Sweda Farms Ltd. v. Egg Farmers of Ontario, 2023 ONSC 1990
CITATION: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2023 ONSC 1990
DIVISIONAL COURT FILE NO.: DC-22-0026-00
DATE: 20230329
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Heeney, Stewart and Sutherland JJ.
BETWEEN:
SWEDA FARMS LTD. Applicant
– and –
EGGS FARMERS OF ONTARIO Respondent
ONTARIO FARM PRODUCTS MARKETING COMMISSION Participant
Peter W. Neufeld, Counsel for the Applicant
Geoffrey P. Spurr, Counsel for the Respondent
Kirk Andrews, Counsel for the Participant
HEARD in Brampton: March 7, 2023 (by videoconference)
REASONS FOR DECISION
Sutherland J.
Overview
[1] The applicant, Sweda Farms Ltd. (“Sweda”) brings an application for judicial review of the decision of the Agriculture, Food and Rural Affairs Tribunal (the “Tribunal”) dated April 13, 2022, which summarily dismissed Sweda’s appeal from a decision of the Egg Farmers of Ontario (“EFO”). Sweda seeks an order setting aside the decision of the Tribunal and an order declaring that the Tribunal’s dismissal of the appeal following a pre-hearing conference was unauthorized or otherwise invalid.
[2] For the reasons that follow, the application of Sweda is dismissed.
Background
[3] Ontario egg production is regulated by a “supply management” system that integrates both federal and provincial authority. EFO is a member of the federal agency Egg Farmers of Canada and regulates the production and marketing of eggs within Ontario with powers granted by the Farm Products Marketing Act,[^1] (the “FPMA”).
[4] Pursuant to the FPMA, Regulation 407: Eggs – Marketing (“Regulation 407”) provides for the control and regulation of the production and marketing of eggs in Ontario. Under the system, egg producers are free to create independent contracts with egg graders. The producers ship eggs to the grading station, which grades the eggs on their quality and pays the producer based on the grade given. Grading stations pay applicable licence fees to EFO under its regulations. Egg graders and processors have no institutionalized form of market share, quota system or assurances of supply pursuant to which they are entitled to receive an allotment of eggs.
[5] The Tribunal plays a supervisory role over EFO as defined in the FPMA and Regulations, while EFO is responsible for the day-to-day management, marketing, and regulation of the egg marketing system in Ontario.
[6] Sweda Farms owns an egg grading station in Blackstock, Ontario. In April 2021, Sweda made a request to EFO that EFO redirect the egg production of 200,000 hens to Sweda’s grading station. EFO wrote back requesting further clarification on the precise relief Sweda was seeking. In May, Sweda submitted a more detailed request. Sweda requested that EFO hold a hearing to determine whether EFO “could create regulations and policies in relation to where a producer’s regulated product is marketed.” Essentially, Sweda argued that EFO had the regulatory power to direct egg producers to specific grading stations (“direct marketing”) and wanted EFO to enforce this power with a new system of regulations and policies.
[7] EFO denied the request on June 1, 2021 and denied a further request for reconsideration on September 7, 2021. EFO’s basis was that Sweda lacked standing as either an egg producer or grading station operator and further, that the issues raised were the same as or similar to issues that remain unresolved in actions that Sweda had brought in the Ontario against two of the major egg graders in Ontario alleging, among other things, conspiracy in the production, grading, sale and/or supply of eggs in Canada.
[8] On October 4, 2021, Sweda brought an appeal to the Tribunal. Sweda asked the Tribunal to set aside EFO’s decision, and in its place order that “EFO implement the regulations as set out in FPMA, Regulations 407, that EFO purchase all producers eggs by means of a pool and direct egg producers to market eggs geographically to all Grading Stations including Sweda and other smaller graders.” In the alternative, Sweda asked that EFO be compelled to direct egg production of 200,000 hens to Sweda and any smaller graders upon request or that the Tribunal order the Ontario Farm Products Marketing Commission (the “Commission”) to investigate the issues raised.
[9] On February 28, 2022, the Tribunal held a pre-hearing conference to receive oral submissions with respect to the jurisdiction of the Tribunal on the appeal. Following that conference, the Tribunal dismissed the appeal and awarded costs in favour of EFO, for reasons delivered on April 13, 2022.
[10] On May 12, 2022, Sweda brought the present application for judicial review.
[11] Although, the Commission was represented by counsel at this hearing, it did not make oral submissions, nor did it file written material.
