Stetler et al. v. The Ontario Flue-Cured Tobacco Growers' Marketing Board; The Attorney General for Ontario, Intervenor

[Indexed as: Stetler v. Ontario Flue-Cured Tobacco Growers' Marketing Board]

76 O.R. (3d) 321

[2005] O.J. No. 2817

Docket: C41821

Court of Appeal for Ontario,

Borins, Feldman and Cronk JJ.A.

July 8, 2005

Application for leave to appeal to the Supreme Court of Canada was dismissed with costs February 16, 2006 (Deschamps, Fish and Abella).

Administrative law -- Judicial review -- Bias -- Agriculture, Food and Rural Affairs Tribunal upholding decision of Ontario Flue-Cured Tobacco Growers' Marketing Board that respondents had engaged in unlawful sale of tobacco -- Divisional Court erring in finding that fact that Board member who participated in decision gave evidence before Tribunal gave rise to reasonable apprehension of bias -- Respondents waiving right to argue reasonable apprehension of bias by not making timely objection before Tribunal and instead raising issue for first time before Divisional Court.

Administrative law -- Judicial review -- Standard of review -- Divisional Court erring in finding that standard of review of decision of Agriculture, Food and Rural Affairs Appeal Tribunal was that of correctness -- Standard of correctness applying to Tribunal's rulings on pure questions of law that did not involve its discretion or expertise but standard of review applicable to Tribunal's decision on issue before it of whether respondents engaged in unlawful sale of tobacco that of reasonableness.

The respondent, a tobacco farmer, was found to have engaged in the unlawful sale of tobacco outside the auspices of the Ontario Flue-Cured Tobacco Growers' Marketing Board's quota system. The penalty was the cancellation of the tobacco quota allocated to the respondent and his company. The Board originally adjourned its hearing at the request of the respondents to allow them to first deal with charges under the Excise Act, R.S.C. 1985, c. E-14 in respect of the same alleged conduct. The Excise Act charges were eventually stayed. In consideration of the stay, the respondents agreed that all of the evidence in the Crown brief would be submitted in evidence before the Board. The Agricultural, Food and Rural Affairs Appeal Tribunal substantially confirmed the Board's decision. The Divisional Court allowed the respondents' application for judicial review. The court concluded that the applicable standard of review was that of correctness. It found that the Tribunal committed errors of law. Since the Divisional Court viewed the case as quasi-criminal in nature, involving a person's livelihood and the potential penalty of licence revocation, it found that the standard of proof required was not proof on a balance of probabilities, but clear and convincing proof based on cogent evidence. The court found that the evidence before the Tribunal was not sufficient to entitle the Tribunal to make its findings. The Divisional Court found that the Tribunal permitted itself to be tainted by a clear apprehension of bias by accepting and relying on the evidence of G, a Vice-Chair of the Board who had participated in the original Board decision. G gave evidence that supported the Board's decision regarding the time it would take to load a van with tobacco. The Divisional Court concluded that the errors of law made by the Tribunal, including the bias issue, were sufficient for it to quash the decisions of both the Tribunal and the Board. The Board and the Tribunal appealed. [page322]

Held, the appeal should be allowed.

The pragmatic and functional approach to determining the degree of deference to be accorded to the administrative decision-maker in the circumstances involves a consideration of four contextual factors: (a) the presence or absence of a privative clause or statutory right of appeal; (b) the expertise of the tribunal relative to a court on the issue in question; (c) the purposes of the legislation and the provision in question; and (d) the nature of the question as one of fact, or law, or of mixed fact and law. In this case, the Divisional Court conducted an abbreviated standard of review analysis, using only some of the contextual factors. It failed to conduct the pragmatic and functional analysis addressing all four contextual factors, and therefore failed to conduct the necessary balancing of those factors. Furthermore, it erred in its characterization of the decision as involving penal consequences, which error significantly influenced its decision on the standard of review.

More fundamentally, the Divisional Court's analysis failed to properly identify the issue that was decided by the Tribunal and was the subject of the judicial review -- the conclusion that the respondent sold tobacco in contravention of the regulations and became subject to a penalty. Instead, the Divisional Court focused on certain legal and procedural issues that may arise during any hearing where evidence is led and where a determination must be made that involves findings of fact and the application of the law to those facts. The Divisional Court treated these problems as the issues under review. Looked at in that way, any administrative hearing and decision would be reviewable on the correctness standard. Considering and balancing all four contextual factors, the standard of review of the Tribunal's decision was that of reasonableness. The privative clause in question was a weak one, signalling deference, but subject to the other three factors.

In considering the second factor, the relative expertise of the Tribunal as compared with that of the reviewing court, it was important to note that the transportation of tobacco from Ontario to Quebec outside the quota system is a regulatory, not a criminal, offence. The jurisdiction of the Board is to investigate such activity and to hold a hearing. If the Board finds that the activity has occurred, it can impose penalties that involve limiting the person's ability to grow or market tobacco. There are no possible penal consequences, nor is there any finding of criminality or quasi-criminality by the Board. The factor of relative expertise was a neutral one. The purpose of the legislative scheme is to ensure that tobacco is grown and marketed under an orderly system that regulates the quantity and price of tobacco produced, providing a fair scheme for all those involved in the industry. The purpose of the specific provision that allows the Board and, on appeal, the Tribunal, to cancel or reduce the quotas of those who violate the scheme is to enforce compliance for the benefit of all. It is intended that the Board and the Tribunal, who are familiar with the marketing schemes, their purpose, their effect and their rules, are to employ that understanding in the enforcement of the regulations. The Tribunal is less specialized than the Board, and to that extent, its particular expertise in tobacco is much more limited.

In any event, because these types of administrative decisions are not policy decisions, but are adjudicative in nature, this factor did not weigh strongly in favour of a deferential standard of review. Where a tribunal is making factual decisions based on the evidence presented before it, a significant degree of deference is accorded to those decisions. Similarly, where a tribunal governed by the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 conducts its hearing within the procedural discretion afforded by that statute, a court will accord substantial deference to its discretionary procedural and legal decisions, provided there has [page323] been no denial of natural justice in the procedure chosen. However, questions of general application that do not engage the specialized expertise or the discretion of the tribunal are reviewable for correctness. While the Tribunal's decision on the issue of whether the respondents engaged in the unlawful sale of tobacco outside the auspices of the Board and the quota system should have been reviewed by the Divisional Court on a standard of reasonableness, the Tribunal was required to be correct on pure questions of law that did not involve the discretion or expertise of the Tribunal.

While the respondents objected to the admission of hearsay evidence contained in wiretapped conversations, an administrative tribunal is entitled to admit and rely on hearsay evidence, and the Tribunal did not exercise that discretion unreasonably in admitting the evidence. Importantly, the agreement that was made in exchange for a stay of the Excise Act charges was that all of the evidence in the Crown brief would be admitted in the regulatory proceeding, subject to the right of counsel to address the proper interpretation of the evidence and the conclusions to be drawn from it. The respondents could not now complain about the admission or the use of that evidence by the Tribunal.

