COURT FILE NO.: CV-56/17
DATE: 20201005
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
AYLMER MEAT PACKERS INC.
Plaintiff
– and –
HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO and THE ATTORNEY GENERAL OF CANADA
Defendants
David B. Williams, Allison M. Webster for the Plaintiff
Darrell Kloeze, Alexa Mingo, Adam Mortimer, Judith Parker, for the Defendant Her Majesty the Queen in Right of Ontario
Jacob Pollice, James Schneider, for the Defendant the Attorney General of Canada
HEARD: January 6, 7, 8, 10, 13,14, 15, 16, 27, 28, 29, 30, 31, February 4, 5, 10, 13, 25, 2020
TRANQUILLI J.
[1] The slaughter and processing of animals for human consumption is regulated by the provincial and federal government to ensure the meat is safe for us to eat. The plaintiff Aylmer Meat Packers Inc. alleges its meat processing company was destroyed by the defendant province’s negligent or wrongful conduct in the exercise of those statutory powers.
[2] In 2003, the Ontario Ministry of Agriculture, Food and Rural Affairs (“OMAF”) oversaw the licensing and operation of provincial abattoirs pursuant to the Meat Inspection Act (Ontario), R.S.O. 1990, c. M.5. That Act and its Regulation set out rules for the inspection, slaughter and processing of animals for human consumption.
[3] Among other regulatory requirements, ministry meat inspectors had to be at the licensed abattoir on every day the slaughterhouse received animals for processing. The animals had to be alive and the inspector had to assess and approve each animal immediately before slaughter and then inspect the carcass and certain parts of its entrails after slaughter. The purpose of these mandatory inspections was to screen the animal and then the carcass for signs of illness, disease or contamination that could make the meat unsafe for human consumption. Live animals or carcasses that failed these inspections were subject to further investigation or testing depending on the identified concern. The abattoir operator could dispute these inspections. The animal or carcass was otherwise liable to be destroyed in order to keep it out of the food chain.
[4] Ministry inspectors approved a carcass for further processing by ink-stamping an inspection legend on the carcass. The stamp could only be applied by the ministry inspector or by an abattoir employee under the inspector’s direct instruction and supervision. The ministry inspector secured this stamp in the inspector’s office in the licensed abattoir. The “Ontario Approved” stamp also identified the licensed abattoir by a designated number.
[5] In 2003, the plaintiff Aylmer Meat Packers Inc. (“Aylmer”) was one such licensed abattoir operating under this provincial regime. Aylmer was known as “Plant 84” under the provincial licensing system. Aylmer had been in operation since 1990. Mr. Walter Richard “Butch” Clare was its principal. Mr. Clare’s two sons, Jeff Clare and Jay Clare operated the abattoir on a day-to-day basis. Aylmer also operated related trucking and livestock businesses.
[6] Aylmer was considered to be one of the busiest provincially-licensed abattoirs for processing cows and pigs and was readying for a significant expansion in the near future with the goal of becoming a federally-licensed abattoir. Aylmer specialized in processing “cull cows” where the cow was at the end of its dairy production, as well as “downers”, which were cows which were unable to stand or walk but were otherwise healthy for slaughter and processing.
Factual Overview
[7] In early 2003, a confidential informant contacted the OMAF manager responsible for overseeing Aylmer. The informant told the OMAF manager that Aylmer was unlawfully processing sick and disabled animals as well as “dead stock” when ministry inspectors were not at the plant. Dead stock is an animal that has died from any cause other than slaughter. The Dead Animal Disposal Act, R.S.O. 1990 c. D.3 prohibits the processing of dead stock for human consumption. The informant also alleged that Aylmer employees used an illegal “Ontario Approved” inspection stamp on the uninspected carcasses. (The identity of that informant remains unknown by court order and was not in issue in this action.)
[8] Investigators from the agricultural investigation unit of the Ministry of Natural Resources (“MNR”) then conducted covert surveillance of the Aylmer plant between May and August 2003 to verify the informant’s report and gather evidence in support of potential regulatory charges. The MNR surveillance occurred on times after inspectors left Aylmer for the day when no animals should therefore be received for processing. The investigators saw activity which in their view was suspicious for breaches of the Meat Inspection Act and other legislation.
[9] The MNR executed search warrants of the Aylmer plant and related properties with the assistance of the Ontario Provincial Police on August 21, 2003. The MNR seized evidence from the Aylmer plant in support of its investigation of Aylmer for breaches of the Meat Inspection Act and other provincial legislation.
[10] During that search, the MNR also discovered unauthorized federal meat packaging material with federal meat inspection legends from a defunct federal abattoir. The MNR notified the Canadian Food Inspection Agency (“CFIA”), the authority responsible for federally-approved meat processing plants and food safety. The CFIA immediately issued a product recall for Aylmer meat products due to concerns that the meat product was unsafe. The CFIA also started its own investigation into breaches of federal law.
[11] The MNR completed its immediate search warrant objectives on the day of its execution and turned the Aylmer plant over to OMAF to address ongoing regulatory concerns.
[12] The Aylmer abattoir ceased business as of the day of the search warrant. It never operated again. OMAF provisionally suspended Aylmer’s licence to operate the abattoir pursuant to its powers under the Meat Inspection Act. OMAF never held a hearing to review the provisional licence suspension as required under the Act.
[13] OMAF also detained all meat and meat product at the plant pursuant to its powers under the Meat Inspection Act. OMAF claimed there was reason to believe that there was uninspected meat on the Aylmer premises. OMAF therefore detained 594,000 pounds of meat product under lock and seal in a freezer on the Aylmer premises. OMAF condemned an additional 49,000 pounds of fresh and frozen meat and meat product that spoiled in the coolers and refrigerated trucks at the plant during the first ten days of the detention. The ministry posted OPP and later private security at the abattoir gate to ensure the meat remained under detention.
[14] OMAF refused to release the detained meat to Aylmer. OMAF claimed the detention was necessary to address food safety concerns as it was unable to identify inspected from uninspected meat product. Aylmer refused to voluntarily condemn the detained meat. OMAF refused to return the plant to the plaintiff while the meat remained under detention. The Meat Inspection Act required OMAF to offer the plaintiff a hearing into the disposition of meat. However, OMAF did not do so.
[15] OMAF therefore remained in control of the Aylmer premises with the detained meat in the plaintiff’s freezer for the next 19 months. An OMAF employee noted the freezer was not working properly within the first several weeks of the detention. The meat began to spoil. The plaintiff refused to pay for repairs while the province occupied the plant. OMAF eventually paid for some repairs, but the freezer never consistently maintained optimal temperatures for the preservation of the meat product. By June 2004, OMAF knew the meat had deteriorated. In October 2004, OMAF notified Aylmer that the meat was condemned pursuant to OMAF’s statutory authority due to spoilage. Five months later, OMAF disposed of the condemned meat and returned the keys to the vacant and unlicensed abattoir to the plaintiff on March 23, 2005.
[16] These events occurred in the larger context of regulatory and criminal investigations of Aylmer that resulted from the MNR investigation and search warrant. The MNR continued its investigation of provincial offences and the CFIA investigated possible breaches of the federal regulations. The OPP then opened a criminal investigation into Aylmer’s conduct in or about October 2003. In December 2003, the Ministry of the Attorney General instructed the MNR to suspend its investigation into the provincial offences as it was in the public interest for the criminal investigation to pursue potentially more serious offences.
[17] In October 2004, the OPP charged Aylmer, Mr. Clare and his two sons with several counts of fraud, conspiracy to commit fraud and uttering forged documents contrary to the Criminal Code and selling meat unfit for human consumption and deceptive labelling of meat contrary to the Food and Drugs Act. In March 2005, they were also each charged by the CFIA with unlawfully possessing plastic bags bearing a federal meat inspection legend and selling meat wrapped in that packaging contrary to the federal Meat Inspection Act.
[18] These charges resolved over two years after OMAF returned the inactive plant to Aylmer. In December 2007 Aylmer and Mr. Clare pled guilty to selling meat which had not been inspected in accordance with the Meat Inspection Act and was therefore unfit for human consumption, contrary to s. 4(b) of the federal Food and Drugs Act. Aylmer was sentenced to pay of fine of $100,000 and Mr. Clare was sentenced to a fine of $10,000. Aylmer and Mr. Clare also pled guilty to charges under the federal Meat Inspection Act for selling meat wrapped in plastic bags to which a federal meat inspection legend was unlawfully applied. Aylmer was sentenced to a fine of $10,000 and Mr. Clare to a fine of $5,000. Aylmer and Mr. Clare were also sentenced to one year of probation, during which time they were prohibited from applying for a licence to operate a meat processing plant, abattoir or slaughterhouse in Ontario. The Crown withdrew all other charges, including those against Mr. Clare’s sons.
The Action
[19] Aylmer does not challenge the MNR’s search warrant or OMAF’s initial authority to enter the Aylmer premises. Aylmer claims the licence suspension and OMAF’s 19-month occupation of the plant was unreasonable, unlawful and caused the destruction of its business.
[20] Aylmer submits the province owed it a private law duty of care to act reasonably in its occupation of the plant, the meat detention and in the suspension its licence. The 19-month occupation and failure to hold a hearing deprived the plaintiff of its use of the plant and caused the deterioration of the plant, the loss of its business and the spoilage of hundreds of thousands of pounds of meat product due to OMAF’s failure to properly maintain the freezer.
[21] Aylmer alternatively claims the province is liable in trespass through OMAF’s unjustified 19-month occupation and in trespass to chattels or conversion regarding the detention and destruction of the meat product and the deterioration of the plant equipment, such as the malfunctioning freezer.
[22] The plaintiff does not contest the validity of Aylmer’s guilty pleas but argues that it did not, in fact, process or sell uninspected meat and that the detained meat was fit for human consumption or other commercial use. The plaintiff also argues the subsequent guilty pleas do not justify OMAF’s prior wrongful conduct two years earlier.
[23] Aylmer seeks damages for the loss of its business, including the value of the plant, the loss of profits and the value of the destroyed meat, with damages in the range of $5,000,000 to $12,000,000.
[24] The province denies that it owed Aylmer a private law duty of care because it acted under a statutory authority to protect public welfare and safety. In any event, the province submits its actions were reasonable in the extraordinary circumstances of an overarching criminal investigation which resulted in criminal convictions of the plaintiff and its principal. The province maintains it had the lawful authority to enter the plaintiff premises and to detain the meat, such that there was no trespass or conversion. It had reasonable grounds to suspect the detained meat was not processed in accordance with the law. The province submits that any business loss experienced by Aylmer was caused by Aylmer’s conduct and not by any wrongful act or omission by the defendant.
[25] The action also named the Attorney General of Canada for damages arising from negligence and trespass to goods by the CFIA in the course of its investigation of the plaintiff and seizure of meat from the plant. The plaintiff settled this claim with the federal defendant after the third day of trial and pursued only its claim against the province regarding OMAF’s conduct. On consent, the claims against the Attorney General of Canada were dismissed without costs.
Preliminary Matters
Rule in Browne v. Dunn
[26] The rule in Browne v. Dunn first arose when the defendant opened its case and remained a recurring issue throughout the balance of the trial. The main plaintiff witnesses Mr. Clare and Mr. Jeff Clare contended that Aylmer never processed dead stock and that there was no uninspected meat in the plant. Neither witness was confronted on cross-examination with evidence subsequently led by the province that contradicted this testimony.
