Court File and Parties

DIVISIONAL COURT FILE NO.: 420/19

DATE: 20211021

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Aston, Backhouse and Favreau JJ.

BETWEEN:

2041219 Ontario Limited

Applicant

– and –

The Business Risk Management Review Committee and Agricorp

Respondents

Brendan F. Morrison and Adam H. Kanji, for the Applicant

Judie Im and Ananthan Sinnadurai, for the Respondent, Agricorp

No one appearing for the Respondent, The Business Risk Management Review Committee

HEARD at Toronto (via videoconference): April 21, 2021

REASONS FOR DECISION

Favreau J.:

Introduction

[1] The applicant, 2041219 Ontario Limited, seeks to judicially review a decision made by the respondent, Agricorp, in a letter dated July 12, 2019. In its decision, Agricorp accepted a recommendation made by the respondent, The Business Risk Management Review Committee (the “Committee”), that weight gain for the applicant’s cattle that occurred outside Ontario is not eligible for a risk management benefit program administered by Agricorp.

[2] The applicant argues that the decision was unreasonable because, at the relevant time, the published materials from Agricorp and Ontario did not explicitly state that only weight gain in Ontario was eligible for the program. In addition, the applicant argues that the decision was procedurally unfair because the Committee and Agricorp relied on a legal issue on which the applicant had not had an opportunity to provide submissions.

[3] For the reasons below, I find that the decision was reasonable and that it was not procedurally unfair.

Background facts

The Risk Management Program

[4] The Ontario government has established various business risk programs for agricultural producers in Ontario. Agricorp, which is a Crown corporation, administers the programs.

[5] One of the programs is the Risk Management Program for Cattle Farmers (the “Program”), which provides various benefits to cattle farmers. The Program is meant to help farmers offset losses due to price falls and production cost increases.

[6] The Program was established in 2011 through Order in Council 1309/2011 titled Ontario Risk Management Program (the “OIC”). The OIC sets out eligibility criteria for the benefits under the Program. The criteria are also set out in Guidelines published by the Ontario government and in a Participant Handbook (“Handbook”) published by Agricorp. The interpretation of the eligibility criteria in the OIC, Guidelines and Handbook is at the heart of this application for judicial review. They are reviewed in detail in the analysis below.

[7] The Program provides benefits to cattle farmers where their average production costs exceed the market value of their products. Production costs and market value are based on the cattle’s weight gain and are calculated on a per pound basis.

[8] The Program is funded by the Ontario government. The funding for the Program is approximately $100 million per year, which covers the administration costs and benefits paid out by the Program. Each producer who participates in the Program is entitled to a maximum of $1.2 million per year, which may be prorated down depending on the overall demand for the Program in any given year.

[9] Producers who participate in the Program are to pay a fee, but the fee does not cover the costs of the Program. The Program is funded by the Ontario government. Producers who participate in the program choose their level of coverage, which in the relevant period could be 100%, 90% or 80%.

[10] The calculation of the amount to be paid under the Program is based on the difference between the average cost of each pound gained by the cattle and its market value. Where the cost exceeds the market value, the Program pays the percentage of coverage for that amount (for example 100% of the loss for farmers opting for 100% coverage) minus 60%.

[11] Agricorp administers the program by processing applications and by conducting occasional audits on the amounts paid out.

[12] Where there is a disagreement between a farmer and Agricorp over the amount owed under the Program, the farmer can request a review by the Committee. The Committee is composed of agricultural producers. The Committee has the power to make non-binding recommendations to Agricorp.

The applicant and the decisions below

[13] The applicant is a cattle producer. It purchases younger cattle, places them with farmers until they reach a predetermined weight, and then sells them to meat packers for further processing. It is undisputed that, at the relevant time, the applicant placed at least some of its cattle with farmers outside of Ontario for the earlier stages of the weight gain process.

[14] The applicant has participated in the Program since its inception in 2011. The applicant received $4,796,520 in benefits from the Program between 2011 and 2017.