The Tribunal made no error with respect to the appropriate standard of proof. There are only two standards of proof used in legal proceedings. In civil and administrative matters, absent an express statutory provision to the contrary, the standard of proof is on a balance of probabilities, while in criminal matters it is proof beyond a reasonable doubt. Where the consequences to an individual are very serious, as where a person's professional standing or livelihood is at risk, the evidence must be clear, cogent and convincing, within the civil standard of proof. In its reasons, the Tribunal referred to the standard of proof as "on the balance of probabilities". It made no error in doing so. Although the tribunal did not articulate a requirement for clear, cogent and convincing evidence, its analysis of the evidence demonstrated that it was only prepared to make findings against the respondents if it was satisfied that the evidence justified the findings to that degree.

There was nothing in the record which indicated that allowing the Board to call G as a witness gave rise to a reasonable apprehension of bias. There was no suggestion in the record that there was any relationship between G and the members of the Tribunal, and there was nothing in the record to indicate whether the procedure followed in calling G was either common or uncommon before the Tribunal. G was not called as a witness in his capacity as a Board member, but, rather, to give evidence within the domain of his extensive, and unchallenged, experience as a tobacco grower. Had an objection been made to the Tribunal when G was called, the context and any relevant facts could have been identified and considered before the Tribunal decided whether to allow him to testify. However, experienced counsel on behalf of the respondents made no objection to this witness before the Tribunal. A reasonable apprehension of bias was not made out in this case. Moreover, any objection was waived by the respondents when they did not raise any issue regarding this witness before the Tribunal.

The Tribunal's finding that the respondents engaged in the unlawful sale of tobacco outside the auspices of the quota system was reasonable. However, the Tribunal upheld the penalty imposed by the Board, despite the Tribunal's finding that liability was established on two dates, and not on the three dates found by the Board. It was not clear that, in imposing the original penalty set by the Board and in the face of its different findings, the Tribunal considered all relevant factors. The Tribunal's penalty decision was, therefore, unreasonable. The matter should be remitted to the Tribunal to reconsider the issue of penalty. [page324]

APPEAL from the decision of the Divisional Court (Dunnet, Jennings and Campbell JJ.), 2003 26757 (ON SCDC), [2003] O.J. No. 5203, 179 O.A.C. 398 allowing an application for judicial review of a decision of the Agriculture, Food and Rural Affairs Appeal Tribunal.

Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, [2003] S.C.J. No. 18, 223 D.L.R. (4th) 599, 302 N.R. 34, [2003] 5 W.W.R. 1, 2003 SCC 19, 11 B.C.L.R. (4th) 1, apld Bernstein and College of Physicians and Surgeons of Ontario (Re) (1977), 1977 1072 (ON SC), 15 O.R. (2d) 447, 76 D.L.R. (3d) 38 (Div. Ct.); R. v. Carter, 1982 35 (SCC), [1982] 1 S.C.R. 938, 46 N.B.R. (2d) 142, 137 D.L.R. (3d) 385, 47 N.R. 289, 121 A.P.R. 142, 67 C.C.C. (2d) 568, 31 C.R. (3d) 97, consd Other cases referred to Abji v. Ontario College of Pharmacists, [2001] O.J. No. 4546 (Div. Ct.); Brett v. Board of Directors of Physiotherapy, 1993 9390 (ON CA), [1993] O.J. No. 1253, 104 D.L.R. (4th) 421 (C.A.), affg 1991 8286 (ON SCDC), [1991] O.J. No. 44, 48 O.A.C. 24, 77 D.L.R. (4th) 144 (Div. Ct.); British Columbia (Superintendent of Brokers) v. Rak, 1990 810 (BC CA), [1990] B.C.J. No. 2383, 74 D.L.R. (4th) 725, 51 B.C.L.R. (2d) 27, 47 Admin. L.R. 243 (C.A.); Canada (Human Rights Commission) v. Taylor, 1990 26 (SCC), [1990] 3 S.C.R. 892, [1990] S.C.J. No. 129, 75 D.L.R. (4th) 577, 117 N.R. 191, 3 C.R.R. (2d) 116 (sub nom. Taylor v. Canadian Human Rights Commission); Carruthers v. College of Nurses of Ontario (1996), 1996 11803 (ON SC), 31 O.R. (3d) 377, [1996] O.J. No. 4275, 141 D.L.R. (4th) 325 (Div. Ct.); Cartaway Resources Corp. (Re), [2004] 1 S.C.R. 672, [2004] S.C.J. No. 22, 238 D.L.R. (4th) 193, 319 N.R. 1, [2004] 8 W.W.R. 62, 2004 SCC 26, 28 B.C.L.R. (4th) 1, 14 Admin. L.R. (4th) 190; Coates v. Ontario (Registrar of Motor Vehicle Dealers and Salesman) (1988), 1988 4555 (ON SC), 65 O.R. (2d) 526, [1988] O.J. No. 1351, 28 O.A.C. 307, 52 D.L.R. (4th) 272 (Div. Ct.); College of Chiropractors of Ontario v. Kovacs, 2004 34625 (ON SCDC), [2004] O.J. No. 4353, 191 O.A.C. 88 (Div. Ct.); Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716, 9 N.R. 115; Energy & Chemical Workers' Union Local 916 and Atomic Energy of Canada Ltd. (Re), 1985 5528 (FCA), [1986] 1 F.C. 103, 24 D.L.R. (4th) 675, 64 N.R. 126, 86 C.L.L.C. 17,012 (C.A.); Guthrie v. Ontario Assn. of Architects, [1988] O.J. No. 364, 29 O.A.C. 146, 29 C.L.R. 27 (Div. Ct.); H.L. v. Canada (Attorney General), [2005] S.C.J. No. 24, 2005 SCC 25, 251 D.L.R. (4th) 604; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 2002 SCC 33, 10 C.C.L.T. (3d) 157; London (City) v. Ayerswood Development Corp., 2002 23580 (ON CA), [2002] O.J. No. 4859, 2002 3225 (ON CA), 167 O.A.C. 120, 34 M.P.L.R. (3d) 1; Man O'War Station Ltd. v. Auckland City Council (Judgment No. 1), [2002] 3 N.Z.L.R. 577, [2002] UKPC 28; Markandey v. Ontario (Board of Ophthalmic Dispensers), [1994] O.J. No. 2913 (Gen. Div.); Martineau v. Canada (Minister of National Revenue), [2004] 3 S.C.R. 737, [2004] S.C.J. No. 58, 247 D.L.R. (4th) 577, 125 C.R.R. (2d) 301, 192 C.C.C. (3d) 129, 2004 SCC 81, 24 C.R. (6th) 207; Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] 3 S.C.R. 152, [2004] S.C.J. No. 51, 242 D.L.R. (4th) 193, 2004 SCC 54, 45 B.L.R. (3d) 161, 17 Admin. L.R. (4th) 1; Moreau-Bérubé v. New Brunswick (Judical Council), [2002] 1 S.C.R. 249, [2002] S.C.J. No. 9, 245 N.B.R. (2d) 201, 209 D.L.R. (4th) 1, 636 A.P.R. 201, 2002 SCC 11; Northwestern Utilities Ltd. v. Edmonton (City), 1978 17 (SCC), [1979] 1 S.C.R. 684, 89 D.L.R. (3d) 161, 23 N.R. 565, 7 Alta. L.R. (2d) 370, 12 A.R. 449; Ontario (Children's Lawyer) v. Ontario (Information and Privacy Commissioner) (2005), 2005 11786 (ON CA), 75 O.R. (3d) 309, [2005] O.J. No. 1426, 253 D.L.R. (4th) 489, 196 O.A.C. 350; Ontario Provincial Police v. Favretto (2004), 2004 34173 (ON CA), 72 O.R. (3d) 681, [2004] O.J. No. 4280, 191 O.A.C. 3 (C.A.); Persaud v. Society of Management Accountants of Ontario, 1997 17789 (ON SCDC), [1997] O.J. No. 884, 144 D.L.R. (4th) 375, 98 O.A.C. 216, 67 O.T.C. 289, 48 Admin. L.R. (2d) 276 (Div. Ct.); Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 1222, [1998] S.C.J. No. 77, [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46, 160 D.L.R. (4th) 193, 226 N.R. 201; Robinson v. Ontario (Securities Commission), [2000] O.J. No. 648 (Div. Ct.); [page325] Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, [2004] 2 S.C.R. 427, [2004] S.C.J. No. 44, 240 D.L.R. (4th) 193, 322 N.R. 306, 32 C.P.R. (4th) 1, 2004 SCC 45; Toronto (City) Board of Education v. Ontario Secondary School Teachers' Federation, District 15, 1997 378 (SCC), [1997] 1 S.C.R. 487, [1997] S.C.J. No. 27, 144 D.L.R. (4th) 385, 208 N.R. 245, 25 C.C.E.L. (2d) 153; Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64, 311 N.R. 201, 2003 SCC 63, 17 C.R. (6th) 276; Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, [2003] S.C.J. No. 50, 231 D.L.R. (4th) 1, 309 N.R. 201, [2004] 2 W.W.R. 1, 2003 SCC 45, 40 C.P.C. (5th) 1, 19 B.C.L.R. (4th) 195; Zündel v. Canada (Canadian Human Rights Commission) (re Canadian Jewish Congress), 2000 16575 (FCA), [2000] F.C.J. No. 1838, 195 D.L.R (4th) 399, 264 N.R. 174, 30 Admin L.R. (3d) 77 (C.A.)

