SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 13-56794

DATE: 20140806

RE: A GROUP OF ONTARIO FARMERS WHO HAVE RECEIVED DEMANDS FROM THE RESPONDENT TO PAY CLAIMS THAT ARE MORE THAN TWO YEARS OLD, Applicants

AND

AGRICORP, Respondent

BEFORE: Mr. Justice Marc L. Labrosse

COUNSEL: Donald R. Good, Counsel for the Applicant

Lise G. Favreau, Counsel for the Respondent

HEARD: May 22, 2014 at Ottawa

ENDORSEMENT

Overview

[1] In or about the beginning of 2012, approximately 4500 farmers in Ontario were notified by the Crown corporation who delivers certain farm-related government programs that they had been overpaid for previous years’ program benefits. On January 1, 2012, participants in various farm-related government programs had outstanding debts totalling $30,771,249. As of January 3, 2014, over 19 million dollars had been collected or will be collected based on repayment agreements.

[2] A group of Ontario farmers commenced an application to determine if AgriCorp, the Crown corporation who manages farm‑related government programs, could commence proceedings for the repayment of debts owing for more than two years. The farmers state that an agent of the Crown is bound by the same two‑year limitation period as other private companies. AgriCorp states that, as an agent of the Crown, it is not bound by the basic two‑year limitation period set out in the Limitations Act, 2002, S.O. 2002, Chap. 24, Sched. B (the “Act”).

[3] The sole issue presented to the Court in this proceeding is to determine if AgriCorp can commence a proceeding to recover debts related to overpayments which are more than two years old. Specifically, does a Crown agent benefit from the exemption found at para. 16(1)(j)(i) of the Act?

[4] For the reasons which follow, I am of the opinion that AgriCorp, as an agent of the Crown, benefits from the exemption at para. 16(1)(j)(i) of the Act and that it is not subject to the basic limitation period of two years under the Act for the commencement of a proceeding to recover a debt.

Factual Background

[5] There is no material dispute in the facts surrounding this Application.

[6] AgriCorp is a provincial Crown corporation created in 1997 pursuant to the AgriCorp Act, 1996, S.O. 1996, c. 17, Sched. A. Its purpose is to deliver government programs that help Ontario producers manage agricultural risks like unpredictable weather, unstable market conditions and production.

[7] The primary sources of the debts at issue in this dispute arise from the Canadian Agricultural Income Stabilization (“CAIS”) program, which was later renamed AgriStability program.

[8] Eligibility for assistance under the AgriStability program was determined following the submission of an application form by the participant farmer which often included projections on annual production. Upon qualifying for program benefits, these were often paid based on anticipated future losses. At the end of the fiscal year, the participant’s production would be confirmed and this could result in an overpayment of benefits.

[9] Historically, AgriCorp would recover overpayments by set‑off on future payments. If a participant did not participate in the same or similar programs in future years, AgriCorp did not actively seek reimbursement.

[10] In April 2012, the Ministry of Agriculture and Food created a Debt Recovery Protocol (“Protocol”) which provided AgriCorp with a framework for the recovery of debts owed to the Crown. Where collection was not successful, a particular debt could be transferred to the Ministry of Finance for collection. The Protocol set out the following relevant collection policies for AgriCorp to follow:

(a) Participants would have to establish a plan to repay their balances within three years of debt notification;

(b) Interest would no longer be waived on outstanding accounts as of January 1, 2013; and

(c) Outstanding debts could eventually be forwarded to the Ministry of Finance for further collection efforts.

[11] In or about April 2012, AgriCorp sent out letters to approximately 4499 participants to advise them of the new policy for collecting outstanding debts.

[12] When the debt recovery program started in 2012, the 4499 participants had outstanding debts totaling $30,771,249. As of January 3, 2014:

(a) Over 70% of participants made agreements to repay their debt to AgriCorp;

(b) $19,580,804 has been collected or will be collected based on the agreements;

(c) The debts of 309 participants have been recommended for write‑offs because of bankruptcy or similar issues;

(d) The debts of 359 participants are being dealt with as “special handling” files for various reasons, including requests for appeal or audits; and

(e) The debts of 516 participants totaling $4,494,971 could be transferred to the Ministry of Finance for collections.

