Rouge River Farms Inc. v. Director of Employment Standards and Ontario Labour Relations Board, 2019 ONSC 3498

CITATION: Rouge River Farms Inc. v. Director of Employment Standards and Ontario Labour Relations Board, 2019 ONSC 3498

DIVISIONAL COURT FILE NO.: 637/17

DATE: 2019-06-06

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Kiteley, Del Frate and Rady JJ.

BETWEEN:

Rouge River Farms Inc.

Applicant

– and –

Director of Employment Standards and Ontario Labour Relations Board

Respondents

– and –

Labour Issues Coordinating Committee

Intervenor

COUNSEL:

John Craig, Jackie VanDerMeulen and Tala Khoury, for the Applicant, Rouge River Farms Inc.

Gráinne McGrath and William Robinson, for the Respondent, Director of Employment Standards

Aaron Hart and Andrea Bowker, for the Respondent, Ontario Labour Relations Board

Christopher D. Pigott and Gillian Round, for the Intervenor, Labour Issues Coordinating Committee

HEARD at Toronto: January 24, 2019

THE COURT

Introduction

[1] This is an application for judicial review brought by Rouge River Farms Inc. (“Rouge River”), of the decision (“Decision”) dated March 8, 2017 of the Ontario Labour Relations Board (the “Board”).[^1] Pursuant to s. 116 of the Employment Standards Act, 2000, S.O. 2000 c. 41 as amended (the “ESA”), the Board dismissed the application to review Compliance Order No. 80042886-CO (“Compliance Order”). The Board affirmed the Compliance Order issued to Rouge River that held that the farm worker exemption did not apply and accordingly the employer was required to comply with various minimum standards including overtime pay with respect to employees working at its facility in Gormley, Ontario (“Gormley Location”).

[2] Rouge River requests that the Court set aside the decision of the Board and substitute a decision confirming the application of the farm worker exemption. The Respondent Director of Employment Standards (“Director”) requests that the application be dismissed. For the reasons that follow, the application is allowed.

Background

[3] Rouge River is a family-owned and family-operated farm that grows corn for the Ontario market year-round on property in York Region, Pickering, King City, Tillsonburg and Ridgetown, as well as in Ohio, Georgia and Florida. At the time of this application, Rouge River owned or leased 1,700 acres of land in Ontario (the “Ontario Lots”) and 6,300 in the United States (the “U.S. Lots”). Over half of the lots of land consisting of approximately 1,100 acres are in the York and Durham Regions are located within 1 to 15 kilometres of the Gormley Location. The remaining lots of land consisting of approximately 600 acres are in Southwestern Ontario in two locations that are 225 to 250 kilometers from the Gormley Location. The American lands are obviously more distant.

[4] Beginning in about 2000, Rouge River began selling its sweet corn packaged in trays. As production expanded, a decision was made to construct a centralized facility to which harvested corn would be transported for post-harvest production. It quickly outgrew two such facilities[^2] and as a result, an existing building at the Gormley Location was purchased and modified for corn production. By locating production in Gormley, Rouge River was able to preserve productive agricultural lands and had access to electricity and clean water for hydro cooling, as well as proximity to a major highway. Rouge River asserts that the Gormley Location is a “farm”.

[5] Rouge River operates during the Ontario growing season (April to October) as well as during the off-season. The Ontario harvest starts in July and Rouge River employs as many as 250 people during the peak, where up to one million cobs may be harvested daily. Cobs are transported to the Gormley Location, which is open around the clock.

[6] The U.S. Lots are used to grow sweet corn year round for the United States market and also to supply the Canadian market during the Ontario off-season from October to June.

[7] Given the seasonal nature of Ontario production, the sweet corn that passes through the Gormley Location is grown on the Ontario Lots during the Ontario season and on the U.S. Lots during the Ontario off-season. In percentage terms, 40% of the sweet corn passing annually through the Gormley Location is grown on the Ontario Lots, while roughly 60% is grown on the U.S. Lots.

[8] The Gormley Location is used exclusively to cool, trim, grade, and pack fresh sweet corn grown by Rouge River on its Ontario Lots (during the Ontario season) and on its U.S. Lots (during the Ontario off-season).

[9] The number of Ontario workers required by Rouge River and the number of hours of work needed at the Gormley Location fluctuate significantly throughout the year due to the seasonal and weather-dependent nature of sweet corn production.

[10] During the Ontario season, Rouge River’s workforce at the Gormley Location typically doubles to approximately 250 employees. Many of these employees perform tasks during the Ontario season that requires moving between the Gormley Location and the Ontario Lots. Of the 250 employees, approximately 115 would be expected to work only at the Gormley Location and the remainder are rotated between the Gormley Location and the Ontario Lots based on operational needs.

[11] Rouge River voluntarily pays all of its employees vacation pay, public holiday pay and two paid 15 minute breaks. Rouge River does not pay its employees overtime pay but overtime is voluntary. Rouge River offers its employees substantial overtime opportunities during the Ontario season in order to meet production demands. Indeed, employees at the Gormley Location work approximately 15,000 hours of voluntary overtime between July 15 and September 30 and approximately 15,000 hours during the remaining 9.5 months of the year.

[12] At the Gormley Location, Rouge River employs workers tasked with what it asserts is the “primary production” of sweet corn. Their responsibilities include: harvesting, sorting, hydro-cooling, secondary cooling, grading, de-shanking, de-husking, tray packing and transportation.

[13] In addition, typical fieldwork is required on the Ontario Lots including repairing equipment, spraying, fertilizing, planting, irrigating, maintaining the soil, planting cover crops, and inspecting the soil. Employees who work at the Gormley Location are moved to the Ontario Lots to assist in that fieldwork.

