AgriCorp’s view it is the best indicator of the FMV of the SEWs ‘at the border’”. The letter also explained that the discounted price recommended by OARC would reflect a point of sale price in the United States, rather than the FMV of SEWs as they left Canada, as required by the applicable TIC. As well, AgriCorp had not discounted the posted FMV of any other livestock category due to the impact of COOL when it applied the TIC.

The Issue

[19] Sunwold does not challenge the merits of the AgriCorp decision on this application for judicial review. The only issue raised is whether the decision was tainted by a reasonable apprehension of bias because of the involvement of staff members, and particularly Ms. Jones, at various stages of the decision-making process.

The Standard of Review

[20] As Sunwold raises an issue of procedural fairness, the Court need not engage in a standard of review analysis. Rather, the Court’s task is to determine the level of procedural fairness required in the circumstances and whether this level was met (Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339 at para. 43; London (City) v. Ayerswood Development Corp. (2002), 167 O.A.C. 120 (C.A.) at para. 10).

Analysis

[21] Sunwold does not allege institutional bias; rather it argues that there was a reasonable apprehension of bias because of the involvement of AgriCorp staff members, and particularly Ms. Jones, at multiple stages of the proceeding.

[22] In determining whether to interfere with a decision on the grounds of a reasonable apprehension of bias, a court must ask whether a reasonable person, viewing the matter realistically and practically and having thought the matter through, would conclude that the decision-maker would not act impartially (Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369 at 394).

[23] There is a wide range of decision-makers with a duty to act impartially, ranging from those which have an adjudicative function to those who exercise executive functions. Accordingly, it is necessary to undertake a contextual analysis to determine the required level of impartiality applicable to a particular decision-maker, as the level of impartiality will depend on the nature of the activities and the functions of the decision-maker (Bell Canada v. Canadian Telephone Employees Assn., 2003 SCC 36, [2003] 1 S.C.R. 884 at para. 21; Imperial Oil Ltd. v. Quebec (Minister of the Environment), 2003 SCC 58, [2003] 2 S.C.R. 624 at para. 31). As the Supreme Court of Canada stated in Bell Canada at para. 22:

All aspects of the tribunal’s structure, as laid out in its enabling statute, must be examined, and an attempt must be made to determine precisely what combination of functions the legislature intended the tribunal to serve, and what procedural protections are appropriate for a body that has those particular functions.

[24] AgriCorp does not exercise adjudicative powers similar to those of a tribunal determining the rights of parties in litigation - for example, in the context of a human rights complaint or a grievance arbitration. In such a setting, the required level of impartiality is high. In contrast, AgriCorp is essentially a delegate of the Minister, exercising the power to make payments under a funding program created to carry out the agricultural policy of Ontario, as that policy was developed through intergovernmental negotiations. AgriCorp’s task is to receive and review applications for benefits from agricultural producers and to award payments in accordance with the Guidelines and TICs. In making funding decisions like those affecting Sunwold, it also plays a policy role. In the present case, it had determine how to deal with non-arm’s length transactions involving out-of-country sales for which there was no known FMV for the commodity in issue.

[25] Accordingly, the level of impartiality required of AgriCorp is that of an “open mind” - that is, it must remain capable of persuasion. In carrying out its duties and making its decision about the benefit payment, AgriCorp was required to carefully review the representations made by Sunwold throughout the process and the recommendation of OARC (see Imperial Oil at para. 34; Transcanada Pipelines Ltd. v. Beardmore (Township) (2000), 186 D.L.R. (4th) 403 (Ont. C.A.) at para. 147).

[26] The record demonstrates that AgriCorp met the required standard of impartiality. Sunwold argues that members of staff were improperly engaged in several different steps of the proceeding, including the OARC hearing, the Ad Hoc Committee process and the briefing of the CEO. However, there is no unfairness in their participation at each of these stages. This is not a case where there are separate steps of the proceeding, such as an investigation, prosecution, adjudication and an appeal. Here, AgriCorp made one decision about funding Sunwold. While that process involved several steps and opportunities for reconsideration of the initial decision, AgriCorp’s role throughout was to make the funding decision in light of the Agreement, Guidelines and TICs.

[27] That AgriCorp maintained an open mind is demonstrated, at least in part, by the fact that it made a change in response to Sunwold’s June 2010 request for an amendment. Moreover, the fact that it did not accept the OARC recommendation does not show that it had a closed mind. The Ad Hoc Committee gave careful consideration to the OARC recommendation. At its meeting, it accepted other recommendations from OARC, but not the one made respecting Sunwold.

[28] The CEO gave a number of policy reasons as to why the USDA price was preferable to the private data from Phoenix, largely because of the transparency and verifiability of the USDA data. Transparency and verifiability were both program objectives that AgriCorp was required to respect. For example, the Agreement’s governing principles specify that policies and programs “will be transparent” and that producers and other stakeholders will be treated equitably across commodities and regions. It is not a violation of the requirement of impartiality that AgriCorp had regard to the governing principles and applicable policies.

[29] The fact that Ms. Jones and Ms. Parker were involved before OARC and subsequently in the Ad Hoc Committee and the briefing of the CEO does not give rise to a reasonable apprehension of bias. There is no issue here of AgriCorp or its employees sitting in judgment of its own appeal, as there was no appeal to OARC. As the respondent’s factum correctly states (at para. 88):

... the evidence is simply that AgriCorp staff and Ms. Jones had an appropriate interest in ensuring that the AgriStability policies were applied in Sunwold’s case in a transparent, verifiable manner that promoted a consistency of treatment across different commodity producers. This does not indicate a closed mind.

Conclusion

[30] For these reasons, the application for judicial review is dismissed. Costs to the respondent are fixed at $15,000 all inclusive, an amount agreed upon by the parties.

___________________________ Swinton J.

Mullins J.

Fregeau J.

Released: November 6, 2015

CITATION: Sunwold Farms Ltd. v. AgriCorp, 2015 ONSC 6111

DIVISIONAL COURT FILE NO.: 13-484-JR

DATE: 20151104

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Swinton, Mullins and Fregeau JJ.

BETWEEN:

SUNWOLD FARMS LTD. Applicant

– and –

AGRICORP Respondent

REASONS FOR JUDGMENT

Swinton J.

Released: November 6, 2015