[13] The Applicants proposed a representative applicant, Peter Tippins. In addition, the affidavit of Jack MacLaren was filed in support of the Application and Mr. MacLaren put himself forward as the representative for the Applicant, as Mr. Tippins could not assume the financial liability. Mr. Tippins was part of the 4499 farmers from whom collection was sought. Although AgriCorp opposed Mr. MacLaren as the representative in this Application, this was not actively pursued at the hearing of the Application, as the parties had reached an agreement on the issue of liability for costs and the quantum. The issue of standing was not pursued.

Position of the Parties

[14] The Applicant asks the Court to determine if AgriCorp can commence a proceeding for the collection of an individual farmer’s debt when considering the basic limitation period as set out in s. 4 of the Act.

[15] The Applicant agrees that AgriCorp is a Crown corporation and that it acts as a Crown agent. The main argument is that the exemption created by para. 16(1)(j)(i) of the Act does not apply to an agent of the Crown, such as AgriCorp. In support of its position, the Applicant submits that AgriCorp is much more like a private corporation with “farmers serving farmers” and that they should not benefit from the exemption of debts owing to the Crown.

[16] The Applicant relies on the fact that para. 16(1)(j)(ii) of the Act specifically refers to a “delivery agent” to which an exemption applies. This section does not refer to any other Crown agent. Further, there are numerous other provincial statutes which specifically refer to Crown agents. The Act does not do this and the Applicant states that the principles of statutory interpretation require the Act to be interpreted as not applying to Crown agents unless specifically mentioned.

[17] The Applicant states that a cheque for payment of an overpayment debt is payable to AgriCorp, it is not payable to the Crown. The debt belongs to Agricorp and not to the Crown. Given that a Crown agent is not specifically referred to under s. 16 of the Act, the basic limitation would preclude the commencement of a proceeding to recover the overpayment. In the end, the Applicant solely wants to know if AgriCorp can “commence a proceeding” as described in s. 4 of the Act.

[18] The Respondent starts by objecting to the questions posed by the Applicant as AgriCorp has not actually commenced any proceedings. It is an abstract question as there is no evidence of AgriCorp attempting to commence any proceedings.

[19] Notwithstanding, AgriCorp is of the view that all Crown agents benefit from the exemption to the basic limitation period provided that the nature of the debt falls under the provisions of s. 16 of the Act.

[20] AgriCorp relies on the ability of the Crown to have established the Protocol in relation to Crown debts. AgriCorp explains the distinction with para. 16(1)(j)(ii) and certain delivery agents is meant to apply to entities which are clearly not Crown agents such as municipalities and native bands. However, applicability of the exemption to Crown agents does not require specific mention. A Crown agent benefits from the same privileges as the Crown except where specifically mentioned.

[21] AgriCorp alleges that any reference to the Crown must include its agents because the Crown can only act through its agents. When the Crown is immune from the operation of a statute then the Crown agent is also immune provided that it is acting within the scope of its authority.

[22] AgriCorp relies on the provisions of the AgriCorp Act to demonstrate that it is acting within the scope of its powers in administering the AgriStability program and in following the direction in the Protocol.

[23] In support of its position, Agricorp provided the Court with a series of decisions where the powers and rights of the Crown were extended to Crown agents without any specific statutory reference.

Analysis

[24] The analysis which is applicable to the issues is very straightforward. The parties are in agreement that AgriCorp is a Crown corporation and that in exercising its functions under the AgriCorp Act, it is acting as a Crown agent.

[25] The Court must then determine if AgriCorp may commence a proceeding after two years of becoming aware of a claim. In these circumstances, there is no discoverability issue raised. AgriCorp was aware of the outstanding debts and sought re‑payment of certain debts which the Applicant alleges in some instances were more than 10 years old.

[26] The analysis of the relevant sections of the Act starts with s. 3 which states that the Act binds the Crown. This means that unless a specific exemption applies, the Crown would be subject to the basic limitation period set out in s. 4 of the Act.

[27] Section 16 of the Act then deals with the various exemptions to the basic limitation period. Amongst such exemptions are proceedings brought by the Crown in respect of claims relating to economic programs (paras. 16(1)(j)(i) and 16(2)(a)). The parties agree that the CIAS and AgriStability programs are economic programs referenced in para. 16(2)(a) of the Act.

[28] This leaves the Court with the very narrow question of determining if the reference to the “Crown” in para. 16(1)(j)(i) includes a Crown agent such as AgriCorp.

[29] I am not persuaded by the Applicant’s argument that since a number of provincial statutes specifically mention Crown agents as part of the legislation, that this would necessarily exclude Crown agents from the exemption applicable to the Crown under para. 16(1)(j)(i) of the Act. Further, I do not agree that by interpreting the word “Crown” to include a Crown agent would be to depart from the ordinary grammatical meaning of the word “Crown” given the decisions referenced below.