[14] During the Ontario off-season, Rouge River grows corn on its U.S. Lots. The harvest and hydro-cooling is performed by U.S. workers. Corn is then transported in refrigerated trucks to the Gormley Location, where the balance of production steps are undertaken. The trip can take between 8 and 48 hours. During the Ontario off-season, Rouge River’s Ontario employees fluctuate in number between 40 and 150.

The Proceedings

[15] On March 8, 2016, the Employment Standards Officer (“ESO”) conducted a proactive inspection of the Gormley Location. In the reasons for decision, the ESO noted that s. 2(2) of Ontario Regulation 285/01 (“Regulation 285”) required the satisfaction of two essential elements, namely that the person must be employed on a farm and the employment must be directly related to the primary production of the designated product. The ESO quoted from the Ministry’s Policy Manual for both of those essential elements. However, the decision was based on the conclusion that the farm worker exemption did not apply because the Gormley Location was “not a farm but rather a large warehouse structure”. In the Compliance Order dated March 21, 2016, the ESO found that Rouge River was in contravention of a number of provisions of the ESA, including failure to pay overtime to the workers at the Gormley Location.

[16] Pursuant to s. 116 of the ESA, Rouge River asked for a review of the Compliance Order. The only issue for the Board to determine was whether those employees working at the Gormley Location fell within the farm worker exemption in s. 2(2) of Regulation 285. If not, the employer was required to pay overtime pursuant to the ESA.

[17] Rouge River argued that it was exempt from the requirement to pay overtime to its employees by virtue of s. 2(2) of Regulation 285 referred to as the “farm worker exemption”. In particular, Rouge River took the position that the employees in question were engaged on a farm in the primary production of a vegetable, namely sweet corn, and therefore were exempt from the overtime provisions of the ESA.

[18] The Director countered that the exemption did not apply because the employees working at the Gormley Location were not working on a farm and because their employment was not directly related to the primary production of sweet corn. On that basis, the Director asserted the exemption did not apply.

[19] The Board convened a hearing on July 11, 12, 18, and 19, 2017. The Director did not call any witnesses.

[20] One of Rouge River’s founders, Robert Reesor, and his son Curtis, who is the company’s controller, testified as to the interdependent parts of the farm in which employees move between the tracts of growing land on the Ontario Lots and the Gormley Location when required.

[21] Rouge River retained Dr. Frank Ingratta as an expert witness who wrote a report entitled “Farms and Farming in Ontario” (the “Ingratta Report”) and who gave evidence on the following six questions:

1. What are the industry and/or academic definitions of a “farm”, with specific reference to a modern farm or modern farming?

2. How has the farm, as an enterprise, changed in the past century in terms of organization, operations, structure, etc.? What in your view are the most significant changes?

3. What are the factors that have led to changes in farms, and farming, with specific reference to the factors as they related to conditions in Ontario?

4. How has the value of farmland in Ontario and in particular, the Greater Toronto Area, changed in the last 50 years? What are the relevant factors that determine the value of farmland in Ontario?

5. What circumstances exist or may arise that would require a farm to conduct aspects of primary production on land that is zoned for use other than agricultural and/or is not contiguous with land used for growing crops? If possible, please provide specific examples in Ontario.

6. In what circumstances do Ontario farms engage third parties within their production cycle? Please provide specific examples in Ontario.

[22] Dr. Ingratta was Ontario’s Deputy Minister of Agriculture, Food and Rural Affairs from 1997 to 2006. He earned Bachelor of Science and Master of Science degrees from the University of Guelph. He has a Ph.D. from the University of Toronto. He describes himself as an expert in the Ontario agriculture industry. His qualifications were not challenged.

[23] He described how a farming enterprise has changed in the past century, and touched on land use pressures, diversification and specialization, technology, operational structures and market relationships. Dr. Ingratta highlighted the modern reality that Ontario farmers are required to produce greater amounts of a commodity, on shrinking and increasingly expensive lands, at a low cost and at competitive prices, while remaining responsive to consumer demands and environmental impacts. He provided several examples of farms and farm activities that are not dependent of the physical location of the soil, including the greenhouse industry, storage facilities, and marijuana production among others.

The Board’s Decision

[24] At paragraphs 9 to 20, the Board set out the framework for its interpretation of s. 2(2) of Regulation 285, which it summarized (at para. 21) as follows:

The Board has taken a narrow approach to exemptions from the Act notwithstanding the purpose of any particular exemption. In Organix at paras. 18 and 23, the Board held that notwithstanding the purpose of the farm worker exemption, the purpose of the Act was the protection of workers and the insurance of minimum employment standards. In determining whether the employees at the Gormley location are covered by the farm worker exemption, I will therefore interpret the farm worker exemption narrowly. In adopting this jurisprudence, I would note the farm worker exemption can only be interpreted as narrowly as the plain and ordinary language of the exemption can reasonably bear.

[25] At paragraphs 26 to 29, the Board referred to the evidence about the tray packing facility as follows:

As set out in Rob Reesor’s testimony, Rouge River Farms uses thirty different tracts of land across Ontario to grow sweet corn. The distance of those tracts of land from the Gormley location ranges from approximately four to 250 kilometers. As noted above, Rouge River Farms also grows sweet corn in the United States. It can take between approximately 8 and 48 hours to get the sweet corn from the United States to the Gormley location.

Prior to tray packing, the sweet corn had been sold in bulk. Tray packing sweet corn has been very successful for the applicant. There are a number of advantages, for retailers, consumers, and Rouge River Farms in selling tray-packed sweet corn including: greater food safety, customers prefer it, less waste for retailers and consumers and increased value to the applicant.