Statutes referred to Excise Act, R.S.C. 1985, c. E-14 Farm Products Marketing Act, R.S.O. 1990, c. F.9, s. 2 Medical Practitioners Act, R.S.B.C. 1996, c. 285 Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990, c. M.16, ss. 16(2), (10), (11), 14.(1.1), 17, 18 Securities Act, S.B.C. 1985, c. 83 Statutory Powers Procedures Act, R.S.O. 1990, c. S.22, ss. 15, 15.1 [as am.], 15.2 [as am.], 16

Rules and regulations referred to Tobacco-Marketing, R.R.O. 1990, Reg. 435, s. 5 Tobacco-Plan, R.R.O. 1990, Reg. 436

Authorities referred to Blake, S., Administrative Law in Canada, 3rd ed. (Markham: Butterworths, 2001) Brown, D., and J. Evans, Judicial Review of Administrative Action in Canada, vol. 3, looseleaf (Toronto: Canvasback Publishing, 1998) Halsbury's Laws of England, 4th ed., vol. 1 (London: Butterworths, 2003) Macaulay, R.W., and J.L.H. Sprague, Practice and Procedure Before Administrative Tribunals, vol. 2, looseleaf (Toronto: Carswell, 1988)

Barry Bresner and Freya Kristjanson, for appellant. F. Paul Morrison and Jacob Glick, for respondents Stetler and 934671 Ontario Limited. David Vickers, for respondent Agriculture, Food and Rural Affairs Appeal Tribunal and for intervenor Attorney General for Ontario.

The judgment of the court was delivered by

[1] FELDMAN J.A.:-- The respondent Wyatt Stetler is a tobacco farmer who, along with his corporation the respondent 934671 [page326] Ontario Limited, was found to have engaged in the unlawful sale of tobacco outside the auspices of the Ontario Flue-Cured Tobacco Growers' Marketing Board's (the "Board") quota system. The penalty was the cancellation of the tobacco quota allotted to the respondent and to the respondent company. The original hearing was before the Board, and its decision was substantially confirmed on appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (the "Tribunal") [See Note 1 at the end of the document]. On judicial review, applying a standard of correctness, the Divisional Court quashed the decisions of both the Board and the Tribunal and declined to send the matter back to the Tribunal for a further hearing.

[2] The appellant Board obtained leave from this court to appeal the decision of the Divisional Court and asks that the decision of the Tribunal be re-instated, or at least that the matter be referred back to the Tribunal for a new hearing. In the event the appeal is successful, the respondents ask that the penalty imposed by the Tribunal be reduced.

The Decisions Below

(1) The Board

[3] The respondents were charged with selling, packing, shipping, transporting or disposing of tobacco on three occasions between December 1, 1997 and March 22, 1999 other than through the Board, contrary to one or more of the provisions of s. 5 of Regulation 435, R.R.O. 1990, as amended, under the Farm Products Marketing Act, R.S.O. 1990, c. F.9, and ss. 9(3), (4), (5) and 21 of the General Regulations of the Board.

[4] The Board originally adjourned its hearing at the request of the respondents to allow them to first deal with charges brought against Wyatt Stetler and his daughter Lori Stetler under the Excise Act, R.S.C. 1985, c. E-14, in respect of the same alleged conduct. In January 2001, Wyatt Stetler made an agreement whereby the Excise Act charges were stayed. In consideration of the stay, he agreed that all of the evidence in the Crown brief would be submitted in evidence before the Board, subject to the right of counsel to address the proper interpretation of and conclusions to be drawn from that evidence by the Board.

[5] The evidence presented at the Board hearing consisted of that record, which included transcripts of wiretapped conversations, [page327] truck rental records, witness statements and videotapes gathered by the R.C.M.P. during their investigation into illegal tobacco sales. R.C.M.P. Constable Reed also testified regarding the criminal investigation and the surveillance conducted on the cube van that was used on the three occasions in question to transport tobacco, allegedly from the Stetler farm to Quebec. Wyatt Stetler also testified. Both the Board and the respondents were represented by counsel. No transcript of the proceedings was made.

[6] In its reasons, the Board set out its findings of what occurred based on the evidence presented. The Board also reproduced extensive passages from the wiretap transcripts from which it drew inferences. It set out the respondents' position, which was a denial that they had participated in the unlawful sale of tobacco and the suggestion that the tobacco that was picked up for transport was not from the Stetler farm. The Board then stated its conclusions.