[15] In 2017, Agricorp became aware that the applicant had been claiming benefits for weight gained by cattle outside Ontario. Through an exchange of various communications with the applicant and its counsel, Agricorp notified the applicant of its determination that the out of province weight gain was ineligible for the Program.

[16] Agricorp went on to conduct an audit of the applicant’s applications under the program from 2014 to 2017 and found that the applicant had received in excess of $26,965 in benefits due in part to out of province weight gain during the relevant period.

[17] The applicant then requested a review by the Committee. The review process included an opportunity for the applicant, Agricorp and Ontario to make written and oral submissions. The Committee held an oral hearing on June 12, 2019.

[18] The Committee released its decision on June 28, 2019. In its decision, the Committee agreed with Agricorp that weight gain outside Ontario was not eligible for benefits. The Committee based this determination on its interpretation of the OIC, which is reviewed in more detail below.

[19] In a letter dated July 12, 2019, Agricorp advised the applicant that it accepted the Committee’s recommendation and, in doing so, adopted the Committee’s reasoning.

Issues raised on the application for judicial review

[20] The applicant seeks to judicially review Agricorp’s decision that weight gain outside Ontario up to 2018 is ineligible for a subsidy under the Program. The applicant does not challenge Agricorp’s power to determine that from 2019 forward weight gain outside Ontario is ineligible under the Program benefits. It challenges the retrospective application of what it regards as a new policy. Apparently, there are other producers who share this view.

[21] The applicant raises the following issues:

a. Agricorp’s decision was unreasonable because the OIC, and pre-2019 Guidelines and Handbook do not state explicitly that weight gained outside Ontario is ineligible under the Program; and

b. Agricorp’s final decision was procedurally unfair because the Committee and Agricorp relied on the definition of “Farmer” in the OIC, which is not an argument that was raised by the parties or that the applicant had an opportunity to address.

[22] As set out below, I do not accept the applicant’s arguments that Agricorp’s decision was unreasonable or procedurally unfair.

Standard of review

[23] This case is fundamentally an exercise in statutory interpretation, specifically the interpretation of the OIC, which has the status of delegated legislation. The other documents are aids to interpretation. The OIC has been interpreted by the independent Business Risk Management Review Committee, comprised of experienced members. Its interpretation was then considered and accepted by Agricorp, a specialized body examining its own home statute. Moreover, Agricorp is the Minister’s delegate for policy and funding decisions, not merely the administrator of the Program. (Sunwold Farms Ltd. v. Agricorp, 2015 ONSC 6111 (Div. Ct.) at para. 24)

[24] There is no dispute between the parties that the applicable standard of review is reasonableness.

[25] Pursuant to the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, the guiding principles for deciding whether a decision is reasonable include the following:

a. Reasonableness is concerned with justification, transparency and intelligibility. A decision is unreasonable if it is internally incoherent or if it is untenable having regard to the relevant factual and legal constraints.

b. The party challenging the decision has the burden of showing that it is unreasonable. A court should not set aside a decision based on minor flaws or peripheral shortcomings. To justify a finding of unreasonableness, the flaws or shortcomings must be sufficiently central or significant to the merits of the decision.

c. The role of the court is to review the decision and not to decide the issue afresh. The focus of the reasonableness inquiry is therefore on the decision making process and the outcome.

d. It is not the role of a reviewing court to re-weigh the evidence and make factual findings. Absent exceptional circumstances, a reviewing court should not interfere with a tribunal’s factual findings.

[26] No standard of review applies to the issue of procedural fairness. Rather, as held in Vaviliv, the court is to apply the factors in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, to determine the level of procedural fairness required in the circumstances of the case and whether it was met.

Issue 1: Agricorp’s decision was reasonable

[27] The applicant argues that Agricorp’s decision was not reasonable because the OIC, the Guidelines and the Handbook do not explicitly provide that out of province weight gain is ineligible for benefits under the Program. As part of this argument, the applicant argues that Agricorp should have applied the doctrine of contra proferentum.