Jurisdiction
[12] The application is brought pursuant to the Judicial Review Procedure Act.[^2] It was brought within 30 days of the release of the Reasons for Decision of the Tribunal, dated April 13, 2022. The Tribunal is a statutory body continued under section 14 of the Ministry of Agriculture, Food and Rural Affairs Act. (MAFRAA)[^3] There is no contest that the applicant has standing to bring this application for judicial review.
Issues
[13] The issues for this Court to address are:
a. The standard of review.
b. Whether the Tribunal erred by dismissing the appeal without a hearing for lack of jurisdiction.
c. Whether the Tribunal erred by dismissing the appeal based on a finding of vexatiousness and bad faith.
d. Whether the award of costs by the Tribunal against Sweda was reasonable.
Standard of Review
[14] Sweda submits that the Tribunal’s determinations concerning its jurisdiction and its findings of vexatiousness and bad faith are reviewable on a correctness standard.
[15] Sweda submits that the Tribunal’s decision concerns the jurisdictional lines between two or more administrative bodies. Sweda submits that per Canada v. Vavilov[^4], the decision is reviewable on a correctness standard. Sweda submits that the Tribunal based its jurisdictional analysis on whether it could direct another administrative body, EFO, to exercise certain powers. Sweda also submits that the Tribunal’s decision regarding its jurisdiction informed its finding that Sweda’s appeal was vexatious and in bad faith. As such, both questions are reviewable on the correctness standard.
[16] EFO submits that the appropriate standard is reasonableness. It submits that there is no dispute in this case regarding jurisdictional boundaries between administrative bodies.
[17] The presumptive standard of review of administrative tribunals is that of reasonableness. Review on a correctness standard does not follow merely because the dispute is of a wide public concern, or the issue in general or in the abstract touches an important issue.[^5] As the Supreme Court of Canada stated in Vavilov, at paragraph 62:
In short, general questions of law of central importance to the legal system as a whole require a single determinate answer. In cases involving such questions, the rule of law courts to provide a greater degree of legal certainty than reasonableness review allows.
[18] The Supreme Court of Canada further indicated at paragraph 63 that the correctness standard is applicable “in order to resolve questions regarding the jurisdictional boundaries between two or more administrative bodies.”
[19] However, the Court also stated, at para. 68:
Reasonableness review does not give administrative decision makers free rein in interpreting their enabling statutes, and therefore does not give them licence to enlarge their powers beyond what the legislature intended. Instead, it confirms that the governing statutory scheme will always operate as a constraint on administrative decision makers and as a limit on their authority. Even where the reasonableness standard is applied in reviewing a decision maker’s interpretation of its authority, precise or narrow statutory language will necessarily limit the number of reasonable interpretations open to the decision maker — perhaps limiting it to one. Conversely, where the legislature has afforded a decision maker broad power in general terms — and has provided no right of appeal to a court — the legislature’s intention that the decision maker have greater leeway in interpreting its enabling statute should be given effect…[^6]
[20] In the circumstances here, I conclude that the standard of review is that of reasonableness. The issue does not strictly concern the jurisdiction of two bodies. The issue concerns the interpretation of the statute to ascertain the limits of the Tribunal’s authority. This is not a general question of law where it is “of central importance to the legal system as a whole.” In addition, the legislature has afforded the Tribunal with broad powers including broad powers to “stand in the shoes”[^7] and substitute the decisions of the EFO and direct the EFO to take such action as the EFO is authorized to take. There is no right of appeal to the judiciary in the FPMA but there is an appeal process within MAFRAA to the Tribunal and for ministerial review.
[21] The issues for the Court to determine are of some importance to the relationship and authority of the Tribunal over that of the EFO.[^8] But does not extend, in my view, to that of central importance to qualify as a question of law that requires a standard of review of correctness.
[22] Considering the FPMA along with the lack of “central importance” of the issues, I accept EFO’s submission that the standard of review is reasonableness for both issues, that of jurisdiction and of the determination of vexatiousness and bad faith.
Whether the Tribunal erred by dismissing the appeal without a hearing for lack of jurisdiction.