[27] The province argued the evidence did not engage the rule as it was not intended to impeach the plaintiffs’ credibility but to demonstrate OMAF had information on which it reasonably relied to take steps to detain the meat in the plant. The court found the evidence nevertheless had the effect of impeaching the witness’s credibility as it substantively sought to contradict the plaintiff position that no illegal activity took place at the plant that would justify OMAF’s conduct.
[28] The plaintiff argued throughout trial that the province’s evidence should be excluded or not given any weight. The plaintiff did not provide authority for this absolute remedy. In fact, authority advises it is a question of weight. The failure of the province to cross-examine the plaintiff witnesses on this evidence raises a question of weight which the court may but is not required to take into account in assessing the plaintiff witnesses’ credibility. The court may decide whether to believe all, part or none of the witnesses’ evidence: R. v. Dexter, 2013 ONCA 744, 2013 O.J. No. 5686 (C.A.) at para. 2.
[29] In the initial ruling the court concluded that the available remedies to a breach of this rule of fairness included an immediate recall of the plaintiff witnesses so that all evidence contradicting the plaintiff could be put to both witnesses before the defendant continued with the remainder of its case. The plaintiff opted to reserve the right to address the matter through reply evidence at the conclusion of the province’s case, if at all. In the end, the plaintiff chose not to call reply evidence. Accordingly, any consideration of the impugned evidence will be a question of weight.
[30] In closing argument, the defendant referred to the impugned evidence to question the Clare’s credibility and trustworthiness, the very thing the defendant submitted it was not attempting the issue first arose in trial. The plaintiff objected to the province’s reliance on the impugned evidence in this manner. The court was never under a misapprehension as to the potential effect of the impugned evidence on the assessment of the plaintiff witnesses’ credibility and reliability. This was the very reason for the plaintiff’s objections and the court’s rulings that gave the plaintiff the option to reply.
Aylmer’s Regulatory History
[31] The court heard evidence regarding Aylmer’s previous history of compliance with the meat inspection regime, prior conduct by Mr. Clare and Jeff Clare and other Aylmer employees towards various OMAF representatives and difficult relationships with Ministry inspectors. Although some of this evidence provided useful context, this evidence had questionable relevance related to the issues in the action. Apart from the fact that Aylmer was a provincially-licensed abattoir in good standing as of August 2003 and had operated under that regime over the previous 13 years, the evidence of prior events in that regulatory relationship is irrelevant to determining whether the province’s conduct after August 21, 2003 was negligent or otherwise unlawful.
Late Service of Expert Reports
[32] The first day of trial was taken in addressing the admissibility of late-served reports by the defendant. The plaintiff sought the exclusion of the reports. For oral and written reasons, the court granted leave abridging the time for service of the defence expert reports and provided the plaintiff with the option to consider whether it required an adjournment to to amend the current trial schedule to provide the plaintiff with the opportunity to reply to the late-served reports. On consent, the parties opted to remedy the issue with a bifurcation of the trial schedule. The parties each first called fact witnesses and then each called expert witnesses.
Best Evidence
[33] The action concerns events that took place beginning over 17 years earlier. A number of witnesses were no longer available to testify, including principal OMAF representatives who were directly involved in the decision-making in issue. These omissions were largely addressed through a voluminous review of documents contemporaneous to the events and which were authenticated by the OMAF witnesses as well as Mr. Clare and Jeff Clare. The court was not asked to draw negative inferences from the failure of either party to call witnesses with direct knowledge of certain events.
Issues
[34] The factual and legal issues for determination are:
Was there uninspected meat on the Aylmer premises?
Did OMAF owe Aylmer a private law duty of care?
Did Aylmer establish the remaining requirements for negligence: (a) Did OMAF breach of the standard of care; (b) Did a breach cause Aylmer’s loss; and (c) Does the claim fail for remoteness?
In the alternative to negligence, did the province’s occupation of the plaintiff’s plant and detention of property amount to a trespass or conversion?
Are there other defences for OMAF’s conduct?
What are the plaintiff’s damages?
1. Was there uninspected meat on the Aylmer premises?
[35] A key factual issue common to the resolution of the legal issues is whether there was reason for OMAF to believe there was a risk of uninspected meat in the detained product at Aylmer in August 2003.
[36] Mr. Clare and his son Jeff Clare testified the confidential informant did not tell the truth and that, in fact, there was not “one ounce” of uninspected meat at the Aylmer plant in August 2003. Each also denied that Aylmer ever processed dead stock during its years of operation between 1990 and 2003.
[37] OMAF submitted the plaintiff’s 2007 guilty plea and formal admissions in a Statement of Agreed Fact at the guilty plea were determinative that there was uninspected meat at the plant. The defendant also called evidence from MNR investigators who testified as to their observations of activity at the plant after meat inspectors left for the day and to their observations and findings upon execution of the search warrant on August 21, 2003.
[38] A determination on this issue requires consideration of the following factors: (a) the guilty pleas; (b) the Statement of Agreed Fact; (c) the MNR evidence; and (d) the plaintiff’s evidence in support of its position.
a. The Guilty Pleas
[39] Mr. Clare admits he and Aylmer pled guilty to the charge of selling uninspected meat. However, he testified they pled guilty in 2007 because OMAF had already destroyed the business, he and his family had been living for years with the stress of the criminal investigation and charges and he wanted to relieve his sons from facing the criminal charges. In closing argument, the defendant urged the court to reject Mr. Clare’s evidence as an abuse of process and to rely on the guilty plea as proof the plaintiff had a practice of allowing uninspected meat to enter the food chain, pursuant to s. 22.1 of the Evidence Act, R.S.O. 1990, c. E. 23.
[40] Pursuant to s.22.1 of the Evidence Act, proof of a conviction of a crime operates as proof that the crime was committed by the person convicted, “in the absence of evidence to the contrary.”
[41] The difficulty for the court is that the plea inquiry from Mr. Clare’s 2007 guilty plea was not in evidence or otherwise put to Mr. Clare on cross examination. There is no evidence before this court that Mr. Clare or Aylmer admitted the circumstances of the offence of selling uninspected meat. There is only evidence of the fact of plea itself, the conviction and elements of the sentence imposed. The absence of evidence of the plea inquiry distinguishes this case from those decisions relied upon by the defendant, where evidence contradicting a party’s previous guilty plea was excluded as an abuse of process: for example, Andreadis v. Pinto, 2009 50220 (ON SC), [2009] O.J. No. 3910 (S.C.J.).
[42] This means that while there is some evidence of the guilty plea and conviction, the court is without a sufficient record on which to find that the guilty plea is determinative and to exclude evidence of the plaintiff’s contrary position as an abuse of process. The result is that both the fact of the guilty plea and the plaintiff’s contradictory testimony is in evidence.
[43] However, there is other evidence related to the plaintiff’s guilty plea that is probative of the issue.
b. The Statement of Agreed Fact
[44] In May 2007 defence counsel for Mr. Clare and Aylmer executed an Agreed Statement of Facts pursuant to s. 655 of the Criminal Code for resolution of the criminal charges. The defendant introduced this Statement in evidence at this trial.
[45] Through their defence counsel, Mr. Clare and Aylmer made the following key admissions in the Statement to the criminal offence of selling uninspected meat:
a. On 5 occasions between May 11 and August 19, 2003, MNR investigators observed nine apparently dead cows being taken into the plant after ministry inspection staff had left for the day;
b. On August 20, 2003, the night before the execution of the search warrant, MNR investigators observed and videotaped a pickup truck and trailer arrive with a dead cow that was taken into the plant and presumably processed;
c. Aylmer employees confirmed that the freshly dressed cow carcass the MNR and OPP found hanging in the cooler when the search warrant was executed was from the dead cow observed being taken into the plant the night before.
d. Biological samples were taken from the dressed cow carcass, a cow hide located in the hide shed, a cow liver located in a rendering truck parked on site and a set of knives in an employee’s locker. Testing confirmed that the DNA profiles of the samples were all the same.
e. More than 20 Aylmer employees told the OPP that they processed animals when ministry inspectors were not present during the years that Aylmer was in operation. The animals that were processed during these times were usually dead stock or old downer cows;
f. Employees and former employees also told the investigator that the uninspected animals were processed into meat the same way as inspected animals and that they would stamp an “Ontario Approved” inspection legend onto the uninspected carcass
g. By their pleas of guilty, Aylmer and Mr. Clare acknowledged that between October 1990 and August 21, 2003, Aylmer sold meat that had not been inspected in accordance with the provincial statutory scheme and was thereby unfit for human consumption, contrary to s. 4(b) of the Food and Drugs Act.
[46] OMAF relied on the Statement as conclusive of the truth of the facts in this civil action.
[47] Mr. Clare acknowledged these admissions in the Statement were “what it says”. However, Mr. Clare and his son Jeff Clare nevertheless maintained there was not “an ounce” of uninspected meat at the plant and contended that dead stock was never processed at Aylmer. Jeff Clare also testified it was impossible to process dead stock as the meat would be ruined. The defence did not confront either witness on whether he adopted the substance of the statements nor did it otherwise challenge the plaintiff witnesses to explain the basis on which these admissions were now qualified or incorrect.
[48] These admissions in the Statement are not determinative of the question of whether the meat was uninspected for the purposes of this action. A formal admission of fact under s. 655 of the Criminal Code is conclusive of the admitted fact and may be introduced in a subsequent proceeding for its truth: R. v. Baksh, 2005 24918 (ON SC), [2005] O.J. No. 2971 (S.C.J.) at para. 84. However, the formal admission is not conclusive in a subsequent civil or criminal proceeding. The admission may be explained, attacked or otherwise countered by the plaintiff: Baksh supra at para 119 (see also paras. 98-101 for further discussion on this point).
[49] The court accordingly has the plaintiff’s formal admissions and the plaintiff’s contrary assertions that the detained meat was not, in fact, uninspected and that Aylmer did not process dead stock at the plant. It remains to be determined whether the plaintiff has satisfactorily explained or otherwise countered the previous admission.
(c) The MNR Evidence
[50] OMAF also called several MNR witnesses to testify as to their findings from the surveillance activity and on execution of the search warrant in 2003. This evidence was consistent the material admissions contained in the Statement.
[51] The MNR testimony included video surveillance taken in conjunction with each investigator’s observations. Although of varying quality, the video images clearly show dead cattle being removed from refrigerator trucks or livestock trailers by various mechanical means and being dragged into the abattoir through Aylmer’s kill floor doors. The animals are stiff limbed, eyes open, lifeless and show no reaction to the rough handling with chains, a winch or a skid steer. There was no evidence to suggest that the cattle were in any state other than dead when they arrived at and were taken into the abattoir.
[52] MNR investigator Susan Atherton testified as to her surveillance of Aylmer on June 6, 9, 26 and July 17, 2003. On each occasion she arrived after ministry meat inspectors had left for the day. She stationed herself behind the plant with a view of the doors onto the abattoir kill floor. Along with an MNR partner, she observed and filmed similar activities occurring on each of these four dates. For example, on June 6, 2003, she watched Aylmer employees use a skid steer to remove a cow from an Aylmer refrigerated truck and move it the doorway of the kill floor, where the skid steer dropped the animal to the ground. Ms. Atherton concluded the cow was dead, based on her observations that the animal was hanging awkwardly and lifelessly on the skid steer forks with its eyes open and tongue hanging out. She then watched the skid steer drag another similarly lifeless cow with chains and deposit it into the kill floor doorway. She made similar observations on June 9, 2003, when the skid steer removed a dead cow from the hide shed on the Aylmer property and then dropped it into kill floor doorway, where it was then dragged into the building. She then observed a man she believed to be one of Mr. Clare’s sons attach a chain around the stiff hind legs of a dead cow on a trailer. The skid steer then dragged the animal off the trailer and into the plant.
