CITATION: Sobczyk v. Ontario, 2022 ONSC 88
DIVISIONAL COURT FILE NO.: DC-21-071 (London)
DATE: 2022-01-05
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
H. McLEAN, R.D. GORDON, T. LEDERER JJ.
BETWEEN:
Matthew Sobczyk
Applicant
– and –
Her Majesty the Queen in Right of Ontario
Respondent
Lisa N. Gunn, for the Applicant
Nansy Ghobrial, for the Respondent
HEARD Via Zoom: December 8, 2021
DECISION ON APPLICATION
R.D. GORDON J.
Overview
[1] The Applicant seeks review of the Decision of the Ontario Ministry of Finance dated June 2, 2021 refusing to issue him a Dealer Registration Certificate and a Producer Registration Certificate for the 2021 calendar year. If issued, the certificates would have allowed him to produce and sell raw leaf tobacco in 2021.
Standard of Review
[2] The decision of the Supreme Court of Canada in Canada (Citizenship and Immigration) v. Vavilov, 2019 SCC 65, confirmed that the presumptive standard of review on an application for judicial review is reasonableness. Reasonableness accords deference to the decision-maker and is primarily concerned with whether the decision is justified, intelligible and transparent and falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.
[3] With respect to procedural fairness, the Court must determine whether the requisite level of procedural fairness has been accorded in all of the circumstances, taking into account the factors set out in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, including the nature of the decision being made and the process followed in making it, the nature of the statutory scheme and the terms of the statute pursuant to which the body operates, the importance of the decision to the individual affected, the legitimate expectations of the person challenging the decision, and the choices of procedure made by the agency itself.
Background
[4] Tobacco is a heavily regulated product. The main objective of that regulation is to curb the flow of untaxed tobacco products into the contraband market.
[5] The Tobacco Tax Act (the “Act”) and the regulations issued thereunder require a person who produces raw leaf tobacco to hold a registration certificate permitting him to do so. A person who sells raw leaf tobacco must also hold a registration certificate.
[6] Persons issued a producer registration certificate may only grow tobacco at the locations specified by the Ministry and may not exceed the allowable acreage set out in their certificate. The Ministry issues to each producer a limited number of single-use labels that accord with the number of bales of tobacco the producer is expected to produce. Those labels must be affixed by the producer to the bales of harvested tobacco and records kept of such things as the date of baling, the weight and purchaser of the bale. All of this allows the Ministry to strictly control the amount of tobacco grown and where it goes.
[7] Section 23 of the Act empowers the Ministry to conduct inspections of raw leaf tobacco operations. It gives officials authorization to inspect any land used to grow tobacco and any location that may hold raw leaf tobacco inventory. During inspections they may ask to review any books, records, or labels that relate to tracking of a producer’s inventory. Inspections are typically unannounced to enable inspectors to gather accurate information without the producer having the time to alter their records or disguise any non-compliance.
[8] The Applicant is a tobacco farmer. From 2013 to 2020 he was issued certificates annually allowing him to produce and sell raw leaf tobacco. However, his relationship with the Ministry was not always positive.
[9] In reports compiled by Ministry inspectors, the following difficulties were noted:
- In late 2013, the Applicant and his family were intimidating, aggressive and obstructionist toward inspectors. The Applicant conceded that he had acted in contravention of the Act. Police had to be called on two occasions when inspectors attended his property.
- The Applicant was aggressive, intimidating and obstructionist toward Ministry inspectors on multiple occasions in 2016, 2017, 2018, 2019.
- On January 23, 2020 the Applicant became angry during an inspection and threatened to remove the inspectors from his property.
- On July 20, 2020 the Applicant insisted on being present for inspections and insisted that inspectors attend only by appointment.
- On September 14, 2020 he refused the inspectors access to the barn and reiterated his insistence that the inspections be conducted by appointment. The Applicant’s brother threatened inspectors and insisted they leave without completing their inspection. The Applicant and his brother were charged under s. 23(6.1) of the Act for hindering or interfering with an audit or examination (this charge remains outstanding at this time).
- On December 3, 2020 the Applicant denied inspectors access to the barn and insisted they return at a later time. He was charged once again under s. 23(6.1) (this charge also remains outstanding).
[10] I note that quite apart from demonstrating a lack of understanding of the breadth of the responsibility of the regulator and the nature of its authority, these “difficulties” are directly contrary to the requirements imposed on registrants that are reviewed with registrants each year.
[11] When the Applicant applied to renew his certificates in 2021, he was advised by letter dated January 25, 2021 that the Ministry intended to refuse him the certificates. The letter outlined the reasons for the refusal and concluded: “Based on your conduct and the conduct of your employees during the interactions with Ministry Inspectors in 2020, in the context of disruptive behaviour in previous years and numerous meetings with Ministry Inspection staff educating you on inspection authorities under the Act, there were reasonable grounds to believe that you will not comply with the Act in 2021.”