Decision of the Tribunal
[23] Separate and apart from the current matter, Sweda had brought three other appeals to the Tribunal around the same time. On January 10, 2022, a pre-hearing conference (the “PHC”) was held for all four hearings and at that conference the Tribunal raised the issue of jurisdiction for the present matter and whether the appeal should be dismissed before the hearing.[^9]
[24] There is no question that the Tribunal had the authority to raise the issue of jurisdiction and whether the hearing should be held at the PHC.[^10]
[25] The Tribunal invited written submissions from the applicant, and the respondent. The participant was not required to provide written submissions.
[26] Written submissions were received, and oral submissions were presented on February 28, 2022.
[27] After the PHC on January 10, 2022, Sweda withdrew three of its four appeals. The decision of the Tribunal only relates to the fourth appeal that was not withdrawn.
[28] In the decision, the Tribunal reviewed the legislation, namely subsections 16, 16(1), 16(4), 16(11) of the MAFRAA and rules 33.01 and 33.02 of the Rules.
[29] The issues before the Tribunal were:
a. Does the applicant have standing?
b. Does the Tribunal have jurisdiction?
c. Did the applicant bring the appeal within one year per s. 16(4) of the MAFRAA?
d. Should the appeal be dismissed as being vexatious and in bad faith?
[30] The Tribunal determined that the applicant had standing and that the one-year limitation did not apply. There is no contest to these findings of the Tribunal.
[31] The applicant contests the Tribunal’s decision on issues (b) and (d).
[32] On the issue of jurisdiction, the Tribunal determined that it did not have jurisdiction. It agreed that pursuant to Regulation 407, it had broad powers and could step into the shoes of the EFO to take any action that the latter is authorized under the FPMA. Notwithstanding these broad powers, the Tribunal determined, at para. 44 of its Reasons, that it had no jurisdiction “to fetter EFO’s discretionary powers or to require that they be exercised. Any use of those powers must be exercised by the local board and not by the Tribunal; nor can the Tribunal direct that they be exercised or the manner in which they are exercised.”
[33] On the determination of the appeal be dismissed as being vexatious and in bad faith, the Tribunal concluded, at para. 64:
The bringing of this appeal, for which there is no jurisdiction, when viewed in the context of three other appeals, filed in proximity in time to this one and now withdrawn, reinforce the intention of Sweda to harass EFO by bringing this appeal. For this additional reason this appeal should be found to be vexatious and in bad faith and be dismissed without a hearing pursuant to Rule 33.01 (a).
[34] The Tribunal further concluded that the appeal should never have been brought and fixed costs against the applicant in the amount of $8,842.25 payable in 30 days with interest accruing after the 30 days, in accordance with section 129 of the Courts of Justice Act.[^11]
Fresh Evidence
[35] At the beginning of this hearing, the respondent brought a motion to request the admission of fresh evidence. The evidence related to the applicant reinstating two of the three appeals it had withdrawn after the Decision of the Tribunal and the commencing of an action in the Superior Court of Justice against EFO and other trading stations on December 15, 2022. The applicant submitted three separate requests on the Ontario Farm Products Marketing Commission, each one requesting an inquiry respecting the EFO per s. 3(1)(b) of the FPMA. The action pertains to a claim for damages and punitive damages for alleged breach of standard of care, conspiracy, and unjust enrichment. The motion was not opposed, and for oral reasons given, the Court granted the relief requested by the respondent and the fresh evidence was admitted.
Analysis
[36] To begin, I believe it is necessary to remember that the appeal to the Tribunal was from a decision of the EFO that found that Sweda did not have standing due to not being an aggrieved party and that further, the issues raised were being considered in other litigation.
[37] The Tribunal was entrusted with an appeal to set aside the decision of the EFO and order or direct the EFO to fashion a new allocation system of direct marketing and was not expecting the Tribunal to do so. In effect, the applicant did not seek that the matter be referred to the EFO to ascertain through their processes of policy and investigation whether to implement a direct marketing system but that the Tribunal direct and order EFO to do so without such vetting of the system requested through the EFO processes.
[38] Against this backdrop, the Tribunal determined that it did not have such jurisdiction. The Tribunal determined that it is not an investigative mechanism. No investigative process or determination was undertaken by the EFO, and the applicant did not request same. Consequently, there was no decision of the EFO on whether direct marketing was acceptable or not. The applicant conceded that it was not requesting the Tribunal to investigate and determine whether a direct marketing system should be utilized.
[39] The applicant has directed the Court to Chicken Processors[^12] and Chicken Farmers of Ontario v. OFPMC.[^13] The applicant argues that these cases support that the Tribunal has the authority to direct or order the EFO and to take whatever action the EFO is authorized to do under the FPMA.