The process the applicant uses for tray packing its sweet corn has not changed since they started tray packing on Uncle Cecil’s Farm and for Ontario sweet corn involves the following steps. First, the sweet corn is harvested from the Ontario fields (either by hand or by machine). It is then sorted. Sorting occurs either on the field where it was grown or at a central facility. The sweet corn is then put into bins and into a “hydro-cooler” which removes the field heat from the cobs. Hydro-cooling the corn is necessary in order to ensure that the sweet corn remains marketable. Following the hydro-cooling, the bins are then moved into a cooler at the Gormley location for secondary cooling. Following secondary cooling, the shank is cut off the sweet corn, a portion of the husk is removed and the corn is packed on a tray to be shipped out to be sold. This is the process Rouge River Farms used at Uncle Cecil’s Farm, then at the Mora Farm, and finally at the Gormley location.

The only material difference in tray packing process for sweet corn grown in the United States is that the secondary cooling occurs in the trailer while the sweet corn is being transported to the Gormley location for packing.

[26] At paragraph 30, the Board noted that Rouge River had called “a considerable amount of evidence in order to describe the current state of farming in Ontario” and, at paragraphs 31-35, the Board referred to the evidence and to the Ingratta Report. The Board noted the following:

During his testimony, Dr. Ingratta spoke at length about changes in farms and farming in Ontario and the increase in consolidation and specialization. Farms are getting bigger and are increasingly focussing on fewer commodities. He described the increased role played by technology as well as the impact of changing consumer demand in farming in Ontario. He also described how it is quite common for farms to grow by purchasing or leasing non-contiguous pieces of land and that many farmers in Ontario seek out land further south (including in the United States) to extend the growing season for their crops.

Dr. Ingratta testified with respect to the value of farmland in Ontario and why in some instances farms might engage in aspects of primary production on non-agricultural land. As examples of the latter, Dr. Ingratta referred to the greenhouse industry, storage facilities, marijuana production, community pastures, honey production and rooftop or indoor farming. Dr. Ingratta also testified about the increased importance of food safety to consumers.

Most significantly, for our purposes, was Dr. Ingratta’s evidence regarding what constitutes a farm. In his report, Dr. Ingratta defined a farm as follows:

A farm is an enterprise that performs all the functions or steps involved in the production of plant and animal products. This would not only include activities in the production facility (field/animal housing) but in areas where post-harvest handling is conducted (tobacco kilns, potato storage, grain drying and storage, grading and packing, refrigerated milk tanks etc.). These post-harvest activities are integral to preparing the products for sale or consumption.

Dr. Ingratta testified that his definition of a farm emphasized that a farm is an enterprise in order to highlight that farms are business entities which pursue a number of steps to produce commodities. Dr. Ingratta also noted that definitions of farms which reference specific tracts of land fail to account for a number of commodities where the land or soil is irrelevant to the production of that particular commodity. He cited mushroom farms and greenhouses as two such examples.

The Applicant also called evidence to establish that each of the farm’s locations are interdependent parts of a single farm. Examples of the interdependence included employees moving between the tracts of growing land and the Gormley location when required, weather events which can directly impact on the volume of corn arriving at the Gormley location for packing, and waste from the Gormley location being returned to the fields to be used as compost.

[27] At paragraphs 36 to 37, the Board reviewed the authorities cited by Rouge River that supported its position.[^3] Rouge River submitted that these decisions supported a definition of a farm that the Board said “divorces the concept of a farm or farming from any particular location”.

[28] At paragraph 39, the Board noted the following:

Finally, the applicant argued that where a term is not defined in the statute, as is the case with the term “farm” in the Act, its plain, commonly accepted or popular meaning should be accepted. The decision of the Court in Ontario Mushroom was cited in support of this proposition.

[29] At paragraphs 40 to 44, the Board then summarized the position that the Director had taken.

[30] At paragraphs 45 and 54, the Board held that the Gormley Location did not constitute a farm for the purposes of the farm worker exemption, accepting the narrow perspective of the Director over the more expansive view of Rouge River. The Board reached that conclusion guided by the following considerations:

(a) Requiring a farm to have a nexus or connection to the location where the produce is grown or raised is consistent with the plain and ordinary meaning of the term (at para. 45);

(b) It is consistent with the Board’s narrow approach to interpreting exemptions from the Act (at para. 46); and

(c) The Board was not provided with any decision where a location or facility was found to be a farm and the growing or raising of the agricultural product did not occur at that location (at para. 47).

[31] At paragraph 55, the Board noted that the finding that the Gormley Location did not constitute a farm under the Act was determinative of Rouge River’s claim. However, the parties had provided extensive submissions on the second criterion of the farm worker exemption and the Board addressed them as well.

[32] The Board held that the work being done at the Gormley Location is not directly related to primary production. The Board held that the Gormley Location did not meet the two requirements for work to be considered directly related to primary production, namely:

(a) work must occur at the physical location where the growing occurs (at para. 65); and

(b) the work must involve “immediate hands on” contact with the agricultural product. The requirement of “immediate hands on contact” must be considered as a part of a “constellation of factors” that will establish if there is a sufficient nexus between the work performed and the agricultural product to warrant the farm worker exemption (at para. 66).

[33] At paragraph 67, the Board concluded as follows:

As set out above, the applicant has argued in favour of a definition of a farm that removes any reference to the physical location and seeks to define a farm solely in terms of whether or not primary production of an agricultural product is taking place. Defining a farm in such a broad and expansive manner is simply not consistent with the legislative purpose of the Act and the Board’s approach to exemptions from it. To the contrary, and as set out above, in applying the farm worker exemption the Board will interpret the exemption as narrowly as possible in order to exclude as few workers as possible from the protection of the Act. As such, and for all of the foregoing reasons, this application is dismissed.