[53] MNR technical specialist Mark Wickham observed, photographed and filmed activity at the plant beginning at about 7:30 pm August 20, 2003 and ending early the next morning upon the MNR execution of search warrants at about 5:00 am on August 21, 2003. At 9:53 pm on August 20, 2003, he observed a cow being winched from the rear of a livestock trailer with a chain and cable. The animal appeared dead as it remained in a horizontal position with three of its legs outstretched and unresponsive as it was dragged into the kill floor area of the abattoir. Over the next few hours, Mr. Wickham then observed individuals make several trips from the kill floor to unload product into receptacles outside of the plant. He believed these loads included product from the dead animal he watched being dragged into the plant. He later observed the skid steer deliver a hide from the kill floor to the hide shed shortly before when the search warrant team arrived.
[54] Lead MNR investigator Rodger Dunlop was part of that search warrant team that arrived at the Aylmer plant shortly before 5:00 am on August 21, 2003. An Aylmer employee took Mr. Dunlop to the cutting room and identified what Mr. Dunlop understood to be the carcass of the dead cow Mr. Wickham observed being unloaded into the kill floor area several hours earlier. That carcass was now dressed and hanging on a roller among other dressed carcasses, as though it was ministry-inspected and ready to be processed. The carcass had blue ink marks on it suggesting it was inspected and approved, although the plant number was blurred and unidentifiable. Samples of this carcass were taken for DNA testing to be compared with DNA samples also taken from the material that Mr. Wickham saw deposited in the rendering truck and hide shed in the time after he saw the dead cow brought onto the kill floor and the execution of the search warrant. Mr. Dunlop also testified he found unauthorized meat grading equipment where he expected to find it on the Aylmer premises.
[55] The MNR witnesses were factual and fair in their evidence. On cross-examination, Ms. Atherton acknowledged she had no information as to what happened to cows after she saw them taken into the plant. She had no information that the carcasses were actually processed. Her concerns were influenced by her understanding that the law prohibited dead animals from being brought into the plant under any circumstance. She also allowed that she conducted surveillance of the plant on several other occasions and did not observe any unusual activity. Mr. Wickham readily acknowledged that his involvement in the investigation was limited to his technical skill in capturing his observations on video and camera. He had no information or opinion as to what took place outside of those observations. Mr. Dunlop was factual and meticulous in his description of the surveillance and findings on execution of the warrants. Like his colleagues, he readily conceded the surveillance itself did not conclusively show that dead stock was processed in the plant.
(d) The plaintiff’s evidence in support of its position.
[56] The plaintiff did not directly respond to the MNR witnesses’ evidence or the surveillance. The primary position remained that there was not an ounce of uninspected meat in the plant and that Aylmer never processed dead stock. The plaintiff offered evidence in three areas to indirectly explain or call the interpretation of the MNR observations into question: (i) Aylmer had no reason to engage in such activity; (ii) Aylmer had temporary permission to handle dead stock at the time; and (iii) There may have been technical non-compliance with the Act would legally mean the meat was uninspected.
[57] As will be explained, the court finds that none of these explanations counters the plaintiff’s previous admissions and is insufficient to otherwise answer to the preponderance of evidence that dead stock improperly entered the plant in a manner such that there was a risk of uninspected meat having been processed for human consumption.
(i) Aylmer had no reason to engage in such activity
[58] The plaintiff argued it made no logical sense that Aylmer would risk its business, livelihood and reputation to engage in an illegal and extraordinary side business of questionable profit. Aylmer was one of the busiest provincial abattoirs with trucking and livestock businesses integrated into the operation. Mr. Clare and his son testified that Aylmer recently made a significant $1,000,000 investment into expanding operations and was nearly ready to start a new “kill floor” that would substantially increase its capacity and position it to seek approval as a federally-licensed meat processing facility. Why would it risk its investment and market position with such conduct? Defendant witnesses such as MNR investigator Mr. Dunlop, OMAF area manager Mr. Bailey and OMAF director Dr. Baker acknowledged the allegations against the well-known abattoir were shocking and extraordinary particularly in light of Aylmer’s business profile.
[59] While the allegations from the confidential informant may have initially attracted incredulity in part due to Aylmer’s business success, the fact is that the MNR investigation confirmed concerns that there was suspicious after-hours activity at the abattoir. The fact that such behaviour makes no business sense does not render those investigation observations meaningless or illusory.
(ii) Aylmer had temporary permission to handle dead stock
[60] Mr. Clare and Jeff Clare testified that OMAF temporarily permitted Aylmer to handle dead stock due to the “BSE crisis”. The crisis began in May 2003 when a cow infected with bovine spongiform encephalopathy (BSE) was identified in Alberta. The United States closed the border to cattle in response to the serious neurological health threat. The Canadian cattle industry was turmoil on how to manage the effect of the border closure and contain the threat. Both plaintiff and defence witnesses testified that in May 2003, rendering companies temporarily stopped collecting dead stock from farms and abattoirs in the immediate fallout from the crisis. OMAF therefore gave Aylmer an exemption and to receive and handle dead stock outside of the usual regulatory practice. The apparent inference the court is invited to make is that Aylmer therefore had permission to handle dead stock in the manner seen in the MNR investigation.
[61] OMAF acknowledged it gave Aylmer temporary permission to handle dead stock; however, Dr. Tom Baker, then Director of the Food Inspection Branch at OMAF, testified that he understood OMAF verbally revoked this authorization on June 9, 2003, when rendering companies began picking up dead stock again. OMAF area manager Edward Bailey testified that he advised the Aylmer meat inspectors that the authorization was revoked, although he could not say he communicated this to the plaintiff. OMAF later confirmed the verbal revocation in a letter to Aylmer dated July 7, 2003 from Dr. Robert Vanderwoude, then Program Manager of the Food Inspection Branch of OMAF. Mr. Clare testified he did not receive this letter until after the seizure of the plant in August 2003. Dr. Vanderwoude was not available to testify. Mr. Clare’s answer does not address OMAF’s position that it verbally revoked the authorization in June 2003; although the court notes Mr. Clare was not cross-examined on that contention.
[62] In any event, the question of when or whether Aylmer knew OMAF revoked permission for Aylmer to handle dead stock is irrelevant to resolving whether this exemption explains the activity seen by the MNR investigators and the court in the video surveillance. The uncontroverted evidence from OMAF witnesses was that the dead stock exemption was limited to permitting Aylmer employees to remove the hide from the dead cow outside of the plant or in the hide shed, and for the carcass to be split and de-natured (to make it unsuitable for use as food) and then placed into a rendering truck located onsite. All of this had to take place in the presence of meat inspectors.
This dead stock exemption therefore does not explain the MNR investigation. That evidence showed Aylmer employees or agents handling dead stock in the absence of meat inspectors and bringing the dead animal into the plant through the kill floor doors. Even plaintiff witness Jeff Clare testified that the OMAF exemption allowed them to pull the hides off the dead animal, cut it in half and throw them into the rendering truck. Neither version of the OMAF exemption for dead stock justifies the activities seen in the MNR investigation.
(iii) Technical non-compliance meant meat was uninspected
[63] One of the admissions in the Statement was that more than 20 Aylmer employees told the OPP that they processed animals when ministry inspectors were not present. Aylmer argued OMAF inspectors historically permitted practices at Aylmer that could be technically interpreted as regulatory breaches.
[64] The regulation required the operator to ensure that no animal was slaughtered unless an inspector approved it for slaughter “immediately” before the time of slaughter. Jeff Clare testified that ministry inspectors did not always insist on strict compliance and occasionally permitted Aylmer employees to start a slaughter when the inspector was busy in another area of the plant. The inspector would then join them later to take up the inspection. OMAF director Dr. Tom Baker acknowledged it was possible this could happen, on condition that the antemortem inspection had already taken place. Vicky French was the OMAF inspector supervisor at Aylmer in 2003. She testified that she could not say that meat inspectors never allowed a slaughter to start without their direct presence; however, she also stated that this practice never happened while she was on duty.
[65] The apparent inference the court was invited to make is that lesser or technical breaches where an inspector was not immediately present at the beginning of the slaughter explains the basis for the plaintiff’s previous admissions and guilty plea to having sold uninspected meat between 1990 and 2003. This does not address or explain the MNR investigation and the images seen on video surveillance, of dead cows being brought into the plant after inspectors were gone for the day and not while the inspectors were elsewhere in the plant.
Conclusion
[66] The defendant failed to confront Mr. Clare and Jeff Clare with the MNR investigation evidence during their cross-examinations. However, the plaintiff opted not to call evidence in reply to this testimony. As such, the defendant’s evidence is not automatically excluded but raises a question of weight which the court may but is not required to take into account.
[67] It was open to the plaintiff to lead evidence to counter its previous admissions and to contradict its guilty plea in order to support its contention that there was no uninspected meat in the plant. However, even without the evidence of the MNR investigation, the plaintiff’s bald denials and indirect explanations are insufficient to counter the admissions.
[68] Those admissions were reinforced by the compelling evidence of the MNR investigators, including the surveillance. The plaintiff’s explanations do not provide an innocent explanation or put the MNR evidence in a different light. This evidence tends to corroborate some of the material admissions contained within the Statement. The plaintiff elected not to address this evidence and the plaintiff’s explanations and the reasons for pleading guilty simply do not explain the observations and investigation findings.
[69] The evidence of the MNR investigation in conjunction with the admissions in the Statement is persuasive of the fact that there was reason to believe, on a balance of probabilities that uninspected meat was on the Aylmer premises. Given the nature of the suspected non-compliance, it was also reasonable for OMAF to be concerned about the conditions under which other species were processed at Aylmer, such as hogs and lamb, and to also detain those products.
[70] The analysis now turns to the legal issues pertaining to whether OMAF is liable in the exercise of its statutory duties in either negligence or an intentional tort and then damages.
2. Did OMAF owe Aylmer a private law duty of care?
[71] Aylmer claims that OMAF owed it a duty of care in the operation and execution of its statutory duties under the Meat Inspection Act and its regulation. The existence of a duty of care is critical to Aylmer’s negligence claim against OMAF. Unless a duty of care is found, no liability in negligence for OMAF’s conduct will follow. The Anns/Cooper test determines whether a duty of care exists: Rankin (Rankin’s Garage & Sales) v. J.J., 2018 SCC 19, [2018] 1 S.C.R. 587 at paras. 17-20.
[72] The determination of whether a duty of care exists in these circumstances considers the following questions: (i) Has the duty of care asserted by Aylmer already been recognized in law? If not, the analysis proceeds to the remaining three considerations under the Anns/Cooper test; (ii) Was it reasonably foreseeable that OMAF’s actions would harm Aylmer; (iii) Was the relationship between OMAF and Aylmer sufficiently proximate that it would be fair and just to impose a duty of care; and (iv) Are there residual policy considerations which militate against recognizing a duty of care?: Williams v. Canada (Attorney General), 2009 ONCA 378 at paras. 13-17; River Valley Poultry Farm Ltd. v. Canada (Attorney General), 2009 ONCA 326 at paras. 32-34.
(i) Has the duty of care asserted by Aylmer already been recognized in law?