[40] There is no issue that between the cases reviewed, the FPMA and Regulation 407, the Tribunal has broad powers to “stand in the shoes” of the EFO.
[41] The question, as I see it, is whether in the circumstances of this appeal where the EFO has not conducted an investigation and made a determination of whether the direct marketing system is suitable, the Tribunal can order or direct the EFO to implement such a system, especially when the applicant concedes that the Tribunal is not the place to conduct such an investigation to determine the suitability of the direct marketing system.
[42] I find that Chicken Processors and Chicken Farmers do not assist the applicant with the question that this Court must determine.
[43] Chicken Processors concerned a situation that involved the Chicken Farmers of Ontario’s refusal to establish a specific pricing formula for which it fixed prices after a consideration of that formula for lack of jurisdiction. The Commission held a hearing regarding the allocation of live chickens to Ontario processors by chicken producers. A 23-day hearing de novo was heard by the Tribunal. The Tribunal determined that it had the jurisdiction to direct the Commission to revoke or amend its regulations. The Tribunal ordered that the pricing formula should be used to price live chickens to producers and that the pricing formula would have three variables. The Tribunal left it to the parties to negotiate the details within the framework established by the Tribunal.
[44] Chicken Farmers was concerned with whether the Commission could amend its regulations to implement a system of formula fixing. The Commission determined it did not have the authority to do so. On appeal, the Tribunal interpreted the legislation and determined that the Commission did have the authority to amend, if it wanted to do so. Thus, the Tribunal had the authority under section 7(1) of the FPMA to direct the Commission to implement the system. But it elected not do so because the Tribunal had not heard arguments “as to whether it would be appropriate to establish a pricing formula or whether to continue the pricing negotiations system in accordance with the regulations or whether to establish some other system.”[^14]
[45] Both cases demonstrate the necessity of a decision from the local board or Commission that was appealed and the necessity of investigative measures to ascertain the evidentiary basis of determining the appropriate price fixing formula.
[46] Given the appeal as framed by the applicant and the lack of an investigation or decision from the EFO on whether a direct marketing system is appropriate, I find that the decision of the Tribunal that it did not have the jurisdiction to grant the relief requested by the applicant was reasonable.
[47] The Tribunal does “fit in the shoes” of the EFO but it is not the EFO itself. The Tribunal requires a substantive basis, be it a hearing and decision from the EFO, an exercise of discretion by the EFO or some evidentiary basis provided by the applicant to have jurisdiction to review the determination of the EFO and grant the relief requested. In this case, there was none. The Tribunal is not an investigative body akin to the EFO.
[48] Subsection 16(11) of the MAFRAA authorizes the Tribunal “to take such action as it or he or she is authorized to take under the [FPMA] and as the Tribunal considers proper, and for this purpose the Tribunal may substitute its opinion for that of the Commission, the local board, the marketing board, or the Director.”
[49] This authority is not exercised in a vacuum. The Tribunal may substitute its decision for that of the EFO and direct or order the EFO to take such action to comply with that decision of the Tribunal.[^15] I am of the view that taking the modern approach to statutory interpretation[^16] to the authority of the Tribunal, it does not have the authority to order or direct the EFO to take such action without a basis to do so, be it a hearing and decision from the EFO or a hearing de novo as in Chicken Processors, or that the governing legislation or regulation mandates EFO to take such action. It is not greatly disputed that there was no obligatory action that the EFO must have taken insofar as the relief requested by the applicant. At all times, any decision taken by the EFO on the relief requested by the applicant would have been discretionary.
[50] Consequently, I find this statement of the Tribunal reasonable: “The Tribunal has no jurisdiction to fetter EFO’s discretionary powers or to require that they be exercised. Any use of those powers must be exercised by the local board and not by the Tribunal; nor can the Tribunal direct that they be exercised or the manner in which they are exercised.”[^17]
[51] I therefore reject the submission of the applicant that the decision of the Tribunal on the issue of jurisdiction as it pertains to the relief requested by the applicant was not reasonable.
[52] The applicant also made the submission that the Tribunal could have reframed the appeal or provided the applicant the opportunity to reframe the appeal as was done in Black v. Chicken Farmers of Ontario.[^18]
[53] In Black, the Chicken Farmers of Ontario (“CFO”) brought a motion to dismiss that appeal to the Tribunal or alternatively, limit the scope of the appeal. The Tribunal reviewed the relief requested by the appellant and determined that the appeal could not proceed as framed. The Tribunal then exercised its discretion and provided the CFO with the alternative relief requested and provided the appellant with the opportunity to limit the scope of the appeal and file an amended notice of appeal.