Jurisdiction

[34] Pursuant to ss. 2 and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1, this court has jurisdiction to hear the application for judicial review.

The Standard of Review

[35] Section 119(14) of the ESA provides:

Nothing in subsection (13) prevents a court from reviewing a decision of the Board under this section, but a decision of the Board concerning the interpretation of this Act shall not be overturned unless the decision is unreasonable.

[36] The parties are agreed that the standard of review is reasonableness.[^4] The decision of the Board attracts deference in the interpretation of its home statute or statutes closely connected to its function. A decision is reasonable if it meets the standards of justification, transparency and intelligibility in the decision making process and if it falls within a range of possible, acceptable outcomes that are defensible in respect of the facts and law.[^5]

[37] The Supreme Court in Canada (Canadian Human Rights Commission) v. Canada (Attorney General)[^6] added to that summary as follows:

When applied to a statutory interpretation exercise, reasonableness review recognizes that the delegated decision maker is better situated to understand the policy concerns and context needed to resolve any ambiguities in the statute (McLean, at para. 33). Reviewing courts must also refrain from reweighing and reassessing the evidence considered by the decision maker (Khosa, at para. 64). At its core, reasonableness review recognizes the legitimacy of multiple possible outcomes, even where they are not the court’s preferred solution.

The Issue

[38] Section 22(1) of the ESA provides that an employer shall pay overtime of at least 1.5 times the regular rate for each hour of work in excess of 44 hours per week. Regulation 285 establishes rules as to hours of work, overtime, public holiday pay and vacation pay. Pursuant to s. 2(2) of Regulation 285, those provisions:

. . . do not apply to a person employed on a farm whose employment is directly related to the primary production of . . . vegetables . . .

[39] The sole issue is whether the decision of the Board is reasonable in its finding that the employees in question were not employed “on a farm” and were not “directly related to the primary production” of sweet corn.

[40] The essence of the decision is the finding that the employees were not employed “on a farm”. Although the supplementary decision that the employment was not “directly related to the primary product” of sweet corn is obiter dicta, this decision will address both criteria.

[41] The issue is one of mixed fact and law and is the type of decision that lies at the heart of the Board’s expertise; hence, deference is attracted.

The Parties’ Positions

[42] The Board’s submissions related to the standard of review. The Board takes no position on the merits of the case.

[43] The Labour Issues Coordinating Committee (“LICC”) is a coalition of agricultural commodity and farm organizations representing the interests of Ontario farm employers. LICC is the principal representative of Ontario’s farm employers at the provincial level with respect to the development and implementation of law related to employment standards, labour relations, human rights, and health and safety. Together, the agricultural commodity and farm organization members of LICC represent the vast majority of farming operations across the province in essentially every sector of Ontario agriculture. All of the farm employers represented by the LICC are subject to the ESA.

[44] The LICC was granted intervenor status to make contextual submissions respecting the history and purpose of the farm worker exemption, the implications of the decision to the broader agricultural industry and the need for a clear and well-defined interpretation of the farm worker exemption.

[45] The LICC takes no position respecting the outcome of the application and relies on its factum, which outlines the history of the ESA and notes that the agricultural sector has been exempted from certain employment standards since the early 20th century because of the unique constraints that present difficulty for Ontario farms to control hours of work including the following:

• the constant change in the agricultural sector;

• the vulnerability of the industry to vagaries of weather;

• the perishability of many products;

• the challenges in recording hours of work;

• the difficulty in absorbing the increased costs associated with employment standards and the inability to pass those costs to consumers in a highly competitive environment;

• the different and variable time requirements for different farms; and

• the impact of reduced working hours on the migrant labour supply.

[46] The LICC points out that the majority of the 51,000 Ontario farms are sole proprietorships and 87.7% of Ontario corporate farms are family corporations. The farm worker exemption does not distinguish between farms on the basis of land size, profitability, payroll size or corporate structure. It urges the court to consider the implications of the Board’s decision on sole proprietorships and family farms that operate similarly to Rouge River.

[47] The LICC factum also referred to the Ingratta Report on the issue of the broader implications of the Board’s interpretation of the farm worker exemption and pointed out Dr. Ingratta’s conclusions that there are many aspects of a farm’s operations that do not require the use of land/soil for the actual growing of the crop that can be, and often are, located off the specific growing plot of land. At paragraph 40 of the factum, LICC quoted from the Report where Dr. Ingratta opined that there is no singular structure for operating Ontario farms and that Ontario farms range in corporate structure, land size, commodity type(s), and number of employees.

[48] LICC asserts that there is a need for a clear and well-defined interpretation of the farm worker exemption. A lack of clarity or significant complexity creates uncertainty for Ontario farmers, leaving them at risk of unintended non-compliance. The farm worker exemption must be interpreted in a manner that employers can apply.

[49] Rouge River submits that the Board’s decision is unreasonable for three main reasons:

(a) the Board’s decision ignores the fundamental principles of statutory interpretation;

(b) the test developed by the Board offends common sense and is unworkable; and

(c) the Board failed to apply the “double nexus” test to the facts of the case.

[50] The Director submits that the decision that the farm worker exemption does not apply to employees working at the Gormley Location falls within the range of reasonable outcomes, defensible on the facts and the law. It submits that the Board’s conclusion is in line with its prior decisions that prefer a narrow construction of the ESA’s regulatory exemptions in order to exclude as few employees as possible.

Analysis

[51] In Re Rizzo & Rizzo Shoes Ltd. (“Rizzo”),[^7] the Supreme Court dealt with the interpretation of ss. 40 and 40(a) of the ESA in the context of a bankruptcy proceeding. The following passages are relevant:

21. . . . Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. . . .

22. I also rely upon s. 10 of the Interpretation Act, R.S.O. 1980, c. 219, which provides that every Act “shall be deemed to be remedial” and directs that every Act shall “receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit. . . .