[73] It is unnecessary to conduct the full Anns/Cooper analysis if a previous case has already established that the duty of care or an analogous duty exists. Aylmer submits OMAF’s duty of care falls within the recognized category of physical damage to property. Aylmer alleges the duty of care is triggered with the physical damage to its plant and spoiled meat product that arose from OMAF’s failure to maintain the freezer at the proper temperature and allowing servants of the CFIA to improperly use a propane-powered forklift in the freezer while the federal agency was inspecting and seizing meat product. Aylmer claims these acts caused hundreds of thousands of pounds of meat to spoil. OMAF also allowed the plant to deteriorate, causing further physical damage to the plaintiff’s property.
[74] The law has recognized a duty of care where the defendant’s negligent act causes foreseeable harm to the plaintiff’s person or property. However, the duty arises where the defendant’s overt act directly causes foreseeable harm. The Supreme Court of Canada has held that where the conduct alleged against a defendant is a failure to act, the nature of the relationship must be examined to determine whether there is a nexus between the parties: Childs v. Desormeaux, 2006 SCC 18 at para. 31. The appellate courts have also cautioned against the classification of physical damage or harm being cast too broadly or at such a level of generality that it fails to provide the sufficient analytic content capable of negating the need for a full Anns/Cooper analysis: Rankin, supra at para 28; Williams v. Canada, 2009 ONCA 378 at paras. 18-19.
[75] The claimed physical damage to property in these circumstances is too general and arises from a non-feasance in terms of OMAF’s failure to maintain the freezer, as opposed to a direct and overt act. This is insufficient to establish a prima facie duty of care based upon the recognized duty of care based on physical damage to property or person. The relationship between Aylmer and OMAF requires a full Anns/Cooper analysis.
Anns/Cooper Analysis
(ii) Was it reasonably foreseeable that the actions of OMAF would harm Aylmer?
[76] When determining whether reasonable foreseeability is established, the proper question to ask is whether the plaintiff has offered facts to persuade the court that the risk of the type of damage that occurred was reasonably foreseeable to the class of plaintiff that was damaged: Rankin, supra at para. 24. The court accepts it was reasonably foreseeable that OMAF’s actions in occupying Aylmer’s abattoir, suspending Aylmer’s licence to operate and detaining Aylmer’s meat product would harm Aylmer’s economic interests.
[77] Dr. Tom Baker, director of OMAF’s food inspection branch, suspended Mr. Clare’s livestock dealer’s licence within days of the provisional suspension of the Aylmer licence. Dr. Baker testified he suspended the livestock dealer’s licence due to the concern that Mr. Clare would be unable to pay farmers as a result of the provisional licence suspension and the investigation of the Aylmer abattoir. OMAF area manager Mr. Ed Bailey acknowledged he was aware that the plant freezer was not operating properly for the proper storage of the detained meat and testified he reported this concern to his superiors at OMAF. OMAF could readily foresee that Aylmer was among the class of plaintiff who could be harmed through the licence suspension, meat detention and exclusion of the plaintiff from use of the plant.
(iii) Was the relationship between OMAF and Aylmer sufficiently proximate that it would be fair and just to impose a duty of care?
[78] Reasonable foreseeability is not enough to establish a prima facie duty of care. The plaintiff must also establish the relationship between plaintiff and defendant is sufficiently proximate that it would be fair and just to impose a duty of care: Williams, supra at para. 14.
[79] Aylmer’s claim is against a public authority exercising powers within a statutory scheme as it relates to the regulation of animal slaughter and meat processing in Ontario. Factors giving rise to proximity must be grounded in that statute: Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537 at para. 43; D.(B.) v. Children’s Aid Society of Halton (Region), 2007 SCC 38, [2007] 3 S.C.R. 83 at para. 27.
[80] The Supreme Court of Canada identified three circumstances when determining if a government actor was in a relationship of proximity to a plaintiff: 1. The relationship may be created in the statute itself. However, since statutes are most often aimed at public goods, it may be difficult to infer that the legislature intended to create private law duties especially where the private law duties would conflict with the duty to the public and where the public duty is overarching; 2. Proximity may arise from a series of specific interactions between the government and claimant, where the government has entered into a special relationship with the plaintiff through its conduct. Again, a finding of proximity might have to give way for policy reasons if it would conflict with the statutory public duty; and 3. Proximity may also be found in a combination of statutory duties and interactions between the parties: R v. Imperial Tobacco Canada, 2011 SCC 42 at paras. 43-46.
[81] Aylmer submits proximity is established through OMAF’s obligations to Aylmer under the Meat Inspection Act and OMAF’s dealings with the plaintiff which damaged or destroyed Aylmer’s property. These actions include the length of the meat detention, the improper handling of the meat, the failure to hold a licensing hearing and allowing the plant and equipment to deteriorate. Aylmer contends it was compelled to rely on OMAF’s investigation and had no opportunity to save its meat product.
[82] OMAF submits the Ontario Court of Appeal previously held that the relationship between a statutory food safety regulator and regulated food producer does not create a prima facie duty of care: River Valley Poultry Farm Ltd. v. Canada (Attorney General), 2009 ONCA 326. OMAF contends that River Valley, supra is determinative that a novel duty of care does not exist in these circumstances. The B.C. Court of Appeal similarly held that the Canadian Food Safety Inspection Agency did not owe a duty of care to a food producer for the negligent inspection of carrots: Los Angeles Salad Company Inc. v. Canadian Food Inspection Agency, 2013 BCCA 34. OMAF urges that this court should not repeat the analysis and can conclude no duty of care exists in these circumstances: Taylor v. Canada, 2012 ONCA 479 at para. 73.
[83] Aylmer submits that River Valley is not dispositive on the existence of a duty of care. River Valley concerned a negligent CFIA investigation of an egg producer for a possible outbreak of salmonella. The Court of Appeal concluded there was no relationship of proximity. Laskin J.A. found there were three compelling features to the federal statute that showed the intention to exclude a private law duty of care. First, the express purpose of the statute was to enable the Crown to protect the health of people and animals. Nothing in the statute suggested that one of its purposes was to protect the economic interests of individual farmers. Second, the statute included a compensation scheme to address the economic interests of individual farmers harmed by the CFIA’s actions. Third, legislation provided for Crown immunity in the event compensation was paid and the statute also included a broad statutory immunity clause for CFIA inspectors.
[84] The court agrees that River Valley is distinguishable on the differences between the federal and provincial statutory regimes under consideration. Although the Ontario Meat Inspection Act makes it clear that the overriding purpose is the protection of the quality of meat for human consumption, the provincial regime does not provide a compensation scheme for affected producers or an immunity clause for government actors.
[85] Nevertheless, the court is of the view that the Meat Inspection Act does not disclose a legislative intention to confer a private law duty of care by OMAF towards the economic interests of abattoir operators. The statutory obligation to hold a hearing after the provisional licence suspension is insufficient to establish a private law duty of care in the context of a statute that is otherwise directed towards promoting public health. The court acknowledges OMAF’s failure to hold a hearing following the provisional suspension of a licence and will return to this issue later in these reasons. However, for the purpose of a proximity analysis, the language of s. 5(2) does not impose a time for the hearing following the provisional suspension of a licence, only that it be held “thereafter”. Without more, this obligation to hold a licence hearing is insufficient to establish a private law duty of care where the overall purpose of the statute is public health.
[86] Aylmer relied on the Ontario Court of Appeal’s decision in Williams v. Toronto (City), 2016 CarswellOnt 14116 as setting out an analogous situation where a government actor’s dealings with the plaintiff established a special relationship sufficient to establish proximity. In Williams the City of Toronto implemented a pilot project to require landlords to improve unsafe rooming houses without leaving the tenants homeless through increased rent. After consultations with a tenants’ association, landlords and community groups, the City advocated to the province to reduce the property taxes for this housing in the expectation that the landlords would reduce the tenants’ rent. The landlords received the tax reduction but did not reduce the rent. The City failed to notify the tenants of the property tax and rent reduction as required by statute. The court concluded there was special relationship of proximity with the tenants that went beyond the City’s statutory obligation to notify tenants of the rent reduction. The court found the tenants were particularly vulnerable and would not know of their rights without the information in the notices they should have received from the City.
[87] The court sees no similarity between Williams v. Toronto and this case for two reasons. First, the proximity relationship arose from the City going beyond its statutory notification role and to directly engage with the plaintiffs for participation in the pilot project. In this case, OMAF’s relationship with Aylmer was restricted to its statutory mandate to regulate safe meat production. Its impugned actions were to that purpose. There is no evidence of dealings between the parties or representations made by OMAF to Aylmer outside of that regulatory relationship. Mere targeting in the context of a statutory regime under which a government agency is responsible for animal and public health is not enough to establish proximity: River Valley, supra at para. 59. Although proximity may be created by a regulator’s conduct, it does not typically arise when the regulator is simply discharging his or her statutory responsibilities in the public interest: Los Angeles Salad, supra at para 51.
[88] Second, the court does not accept Aylmer’s characterization of its reliance on OMAF regarding the meat detention and possession of Aylmer’s plant. The statute allows for these discretionary powers. Aylmer did not rely on OMAF’s advice that the detained meat should be destroyed and instead challenged the government’s authority from the outset.
[89] In conclusion, the relationship between OMAF and Aylmer was not sufficiently proximate that it would be fair and just to impose a duty of care.
(iv) Are there residual policy considerations which militate against recognizing a duty of care?
[90] There is also an overriding policy consideration that negates a private duty. Policy concerns are relevant under both parts of the Anns/Cooper test. Under part one, questions of policy related to factors arising from the particular relationship between the plaintiff and defendant. Residual policy concerns under part two are concerned not so much with the relationship between the parties but with the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally. There is the possibility of some blending of these two policy considerations and it may not matter at which stage policy is concerned. The underlying question is whether a duty of care should be imposed, taking into account all relevant factors disclosed by the circumstances: D.B. v. Children’s Aid Society of Halton (Region), 2007 SCC 38 at paras 32-33.
[91] There is the potential for conflict if OMAF must be mindful not only of the health of the public but the individual economic interests of the meat processors. The Court Appeal recognized a similar policy concern that would negate a private law duty of care in such circumstances: River Valley, supra at para. 84. The conflict between Aylmer and OMAF in this action regarding the meat detention, whether it was fit for human consumption and whether OMAF ought to have released that meat is an example of the potential for conflict between the economic interests of an individual operator and the public interest in protecting the food supply.
[92] This conclusion is not intended to suggest that a private law duty of care can never exist between a government food regulator and a food producer. The conclusion is only that a private duty of care towards licensees cannot coexist with OMAF’s public duties on the facts of this claim.
[93] In the event this conclusion is in error, these reasons shall consider the remaining requirements for negligence claim.
3. (a) Did OMAF breach of the standard of care?
Does the MNR Investigation demonstrate the Standard of Care for OMAF’s Conduct?
[94] The plaintiff submits the MNR’s meticulous planning in its investigation and execution of the search warrants establishes the measure of the standard of care expected of OMAF in the exercise of its statutory powers in detaining the meat and suspending Aylmer’s licence.
[95] MNR lead investigator Rodger Dunlop testified to the substantial time and effort the MNR investigation team spent in compiling data, considering alternative solutions to a search warrant and planning execution of the search warrants and seizure of evidence. The MNR investigation goal was to intrude on the plaintiff’s property rights and to disrupt the plaintiff’s business as little as possible. To that end, the MNR completed its search, seized the evidence and vacated the plaintiff’s plant within 48 hours of the execution of the warrant, at which time it handed the plant over to OMAF.