[28] In this case, the decision below is Agricorp’s final decision to accept the Committee’s recommendation. These decisions were concerned with the interpretation of the eligibility criteria in the OIC and the Guidelines. I therefore start my analysis with a review of the relevant provisions in these instruments followed by a review of how Agricorp and the Committee interpreted these provisions.

Relevant provisions in the OIC, Guidelines and Manual

[29] The introduction to the OIC states that the “Government of Ontario recognizes the important economic and social contribution agriculture plays within Ontario” [emphasis added].

[30] Part I of the OIC includes general definitions, including defining “Farmer” as “a Person engaged in the production of” various products including cattle “within Ontario” [emphasis added].

[31] Part IV deals with general eligibility criteria for the Program and includes, at section 8(1), a requirement that Farmers meet all the requirements in the OIC and the Program Guidelines.

[32] Part V of the OIC deals specifically with the Program as it relates to Cattle Farmers.

[33] Section 9 in Part V defines “Cattle” as “a bovine of a beef-type whose main characteristic is meat that is produced in Ontario for a minimum of 120 calendar days and includes calves, steers and heifers” [emphasis added].

[34] Section 10(1) deals with the eligibility criteria specific to cattle and includes a requirement at subsection (b) that the “Farmer must own and produce the Cattle in Ontario or be part of a feeder cattle co-operative that owns and produces the Cattle in Ontario”. Subsection (e) also requires that Farmers comply with any additional requirements in the Guidelines.

[35] The 2013 Guidelines apply to the relevant time period. Section 4 of the Guidelines addresses “Eligible Cattle”. Section 4.1 specifies that “All Cattle produced in Ontario by a Participant” [emphasis added] that fall within specified weight categories are eligible. Section 4.4 emphasizes the importance of participants owning the Cattle, and section 4.5 sets out the Minimum Length of Ownership as follows:

A participant must demonstrate Ownership for a minimum continuous period of 120 calendar days in Ontario for all Cattle covered under the Program. If a Participant’s Cattle does not meet this Ownership requirement they will not be eligible for coverage under the Program. [emphasis added]

[36] The Participant Handbook is not prescribed by the OIC but is prepared by Agricorp to assist farmers in making claims for benefits. The Handbook describes “eligible production” as the “production of Ontario-grown livestock within the allowable weight ranges of a category, and covered by the program” [emphasis added].

[37] Agricorp supplies worksheet to farmers for making claims under the Program. The work sheets include boxes to show weight gain but, at the relevant time, no distinction was made on the worksheets between weight gain in Ontario and weight gain outside Ontario.

[38] In 2019, Agricorp prepared a Rates, Dates and Updates Information Sheet (“2019 Information Sheet”) for cattle farmers that specifically states for the first time that “Only in-province weight gain is eligible for Ontario’s Risk Management Program”. Prior to 2019, there were no documents available to cattle farmers that stated this eligibility requirement explicitly. The new “Sales Reporting Checklist” form of 2019 also marked the first time farmers were asked to expressly differentiate weight gain within Ontario and outside Ontario. However, it is also worth noting that as early as 2015 the Participant Handbook specified that “the production or weight gain of Ontario grown livestock qualifies for eligibility”. (emphasis added)

Agricorp and Committee decisions

[39] After Agricorp became aware that the applicant was claiming benefits under the Program for weight gain outside Ontario, Agricorp sent an email to the applicant explaining the basis for not paying benefits for weight gain outside Ontario. In doing so, Agricorp focused on the definition of “Cattle” in the OIC and the references in that definition to cattle having to be “produced in Ontario”:

“Cattle” means a bovine of a beef-type whose main characteristic is meat that is produced in Ontario for at least 120 calendar days and includes calves, steers and heifers.