[7] The following is a summary of the Board's factual findings: The R.C.M.P. in Quebec began the investigation in September 1998, after noting a cube van with Ontario licence plates delivering tobacco to Marcel Guillemette in Mascouche, Quebec. On the evidence, Ronald Coucke had made an arrangement with a number of Ontario tobacco farmers to purchase tobacco for sale to M. Guillemette. The Hertz rental records from the Simcoe outlet showed that the same cube van was rented 52 times between December 1997 and March 1999 by Ronald Coucke, his father Joseph Coucke or his wife Janet Stetler, the former wife of Wyatt Stetler and the mother of Lori Stetler. Each time the van was driven approximately 1,500 kilometres and delivered tobacco to M. Guillemette. On three occasions, September 13, 1998, September 20, 1998 and February 4, 1999, the cube van was observed under police surveillance heading toward and away from the Stetler farm and then on to Quebec.

[8] On the nights of September 13th and 20th, 1998, the cube van was driven into a lane on the Stetler farm. The R.C.M.P. surveillance officer could not observe the van at the farm because of the darkness and farm buildings that obstructed the view. On the 13th, the van did not leave the farm the same way that it entered. The R.C.M.P. later discovered that the lane connected to a road north of the farm, and concluded that the van must have departed using that route. On September 20th, the van departed the same way that it entered, 25 minutes following its arrival. R.C.M.P. surveillance teams followed the van to Quebec and witnessed bales of tobacco being unloaded from it.

[9] On January 22, 1999, the R.C.M.P. obtained judicial authorization for certain telephone wiretaps as well as for a listening [page328] probe in the cube van. This gave them information about future deliveries, including one on February 4, 1999. On that evening, the cube van was picked up at Hertz and followed to the Stetler farm. The van was on the farm property for 13 minutes, and was under continuous R.C.M.P. surveillance until it arrived in Quebec, where 90 bales of tobacco were unloaded. The van was driven by Ronald Coucke's son Joseph Coucke and by Daniel Lucas.

[10] The Board used the wiretap evidence to help it understand how the shipments were arranged. The recorded conversations were between Ronald Coucke and Marcel Guillemette on February 4, 1999 and February 5, 1999, between Wyatt Stetler and Lori Stetler on February 5, 1999, between Janet Stetler and Lori Stetler on February 17, 1999, between Ronald Coucke and Janet Stetler on February 18, 1999, between Wyatt Stetler and Lori Stetler on February 27, 1999, between Ronald Coucke and Lori Stetler on March 1, 1999 and between Daniel Lucas and Joseph Coucke on March 12, 1999.

[11] Wyatt Stetler testified that he had not participated in the unlawful sale of tobacco. He also denied that any of the tobacco shipped to Quebec came from his farm, but said that if it did, it was without his knowledge. Mr. Stetler's counsel, Mr. Peel, suggested that the laneway into the Stetler farm could have been used to access other farms via a railway line that cut across the Stetler property.

[12] Having reviewed the evidence and the position of the respondents, the Board then stated its conclusions. First, the Board was satisfied beyond a reasonable doubt that the 90 bales of tobacco were picked up from the Stetler farm on February 4, 1999 and that such a quantity could not go missing without being noticed by Wyatt Stetler. Second, it found on a balance of probabilities that Wyatt Stetler unlawfully sold tobacco on September 13 and September 20, 1998. The Board specifically rejected the submission that the cube van only passed through the Stetler property to another farm or farms to obtain the tobacco. The Board reasoned that on February 4, 1999 the path would likely have been impassable with snow and there was insufficient time (15 minutes it said) to get to another farm. The Board also relied on Constable Reed's testimony that none of the farms of farmers accessible by that path was implicated in the investigation.

[13] The Board also rejected as incredible, Wyatt Stetler's alternative position that if the tobacco did come from his farm, it was done without his knowledge. The quantities involved were too large for an experienced tobacco farmer not to notice that they were missing. Also, the Board used the recorded wiretap conversations to infer that Wyatt Stetler knew of the scheme. [page329]

[14] The Board rejected an argument made by counsel for the respondents, that there was no evidence to show whether it was Wyatt Stetler's tobacco or the respondent company's tobacco that was shipped unlawfully. The Board concluded that the respondent company is Wyatt Stetler's alter ego and, therefore, the distinction between the respondents was not significant to the Board.

[15] The Board also took into account Wyatt Stetler's testimony that, on more than one occasion, he transferred tobacco to neighbours to sell using their quota when he had insufficient quota of his own to sell all of his tobacco. As this activity also constituted the illegal sale of tobacco, the Board viewed it as reflective of a cavalier attitude towards the Board and the Regulations.

[16] Finally, the Board said that based on "the totality of the evidence", it had "no difficulty concluding that": (a) Wyatt Stetler had engaged in the unlawful sale of tobacco on at least three occasions; (b) he would have continued to do so had Ronald Coucke agreed to pay in advance; and (c) he had previously engaged in unlawful sales to his neighbours.

[17] The Board went on to determine penalty. I will discuss that aspect of its decision later in these reasons.

(2) The Tribunal

[18] On an appeal from a decision of the Board, the Tribunal is authorized to hold a hearing to which the Statutory Powers Procedures Act, R.S.O. 1990, c. S.22 ("SPPA"), applies. The Tribunal may substitute its opinion for that of the Board: Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990, c. M.16, s. 16(11).

[19] At the Tribunal hearing, both the Board and the respondents were represented by the same counsel as at the Board hearing. No transcript of the proceedings was made. The Tribunal first noted, as a matter of background, that it was informed that the Board and the respondents had agreed that the evidence in the Crown brief from the R.C.M.P. Excise Act investigation could be submitted before the Board at its hearing into the matter, subject to the right of counsel to address the proper interpretation of and conclusions to be drawn from that evidence on appeal. The Tribunal also noted that the time within which the stayed criminal charges against the respondents could be reactivated had passed.

[20] The Tribunal received certain written documentation as evidence, although it did not describe the content of that documentation in its reasons. It also heard the evidence of four witnesses: Dudley Stetler (Wyatt Stetler's son), Wyatt Stetler, R.C.M.P. Constable Ed Ferrara and Gary Godelie, an experienced tobacco farmer and Vice-Chair of the Board. [page330]

[21] In its reasons, the Tribunal set out the two issues to be determined, gave a detailed recitation of the oral evidence given by each of the witnesses, then a description of the submissions made by counsel and finally, stated its findings.

[22] The two issues were: (a) whether the respondents participated in the unlawful sale of tobacco on September 13 or 20, 1998 or February 4, 1999; and (b) if they did, was the penalty imposed by the Board appropriate and, if not, what was the appropriate penalty.

[23] Dudley Stetler testified about his knowledge of the geographic area. In that context, he testified that other farms were accessible from the Stetler farm using the abandoned railway line and the path beside it. He had used this route in the winter, although it was neither lit nor ploughed. Two of the accessible farms were the Devos farms, another farmer who had admitted involvement in illegal tobacco sales. Those farms were two and five miles respectively from the Stetler farm. He also testified that his sister Lori lived on the Stetler farm at the relevant time and that his father lived part-time on the farm and part-time in Delhi. He considered his father to be a hands-on farmer.