[96] In contrast, the plaintiff contends OMAF’s conduct in its occupation of the plant displayed a complete failure to plan the exercise of its statutory powers and a complete disregard for the plaintiff’s rights. Instead, it remained in possession of the plant for 19 months without a plan, without the required hearings and allowed the meat to spoil.
[97] The court is not persuaded that the MNR investigation establishes the measure of the standard of care required of OMAF in the execution of its statutory duties. It is true that both government agencies acted out of similar concerns regarding unauthorized activities at Aylmer. However, the two government agencies exercised their statutory powers for different purposes.
[98] MNR lead investigator Rodger Dunlop testified that the MNR agricultural investigation unit was tasked with provincial investigations of compliance issues and possible prosecutions under the Meat Inspection Act and related statutes such as the Livestock Act and the Dead Animals Disposal Act. The predominant purpose of the investigation unit was for the prosecution of provincial offences under that body of agricultural legislation. The investigators therefore needed to carry out their duties and gather evidence with regard to Charter values, such as the presumption of innocence. Mr. Dunlop testified that the team needed to carry out its search warrant and investigation with respect for individual’s rights, and property interests and to be as efficient as possible.
[99] In contrast, OMAF’s steps in suspending Aylmer’s licence and detaining the meat product were carried out in accordance with its health and safety mandate to manage a prospective risk to the public where there were grounds to believe that uninspected meat could enter the food supply. In the court’s view, there is therefore no direct comparison to be made with the conduct of the MNR investigation for the purposes of determining whether OMAF met the standard of care in the exercise of its duties.
[100] Aylmer submitted that OMAF’s conduct was nevertheless so egregious and lacking in basic planning that it could not possibly meet the standard of care. The plaintiff contends that OMAF’s own testing of the detained meat demonstrated it was safe and could have been released in September 2003 but that Ministry officials unreasonably continued to detain it and allowed it to spoil. Ministry employees were aware OMAF’s conduct could cause damage to the plaintiff. The plaintiff submits that OMAF’s conduct over the 19-month detention showed a “decision-making paralysis” that was due to either unreasonable inadvertence or unreasonable and intentional conduct. OMAF’s statutory powers did not give it the right to destroy the plaintiff’s assets.
[101] The defendant argues it had the statutory authority under the Meat Inspection Act to enter the Aylmer premises, to detain the meat and to suspend Aylmer’s licence pending a determination of the concern that Aylmer had processed uninspected meat for human consumption. It had reasonable grounds for refusing to release the meat. The Act required OMAF to hold a hearing into the provisional suspension of Aylmer’s licence and also to convene a hearing regarding the meat detention. However, there was no requirement as to when the hearings had to be held. The unusual circumstances of the criminal investigations by the OPP and CFIA made it advisable to defer regulatory hearings until the outcomes of those investigations were known.
[102] Conduct is negligent if it creates an objectively unreasonable risk of harm. The measure of what is reasonable depends on the facts of each case, including the likelihood of a known or foreseeable harm, the gravity of that harm, and the burden or cost which would be incurred to prevent the harm. A statutory breach does not automatically give rise to civil liability; although it can be some evidence of negligence. One cannot avoid the underlying obligation of reasonable care simply by discharging statutory duties. Statutory standards can be highly relevant to the assessment of reasonable conduct and may render reasonable an act or omission which would otherwise appear to be negligent: Ryan v. Victoria (City), 1999 706 (SCC), [1999] 1 S.C.R. 201 at paras. 28-29.
[103] In that context, the court will review the evidence on the following issues in order to determine whether OMAF fell short of the standard of care: (i) The refusal to release the detained meat; (ii) The failure to hold regulatory hearings; (iii) The detention of the meat at the plant; and (iv) The spoilage of the meat.
(i) The refusal to release the detained meat
[104] Aylmer submits that OMAF disregarded the results of its own scientific testing in September 2003 and continued to detain the meat thereafter without justification. Aylmer also relies on expert opinion to establish that the detained meat was fit for human consumption and could have been released in 2003.
[105] The immediate aftermath of the search warrant in August 2003 triggered an extensive CFIA recall of Aylmer product and led to intense public interest and scrutiny. In late August 2003, the provincial Ministry of Public Safety and Security authorized testing of the recalled and detained products. OMAF carried out that testing in accordance with its protocols. On September 8, 2003, the Commissioner of Public Safety and Security announced that the preliminary results from this testing confirmed the recalled meat products from Aylmer would have posed minimal risk to the public.
[106] Aylmer submits these test results demonstrated the meat was safe for human consumption and that OMAF ought to have released it to Aylmer in the fall 2003. Aylmer notes the provincial government made this announcement in order to demonstrate the strength of the meat regulation system. OMAF cannot have it both ways and now claim the testing was insufficient in order to justify its inaction.
[107] OMAF food inspection branch director Dr. Tom Baker and meat inspector Vicky French acknowledged that the Ministry undertook extensive sampling and testing and that the results indicated there was “minimal risk” to the public. However, OMAF maintained that these results were insufficient to justify a release of the detained meat product for public consumption.
[108] Dr. Baker testified that the testing samples only addressed the safety of a particular meat sample and not all of the meat. The test results also did not resolve OMAF’s fundamental concern of the risk of uninspected meat being among the detained product. Antemortem and post-mortem inspection are the cornerstone to the regulation of safe meat processing for human consumption and cannot be replaced by post-mortem testing. In particular, there is no testing that can be done to detect BSE. BSE is initially screened through the antemortem inspection. Dr. Baker explained that although BSE is rare, the consequences of the disease are devastating, therefore making antemortem inspection crucial for food safety.
[109] Each party called expert opinion on the issue of whether the 2003 testing results demonstrated the meat was fit for human consumption. The plaintiff called microbiologist Dr. Ewen Todd, who was qualified to provide opinion evidence on the issues of microbiological pathogens, food borne disease and food safety and to offer his opinion on the safety of the meat sampled for human consumption or other purposes. The defendant called microbiologist Dr. Lynn McMullen, who was qualified to provide opinion evidence on microbiological safety and quality of meat. Both experts were authoritative and credible in their testimony, with clear explanations for the conclusions they each drew from the testing. Each made reasonable concessions and acknowledged the limits to their opinions because of unknown or missing data.
[110] That said, the court finds that expert opinion on the microbiological safety of the detained meat does not address whether the detained meat was safe for release to the public. This scientific analysis does not replace the role of antemortem and post-mortem inspection in meat processing in promoting food safety.
[111] Dr. Todd testified the meat could have been released to Aylmer for sale to consumers or to be further processed for animal feed. From a microbiological point of view, Dr. Todd concluded that as of the time OMAF testing in August 2003, the meat posed no health risk to the public if properly cooked. The Aylmer meat showed higher levels of microbial growth in comparison to baseline surveys of processed cattle from other facilities. Dr. Todd testified this could be the result of other factors, such as the freezer malfunction and the fact that the samples may have come from Aylmer processing a higher percentage of downer cows, where contamination can be greater. The meat was nevertheless safe to eat if cooked properly and generally posed the same risks as other meat consumed by the public.
[112] However, in cross-examination Dr. Todd acknowledged that inspection played a role in food safety and that in particular, BSE testing was based on antemortem inspection. He also agreed that the risk of BSE entering animal feed would be a concern. Dr. Todd also agreed that Ontario law required meat to undergo inspection and that uninspected meat would be unsaleable in law.
[113] Dr. McMullen acknowledged that Dr. Todd had undertaken a careful review of the sampling data but disagreed with his conclusion that the contamination rates were similar to the rates of contamination found elsewhere in the industry. In her view, the Aylmer rates of contamination were higher, and a proportion of the beef carcasses were not fit for human consumption. For example, the frozen boxed beef samples contained statistically higher rates of salmonella contamination. She did not accept that cooking would mitigate any health risks, since in her view it was well documented that consumers do not properly cook meat. She was not aware that there had been issues with Aylmer’s freezer temperature after the detention and acknowledged this could have been a factor in the higher contamination rates in the samples.
[114] In the end, Dr. McMullen’s disagreement with Dr. Todd’s interpretation of the data was academic. Dr. McMullen concluded that any meat that originated from uninspected animals would not be fit for human consumption. As it was impossible to tell inspected meat from uninspected meat, none of the detained meat was fit for human consumption. Dr. McMullen also had reservations about whether the meat would be suitable for other purposes such as pet food. Pet food processing would not destroy prion particles that are the cause of BSE. Without the antemortem inspection, one would not be able to say that the meat came from animals that did not have BSE.
[115] The court finds that that the 2003 OMAF testing results did not demonstrate that the detained meat was fit for human consumption. The consensus in expert opinion highlights that the microbiological testing is not a substitute for the role of antemortem and post-mortem inspection. As was also acknowledged by both experts, the uninspected status of the meat would make it unsuitable for use as animal feed as well. The expert opinion supports Dr. Baker’s reasons for refusing to release the meat. OMAF was not unreasonable in its refusal to release the detained meat.
However, questions arise from OMAF’s failure to convene regulatory hearings, its decision to detain the meat at the Aylmer plant and the spoilage of the meat.
(ii) The failure to hold regulatory hearings
[116] OMAF did hold hearings into the provisional licence suspension and the detention of the meat, as was required under the Act.
[117] The court must first address a procedural issue before considering the evidence on OMAF’s failures to hold hearings. OMAF objected to the plaintiff’s submission that the failure to hold a hearing was a basis for a finding of liability. OMAF argue the issue of the regulatory hearings was pleaded in earlier versions of the statement of claim but had been removed in the most recent amendments. The defendant contended that liability could therefore not be based on this ground: Kalkanis (Litigation Guardian of) v. Allstate Insurance Co. of Canada, 1998 6879 (ON CA), [1998] O.J. No. 4466 (C.A.) at paras 13-15. During trial, the court ruled that the pleadings were sufficiently broad to include these allegations. The defendant repeated its objection in its closing submissions. The statement of claim alleges OMAF breached the duty of care owed to Aylmer by failing to employ proportionate and appropriate remedies for perceived regulatory violations and failing to follow the procedures mandated in the relevant statutes with respect to the detention of meat. The court finds the claims relating to the failure to hold hearings falls within these allegations. The defence was also able to lead evidence on this issue at trial. The court will therefore consider the evidence on this point.
[118] When a director provisionally suspends a licence, s. 5(2) of the Meat Inspection Act requires the director to convene a hearing into the suspension “thereafter”. Dr. Baker’s personal practice was to convene a hearing within two to four weeks of a suspension. It is true that the legislation does not impose a timeline for holding a hearing; however, in this case, a licence hearing was never held.
[119] OMAF had authority to detain an animal, meat or meat product if it considered that it did not meet the requirements of the regulation. Authority over the meat was limited to inspecting and detaining it. It could not dispose of the meat without first providing an opportunity for a hearing: s. 85(1), (6); s. 87(1), (9).
[120] Dr. Baker testified that he did not convene hearings in this instance due to the collateral criminal investigations by the OPP and the CFIA. Dr. Baker expected that the provincial regulatory process was under the “umbrella” of those criminal proceedings. In his view, it was not prudent to have a regulatory hearing under those circumstances. There would be difficulty in releasing the meat for public consumption only to later have convictions on the criminal charges. Hearings would also require evidence which was in the possession of the OPP and CFIA. It was his hope that the outcome of the criminal process would give some clarity to the situation regarding the meat detention and licence suspension. He did not anticipate that the process would take so long and that a decision would be made to eventually dispose of the meat 19 months later, after it was condemned due to spoilage.