In order to be eligible to participate in this Program, a Farmer must: (d) enroll all Cattle he/she/it/they produce in Ontario within the Cattle Category (or Cattle Categories) under which he/she/it/they choose to enroll for the Program Year in which he/she/it/they are Participants in the Program;

Only weight gain that occurred (was produced) in Ontario is eligible for the RMP program. When the cattle are raised/fed outside Ontario, that weight gain was not produced in Ontario and is not covered/eligible for the program. Therefore, for cattle fed outside Ontario, we require the date and weight of the cattle when they enter into Ontario to be recorded on the Sales Report, not the original purchase date and weight. [Emphasis added in original.]

[40] In its recommendation decision dated July 12, 2019, the Committee relied on the definition of “Farmer” in the OIC as support for its finding that benefits under the Program are not available for weight gain outside Ontario. In doing so, the Committee rejected an argument made by the applicant that the definition of “Cattle” in the OIC only required that the cattle be present in Ontario for 120 days and that, as long as that criterion was met, weight gain outside Ontario was eligible for benefits. The Committee also rejected the applicant’s argument that the doctrine of contra proferentum applied:

We find Agricorp is correctly interpreting weight gain outside of Ontario and production outside of Ontario as ineligible production, and that the additional criteria, such as the criterion of the minimum ownership period, are only applied when considering production within Ontario. Production outside Ontario is not eligible under RMP.

We base our interpretation primarily on the language used in the Order-in-Council. We make no finding regarding the producer’s assertion that RMP is insurance and therefor subject to insurance law concepts, but we note that contra proferentum is a principle of contract interpretation and is not a principle applicable to the interpretation of an Order-in-Council. Even if contra proferentum applies to the Guidelines and the Handbook, we do not find the stipulation that only production in Ontario is eligible is ambiguous due to the Order-in-Council.

When read together, the definition of “Farmer” in section 1 of the Order-in-Council, and the first statements in subsection 8(1) and subsection 10(1), make it clear that only production in Ontario is eligible for the program, and that other criteria, such as the minimum ownership period, are additional criteria to be considered when determining eligibility. Section 1 defines “Farmer” as “a person engaged in the production of one or more of the following commodities within Ontario:”. That is, for all commodities covered by the program, production must be in Ontario in order for the producer to be a “Farmer” under the program. Only the cattle subcomponent features the 120 minimum ownership period (other ownership periods apply for other livestock), and this additional criterion cannot, as a matter of interpretation of the Order-in Council, be taken to modify the definition of “Farmer”, as “Farmer” could also be a producer of hogs, grains, etc. and not be subject to the rules of the cattle subcomponent. Subsections 8(1) and 10(1) add criteria for eligibility but one must first be a “Farmer”, as defined in the Order-in-Council, as so no production outside of Ontario could be eligible under RMP.

Other mentions in the Guidelines and Handbook of eligible cattle and eligible production, such as in section 4.1 of the Guidelines and in the definition of “eligible production” in the Handbook, are based on the Order-in-Council stipulation that production must occur within Ontario in order to be eligible.

While the sales report and application do not prompt a producer to report information such as the weight of cattle upon entry in Ontario, these omissions do not affect the interpretation of the Order-in-Council. [Emphasis added.]

[41] In its decision accepting the Committee’s recommendation, Agricorp agreed with the Committee’s reliance on the definition of “Farmer” as support for the decision that weight gain outside Ontario was not eligible for benefits:

The Committee’s recommendation is that Agricorp’s position be upheld.

The BRMRC found that Agricorp was not estopped from applying the provisions of the Order in Council (OIC), Guidelines and Handbook to deny a program payment. Their recommendation was based on the clear language around Section 41 and 49 of the OIC which stipulate there is no right of payment under the program.

The BRMRC further determined that while contra proferentum is a principle of contract interpretation, it is not a principle applicable to the interpretation of an OIC.