23. In my opinion, the consequences of effects which result from the Court of Appeal’s interpretation of ss.40 and 40a of the ESA are incompatible with both the object of the Act and with the object of the termination and severance pay provisions themselves. It is a well-established principle of statutory interpretation that the legislature does not intend to produce absurd consequences. According to Côté, supra, an interpretation can be considered absurd if it leads to ridiculous or frivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment (at pp. 378-80). Sullivan echoes these comments noting that a label of absurdity can be attached to interpretations which defeat the purpose of a statute or render some aspect of it pointless or futile (Sullivan, Construction of Statutes, supra, at p. 88).

[52] In Canada Trust Co. v. Canada,[^8] the Supreme Court adopted paragraph 21 from Rizzo and added a refinement as follows:

. . . The interpretation of a statutory provision must be made according to a textual, contextual and purposive analysis to find a meaning that is harmonious with the Act as a whole. When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole.

[53] The object of the ESA is the protection of employees by requiring employers to comply with certain minimum standards of employment. The object of Regulation 285 is to establish those minimum standards while identifying the circumstances in which those minimum standards, in particular, overtime compensation, do not apply.

A. Is the Gormley Location a “farm”?

[54] We find that the Board’s Decision that the Gormley Location is not a farm is unreasonable for the following reasons.

[55] First, the Board disregarded the extensive evidence of Dr. Ingratta as to the current farming context. As the Supreme Court indicated, the context in which the statute or regulation is interpreted is crucial. The Board did refer to the evidence and the report of Dr. Ingratta. However, after those references in paragraphs 29 to 34, the only subsequent reference to all of that evidence is found in paragraph 45 in which the Board mentioned the modern examples of farming which Dr. Ingratta had described. In paragraph 45, the Board accepted the narrow perspective of the Director and therefore rejected a broader interpretation. However, the Decision contains no analysis of the expert evidence and no basis for not accepting or rejecting his comprehensive evidence as to the commonly accepted meaning of the word “farm” in the current farming context.

[56] Indeed, as indicated above, at paragraphs 17 to 21 of the Decision, the Board accepted the narrow interpretation advanced by the Director – before considering the evidence of Dr. Ingratta.

[57] At paragraph 33 of the Decision, the Board introduced as “most significant” the evidence of Dr. Ingratta to the effect that a farm:

… is an enterprise that performs all the functions or steps involved in the production of plant and animal products. This would not only include activities in the production facility (field/animal housing) but in areas where post-harvest handling is conducted (tobacco kilns, potato storage, grain drying and storage, grading and packing, refrigerated milk tanks etc.) These post-harvest activities are integral to preparing the products for sale or consumption.

[58] In other words, the Board received unchallenged expert evidence that Ontario farms commonly operate on non-contiguous tracts of land and that it is common for farms to preserve prime growing land by locating post-harvest aspects of primary production on non-productive land. The expert evidence is that there is nothing unusual about Rouge River’s farm structure. While observing that that evidence was “most significant”, the Board did not explain why it did not accept the evidence. Indeed, at paragraph 45, the Board appeared to approve of that definition by suggesting that the “nexus” principle which it adopted was consistent with the “modern examples of farming, including many of those cited by Dr. Ingratta in his report”.

[59] It was unreasonable for the Board to disregard – without explanation – compelling expert evidence that necessitated a broader interpretation of “farm” in s. 2(2).

[60] In paragraph 58, in the section of the Decision on “primary production”, the Board noted the submission by Rouge River with respect to the Ministry of Labour’s Policy and Interpretation Manual that included transportation as an aspect of “primary production”. However, the Manual was also important to the analysis of whether the Gormley Location was a farm as this passage from the Manual indicates:

It is the Program’s position that while the ordinary meaning of “a farm” is “a tract of land”, this does not necessarily mean that the property in question must be a single tract of land or even contiguous lots or part lots. So long as all of the tracts of land are worked or managed by the same farmer, all of those tracts will be considered to be a farm. For example, where in expanding his or her operations Farmer A has purchased fields that are separated by roads or highways or even another farmer’s field, the fields owned by Farmer A would be considered to be a farm. [Emphasis added.]

[61] In its Policy and Interpretation Manual, the Ministry conceded that the plain and ordinary meaning did not apply. Based on the evidence, the definition of a farm created and advanced by the Ministry in the Manual was more consistent with the definition advanced by Dr. Ingratta and not consistent with the definition advanced by the Director. It was unreasonable for the Board to have disregarded such evidence in favour of a narrow definition based on the fact that sweet corn was not grown at the Gormley Location. The fact that the Board preferred the interpretation advocated by the Director does not explain the reason for not accepting, for rejecting, or for disregarding comprehensive, persuasive and relevant expert evidence.

[62] Second, the interpretation by the Board is arbitrary and leads to an absurd result. One aspect of the work at the Gormley Location – sorting – can occur either on the growing land or at the Gormley Location. The location of sorting varies based on the operational needs at any given time. Under the Board’s analysis, workers engaged in sorting would be subject to the farm workers exemption only if they are standing on the tract of land on which the sweet corn being sorted was grown. They would not be subject to the farm workers exemption if: (a) they were sorting while standing on the tract of land occupied by the Gormley Location or (b) sorting while standing on a tract of the land but the sweet corn being sorted was grown on a different tract. However, every aspect of the work of sorting is exactly the same. The failure to interpret the exemption in a way that reflects all aspects of the work of sorting is arbitrary and therefore unreasonable. It is illogical to have the farm worker exemption apply to one of those three categories of employees but not to the other two categories. It is incompatible with the objects of the regulation to differentiate such work.