[121] OMAF submitted that Dr. Baker relied on legal advice in his decision to postpone any regulatory hearings. The plaintiff objected to this argument, as the defendant did not call any evidence to detail that legal advice. Dr. Baker’s evidence is that he relied on a government lawyer and would ask for updates on the other proceedings from time to time. He was not examined on the specifics of any legal advice he may have been given regarding the postponement of the hearings or the meat detention; however, Dr. Baker agreed with the suggestion on cross-examination that his own decision-making was supplanted by lawyers, who were “very involved” in the matter. It is evident that the criminal investigation took precedence over the regulatory process, as demonstrated by the Attorney General’s direction that the MNR suspend its regulatory investigation in deference to the broader criminal inquiry. The court does not consider this point to be central to the analysis due to the otherwise vague evidence of any legal advice given to Dr. Baker; nevertheless, the involvement of lawyers through OMAF of the attorney general is one factor to consider.
(iii) The detention of the meat at the plant
[122] The detained meat remained under lock and seal in the freezer of the Aylmer plant for 19 months, between August 2003 and March 2005. OPP and then private security, controlled access to the plant from the main entrance. Mr. Clare and his sons could access the plant during this time, but only through a request to OMAF and in the company of a Ministry representative, who were to impede the Clare’s access as little as possible.
[123] Dr. Baker’s colleague, Dr. Robert Vanderwoude, made the initial decision to detain all meat and meat product at the plant site. Dr. Baker testified that he agreed to continue to detain the meat at the plant because it was where the incident happened, and it was logistically easier to protect the meat and ensure it remained under detention with 24-hour security. OMAF referred to this as “continuity of detention”. Dr. Baker explained OMAF did not remove the meat before March 2005 because it was hoped at the time that the outcome of the criminal investigation would provide certainty to what should be done with the meat. The criminal proceedings went longer than expected. In fact, the meat spoiled and was condemned and disposed of pursuant to the Meat Inspection Act almost two years before the plaintiff’s guilty pleas.
[124] Dr. Baker acknowledged that OMAF did not have a documented or even informal plan as to how to manage the meat detention. In hindsight, he allowed it would have been a good idea. Again, OMAF’s focus was to secure the detained meat and allow the other government agencies complete their investigations. OMAF never considered storing the meat off-site and returning the property to the plaintiff. The security cost of 24-hour plant surveillance amounted to approximately $40,000 per month. In retrospect, Dr. Baker allowed that it might have been sensible to do an analysis of the cost and logistics of storing the meat elsewhere. However, at the time, the imperative was to ensure the meat was secure.
(iv) The spoilage of the meat
[125] OMAF area manager Mr. Edward Bailey was tasked with regular monitoring of the detention of the meat product in the freezer throughout OMAF’s 19-month possession of the plant. Beginning in early September 2003, he testified he noticed the freezer was not maintaining the minimum appropriate temperature for the preservation of the meat at -18 degrees celsius. Mr. Clare refused OMAF’s direction to repair the freezer, arguing that he had been deprived of any meaningful involvement in the plant and that it was OMAF’s duty to do whatever was necessary to preserve the meat product. OMAF contended that responsibility for the freezer remained with the plaintiff.
[126] A Ministry supervisor eventually authorized some repairs at an approximate cost of $20,000; however, Mr. Bailey agreed that the temperature logs showed the freezer never maintained the required minimum temperature throughout the 19 months that OMAF was in possession of the plant. In Mr. Bailey’s view, the meat had likely spoiled by late 2003. In June 2004 Mr. Bailey inspected the detained meat in the freezer with Ministry scientist Dr. George Branov. Dr. Branov reported the meat contained decomposing substances and portions were beyond the “best before” date.
[127] Dr. Baker testified OMAF could not previously deal with the meat without Aylmer’s consent or with a hearing. Aylmer would not consent to its disposal. The meat therefore remained in detention at the plant and without a hearing. However, once OMAF confirmed the meat was spoiled, it was “contaminated” within the meaning of s. 1 of the regulation and OMAF then had jurisdiction to condemn the meat and dispose of it in accordance with the regulation: s. 1, 41, 74.
[128] OMAF notified the plaintiff of the condemnations of the entire inventory in October 2004 and advised the plaintiff of its intention to dispose of the meat. The plaintiff questioned the basis for the condemnations and demanded a right of consultation on the disposal. The parties exchanged positions over the course of the next five months and OMAF eventually disposed of all of the meat pursuant to the condemnations in March 2005.
[129] In cross-examination Dr. Baker acknowledged that OMAF likely remained with its initial view that the detained meat should be condemned. It would have taken compelling evidence to disturb his “high suspicion” that the meat was unfit for human consumption. This was based upon the MNR evidence that showed some of the meat was uninspected.
[130] Dr. Baker acknowledged OMAF should have attempted to preserve the meat for as long as possible. He was unaware there were longstanding issues with the freezer repairs. He knew there was some debate with Aylmer over responsibility for the repairs but assumed at the time it had been addressed as he had heard nothing further about it. Mr. Bailey testified that he reported the freezer concerns to his supervisors but received little direction. He understood the ministry did not want to authorize the substantial repair cost.
[131] OMAF submitted that budgetary reasons which influenced its decision-making regarding the freezer disrepair. The court did not hear any evidence on the particulars of such decision-making, other than that they generally wanted to avoid such a “spend”. The court agrees with the plaintiff that such budgetary reasoning is difficult to reconcile with OMAF’s decision to spend in the range of $40,000 a month in security in order to detain the meat at the plant.
[132] Dr. Baker acknowledged that one could reasonably conclude that OMAF deliberately allowed the meat to spoil: OMAF’s position from the outset was that the meat should not be released, it knew the freezer was not working and it knew of concerns about the off-condition of the meat. However, Dr. Baker maintained that there was no intentional or deliberate plan to let the meat spoil. OMAF did not have definitive proof that animals were slaughtered without inspection, just evidence that raised a “high probability”. Without either the plaintiff’s consent or the plaintiff’s guilty plea to the charges, his view was that OMAF could not take action to unilaterally destroy the meat.
Conclusion regarding Standard of Care
[133] The court agrees with Aylmer that OMAF’s execution of its statutory duties does not allow the ministry to disregard the rights of its licensee. There are indeed aspects of OMAF’s conduct that are troubling: the detention at the plant, the spoilage of the meat, the failure to offer regulatory hearings. It was not OMAF’s finest hour. Analyzed in isolation, the reasonableness of OMAF’s conduct could lead to a conclusion that it did not meet the standard of care
[134] However, in the context of this case, the court conclude these failures were errors in judgment that did not amount to a breach of the standard of care. The surrounding circumstances must also be considered when determining the requisite standard of care: Just v. British Columbia, 1989 16 (SCC), [1989] 2 S.C.R. 1228 at para. 30.
[135] Those surrounding circumstances explain OMAF’s “decision-making paralysis”. The investigation, meat recall and criminal investigation was an extraordinary event. There was intense media and public scrutiny and concerns of contamination in the food supply. The preliminary MNR investigation justified serious concern by OMAF regarding breaches of the meat inspection laws that were designed to protect public health and safety. The MNR investigation of provincial regulatory breaches expanded to OPP and CFIA investigations into criminal charges. The Ministry of the Attorney General directed the MNR suspend its investigation of regulatory violations to allow the OPP criminal investigation to take precedence. In this context, it is not surprising that at the time, OMAF considered its role to be subordinate to the criminal investigation and that it expected that the results of the criminal investigation would inform its decision-making regarding the licence and the meat detention.
[136] The failures to hold hearings amount to statutory breaches, which could be seen as some evidence of a failure to meet the standard of care. However, the court accepts Dr. Baker’s explanation that his decisions to defer the hearings occurred in the context of an unprecedented and complicated situation involving collateral criminal investigations dealing with the same evidence. For example, MNR investigator Rodger Dunlop testified that he expected he would be called to give evidence at a regulatory hearing, had one been convened. However, the MNR investigation evidence was now part of the criminal investigation by the OPP.
[137] A hearing into the disposition of the meat would have been moot following the guilty plea, if only for the reason that it had already spoiled, been condemned and destroyed. However, OMAF never convened a licence hearing, even after the disposition of the criminal charges. The Act requires OMAF to hold a hearing “thereafter”. The court never received an explanation for this oversight and Dr. Baker did not appear to be aware of the ultimate disposition of the charges in 2007. It seems that OMAF’s reasons for ongoing direct engagement with Aylmer disappeared along with the disposal of the spoiled meat in March 2005. There were no further dealings between the parties but for Aylmer’s lawsuit. The ongoing criminal investigations had the practical effect of continuing to overtake the regulatory process until the guilty pleas in 2007. The sentence on the guilty pleas then included a one-year prohibition on applying for a licence to operate an abattoir.
[138] The plaintiff likely had similar practical reasons not pursuing regulatory hearings pending the disposition of the criminal charges. There would be no onus on the plaintiff to demand the regulatory hearings; however, although Aylmer made repeated demands through its lawyer for the return of the meat and commenced this lawsuit in April 2004, it is telling that the plaintiff did not pursue its statutory rights to a hearing. Mr. Clare also testified that once the plant was returned to him in March 2005, he let it sit dormant and did not take a lot of interest in the property apart from moving forward with this lawsuit.
[139] The court does not find that there was intentional or bad faith conduct by OMAF by allowing the detained meat to spoil so that it could then condemn the meat. The plaintiff contends that had OMAF had the courage of its convictions about the fitness of the meat, it would have condemned and disposed of the meat in September 2003, rather than detain it for 19 months on the plaintiff’s property and allow it to spoil. This overlooks the fact that the plaintiff insisted the meat was fit and demanded its release. Without the plaintiff’s consent, or a hearing, OMAF did not have authority to dispose of the meat at the time. The court has already reviewed the reasons for not having held a hearing into the meat detention pending the determination of the criminal charges. OMAF’s statutory authority to unilaterally dispose of the meat did not arise until the meat was contaminated, when decomposed substance was found in the meat, at which time it could act.
[140] The malfunctioning freezer arguably ought to have triggered consideration to detaining the meat elsewhere. However, the court accepts that this was an unprecedented situation, where OMAF’s focus was on ensuring hundreds of thousands of pounds of meat product were secured from distribution to the public while OMAF awaited direction from the disposition of the criminal proceedings.
[141] The plaintiff observed that the MNR removed its evidence from the plant within two days and that the CFIA similarly removed meat product from the Aylmer freezer within a matter of weeks to a freezer at another location. The Act also allows for OMAF to direct that the detained meat be stored elsewhere. However, the MNR removed a small amount of meat/meat product for prosecutorial purposes. OMAF was dealing with substantially more meat product that was detained for public health protection. Relocation of the meat would have been no small undertaking. It is noted that the CFIA spent four weeks at the Aylmer plant between September and October 2003 in exercising its search warrant to remove just a portion of the meat product to another facility.
[142] In conclusion, if OMAF owed a private law duty of care to Aylmer, the court finds that OMAF did not breach the standard of care.
3. (b) Did a breach cause Aylmer’s loss?
[143] Even if OMAF’s acts and omissions fell below the standard of care, the court finds that Aylmer failed to prove that this conduct was the cause of the plaintiff’s losses.