Finally, the BRMRC noted that the definition of a “Farmer” in section 1 of the OIC as a “Person engaged in the production of one or more of the following commodities within Ontario” …. And sections 8(1) that “No Farmer shall be considered to be eligible for the purposes of this Program unless that Farmer meets all of the requirements set out in this OIC and the Program Guidelines”, and 10(1) that “The Farmer must own and produce the Cattle in Ontario ….” make it clear that only production in Ontario is eligible. Any addition criteria such as the minimum ownership period is only applied when considering production within Ontario and cannot be used to modify the definition of “Farmer”. [Emphasis added]

This is to advise that Agricorp accepts the MRMRC recommendation…

Analysis

[42] The applicant argues that the decision was unreasonable because there was no explicit requirement in any of the pre-2019 documents that the weight gain take place in Ontario.

[43] At the outset, it is worth noting that the applicant’s arguments appear to be an attempt to argue the issues de novo. However, it is not the role of this court on an application for judicial review where the reasonableness standard applies to decide the issues afresh. Rather, as reviewed above, the court’s role is to assess whether the decision below stands up to scrutiny having regard to the reasoning, the outcome and the legal and factual constraints at play. In this case, where the core issue is the interpretation of delegated legislation, namely the OIC, the court’s role is to determine whether that interpretation is reasonable having regard to the purpose and wording of the instrument.

[44] In my view, Agricorp’s final decision accepting the Committee’s recommendation is reasonable. Both the recommendation decision and the final decision considered the purpose of the program and the wording of the relevant provisions. They both place emphasis on the consistent reference to “production in Ontario”. The Committee rejected the applicant’s reliance on the 120 day minimum in Ontario in the definition of “Cattle” and explained its rationale for doing so; namely that this criterion focused on ownership of the cattle for a minimum of 120 days in Ontario but not on the location of weight gain eligible for the Program. This distinction is supported by the wording of the relevant provisions.

[45] The definition of “Cattle” in section 9 of the OIC refers to “meat that is produced in Ontario”. It is reasonable to equate that to “weight that is produced in Ontario”, particularly when production costs and market value are calculated on a “per pound” basis under the Program. Agricorp admits the applicant is a farmer within the meaning of the regulation. (transcript of Agricorp representative’s cross examination, questions 45-47). It admits the applicant’s cattle met the 120 day rule for eligibility. (same transcript, questions 39-44). However, these admissions do not mean that every pound of meat, or weight gain, goes into the calculation or quantification of the eligible payment. Only weight gained in Ontario is “produced” in Ontario. The members of the Committee understood that the underlying foundation for monetary compensation is “production within Ontario”. The fact that a particular “bovine of beef-type” is eligible does not mean that all its weight gain is eligible. It is not unreasonable, in the context of the policy objectives of the regulation, to exclude weight gained outside Ontario.

[46] The applicant argues that the decision is not reasonable because of the reliance on the definition of “Farmer”. The applicant says that “Farmer” refers to the person or entity producing the cattle and the definition therefore cannot help in understanding whether weight gain occurring outside Ontario is eligible for a benefit. However, in its recommendation decision, the Committee did not only rely on the definition of “Farmer”, but rather had regard to the repeated reference to production in Ontario, including in the definition of Farmer. Specifically, the Commission said “When read together, the definition of ‘Farmer’ in section 1 of the Order-in-Council, and the first statements in subsection 8(1) and subsection 10(1), make it clear that only production in Ontario is eligible for the program…” [emphasis added]. In other words, the Committee did not single out the word “Farmer”, but rather looked at it in the context of the eligibility criteria that emphasize production in Ontario. In its final decision, Agricorp reiterated the reliance on the definition of “Farmer” and on sections 8(1) and 10(1) of the OIC. This chain of reasoning is reasonable and supported by the wording of the OIC.