[63] Third, the arbitrariness and absurd result creates uncertainty in an area of law affecting thousands of farmers and employees. The uncontradicted evidence is that employees are routinely transferred between harvesting duties where the corn is grown and post-harvesting duties at the Gormley Location, all depending on the operational needs at any particular time. Based on the Board’s interpretation of “a farm”, the employer would be expected to track with precision the hours spent on the Gormley Location (where the exemption did not apply) and the hours spent on approximately 30 tracts of land in the Ontario Lots (where the exemption would apply). Imposing such a distinction would create significant obstacles in managing the labour force and, for employers and employees, significant challenges in record keeping. The Decision failed to provide a clear and well-defined interpretation of the term “a farm” as urged by the LICC.

[64] The Decision as to the meaning of “farm” makes it difficult for persons engaged in the occupation covered to determine whether the farm worker exemption applies or not. This court has previously stressed the importance of interpreting employment standards in a manner that is understandable to those subject to them, particularly so that employers can avoid inadvertently running afoul of the statute. For example, at paragraph 6 in Ontario Mushroom the court observed:

The section we are concerned with deals with farms and farming. I would not think that the language was used with any other intention than it should be comprehensible to persons engaged in the kind of occupations that are covered. These include…persons employed on farms, etc. It seems to me, therefore, that the statute should be interpreted in accordance with the common understanding of terms in common use.

B. Are the employees at the Gormley Location involved in employment that is “directly related to the primary production” of a vegetable, namely sweet corn?

[65] For the reasons that follow, we find that the Board’s conclusion that the work that occurred at the Gormley Location was not “directly related to the primary production” of sweet corn was unreasonable.

[66] The first reason is that, again, the Board disregarded the evidence not only of Dr. Ingratta but also of Robert and Curtis Reesor.

[67] As Dr. Ingratta’s Report indicates, he understood that the questions he was asked to answer related to the issue of whether employees working at the Gormley Location were employed “on a farm”. He was not asked to define “primary production” but he incorporated that concept into various aspects of his report including:

(a) In his definition of farm, he included post-harvest activities as integral to preparing the products for sale or consumption (at p. 2);

(b) For many farming commodities, traceability systems have been developed and are an essential element of primary production to ensure food safety. . . Primary producers have become an integral part of food safety systems, particularly with the packing and preparing of consumer ready productions. Although food safety requirements are relatively new, they clearly fit into the production process of farming (at p. 8);

(c) There are growing demands for certification of some aspect of the food producing system. Organic, halal, kosher, GMO free, gluten-free, fair trade and sustainable, are all forms of food production which require a certification process … many of these processes require the primary producer to alter traditional production patterns in order to meet certification requirements. These altered practices would still be seen as essential parts of farming (at p. 8); and

(d) in response to the fifth question about conducting “aspects of primary production” on non-agricultural and non-contiguous land, he wrote the following:

Any aspect of the farm’s operation which does not require the use of land/soil for the actual growing of the crop could be located off the specific growing plot of land. The rationales for alternative locations are quite varied, but include:

• Providing a central service for non-contiguous properties owned by the farm. Examples would include equipment storage/servicing, input supply storage, grading and handling, crop drying, feed mixing and storage, crop storage, and sorting and packing.

• The farmer enters into a commercial relationship to perform the above functions at a cooperative facility because the farm lacks capacity for any or all of these functions (at p. 10).

[68] In addition, Robert and Curtis Reesor provided extensive evidence about the operational imperatives that necessitated locating the post-harvest production on land other than growing land. That evidence explained the rationale for Rouge River centralizing the post-harvest production in order to have access to large amounts of electricity (essential for cooling) and to have access to an indoor facility to ensure the quality of the sweet corn. The Agreed Statement of Facts included the following;

The Production of Sweet Corn

24. Sweet corn is a highly perishable crop that must be cooled, trimmed, graded, and packed after harvest to protect its quality. Mishandling of sweet corn causes serious and irreversible deterioration in quality, making sweet corn unfit for consumers. . . .

25. The hydro-cooling process is a crucial part of the production of sweet corn because: (1) it preserves the sweet corn; (2) it maintains the sweet corn’s sugar content; and (3) it maintains the sweet corn’s fresh quality for up to 21 days. Absent the hydro-cooling process, the sweet corn will rapidly overheat, lose significant sugar content, and become unmarketable. . . .

26. It should be noted that a few wholesale customers prefer the sweet corn to remain in the husk. This represents about 1% of the sweet corn that passes through the Gormley Location. This sweet corn is also not de-shanked. The sweet corn is sold in a small bulk container, which includes between 48 to 60 cobs.

[69] In other words, 99% of Rouge River “production” requires that immediate steps be taken, otherwise there is a risk of loss of the harvest. The interpretation of “primary production” by the Board is unreasonable in that it fails to take account of this crucial context.

[70] That evidence was uncontradicted. The Board was required to consider it. The decision contains no analysis of that evidence and no basis for not accepting or for rejecting his comprehensive evidence. It was unreasonable for the Board to disregard – without explanation – compelling evidence that contextualized the meaning of “primary production”.

[71] The second reason is the frailty of the analysis by the Board of the impact of the Highline Produce v. Flieler[^9] case. Both Rouge River and the Director had referred to Highline Produce – the Board described it as the “leading case” on the issue of whether employment is “directly related to primary production”. At paragraph 56 of the Decision, the Board quoted paragraphs 23-25 as follows:

While these authorities are brief on analysis, it is possible to discern the application of some consistent principles. Work that is “directly related” must be work at the physical location where growing occurs and involves immediate “hands on” contact with the agricultural product. “Primary production” appears to refer to any step in the production or growing process prior to a change in the form or state of the product. In other words, the processing of a raw vegetable into some other state, such as liquid or cooked solid would not be part of “primary production” nor would the handling of product in the changed state or form.