[24] Wyatt Stetler testified that he had grown tobacco all his life, and that he had not illegally sold tobacco to Ronald Coucke or anyone else on the three dates charged or at any other time. He said that he was aware that Ronald Coucke and Janet Stetler had hinted to her daughter Lori that money could be made selling tobacco in Quebec, but he never spoke directly to Ronald Coucke and did not know how much tobacco he wanted or the price he would pay. He stated that it was his understanding that Ronald Coucke was looking for hand-tied tobacco, and that he had none on his farm. Nor did he know Marcel Guillemette. He never noticed any tobacco missing, but said that most of it was in bales so he would not necessarily notice. On the issue of selling tobacco to neighbours, he said that he had shipped through the Board warehouse using another grower's shipping number and that he had heard that 25 per cent of growers did this, including a member of the Board. He did not read well and did not know that he was not allowed to sell tobacco in this manner. He did know that he required a permit to transport tobacco.

[25] On February 27, 1999 in a recorded conversation with his daughter Lori, Wyatt Stetler said:

February 27, 1999

LS: what did you want

WS: jus' wonderin' if you had any ring a ding a lings (pause) no [page331]

LS: did I have any c ... calls ...

WS: you know what I mean yeah

LS: no

WS: oh you know what to say when you talk eh

LS: yeah I guess

WS: you want up front

LS: yeah

WS: you know what I mean

LS: yeah

WS: that will stop

LS: mmhmm

WS: ah shit

On March 1, 1999, Lori Stetler reported to Ronald Coucke as follows:

March 1, 1999

RC: so did you ever ... did you ever get around to talking to your dad

LS: yeap I did (unintelligible conversation in background) but ah he said he wanted it up front before you took any

(Emphasis added)

[26] With respect to his February 27, 1999 conversation with his daughter recorded on the wiretap, Wyatt Stetler explained that when he discussed getting his money up-front, he was referring to a car loan he had made to his ex-wife. He did not recollect which tobacco shipments he had discussed with Lori in February 1999. Nor did he recall what he meant when he asked her about receiving any phone calls and when he said to her that she knew what he meant.

[27] Constable Ferrara testified about the R.C.M.P. investigation and the surveillance conducted in connection with that investigation. An Ontario-licensed cube van was used to transport tobacco to Marcel Guillemette in Quebec, where the tobacco was cut into fine pieces and sold in plastic bags or hand-tied and sold. His team had traced the van's licence plates to a rental agency and discovered that the van had been rented by Ronald Coucke several times, including dates when tobacco was transported to Quebec. Mileage and time records were also consistent with a round-trip to M. Guillemette's residence.

[28] On September 13, 1998, his team had the cube van under surveillance but lost sight of it after it turned off Windham Road #9 at 10:10 p.m. The Quebec R.C.M.P. saw the 70 bales of tobacco [page332] unloaded from the van the next morning. A few days later, the Board informed the R.C.M.P. team that the farm in the area where the van was lost from sight was the Stetler farm. The team then discovered the northern entrance to the farm.

[29] On September 20, 1998, the R.C.M.P. surveillance team observed the cube van driving from the rental agency to Ronald Coucke's residence. They lost sight of the van after it left the residence, but picked it up again driving south on the farm lane from Regional Road #9 to the Stetler farm at 11:45 p.m. They observed the van leave the farm via the same route 25 minutes later. They did not see any tobacco being loaded. The van was followed to the Guillemette residence where 66 bales of tobacco were unloaded. There had been numerous calls between Ronald Coucke's residence and Marcel Guillemette's residence, between Ronald Coucke's residence and the Stetler farm, and one call from the Stetler farm to the Guillemette residence. The police did not know who made the calls.

[30] On February 4, 1999, the R.C.M.P. team observed the van leave the rental agency, enter the Stetler farm from the south via the driveway and leave the same way 13 minutes later. The van was accompanied by a vehicle. The R.C.M.P. followed the van to M. Guillemette's residence where 85 bales of tobacco were unloaded. Constable Ferrara was the closest officer to the Stetler farm, but from inside his car he did not see or hear tobacco being loaded. His view was hindered by darkness, buildings and trees. The Stetler farm had one light on and the house showed no sign of being occupied.

[31] When the R.C.M.P. searched the farm on March 12, 1999, they seized 29,609 pounds of tobacco and found loose tobacco stored in a tall building. Constable Ferrara testified that a cube van could be driven into the building and that there was a forklift truck inside.

[32] The last witness was Gary Godelie, a tobacco grower for over 29 years and Vice-Chair of the Board. His own tobacco average yield was 2,475 pounds per acre. He testified that it was possible to load a cube van with bales of tobacco in 13 minutes by hand or with a forklift. He said that although tobacco could not be loaded in the dark, lights inside a barn may not be visible from outside. He also said that a forklift would make noise. He did not believe that it was common for tobacco growers to engage in the illegal practice of shipping tobacco through the Board's warehouse using another producer's shipping number. That practice would not affect the market but would undermine the quota system. Illegally selling tobacco to an unlicensed buyer was a more serious offence. [page333]

[33] The Tribunal gave a detailed summary of the positions taken by each side in argument. Mr. Peel, on behalf of the respondents, took the position that there was no evidence that tobacco was removed from the Stetler farm on September 13, 1998. If tobacco was removed, there was no evidence that Wyatt Stetler was involved. He suggested that the phone call to the Guillemette residence from the Stetler farm that night may have been placed by Lori Stetler, who had been discussing illegal tobacco sales.

[34] Mr. Peel suggested that on September 20, 1998, the cube van that entered the Stetler farm could have used the railway path to go to another farm, and that no activity was observed on the Stetler farm that night or on February 4, 1999. He submitted that the evidence did not show on a balance of probabilities that the tobacco came from the Stetler farm with Wyatt Stetler's knowledge. He acknowledged that Lori Stetler had tried to persuade her father to sell illegally, but Wyatt Stetler had declined to do so. Finally, Mr. Peel asked the Tribunal to be compassionate with respect to penalty and to reduce the penalty imposed by the Board.

[35] Mr. Bresner, for the Board, submitted that it would not make sense for the van to have accessed a nearby farm using the long route through the Stetler farm, and that the short time periods on September 20, 1998 and February 4, 1999 between when the van entered the Stetler farm and when it headed for Quebec were not long enough to go beyond the Stetler farm. He suggested that no activity was observed by police because the van could be driven right inside the barn.

[36] He submitted that the wiretap evidence should be read as a whole in order to interpret it properly. This evidence showed that Wyatt Stetler sold tobacco illegally to Ronald Coucke until February 1999, when Wyatt Stetler refused to continue without being paid in advance. Mr. Bresner suggested that Wyatt Stetler was unnaturally guarded in his telephone conversation with his daughter. The balance of his submissions related to penalty and the need for general deterrence.

[37] After setting out the evidence and summarizing the submissions, the Tribunal made its findings:

(1) There was insufficient evidence to determine on a balance of probabilities that the tobacco shipped to Quebec on September 13, 1998 came from the Stetler farm.

(2) The tobacco shipments on September 20, 1998 and February 4, 1999 came from the Stetler farm. [page334]

(3) The Tribunal accepted that it was possible to load the cube van within the times between which the van was seen entering and exiting the Stetler farm on September 20th and February 4th. It was possible that the R.C.M.P. officers would not have seen the loading if the van was inside the barn.