[47] The applicant also argues that the decision was not reasonable because the 2019 Information Sheet makes clear that, up to that point, it was not evident that weight gain outside Ontario was ineligible for the Program. However, the 2019 Information Sheet does not have the status of the OIC or the Guidelines. The latter are the instruments that set out the eligibility criteria for the Program. Assuming the OIC or Guidelines did allow benefits for weight gain outside Ontario, as argued by the applicant, an information sheet prepared by Agricorp cannot amend those instruments. In any event, even if the 2019 Information Sheet had the same status as the OIC or Guidelines, as provided for in section 56(2) of the Legislation Act, S.O. 2006, c. 21, “[t]he amendment of an Act or regulation does not imply that the previous state of the law was different”.

[48] I also do not accept the applicant’s argument in its factum that the doctrine of contra proferentum applies. Again, the Court’s role is not to consider this argument afresh but to decide whether the decision below was reasonable. In this case, the Commission considered this argument and found that the doctrine did not apply because the Program was not established by contract but rather by the OIC. As stated by the Committee and accepted by Agricorp, “contra proferentum is a principle of contract interpretation and is not a principle applicable to the interpretation of an Order-in-Council”. This conclusion is consistent with the case law on this issue (see McClelland & Stewart Ltd. v. Mutual Life, [1981] 2 SCR 6, at p. 15), and is therefore reasonable.

[49] Accordingly, in my view, Agricorp’s decision that the Program does not include weight gain outside Ontario is reasonable and supported by the intent and language of the OIC and Guidelines.

Issue 2: the decision was procedurally fair

[50] The applicant argues that the decision was procedurally unfair because the Commission and Agricorp relied on the definition of “Farmer” to find that weight gain outside of Ontario is not eligible for benefits under the Program. The applicant argues that this issue was not raised before the Commission and it did not have an opportunity to address the issue.

[51] In terms of the level of procedural fairness afforded in this case, the applicant had an opportunity to make full written and oral submission to the Commission. Agricorp accepted that recommendation and it was therefore not necessary for Agricorp to seek out further submissions on the issue. There was therefore extensive procedural fairness accorded to the applicant to make full arguments in support of its position that the OIC and Guidelines should be interpreted to allow for weight gain outside Ontario.

[52] There may be circumstances in which there is a breach of procedural fairness where a decision maker decides a case based on an issue or argument that was not raised at the hearing without giving the parties an opportunity to make submissions on the issue. However, this is not what occurred in this case.

[53] The OIC and its interpretation were at the heart of the issues between the parties. The Commission’s reliance on the definition of “Farmer”, while not explicitly addressed in argument, did not raise a new issue. Rather, as reviewed above, consideration of the definition of “Farmer” included consideration of other provisions that also referred to “production in Ontario”. This is in line with arguments made at the hearing and to which the applicant responded.

[54] In addition, there was in fact some discussion about the definition of “Farmer” during the hearing. While the discussion was not explicit notice to the applicant that the panel intended to rely on the definition, it was nevertheless clear to all parties that the definition of “Farmer” was in play.

[55] Finally, judicial review is a discretionary remedy. Even if I had found procedural unfairness in this case on the basis that the Commission and Agricorp did not put the applicant on notice that they intended to rely on the definition of “Farmer”, I am not satisfied that this would have made a difference to the outcome. As mentioned above, the Commission and Agricorp did not just rely on the definition of “Farmer” in finding that eligible weight gain had to occur (or be produced) in Ontario; they relied on other provisions to the same effect. The applicant’s argument that the definition of “Farmer” does not address the location of weight gain would not have changed the outcome.

Conclusion

[56] The application for judicial review is dismissed.

[57] As agreed between the parties, as the successful party, Agricorp is entitled to costs in the amount of $40,000 all inclusive.

Favreau J.

I agree _______________________________

Aston J.

I agree _______________________________

Backhouse J.

Released: October 21, 2021

DIVISIONAL COURT FILE NO.: 420/19

DATE: 20211021

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Aston, Backhouse and Favreau JJ.

BETWEEN:

2041219 Ontario Limited

Applicant

– and –

The Business Risk Management Review Committee and Agricorp

Respondents

REASONS FOR decision

Favreau J.

Released: October 21, 2021