In summary, it seems that work directly related to primary production means “hands on” work which occurs on the farm or place of growing, that deals with the product in its original /raw state.

The application of these broad principles would lead to the conclusion that packing mushrooms in their raw state at the farm where they are grown, is directly related to primary production. [Emphasis added.]

[72] The Board concluded its analysis at paragraphs 64 and 65 as follows:

The parties emphasized different paragraphs in Highline Produce to support their respective positions. The applicant relied on para. 24. The DES relied on paras. 23 and 25. It seems to me that paras. 23 and 24 reflect the same principles and are complementary. At para. 23 the Board listed the principles to apply in order to determine first, what is required for work to be “directly related” and second, what is required for work to be “primary production”. Para. 24, which begins with the words “in summary”, is exactly that, a summary of the principles set out in para. 23. The decision in Highline Produce establishes two requirements for work to be considered “directly related” to primary production. First the work must occur at the physical place of growing, whether that be a farm or any other place of growing. Second it must involve immediate “hands on” contact with the agricultural product. This is confirmed at para. 25 of the decision.

I accept the argument of the DES that in order for work to be “directly related” to primary production the work must be done where the growing occurs. The work being done at the Gormley location is not occurring at the physical place of growing. In many cases the work being done at Gormley is both geographically and temporally quite remote from where the sweet corn was actually grown. As such it is not directly related to the primary production of sweet corn. This conclusion is consistent with the Board’s jurisprudence in Highline Produce. It is also consistent with the interpretative approach the Board has applied to exemptions from the Act.

[73] In Highline Produce, the ESO found that the employer had failed to pay public holiday pay to the employee. The employer sought a review pursuant to s. 116 on the basis that the employee was exempt pursuant to s. 2(2). As indicated at paragraph 14 of that decision, the parties agreed that the work in question occurred on a farm. The issue was whether packing of mushrooms, including wrapping with cellophane before storage and transport, was “directly related” to “primary production”.

[74] Secondarily, the issue was whether the Director’s “new” view of the application of the exemption was different from the position taken historically. The reasoning of the Board must be taken in the context that the place in which the mushrooms grew and the place in which the packing was done were the same and the parties had agreed that that was a farm. The issue as to whether the packing could have been done at another location was not before the Board. To the extent that the Board concluded that the packing had to be “hands on” at the physical location of growing, it was not a finding of fact and law as to the definition of “primary production” that must be applied in this case.

[75] The key passage in Highline Produce is at paragraph 23:

. . . “Primary production” appears to refer to any step in the production or growing process prior to a change in the form or state of the product. In other words, the processing of a raw vegetable into some other state, such as a liquid or cooked solid would not be part of “primary production” nor would the handling of product in the changed state or form.

[76] Indeed, in the Ministry’s Policy and Interpretation Manual the following appears:

“Primary production” refers to “any step in the growing or production of the product prior to a change in the form or state of the product”. This includes harvesting and on-farm storage, as well as transportation to market of unprocessed agricultural products (see below). . . .

Primary production ends once employees are engaged in processing, which is a step that transforms the raw produce into a different state (e.g. by pureeing, cooking, brining, canning or drying).

[77] The definition in the Policy and Interpretation Manual is consistent with the report by Dr. Ingratta in that “primary production” includes any step in the growing or production prior to a change in the form. Furthermore, primary production ends once processing starts.

[78] The Board did not consider that the farm worker exemption has always been understood to apply to employees operating vehicles to transport crops or livestock to market. However, their jobs are performed in large measure off the physical location of the farm, yet they are subject to the exemption. In the Board’s decision in Highline Produce it rejected the Director’s contention that work related to packaging mushrooms was not related to primary production. The Board held at paragraph 28:

It is also difficult to reconcile the position taken by the Director that work involved in storing and transporting mushrooms which occurs on the farm but after packing, is work that is directly related to primary production – while the work of packing is not. There would seem to be no rational or logical basis for distinguishing between the act of packing fresh mushrooms on a farm and the act of driving away from the farm pulling a trailer filled with packed mushrooms. If anything, the act of driving the truck might be understood to be more remote from, and less directly related to primary production. Indeed, given the Director’s position that the latter work (transport) is in fact primary production, it would appear inconsistent with the statutory scheme to conclude that packing was not directly related to primary production. No explanation was offered which would permit these apparent contradictions to be resolved. It is difficult to imagine an expansive reading of employee entitlement that would render such an outcome coherent.

[79] It was unreasonable to adopt and rely on the decision in Highline Produce for the proposition that the work had to be done at the same location as the growing.

[80] Third, the requirement that a “double nexus test” be met creates uncertainty. In arriving at the definition of “a farm”, the Board required that there be a sufficient nexus or connection to the location where the sweet corn was grown to be considered a farm. In arriving at a definition of “primary production”, the Board asserted that it was necessary to take into account a “constellation of factors” including the presence of immediate “hands on” contact, to determine if there was a sufficient nexus between the work being performed and the sweet corn to warrant the application of the farm worker exemption.

[81] Furthermore, having created the “double nexus test”, the Board failed to apply the test to the evidence as to the seamless integration of the primary production of sweet corn between the Gormley Location and the growing land. The Board focused on the fact that in the Ontario off-season sweet corn is grown on land in the United States and must travel from 8 to 48 hours to read the Gormley Location. The Board referred to a “constellation of factors” without identifying any factors other than immediate “hands on” contact.

[82] The Decision makes it difficult for persons engaged in the occupation to determine whether the farm worker exemption applies or not. Paragraph 6 of the decision in Ontario Mushroom, quoted above, applies equally to this second element of the exemption. The Decision failed to provide a clear and well-defined interpretation of the term “directly related to primary production” as urged by the LICC.