(4) The Tribunal found Dudley Stetler to be credible, but rejected as implausible his suggestion that the cube van could have been driven from the Stetler farm to another farm to pick up tobacco on September 20th and February 4th.

(5) The Tribunal had no doubt that the cube van could not have gone further than the Stetler farm in the 13 minutes that it was out of sight on February 4, 1999.

(6) The Tribunal also found Constable Ferrara to be a credible witness, but resolved the discrepancy between his and Dudley Stetler's evidence regarding the proximity of the nearest Devos farm by saying that it was possible that the constable was not aware of the farm described by Mr. Stetler.

(7) With respect to Wyatt Stetler's credibility, the Tribunal specifically excluded any consideration of his sale of tobacco using other growers' shipping numbers, although it noted his honesty in acknowledging these violations.

(8) The Tribunal rejected as incredible Wyatt Stetler's explanation that his comments in the wiretapped conversation regarding "up front money" referred to an unpaid car loan to his ex-wife Janet Stetler, and noted that he could not recall many other details about this conversation.

(9) There was considerable debate between the parties regarding the state of the tobacco on the Stetler farm and the tobacco delivered to the Guillemette residence in Quebec. The Tribunal could not determine whether the tobacco was hand-tied in Ontario or in Quebec, but only that it was delivered in bales. Nor could the Tribunal establish whether in a wiretapped conversation, Ronald Coucke said that the tobacco was hand-tied in Ontario. Therefore, the Tribunal did not use the state of the tobacco as a determinative consideration in its decision.

(10) On balance, the wiretap evidence supported the finding that tobacco was shipped from the Stetler farm to Quebec on September 20, 1998 and February 4, 1999. [page335]

(11) The Tribunal found that it was clear that Wyatt Stetler knew what was going on, even if he did not participate in loading the tobacco. First, the wiretap evidence suggested that Wyatt Stetler was aware that tobacco was being shipped from his farm to M. Guillemette. Second, the Tribunal did not believe that it was likely that over 85 bales of tobacco could be removed from the Stetler farm without Wyatt Stetler becoming aware that it was missing.

(12) The Tribunal confirmed the penalty imposed by the Board on the basis that Wyatt Stetler chose to undertake illegal sales of tobacco and should have been aware of the consequences as he had been active in the tobacco industry for many years.

(3) The Divisional Court

[38] The respondents sought judicial review of the decision of the Tribunal. They raised five issues: (1) the standard of review; (2) the procedure adopted by the Tribunal; (3) errors of law by both the Board and the Tribunal with respect to the admission of evidence and the burden of proof; (4) reasonable apprehension of bias; and (5) the penalty.

[39] The Divisional Court concluded that the applicable standard of review was the correctness standard. It noted that the Tribunal's decisions are by statute final and therefore protected by a privative clause, suggesting a deferential standard of review. However, the Divisional Court justified its finding that the applicable standard is correctness, on the basis that the issues were legal issues involving the admission of evidence and the burden of proof in the context of quasi-criminal charges with penal consequences, which did not engage the specialized expertise of the decision-makers.

[40] The Divisional Court rejected the procedural claim, noting that the Tribunal held a trial de novo, which was a procedure it was entitled to use: Ministry of Agriculture, Food and Rural Affairs Act, s. 16(11).

[41] The Divisional Court found, however, that the Tribunal committed errors of law. First, by finding only that Wyatt Stetler was aware that tobacco was being shipped from his farm to Quebec, the Tribunal failed to answer the question before it: whether Wyatt Stetler participated in the illegal sale of tobacco. Second, since the Divisional Court viewed the case as quasi-criminal in nature, involving a person's livelihood and the potential penalty of licence revocation, it found that the standard of proof required was not proof on a balance of probabilities, but clear [page336] and convincing proof based on cogent evidence. Third, the Divisional Court then found that the evidence before the Tribunal was not sufficient to entitle the Tribunal to make its findings.

[42] On the fourth issue, the Divisional Court found that the Tribunal permitted itself to be tainted by "a clear apprehension of bias" by accepting and relying on the evidence of Gary Godelie, a Vice-Chair of the Board who had participated in the original Board decision. He gave evidence that supported the Board's decision regarding the time it would take to load a van with tobacco. The Divisional Court rejected the argument that the respondents were precluded from raising the bias issue for the first time before it because they did not object when the evidence was led before the Tribunal.

[43] The Divisional Court concluded that the errors of law made by the Tribunal, including the bias issue, were sufficient for it to quash the decisions of both the Tribunal and the Board. The Divisional Court declined to refer the case back to the Tribunal because of its conclusion regarding the insufficiency of the evidence.

The Issues

[44] The appellant identified three issues for appeal, although there are several sub-issues within the first one: (1) the standard of review; (2) bias and waiver; and (3) the remedy of quashing the Tribunal decision and not sending the matter back for a new hearing.

(1) Standard of Review

[45] The method for determining the appropriate standard of review to be applied by a court on judicial review (or on an appeal) of an administrative decision was explained recently by the Supreme Court of Canada in Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226, [2003] S.C.J. No. 18, a discipline case similar to this case. See also Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982, [1998] S.C.J. No. 46; Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), 2004 SCC 54, [2004] 3 S.C.R. 152, [2004] S.C.J. No. 51; Re Cartaway Resources Corp., 2004 SCC 26, [2004] 1 S.C.R. 672, [2004] S.C.J. No. 22; Society of Composers, Authors and Music Publishers of Canada v. Canadian Assn. of Internet Providers, 2004 SCC 45, [2004] 2 S.C.R. 427, [2004] S.C.J. No. 44, at para. 48. In the Dr. Q. case, the Supreme Court stated that a pragmatic and functional approach is required in order to determine the legislative intent of the statute that creates the administrative tribunal. The three standards reflect different degrees of relative deference [page337] to the tribunal: (1) correctness, an "exacting review"; (2) reasonableness, a "significant searching or testing"; and (3) patent unreasonableness, where the issue is "left to the near exclusive determination of the decision-maker" (Dr. Q. at para. 22).

[46] The pragmatic and functional approach to determining the degree of deference to be accorded to the administrative decision-maker in the circumstances involves a consideration of four contextual factors: (a) the presence or absence of a privative clause or statutory right of appeal; (b) the expertise of the tribunal relative to a court on the issue in question; (c) the purposes of the legislation and the provision in question; and (d) the nature of the question as one of fact, of law, or of mixed fact and law (Dr. Q. at para. 26).

[47] The Supreme Court described the application of each factor. First, the existence of a privative clause militates in favour of deference, and the stronger the privative clause, generally, the more deference is due.

[48] In order to properly address the second factor, the reviewing court is to characterize the expertise of the tribunal in question, consider the court's own expertise relative to that of the tribunal, and identify the nature of the specific issue before the tribunal relative to its expertise: Pushpanathan at para. 33. As the Supreme Court pointed out in Dr. Q., relative expertise can derive from a number of sources and from experience. Importantly, expertise can relate not only to factual and policy issues, but to issues of pure law and of mixed fact and law. Again, more deference is called for where the question at issue is within the tribunal's relative expertise.