[30] The Act does not make a distinction between the Crown and a Crown agent. The reference to a “delivery agent” in para. 16(1)(j)(ii) references specific authorities who are defined as “delivery agents” under certain statutes. These are clearly not Crown agents and, as such, have been specifically referenced.

[31] I am not persuaded by the Applicant’s analogy to the Proceedings Against the Crown Act, R.S.O. 1990, c. P.27 in advancing the argument that as AgriCorp can be sued individually, it should be considered separately from the reference to the “Crown” in para. 16(1)(j)(i) of the Act. To the contrary, the reference to “Crown” cannot in statutory interpretation necessarily exclude Crown agents as there is an established body of case law, which confirms that rights afforded to the Crown also extend to Crown agents.

[32] The Supreme Court of Canada has specifically addressed the issue in R. v. Eldorado Nuclear Ltd., 1983 34 (SCC), [1983] 2 S.C.R. 551 at paras. 25 and 44 where the court found that “when an enactment refers to the Crown, and a particular body is expressly made a Crown agent for all purposes, the enactment embraces the statutory agent”. AgriCorp further refers the Court to several other cases where the courts have found that limitation periods or an exemption to a limitation period apply to both the Crown and Crown agencies (see Moran v. Pappas, 1997 12161 (ON SC), 34 O.R. (3d) 251, [1997] O.J. No. 2492 (Gen. Div.) at paras. 8, 10 and 18‑19, Alberta Government Telephones v. Arrow Excavators and Trenchers, 1989 Carswell Alta 147, paras. 15 and 18, Klapstein v. Alberta Mortgage and Housing Corp. and Alberta Home Mortgage Corp. v. Keats, [1994] A.J. No. 381, para. 20, leave to appeal dismissed [1994] S.C.C.A. No. 352). These decisions support a finding that a reference to the “Crown” in the Act includes a Crown agent as it has not otherwise been specified to exclude a Crown agent.

[33] In the end, a proper statutory interpretation of a reference to the “Crown” in the Act is meant to include, rather than exclude, a Crown agent. Consequently, AgriCorp is not precluded by s. 4 of the Act from commencing a proceeding for the recovery of a debts owing to AgriCorp or debts owing to the Crown.

Conclusion

[34] The Notice of Application seeks relief with respect to the appointment of a farmer as a representative of the group of farmers who have received a demand from the Respondent to pay overpayment debts. This was not pursued by either party at the hearing of the Application and as such I assume that no findings are required unless the parties request to re-attend to fully argue this issue with supporting jurisprudence.

[35] If unsuccessful, the Applicant requests an Order that the interpretation provided shall be without prejudice to any other specific claim or defence that any party may have with respect to individual cases outside the interpretation provided by the Court. This was not opposed by the Respondent. However, such a finding requires an analysis of the principles of res judicata and how this Endorsement may impact future proceedings. Neither party made any detailed submissions on the appropriateness of such an Order. This application dealt with a very specific question as to the applicability of para. 16(1)(j)(i) of the Act. The findings made are sufficiently narrow to allow a future Court to apply the principles of res judicata to this Endorsement. This question shall be left to a judge hearing any future proceedings.

[36] As such, the application seeking a declaration that AgriCorp is bound by the two year limitation period in the Act and should therefore be precluded from collecting on any outstanding amounts that are more than two years old is dismissed with costs.

[37] As agreed to by the parties, the successful party is entitled to an award of costs fixed in the amount of $4500.00 inclusive of HST and disbursements. The Applicant is therefore liable to AgriCorp for the payment of such costs. If there is a dispute as to who should be personally liable for this costs award, the parties may write to me with their submissions and I will decide the matter.

Mr. Justice Marc L. Labrosse

Date: August 6, 2014

COURT FILE NO.: 13-56794

DATE: 20140806

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: A GROUP OF ONTARIO FARMERS WHO HAVE RECEIVED DEMANDS FROM THE RESPONDENT TO PAY CLAIMS THAT ARE MORE THAN TWO YEARS OLD, Applicants

AND

AGRICORP, Respondent

BEFORE: Mr. Justice Marc L. Labrosse

COUNSEL: Donald R. Good, Counsel, for the Applicant

Lise G. Favreau, Counsel, for the Respondent

ENDORSEMENT

Labrosse J.

Released: August 6, 2014