[54] The Black decision I find is not helpful to the applicant for the factual circumstances are distinguishable from the factual circumstances in this application.
[55] In the appeal to the Tribunal on this matter, there was no request by the applicant or EFO to direct the applicant to limit the grounds of appeal or that the applicant have the opportunity to file an amended notice of appeal. The application before this Court is that of a judicial review. There is no basis for this Court to review a decision of the Tribunal that was never requested or made.
Whether the Tribunal erred by dismissing the appeal based on a finding of vexatiousness and bad faith.
[56] I conclude that the alternate means for dismissal of the appeal as being vexatious and in bad faith was reasonable.
[57] The Tribunal in its decision set out the pathway of reasoning on which it concluded that the appeal was vexatious and brought in bad faith. The Tribunal found that:
a. By comparing the allegations in the Statement of Claim that there are certain aspects of the appeal that are raised in the ongoing litigation. There is a danger of different decisions on certain issues in different forums.
b. The appeal should not have been brought as framed by the applicant for it had no chance of success and that it was “plain and obvious” that it was bound to fail.
c. The EFO was forced to defend the same issues on two fronts forcing it to incur additional costs.
d. The three other appeals filed in close proximity in time to the appeal that the Tribunal was determining displayed the applicant’s intention to “harass” the EFO.
[58] On these factual findings that are apparent from the record, it cannot be said that the decision of the Tribunal to have dismissed the appeal for being vexatious and in bad faith was unreasonable.
Whether the award of costs by the Tribunal against Sweda was unreasonable.
[59] The award of costs by the Tribunal is discretionary. The Tribunal determined that costs should be awarded due the conduct of the applicant and the costs incurred by the EFO.
[60] This was clearly within the jurisdiction and discretion of the Tribunal to do. I am not convinced that the exercise of that discretion by was unreasonable.
Hence, I find no reason to disturb the costs award as determined by the Tribunal.
Disposition
[61] The application for judicial review is dismissed.
[62] By agreement of the parties, costs are awarded to the successful respondent in the amount of $15,000. The Commission did not seek costs.
Sutherland J.
I agree _______________________________ Heeney J.
I agree _______________________________ Stewart J.
Released: March 29, 2023
CITATION: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2023 ONSC 1990
DIVISIONAL COURT FILE NO.: DC-22-0026-00
DATE: 20230329
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
SWEDA FARMS LTD. Applicant
– and –
EGG FARMERS OF ONTARIO Respondent
ONTARIO FARM PRODUCTS MARKETING COMMMMISSION Participant
REASONS FOR DECISION
Sutherland J.
Heeney J.
Stewart J.
Released: March 29, 2023
[^1]: R.S.O. 1990, c. F.9 [^2]: R.S.O., 1990 c. J. 1. [^3]: R.S.O. 1990, c. M.16. [^4]: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at para. 53. [^5]: Ibid, Vavilov, at para. 61. [^6]: Supra, note 5, at para. 68. [^7]: Association of Ontario Chicken Processors v. Ontario (Agriculture, Food and Rural Affairs Appeal Tribunal), at para. 37. [^8]: Regulation 407, ss. 5, 6, 7 and 12. [^9]: Decision of the Tribunal dated April 13, 2022, at para. 44 (the “Tribunal Decision”). [^10]: MAFRAA, s. 16(4); Rule 33.01 of the Tribunal’s Rules of Procedure (the Rules). [^11]: RSO 1990, c. C.43. [^12]: Association of Ontario Chicken Processors v. Ontario (Agriculture, Food and Rural Affairs Appeal Tribunal) [^13]: 2001 ONAFRAAT 47. [^14]: Chicken Farmers of Ontario v. OFPMC, 2001 ONAFRAAT 47, last paragraph. [^15]: Stetler v. Ontario Flue-Cured Tobacco Growers Marketing Board, at para. 57. [^16]: Rizzo & Rizzo Shoes Ltd (Re); Bell ExpressVu Ltd. Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. at paras. 26-27; Vavilov, at paras. 117-121. [^17]: Tribunal Decision, at para. 44. [^18]: 2014 ONAFRAAT 12 and the appeal, 2014 ONAFRAAT 26.