[49] For the third factor, the reviewing court is to consider the general purpose of the statutory scheme within which the tribunal's decision is being made. A reviewing court is expected to accord increased deference where the legislation is intended to balance and resolve competing policy objectives. In contrast, where the issue is the factual resolution of a dispute between two parties, less deference is required (Dr. Q. at paras. 30-32).

[50] Finally, the Supreme Court noted that while the nature of the problem is only one of the four contextual factors to be assessed to determine the appropriate standard of review of administrative decisions, in the case of an appeal of a court decision, whether the question is one of fact, law, or mixed fact and law is essentially the only factor: see for example, Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31 and H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] S.C.J. No. 24, 251 D.L.R. (4th) 604. In administrative review, a factual decision or a mixed decision with a strong factual component will attract [page338] more deference, while a legal decision or a law-intensive mixed question will attract less deference.

[51] In Dr. Q., an Inquiry Committee of the College of Physicians and Surgeons found the doctor guilty of professional misconduct with a patient, and suspended him from practice. The Medical Practitioners Act, R.S.B.C. 1996, c. 285, provided for an appeal to the Supreme Court of British Columbia "on the merits" of the case. The reviewing judge reassessed the evidence of guilt to determine whether it was sufficient to meet the standard of clear and cogent evidence. She disagreed with the Committee's findings of credibility and concluded that the evidence was not sufficiently cogent to allow the court to safely uphold the Committee's findings. On appeal to the British Columbia Court of Appeal, the court concluded that the reviewing judge's decision was not clearly wrong and dismissed the appeal.

[52] The Supreme Court of Canada applied the four factors discussed above to determine the standard of review of the Committee's decision. The Supreme Court concluded that the proper standard was reasonableness. In that case, there was a broad right of appeal (the opposite of a privative clause) and the Committee was no more expert than a court on the issue. Therefore, the first two factors suggested low deference. The third factor, the purpose of the statute and the particular provision, was not determinative. One purpose was to protect the public and set ethical standards of conduct, suggesting more deference, but a second was to adjudicate fairly individual cases of alleged misconduct, suggesting less deference. However, because the nature of the question was factual, involving findings of credibility, the court should have accorded a high degree of deference to the Committee who saw and heard the witnesses. The court balanced these factors and concluded that the reviewing court should have asked "whether the Committee's assessment of credibility and application of the standard of proof to the evidence was unreasonable, in the sense of not being supported by any reasons that can bear somewhat probing examination" (at para. 39). Instead, the reviewing judge had used a correctness standard and had substituted her view of the evidence for the Committee's view.

[53] Finally, the Supreme Court clarified the role of the Court of Appeal, which is to determine the proper standard of review. It is an error of law for the reviewing court to apply an incorrect standard of review. The Court of Appeal is to set aside the decision of the reviewing court and apply the correct standard of review to the administrative decision. The Supreme Court concluded in the Dr. Q. case, applying the reasonableness standard [page339] of review, that there was ample evidence to support the Committee's decision, which it reinstated.

[54] In this case, the Divisional Court conducted an abbreviated standard of review analysis, using only some of the contextual factors. In my view, the Divisional Court committed the error of law identified by the Supreme Court in Dr. Q. -- it failed to conduct the pragmatic and functional analysis addressing all four contextual factors, and therefore failed to conduct the necessary balancing of those factors. Furthermore, it erred in its characterization of the decision as involving penal consequences, which error significantly influenced its decision on the standard of review.

[55] More fundamentally, however, the Divisional Court's analysis failed to properly identify the issue that was decided by the Tribunal and was the subject of the judicial review -- the conclusion that the respondent sold tobacco in contravention of the regulations and became subject to a penalty. Instead, the Divisional Court focused on certain legal and procedural issues that may arise during any hearing where evidence is led and where a determination must be made that involves findings of fact and the application of the law to those facts. The Divisional Court treated these problems as the issues under review. Looked at in that way, any administrative hearing and decision would be reviewable on the correctness standard.

[56] Because of these errors, this court must determine the appropriate standard of review, and apply that standard to the decision of the Tribunal.

The Legislative Framework

[57] Under the Farm Products Marketing Act, the Ontario Farm Products Marketing Commission is empowered to carry out the purpose of the Act, which is to "provide for the control and regulation in any or all aspects of the producing and marketing within Ontario of farm products including the prohibition of such producing or marketing in whole or in part" (s. 2). For tobacco, that power has been delegated by the Commission to the Board by regulation (R.R.O. 1990, Reg. 435). This delegation includes all power over the allocation and revocation of tobacco production quotas. By General Regulations, promulgated on a year-to-year basis, the Board regulates the production and marketing of tobacco through licences to produce and buy tobacco and by the allocation of marketing and production quotas. Section 9 of the General Regulations prohibits the sale or transfer of tobacco other than at a tobacco exchange operated by the Board. By s. 21, the local board may cancel, reduce or refuse to increase the quota [page340] of a person who has circumvented the General Regulations or for any other reason. The Ministry of Agriculture, Food and Rural Affairs Act, s. 16(2), provides for an appeal to the Agricultural, Food and Rural Affairs Appeal Tribunal from a decision of a local board made under the Farm Products Marketing Act. The SPPA applies to the hearing of an appeal by the Tribunal (s. 16(10)). By s. 16(11), on an appeal the Tribunal may, as the Tribunal considers proper, order the Board to take any action it is authorized to take under the Farm Products Marketing Act. The Tribunal may substitute its opinion for that of the Board. The Act goes on to provide for a possible reconsideration by the Tribunal as well as a further power in the Minister to vary the Tribunal's decision (ss. 17 and 18).

[58] The members of the Board must be tobacco producers (R.R.O. 1990, Reg. 436, amended to O. Reg 60/02). The members of the Tribunal are appointed by the Lieutenant Governor in Council and one of them must be a barrister and solicitor (Ministry of Agriculture, Food and Rural Affairs Act, s. 14(1.1)). The members of the Board have expertise in all aspects of the production and marketing of tobacco, while the members of the Tribunal sit on appeals from numerous local agricultural boards dealing with different agricultural products and marketing schemes.

Application of the Four-Factor Test from Dr. Q.

[59] Although the Divisional Court purported to quash the decision of the Board as well as the decision of the Tribunal, the court was conducting a judicial review of the decision of the Tribunal, not of the Board. Similarly, this court is dealing with an appeal of the Divisional Court decision and therefore is concerned with judicial review of the Tribunal, which held a de novo hearing.

[60] The first factor to be considered in determining the standard of review is the privative clause identified by the Divisional Court. The respondents argue that a clause that makes the decision of an administrative tribunal a "final" decision is a weak privative clause, because it does not use language that prohibits judicial review: Sara Blake, Administrative Law in Canada, 3rd ed. (Markham: Butterworths, 2001) at p. 190. In Pushpanathan, the Supreme Court characterized such a clause as signalling deference, but subject to the other three factors (at paras. 30-31).