[12] In accordance with s. 2.2(9) of the Act, the Applicant was afforded an opportunity to appear before the Minister to show cause why the registration certificates should not be refused. The hearing was held on May 14, 2021.
[13] Prior to the hearing, on April 26, 2021, a Ministry representative (Mr. Hester) emailed counsel for the Applicant (not counsel on this application) to ask who would be attending the hearing on the Applicant’s behalf. With the hearing date looming, and not having received a response, a further email was sent on May 5, 2021 asking who would be attending the hearing with the Applicant so that the Zoom link could be sent to all who were expected to participate. The next day Mr. Hester received a response indicating that the Applicant and his counsel would be attending and asking if any witnesses would be called by the Ministry. Mr. Hester responded the same day and indicated that the Applicant had received a letter explaining the reasons for the denial, had been provided the inspection reports related to the matter and that Ministry witnesses do not give evidence at these hearings. Mr. Hester directed counsel to a link containing information on Administrative Hearings held under the Act.
[14] The link led to a page from the Ministry’s website entitled “Tobacco Tax Act Administrative Hearings”. The page explained that administrative hearings provide an opportunity for persons to make submissions to a representative of the Minister of Finance to show reasons why the Ministry should not proceed with a proposed action or continue an already initiated action.
[15] It went on to explain that submissions at the hearing may be oral or written and may include supporting documents provided they are filed with the Ministry at least five business days before the scheduled hearing date. It outlined the typical sequence of events as follows:
- Chairperson delivers opening remarks.
- Applicant or Registrant provides submissions.
- Chairperson may ask the Applicant or Registrant questions to clarify the Applicant’s or Registrant’s position, including questions related to any submissions made.
- Chairperson typically reserves his or her decision.
- Chairperson concludes the hearing with closing remarks.
[16] The hearing was held on May 14, 2021. The Applicant appeared with his counsel. He filed no documents in support of his position. He made no request to question any representative of the Ministry. The Applicant was asked questions by his counsel and by the members of the panel representing the Ministry. The Chairperson reserved her decision.
[17] On June 2, 2021 the Chairperson issued her decision, concluding that there were indeed reasonable grounds to believe the Applicant would not comply with the Act and its regulations if the certificates were issued. Although the decision was emailed to the Applicant’s counsel that same day, the decision was not provided to the Applicant until he received a copy directly from the Ministry on June 17, 2021.
[18] On June 30, 2021 the Ministry learned that the Applicant had planted tobacco notwithstanding the decision of June 2 that he be denied a producer certificate. As a result, the Ministry issued him a Notice of Intent to seize the tobacco for failing to comply with the Act. A subsequent inspection revealed he was harvesting and curing the tobacco. The Ministry declined the Applicant’s request for relief from seizure. The tobacco was eventually seized and is currently being held by the Ministry pending the decision in this matter.
[19] The Notice of Application for Judicial Review was issued August 18, 2021. Although it seeks review of both the decision of June 2, 2021 and the subsequent decision to deny relief from seizure, counsel for the Applicant did not advance argument with respect to the decision pertaining to the seizure. She submitted that if the Applicant is successful in his application with respect to the June 2, 2021 decision, with the eventual result that he is issued his certificates to produce and deal tobacco for 2021, he will be deemed to have produced the tobacco lawfully, the seizure will necessarily have been improper and the tobacco will be returned to him. The Ministry has indicated that, on a practical basis, this is indeed the case. Similarly, if this application is unsuccessful, the Applicant will have produced the tobacco in contravention of the Act, and it will have been properly seized.
Analysis
[20] The parties have identified several issues for determination.
1. Should the Application be Dismissed for Delay?
[21] Subsection 5(1) of the Judicial Review Procedure Act provides that an application for judicial review shall be made no later than 30 days after the date of the decision or matter for which judicial review is being sought is made or occurred. An extension of time may be granted by the court if it is satisfied that (a) there are apparent grounds for relief; and (b) that no substantial prejudice or hardship would occur as a result of the delay.
[22] The Applicant first received notice of the decision on June 17, 2021. He took prompt steps to retain counsel and the Ministry was provided with written notice of his intention to apply for review of the decision on July 6, 2021. Subsequent delay was largely attributed to his counsel being diagnosed with COVID.
[23] I am satisfied there are apparent grounds for the relief sought in the Notice of Application and there is no substantial prejudice or hardship to the Ministry as a result of the delay. The required extension of time for the filing of this Notice of Application is granted.
2. Should Paragraphs 5-8 of the Applicant’s Affidavit be Struck?
[24] As a general principle, evidence that was not before the decision-maker and that goes to the merits of the matter is not admissible on an application for judicial review. There are, however, limited circumstances in which the record may be supplemented: (a) to show the absence of evidence on an essential point; (b) to disclose a breach of natural justice that cannot be proven by reference to the record; or (c) to provide general background that might assist the court in understanding the underlying issues. [See Durham Regional Police Service v. The Ontario Civilian Police Commission, 2021 ONSC 2065].