[144] OMAF’s conduct must have been the cause-in-fact of Aylmer’s losses. As a general rule, a plaintiff cannot succeed unless he shows as a matter of fact that he would not have suffered the loss “but for” the negligent act of the defendant: Clements v. Clements, 2012 SCC 32 at paras 6-10. If the plaintiff’s loss would have happened whether or not OMAF acted negligently, then OMAF’s conduct is not a cause of the loss.
[145] The plaintiff alleges that the province’s negligence caused it the loss of use of its plant, the loss of the meat and the loss of its business. This is problematic. One cannot assess causation in artificial isolation without regard to the impact and outcome of the criminal investigation, which did not resolve until December 2007. The guilty pleas resulted in a sentence that included a prohibition on the plaintiff seeking a license to operate an abattoir for 12 months. The plaintiff never reapplied for a licence. Therefore, the court cannot conclude that “but for” OMAF’s negligence, Aylmer would not have lost its business.
[146] The plaintiff did not establish that the failure to hold a hearing caused its losses. There was no evidence to suggest that had the hearings been held, it was more likely than not that Aylmer’s licence would have been restored or the detained meat returned to its possession. Dr. Baker acknowledged that OMAF did not afford the plaintiff with an opportunity to tell its side of the story through convening a hearing and so he could not presuppose the outcome of the hearing. The plaintiff had that opportunity to provide its response to the MNR investigation in this trial 16 years later yet did not do so.
[147] The plaintiff alleges OMAF’s use of the plant to detain the meat for 19 months caused a loss of use of the plant. However, the evidence fails to establish that but for the province’s detention, the plaintiff would have had use of the plant. The plant could not be used by the plaintiff for its intended operation as an abattoir, given the provisional suspension of its licence.
[148] The plaintiff led evidence to demonstrate that the occupation deprived it of the opportunity to sell the plant. Witness James Clark, executive director of the Ontario Cattle Feeders Association, testified to his efforts in consulting with Mr. Clare to sell property to manage Aylmer’s cash flow challenges after August 2003. Mr. Clark assisted in the sale of a mothballed federal meat processing plant owned by Aylmer in Kitchener in 2003. That sale provided a substantial profit to Aylmer, due in part to the BSE crisis which had created demand for Canadian-based slaughter facilities. Mr. Clark testified that in his view, a sale of the Aylmer plant stood to realize an even larger profit; however, no investor would be interested in purchasing it given OMAF’s occupation of the property. Mr. Clark acknowledged that he did not take steps to show the plant to any prospective purchasers. Mr. Clare claimed he would have tried to sell the plant but could not show it since he was not allowed in it. This is not entirely accurate. Although OMAF retained the keys, had security at the gates and had the detained meat under lock and seal in the freezer, there was no evidence that the plaintiff witnesses were denied entry to the facility when requested. The court accepts that the province’s presence at the facility may have made a sale more challenging. It is hard to accept that it would make it impossible to sell in a climate where there was significant interest taking advantage of the demand for Canadian slaughterhouses due to the BSE crisis. In the absence of evidence of active efforts to market and show the property to prospective buyer, the court cannot find that but for the defendant’s occupation, the plaintiff could have sold the Aylmer plant.
[149] The plaintiff alleges that the spoilage of the meat caused a loss as the meat was unsaleable. The plaintiff’s theory of liability requires the court to find that the meat would have had commercial value to Aylmer but for OMAF’s negligence. As the court found that the detained meat was unfit for consumption or other alternative uses, it follows that no loss arises from the spoilage of the meat. In other words, the freezer disrepair did not cause the loss of this meat, rather, the meat was unsaleable in any event of the manner of the detention and spoilage. Furthermore, the beef products were also subject to a recall notice, the validity of which was not challenged by the plaintiff at trial. This meat would therefore still have no commercial value to the plaintiff in any event of OMAF’s detention.
[150] The plaintiff did not establish on a balance of probabilities its business losses would not have occurred but for OMAF’s negligence.
3. (c) Does the claim fail for remoteness?
[151] Causation alone is not enough; it must be demonstrated that the conduct was the proximate cause of the loss. It is more a question of law and policy than fact. OMAF submits that any breach by the defendant did not cause Aylmer’s damage in law and that it is too remote to warrant recovery. OMAF submits that the plaintiff’s business loss claim is too unrelated to its conduct to hold OMAF fairly liable. Aylmer argues that OMAF leadership were acutely aware of the impact of their actions on Aylmer’s business. It knew within days of its occupation of the plant that the occupation would impact the business.
[152] An injury will be sufficiently related to the wrongful conduct if it is a reasonably foreseeable consequence of that conduct. The remoteness analysis is concerned with the reasonable foreseeability of the actual injury suffered by the plaintiff: Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63 at paras. 77-78.
[153] The question on this approach is whether the loss claimed is too remote from the wrongful act for the act to be the “legal cause” of the loss. The basic question is whether the loss is reasonably foreseeable, having regard to a variety of factors, including the relationship between the parties and the expectations that flow from it, the circumstances of the case, and other factors bearing on the connection between the wrongful act and the loss claimed including external or intervening influences. In the end, a close and proximate connection between the wrongful act and the loss claimed must be established, having regard to all these things: Deloitte & Touche, supra, at para 173
[154] As was reviewed in the duty of care analysis, there is evidence from OMAF that demonstrates that economic harm to Aylmer was reasonably foreseeable as a result of the suspension and meat detention. However, the criminal investigation and the presence of uninspected meat significant intervening factors and circumstances which makes the claimed losses too remote to be recoverable at law. The criminal investigation impeded OMAF’s ability to address regulatory compliance. Aylmer could have avoided its business loss through not causing or permitting uninspected meat to be in the plant. It was in control of the very risk that led to its losses.
4. In the alternative to negligence, did the province’s occupation of the plaintiff’s plant and detention of property amount to a trespass or conversion?
[155] Aylmer’s evidence and legal argument at trial largely focused on the negligence claim. The plaintiff alternatively alleged OMAF committed the intentional torts of trespass to property, trespass to chattels and/or conversion.
[156] OMAF concedes it intentionally entered the Aylmer plant and detained Aylmer’s meat products but argues that it did so in the rightful execution of its statutory powers for the protection of the general public pursuant to the Meat Inspection Act. Aylmer contends that OMAF exceeded any such authority through the length of the plant occupation, lack of freezer maintenance and the deterioration and then destruction of the meat product.
[157] Trespass is committed by the entering upon land of another without lawful justification. A person who has lawful authority to enter the land of another does not commit trespass. However, that person becomes a trespasser ab initio if that authority is abused: G.H.L. Fridman et al, The Law of Torts in Canada, 3d ed. (Toronto: Carswell, 2010) at 34. The abuse must amount to a positive, wrongful act, as opposed to an omission or non-feasance. The abuse triggering the trespass ab initio must be related to and take away the entire reason for the entry. If the abuse is unrelated to some legitimate and justified reason for entry, the entry will not consist of trespass ab initio: Fuoco Estate v. Kamloops (City), 2000 BCSC 1042 at paras. 29-31, rev’d on other grounds, 2001 BCCA 325.
[158] The Meat Inspection Act allowed OMAF to enter the Aylmer premises for the purpose of carrying out the ministry’s duties under the act: s. 11. As previously established, OMAF had reason to be concerned that uninspected meat was processed at the Aylmer plant in contravention of the Meat Inspection Act and its regulation. The regulation authorized OMAF to detain the meat at the Aylmer premises: s. 85. The court accepts that OMAF’s acts of obtaining the keys from the plaintiff principals and in posting security at the gate were implicitly authorized by the act and were necessarily incidental to the ministry’s statutory duties.
[159] The court cannot find any positive, wrongful act on the part of OMAF that undermines its legitimate reasons for entering the premises and would render its entry as trespass ab initio. OMAF’s alleged failures are in the nature of acts of omission or non-feasance and therefore do not nullify the ministry’s statutorily authorized presence in the plant and its detention of the meat product.
[160] Similarly, the court finds that OMAF did not commit either trespass or conversion in its detention of the Aylmer meat products. The elements of conversion are: (a) the plaintiff has a possessory interest in personal property; (b) the personal property is identifiable or specific; and (c) the defendant intentionally commits a wrongful act in respect of the property that is inconsistent with the plaintiff’s right of possession: Daimler Chrysler Canada Ltd. V. Associated Bailiffs & Co., [2005] O.J. (S.C.J.) at para 9. Trespass to goods is the interference with another’s possession of goods. It concerns the improper handling or even temporary interference with the plaintiff’s possession of goods: Aylmer Meat Packers Inc. v. Ontario, [2011] O.J. No. 3424 (S.C.J.) at para. 18.
[161] The detained meat product was unquestionably plaintiff property. However, OMAF had the authority under the Meat Inspection Act and its regulation to detain the meat where it considered that the meat did not meet the regulatory requirements: s. 85. It only condemned the meat once it was confirmed to be “contaminated” within the meaning of the regulation, which then authorized OMAF to require that the meat be disposed of.
[162] The length of the occupation, questionable diligence in freezer repair and maintenance and the government’s failure to consider storing the meat offsite raise questions in hindsight and in isolation about whether OMAF exceeded or abused its statutory authority. Even if these issues are characterized as positive, wrongful acts, as was previously reviewed, the context of the situation at the time is such that one cannot expect OMAF to have been able to appreciate the implications of its decisions and the practical alternatives that might have been available to it at the time. The MNR investigation gave OMAF well-founded concern about the fitness of the meat product. OMAF was unable to distinguish inspected from uninspected meat and faced managing the detention of 594,000 pounds of meat product pending a determination on its disposition. The plaintiff would not voluntarily condemn the meat and the OPP criminal investigation impeded OMAF’s ability to address the disposition in a summary fashion with a regulatory hearing. It was an extraordinary situation and none of the OMAF witnesses had experienced such circumstances before. OMAF did not anticipate that it would remain in the plant for 19 months while it awaited clarity from the criminal investigation.
5. Are there other defences for OMAF’s conduct?
[163] Although the plaintiff’s claims are dismissed, OMAF raised a defence which should be provisionally addressed.
[164] OMAF raised the defence of ex turpi causa non oritur actio to either invalidate the entire cause of action or to disallow specific damages where the effect of the award would be to permit the plaintiff to profit from a crime. OMAF claims that Aylmer seeks compensation for illegal activities such as the loss of profits from uninspected meat and lost profits from an illicit business enterprise.
[165] There are limited circumstances in which the immoral or criminal conduct of a plaintiff bar the plaintiff from recovering damages to which he would otherwise be entitled. The only justification for its application is the preservation of the integrity of the legal system. This concern is only in issue where a damage award in a civil suit would allow a person to profit from illegal or wrongful conduct or rebate of a penalty prescribed by the criminal law: Hall v. Hebert, 1993 141 (SCC), [1993] 2 S.C.R. 159 at para. 5.
[166] The court concludes there is an insufficient evidentiary basis for the application of the ex turpi doctrine as either a complete or partial defence. The plaintiff’s admissions in evidence at this trial included that it sold uninspected meat throughout the entire time of its operations and this court has found there was reason for OMAF to believe the detained meat was uninspected. However, it does not follow that all of the meat processed at its plant was uninspected. In particular, the trial evidence confirmed that Aylmer processed a high volume of livestock in the presence of provincial meat inspectors; the issue is what happened there after hours. Furthermore, the only evidence of the plaintiff’s criminal penalty were the fines and the one-year prohibition from applying for a licence. There was no evidence in this trial as to the rationale or basis for the penalties, such as may have been available from a transcript of the sentencing submissions and reasons. This court is therefore not in a position to conclude on a balance of probabilities that compensation would amount to a rebate of a penalty.