[61] The second factor is the relative expertise of the Tribunal as compared with that of the reviewing court, in respect of the issue to be determined by the Tribunal. In this case the issue before the Board and then on appeal before the Tribunal was [page341] whether the respondents had engaged in the unlawful sale of tobacco outside the auspices of the Board and the quota system, and if so, whether their quota should be cancelled or reduced.

[62] The allegations against the respondents in this case involve surreptitiously transporting tobacco from Ontario to Quebec outside the quota system. This activity, if proven, is an "offence" because it contravenes the legislation I have just outlined. But, in the context of the hearing before the Tribunal, it is a regulatory, not a criminal offence. The jurisdiction of the Board is to investigate such activity and to hold a hearing. If the Board finds that the activity has occurred, it can impose penalties that involve limiting the person's ability to grow or market tobacco. Contrary to the statement by the Divisional Court, there are no possible penal consequences, nor is there any finding of criminality or quasi-criminality made by the Board.

[63] As the Supreme Court stated in Martineau v. Canada (Minister of National Revenue), 2004 SCC 81, [2004] 3 S.C.R. 737, [2004] S.C.J. No. 58, "proceedings of an administrative -- private, internal or disciplinary -- nature instituted for the protection of the public in accordance with the policy of a statute are not penal in nature" (at para. 22). The court held that although a disciplinary proceeding may be aimed at deterring potential offenders, this feature does not make it penal or quasi-criminal (at para. 38). The reasoning of Fish J. is apposite (at para. 45):

This process thus has little in common with penal proceedings. No one is charged . . . . No information is laid against anyone. No one is arrested. No one is summoned to appear before a court of criminal jurisdiction. No criminal record will result from the proceedings.

[64] In conducting the hearing, the Tribunal necessarily had to determine the admissibility and the weight to be accorded to the evidence and had to determine and apply the correct burden of proof. These are necessarily functions of all hearings of a disciplinary nature. The power to make determinations regarding the admission and use of evidence in an administrative context is given by the SPPA (ss. 15, 15.1, 15.2, 16). The Tribunal was also concerned with making findings of credibility and of fact and with drawing inferences from the evidence. Again, these are common issues in hearings of a disciplinary nature.

[65] The governing legislation ensures that the Tribunal has some expertise in legal matters by requiring that one of the members must be a lawyer. Given the nature of the issues before the Tribunal, which are equally familiar to a court and to the Tribunal, as was the case in Dr. Q., the factor of relative expertise in assessing the standard of review is a neutral one. [page342]

[66] The third factor relevant to the determination of the standard of review is the purpose of the legislation and the provision in question. The purpose of the legislative scheme I have briefly described is to ensure that tobacco is grown and marketed under an orderly system that regulates the quantity and price of tobacco produced, providing a fair scheme for all those involved in the industry. The purpose of the specific provision that allows the Board, and on appeal, the Tribunal, to cancel or reduce the quotas of those who violate the scheme is to enforce compliance for the benefit of all. It is intended that the Board and the Tribunal, who are familiar with the marketing schemes, their purpose, their effect and their rules, are to employ that understanding in the enforcement of the regulations. The Tribunal is less specialized than the Board, and to that extent, its particular expertise in tobacco is much more limited. In any event, because these types of administrative decisions are not policy decisions, but are adjudicative in nature, as in the Dr. Q. case, this factor does not weigh strongly in favour of a deferential standard of review.

[67] The final factor is the nature of the issues to be determined. In deciding any case where witnesses are called, there are issues of fact, including findings of credibility and inferences to be drawn from the evidence. There are also procedural and legal issues including notice, the opportunity to be heard, the admission of evidence, the burden of proof and the duty to give reasons, to name a few. In this case, the Tribunal made findings of fact, including significant findings of credibility. It was also required to draw inferences from the evidence, including the wiretap evidence. The Tribunal admitted evidence, decided what use to make of it and determined and applied the burden of proof.

[68] Where a tribunal is making factual decisions based on the evidence presented before it, a significant degree of deference is accorded to those decisions. Similarly, where a tribunal governed by the SPPA conducts its hearing within the procedural discretion afforded by that statute, a court will accord substantial deference to its discretionary procedural and legal decisions, provided there has been no denial of natural justice in the procedure chosen: Moreau-Bérubé v. New Brunswick (Judicial Council), 2002 SCC 11, [2002] 1 S.C.R. 249, [2002] S.C.J. No. 9, at paras. 74-75; London (City) v. Ayerswood Development Corp., 2002 3225 (ON CA), [2002] O.J. No. 4859, 167 O.A.C. 120, at para. 10. However, questions of law of general application that do not engage the specialized expertise or the discretion of the tribunal are reviewable for correctness: Toronto (City) Board of Education v. Ontario Secondary School Teachers' Federation, District 15, 1997 378 (SCC), [1997] 1 S.C.R. 487, [1997] S.C.J. No. 27, at para. 39; [page343] Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, [2003] S.C.J. No. 64, at paras. 14-15; London (City), supra, at para. 7.

[69] In this case, the respondents' position is that the Tribunal made errors on legal issues before it (1) by failing to employ the standard of "clear, cogent and convincing evidence"; and (2) by using the hearsay wiretap conversations where Wyatt Stetler was not a party, without applying the R. v. Carter, 1982 35 (SCC), [1982] 1 S.C.R. 938, 137 D.L.R. (3d) 385 analysis for the admission of hearsay by co-conspirators. The respondents also argue that the Tribunal made an error of law or denied them natural justice by admitting the evidence of Gary Godelie, thereby creating an apprehension of bias in the Tribunal.

[70] On the standard of proof and bias issues, the Tribunal had to be correct regardless of the standard of review to be applied to the decision of the Tribunal. In contrast, the hearsay issue is a question of law within the context of the procedure of the Tribunal and includes a discretionary element. In that context, it is subject to the overall standard of review of the Tribunal decision.

The Correct Standard of Review in this Case

[71] Balancing all of the four factors, I conclude that, as in Dr. Q., the Tribunal's decision on the issue before it, which was whether the respondents engaged in the unlawful sale of tobacco outside the auspices of the Board and the quota system, should have been reviewed by the Divisional Court on a standard of reasonableness. The court was therefore required to ask whether the conclusion reached by the Tribunal was unreasonable considering the record before it and applying the proper standard of proof. That said, on pure questions of law that do not involve the discretion or expertise of the Tribunal, the Tribunal had to be correct.

[72] Before considering whether the Tribunal's decision on the issue before it was unreasonable, I must first address the specific concerns raised by the respondents that they characterize as legal issues. The first is the treatment of the hearsay evidence contained in the transcripts of wiretapped conversations that did not involve Wyatt Stetler, but which referenced him. The respondents argue that because the Tribunal concluded that Wyatt Stetler did not participate in loading the tobacco himself, he could only have been found guilty as a co-conspirator and, on that basis, the Tribunal could only admit the hearsay evidence after applying the Carter test for the admission of hearsay evidence of a co-conspirator against an accused person. [page344]

[73] I reject this argument for several reasons. First, the rule in Carter is a test applied to certain hearsay evidence that allows the evidence to be used to prove beyond a reasonable doubt that a person was a member of a conspiracy. In an administrative proceeding such as the one at issue in this case, the standard of proof beyond