Conclusion with respect to the exemption in s. 2(2)

[83] We agree with Rouge River that the Board’s Decision that the farm worker exemption does not apply because the Gormley Location is not “a farm” and the work done at the Gormley Location is not “directly related to the primary production of sweet corn” is unreasonable because:

(a) the Decision disregarded the comprehensive uncontradicted expert evidence of Dr. Ingratta as to the commonplace definition of “farm” and the common understanding of “directly related to primary production”;

(b) the Decision disregarded the extensive uncontradicted evidence of Robert Reesor and Curtis Reesor as to the operational context in which sweet corn is harvested and brought to market;

(c) the Decision adopted definitions of “farm” and “directly related to primary production” that are arbitrary, create absurd results, and promote uncertainty; and

(d) the Decision favours narrow definitions in isolation primarily to restrict the application of the exemption without proper consideration of the contextual circumstances that are required as part of the analysis.

[84] Furthermore, that Decision is not transparent because it does not contain any explanation for disregarding the expansive uncontradicted evidence of “farm” and “directly related to primary production” in favour of narrow definitions. The fact that the Board preferred the interpretation advocated by the Director does not explain the reason for not accepting, or for rejecting comprehensive, persuasive and relevant evidence.

[85] The protective purpose of the farm worker exemption must be interpreted according to its purpose, its plain meaning, and in light of its distinct role within the scheme of the ESA. A purposive and contextual approach calls for a balancing of the interests protected by the ESA and by the farm worker exemption in Regulation 285. The Board did not engage in such balancing, relying instead on the principle that Regulation 285 had to be construed in the narrowest manner possible so as to limit the number of employees caught by the exemption.

[86] The court recognizes the importance of deference to the Board, particularly when the essence of the Decision is the interpretation of a regulation that falls squarely within its statutory mandate. However, the Decision cannot stand. This Court has not reweighed and reassessed the evidence, but rather has had to weigh and assess evidence that the Board disregarded without explanation. The Board failed to meet the standards of justification, transparency and intelligibility in the decision-making process. The Decision does not fall within a range of possible acceptable outcomes that are defensible in respect of the facts and law and is, thus, unreasonable.

Remedy and costs

[87] At the conclusion of submissions on the merits of the application, the Court asked counsel for submissions as to remedy and costs. Written submissions were made on behalf of Rouge River, the Director and the Board.

[88] Rouge River takes the position that if the Decision is set aside, the Court should substitute its own decision. In the alternative, Rouge River asks that the Court set aside the Decision and do nothing further. They take the position that doing nothing further does not mean that the decision of the ESO is somehow “revived” because it too is set aside by necessary implication.[^10]

[89] The Director takes the position that if the Decision is set aside, the court should not substitute its decision but should remit the question to the Board with or without directions.

[90] The Decision of the Board does not fall within a range of possible, acceptable outcomes that is defensible in respect of the facts and law. Applying a textual, contextual and purposive analysis to the interpretation of s. 2(2), the Gormley Location is a farm and those who are working there are employed in activities that are directly related to the primary production of sweet corn. That is the only possible, acceptable outcome that is consistent with the object of the ESA and the object of Regulation 285 and that is defensible in respect of the facts and law. There is no reason to return the matter to the Board with or without directions. This is one of the exceptional circumstances in which the Court should substitute its decision.

[91] In the supplementary submissions, Rouge River asked for costs against the Director in the amount of $5,000. In response, the Director agreed to that amount if costs were ordered in favour of Rouge River, but did not ask for costs if the application for judicial review was dismissed.

ORDER TO GO AS FOLLOWS:

[92] The Application is granted.

[93] The Decision of the Board dated March 7, 2017 is set aside. The “farm worker exemption” pursuant to s. 2(2) of Regulation 285 applies to the employees of Rouge River Farms Inc. at the Gormley Location.

[94] The Director shall pay costs to Rouge River Farms Inc. in the amount of $5,000.

Justice F. Kiteley

Justice R. Del Frate

Justice H.A. Rady

Released: June 06, 2019

[^1]: 2017 O.L.R.B. Rep. 346. [^2]: Rouge River’s first centralized production was at Cecil’s Farm in Markham and, when Rouge River outgrew that facility, production was moved to an existing repurposed building owned by the Morra family in Stouffville. [^3]: The authorities cited include DeCloet Ltd. v. Minister of National Revenue, [1989] T.C.J. No. 203; U.F.C.W., Local 373A v. Leaver Mushrooms Co., [1991] Alta. L.R.B.R. 20; Ontario Mushroom Co. v. Learie (1977), 1977 1117 (ON SC), 15 O.R. (2d) 639, 76 D.L.R. (3d) 431 (Div. Ct.) (“Ontario Mushroom”); MedReleaf Corp. 2015 85534 (Ont. L.R.B.). [^4]: Abdoulrab v. Ontario (Labour Relations Board), 2009 ONCA 491, 95 O.R. (3d) 641, at paras. 46-47. [^5]: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654. [^6]: 2018 SCC 31, [2018] 2 S.C.R. 230, at para 55. [^7]: 1998 837 (SCC), [1998] 1 S.C.R. 27, 154 D.L.R. (4th) 193. [^8]: 2005 SCC 54, [2005] 2 S.C.R. 601, at para. 10. [^9]: [2009] O.L.R.B. Rep. 562 (“Highline Produce”). [^10]: Blue Mountain Resorts Ltd. v. Bok, 2013 ONCA 75, 114 O.R. (3d) 321, at paras. 2- 4; Tosswill v. Ciavone Investments Limited (Canadian Tire), 2007 29223, at para. 6 (Ont. L.R.B.).