[25] Given that the scope of this judicial review has been limited to the June 2, 2021 decision, and paras. 5-8 of the Applicant’s affidavit address issues arising thereafter, I agree with the Ministry that those paragraphs should be struck.
3. Was the Applicant Afforded Procedural Fairness?
[26] The Ministry submits that the procedure employed by the Ministry was fair. It points out that the Applicant was given advance notice of its concerns and given copies of the documents to be placed before the decision-maker. He was represented by counsel and was given the opportunity to file documents and to make oral submissions. Further, at the outset of the hearing the decision-maker and counsel for the Applicant had the following exchange:
Mr. Prevost: Thank you, Madam Chair. What I was hopeful to do is just sort of lead by client through some questions in aid of what eventually will be the submissions.
Madam Chair: Okay.
Mr. Prevost: If that’s agreeable.
Madam Chair: It’s your opportunity to show cause during this hearing, so whatever format you prefer to do.
[27] The Applicant acknowledges all of this but submits it was fundamentally unfair for the decision-maker to receive and rely upon the inspection reports compiled by the Ministry over an eight year period without giving him the opportunity to cross-examine the authors of those reports. He submits that this is particularly so given that the decision would impact directly on his ability to earn a living.
[28] Notably, police accompanied inspectors during several of their attendances at the Applicant’s farm and the Applicant adduced no evidence from them to contradict the reports of the inspectors. Additionally, the Applicant’s father and brother were often present during inspections and the Applicant adduced no evidence from them to contradict the reports of the inspectors. The Applicant did address the decision-maker and offer explanations for the difficulties with inspectors in 2020, but he did not contradict the many reports pertaining to previous years.
[29] The Applicant did not ask to question or cross-examine any of the authors of the reports and he left the contents of those reports largely uncontradicted. In my view, any potential objection to the decision maker proceeding on the basis of the reports without cross-examination was waived by the Applicant when he failed to raise the issue at the hearing. [See Stetler v. Ontario Flue-Cured Tobacco Growers’ Marketing Board para. 98 (ONCA)].
4. Was the Decision of June 2, 2021 Reasonable?
[30] Section 6(2)1 of O. Reg 247/14 provides that the Minister is not authorized to issue a registration certificate if there are reasonable grounds to believe that the Applicant will not comply with the Act and the regulations, based on information provided to the Minister and based on the past conduct of the Applicant or a related party. It was under this section that the Applicant’s application for renewal of his certificates was declined.
[31] The “reasonable grounds to believe” standard requires something more than mere suspicion, but less than the standard applicable in civil matters of proof on the balance of probabilities. In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information. [See Mugesera v. Canada (Minister of Citizenship and Immigration 2005 SCC 40, [2005] 2 S.C.R. 100 at para. 114].
[32] The hearing of June 2, 2021 was held pursuant to section 2.2(9) of the Act which provides as follows: “If the Minister proposes to refuse to issue a registration certificate or proposes to suspend or cancel a registration certificate, the Minister shall, before doing so, afford the person an opportunity to appear before the Minister to show cause why the registration certificate should not be refused, suspended or cancelled, as the case may be.”
[33] Accordingly, the onus was on the Applicant to satisfy the decision maker that there were not reasonable grounds to believe he would not comply with the Act and the regulations.
[34] In my view, the decision was reasonable. The decision maker was entitled to rely on the evidence contained in the reports filed with her. Those reports revealed the Applicant’s long and largely uncontradicted history of disruptive and sometimes intimidating behaviour towards Ministry inspectors, previous contraventions of the regulations, Ministry personnel’s various attempts at educating the Applicant, and the circumstances surrounding the Applicant’s two charges of Interference with Inspections contrary to ss. 23(6.1) of the Act in 2020. She considered the submissions of the Applicant but determined, in all of the circumstances, that there remained reasonable grounds to believe he would not comply with the Act and the regulations. Whether one agrees or disagrees with her conclusion it certainly falls within the range of possible acceptable outcomes that are defensible in respect of the facts and law.
Conclusion
[35] The Application for Judicial Review is dismissed. The Ministry is at liberty to destroy the tobacco seized from the Applicant’s operation. The Applicant shall pay to the Ministry costs in the amount of $19,000.
R.D. Gordon J.
I agree __________________________________
H. McLean J.
I agree __________________________________
T. Lederer J.
Released: January 5, 2022
CITATION: Sobczyk v. Ontario, 2022 ONSC 88
DIVISIONAL COURT FILE NO.: DC-21-071 (London)
DATE: 2022-01-05
ONTARIO
COURT OF JUSTICE
DIVISIONAL COURT
H. Mclean, R.D. Gordon, T. Lederer JJ.
BETWEEN:
Matthew Sobczyk
Applicant
– and –
Her Majesty the Queen in Right of Ontario
Respondent
DECISION ON APPLICATION
Released: January 5, 2022