6. What are the plaintiff’s damages?
[167] The court will provisionally assess the damages had the plaintiff established liability on a balance of probabilities. This assessment requires consideration of different loss theories and expert evidence presented by both parties.
[168] The plaintiff alleged OMAF’s occupation of its premises and suspension of its abattoir licence “destroyed” Aylmer’s business. Mr. Clare testified that the plant was “worthless” when OMAF returned the premises to him in poor condition in March 2005. There was no abattoir business left, which was the keystone to the Aylmer enterprise. Aylmer could not sell the plant while it was in the province’s possession. Aylmer later unsuccessfully attempted to sell the plant in 2008. Mr. Clare eventually stopped paying taxes on the property and the municipality seized the property. The plaintiff closed down the trucking business due various factors. Only the livestock business has continued through a different entity.
[169] In addition to the destruction of the abattoir business, Mr. Clare testified that OMAF’s occupation forced him to euthanize 600 head of cattle in 2003 as they could not be processed at Aylmer and could not be transported elsewhere for slaughter in a timely way. Aylmer also claims it sustained losses in the cattle sales it was able to achieve between November 2003 and January 2006. Finally, Aylmer also claimed the loss of the value of the detained meat, consistent with its position that the meat was fit for human consumption or other commercial purpose.
[170] Aylmer presented three options for the court’s consideration in the assessment of the plaintiff’s damages: (1) the lost enterprise value of Aylmer plus the losses of cattle and the detained meat; (2) Aylmer’s economic losses from 2003 to 2012; or (3) the court’s own assessment of Aylmer’s damages including those damages arising from the loss of the chance to sell the plant during OMAF’s occupation between 2003 and 2005.
[171] OMAF raised a number of objections to each of the loss theories and calculations, including that the plaintiff’s claims are overly broad and fail to account for issues unrelated to the province’s alleged misconduct, such as the negative impact of BSE and changes to the trucking and livestock arms of the Aylmer business enterprise. OMAF submitted that any damages flowing from its possession of the Aylmer premises would be limited to the property expenses during the occupation period.
[172] The court prefers the first option, lost enterprise value plus other pecuniary losses, as a reasonable basis on which to assess the plaintiff’s damages in preference to either the economic loss or “lost opportunity to sell” theories. The concept of the lost enterprise value is consistent with the plaintiff’s evidence that the defendant’s wrongful actions caused the destruction of its business rather than an ongoing business loss.
[173] The economic loss theory is inappropriate in the context of the evidence. The plaintiff conceded that the end date for the economic loss theory at 2012 was admittedly arbitrary and arose from the fact that this was the last year for which the plaintiff had financial statements. The theory also rests on the assumption that Aylmer would have continued to operate and remain profitable. This leaves too many issues unanswered. This would assume that Aylmer’s abattoir licence would have been returned after a hearing. As previously noted, there is an insufficient evidentiary basis on which the court can conclude that the licence would have been restored had OMAF held a hearing. The economic loss theory does not account for the reality of the criminal charges and eventual convictions in 2007 on Aylmer’s business. Even if the court accepted the plaintiff’s reasons for pleading guilty, it would still have had to deal with the disposition of the criminal charges.
[174] In closing argument, OMAF argued that the meat processing industry underwent significant change after 2003 which would have negatively impacted Aylmer’s business. The court heard that in 2005 the Meat Inspection Act was repealed and replaced by the Food Safety and Quality Act, 2001, and that “downer” cows could no longer be slaughtered. The court heard no other evidence as to how this or other industry issues impacted the meat processing business since 2003 and would therefore have been likely to have also affected Aylmer had it remained in business. That said, during his examination in chief, Mr. Clare volunteered his observation that there had been a “huge amount of change” in the meat processing industry throughout North America. In particular, he testified that in the past 20 years, meat processing in Ontario went from an estimated 14,000 to 15,000 per week down to 11,000 at present. Plaintiff witness Mr. Clark also testified that there was a time-limited window for selling abattoirs during the BSE crisis and that interest had faded by 2005 due to market readjustments. Therefore, there is some evidence to indicate a question as to Aylmer’s ongoing profitability but for OMAF’s alleged misconduct. This is another reason why the economic loss theory is inappropriate in the circumstances.
[175] The courts have recognized that the quantification of a chance lost is appropriate where the uncertainty is not of the plaintiff’s making and the plaintiff has suffered the loss. The court must make its best estimate on the evaluation of a series of chances which contributed to the loss of a favourable outcome: Folland v. Reardon, 2005 1403 (ONCA). As the court has the assistance of qualified experts to consider the lost enterprise valuation, it seems unnecessary to embark on an inexact quantification. The court will therefore not address the evidence surrounding or questioning the plaintiff’s efforts to sell the plant in an effort to quantify loss on this basis.
[176] Aylmer called forensic accountant James Forbes to provide calculations as to the plaintiff’s losses based on both the loss of enterprise and the economic loss theory. These reasons will consider only the evidence in respect of the loss of enterprise valuation. Mr. Forbes assessed the loss of the enterprise of the Aylmer business in the range of $2,800,000 to $4,340,000. In contrast, OMAF called forensic accountant Ivor Gottschalk to critique the plaintiff expert’s opinion and to instead present a loss calculation related to the expenses associated with the province retaining possession between August 2003 and March 2005, thereby valuing the plaintiff’s damages loss of use of the premises at $185,780 based on bank charges, interest, rent, insurance and taxes.
[177] Each expert was qualified to offer opinion evidence as to the financial losses sustained by Aylmer. The court finds that both experts were independent, acknowledged the limits to their expertise and conceded the assumptions on which they made their calculations. However, although Mr. Gottschalk had a number of criticisms of the valuation methodology and data used by Mr. Forbes, the defence expert was not instructed to perform any loss calculations based upon the plaintiff’s damage theories and assumptions. Instead, his primary criticisms focussed on the assumptions underlying the plaintiff expert’s calculations such as the cause of Aylmer’s loss of its licence as well as speculation on the impact of BSE to the plaintiff’s business.
[178] The court accepts the plaintiff’s submission that it is inappropriate for an expert with these qualifications to be weighing such evidence in this manner. It was implied that Mr. Gottschalk had adopted the role of advocate; however, in the court’s view, his opinion is best understood as being confined to the assumptions and instructions provided to him by the defendant. In any event, the court had no opinion that responded directly to the plaintiff expert opinion and therefore no assistance or calculations in understanding the defendant’s position that minor adjustments to the plaintiff’s valuation formula would translate to a negligible loss for Aylmer. Instead, Mr. Gottschalk’s instructions narrowed his inquiry to the assumption that the province did not cause any economic loss to the plaintiff apart from the occupation costs the province asked him to calculate.
[179] The court accepts the plaintiff’s contention that if damages flowed from OMAF’s conduct as alleged, a reasonable measure of damages would represent more than just the occupation costs as submitted by the defendant. The court therefore relies on the evidence of Mr. Forbes in considering the lost enterprise value.
Loss of Enterprise Value
[180] To arrive at the loss of enterprise value, Mr. Forbes calculated the difference between the pre-incident value of Aylmer as at August 20, 2003, the day before the province entered the plant and the post-incident value of the business on March 24, 2005, the day after the plant was returned to the plaintiff.
[181] Mr. Forbes calculated the loss from the unaudited financial statements and corporate tax returns prepared by Aylmer’s accountant, which were unchallenged by the defendant. By Mr. Forbes’ assessment, Aylmer’s maintainable operating cashflow, or Earnings Before Interest, Taxes, Debt and Amortization (EBITDA) was in the range of $1.2 to 1.4 million. Mr. Forbes calculated the enterprise value or fair market value of Aylmer as at August 20, 2003 to be in the range of $3,800,000 to $4,700,000. The court accepts that this likely a reasonable value of the business in 2003. The plaintiff was in a position to significantly increase its operation through the kill floor expansion and the BSE crisis had temporarily resulted in greater demand and profitability for Ontario abattoirs as the border with the United States was closed.
[182] Mr. Forbes calculated the value of Aylmer in March 2005 based upon the liquidation value of the business since the abattoir was not in operation. Mr. Forbes calculated the liquidation value as at March 24, 2005 to be in the range of $1,000,000 to $1,360,000.
[183] The liquidation value was based on book value of the assets with adjustments and included an appraisal done by real estate appraiser and participant expert witness Mr. Larry Rosevear. Mr. Clare retained Mr. Rosevear in September 2006 to appraise the market value of the vacant Aylmer property at that time. Although retired at the time of his testimony at trial, Mr. Rosevear had 35 years of experience in the agricultural sector, including as a real estate appraiser. He provided thorough explanations for the basis for his valuation approach, how this mirrored real estate appraisal practices and his rationale for his conclusions. The court finds his evidence was undisturbed on cross-examination. No similarly qualified expert challenged his assessment.
[184] Mr. Rosevear valued the land based on three different approaches: cost, direct comparison and income. The appraiser then took the three estimated values to arrive at an overall range of $2,289,000 to $2,535,000. However, as the plant was vacant and had some deterioration, Mr. Rosevear deducted from the value an estimated cost of $350,000 to bring the property back to operational condition. Mr. Rosevear acknowledged on cross-examination that he was not an expert regarding the cost of repairs and start-up operational costs; however, he was comfortable based upon his years of experience in the agricultural industry to estimate the range at between $300,000 and $400,000, from which he took the midpoint of $350,000. There was no evidence to contradict his estimate or approach on this point. The adjusted value of the plant is in the range of $1,939,000 and $2,185,000. The court accepts the plaintiff’s submission that this appraisal value is reasonable as it likely would have been higher had it been done 18 months earlier at the time OMAF returned the plant to the plaintiff.
[185] Deducting the 2005 liquidation value of the business from the 2003 fair market value, Mr. Forbes assessed Aylmer’s loss of enterprise value in the range of $2,800,000 (low) to $3,520,000 (mid) to $4,340,000 (high).
[186] The court finds that there is a reasonable basis to assess the loss of enterprise value at the mid-point of $3,520,000.
[187] Cross-examination of Mr. Forbes highlighted the possibility that Aylmer’s maintainable earnings were overstated. For example, profit was trending downward before August 20, 2003 and a company specific risk premium at 1% was arguably low in light of the decreased profits in the trucking arm of the business, the impact of BSE and a relatively large working capital deficiency. Although the defendant did not present any adjusted valuations on that basis, these factors persuade the court that the mid-point of the range is reasonable to address such concerns.
[188] Mr. Forbes confirmed in his evidence that this calculation did not include additional losses that Aylmer may have incurred as a result of the province’s alleged negligence or unlawful conduct. The defendant’s arguments to limit the plaintiff’s assessment due to the potential for double recovery were devoted to the economic loss theory. The damages assessment will therefore consider the additional loss items claimed by Aylmer.
Euthanized Cattle & Cattle Sold at a Loss
[189] The plaintiff claims damages for the loss of 598 head of cattle that were ready to be processed but for the province’s occupation of the Aylmer plant. Mr. Clare testified that these cattle in the Aylmer feed lot(s) would have been inspected and would have “had a shot” at being processed at the Aylmer abattoir but for the OMAF seizure and occupation. The cattle were of an age and size that they could not be transported to another abattoir for processing. He maintained handwritten notes of the slaughter of these cattle beginning in November 2003, which records the loss of 398 cattle. He testified he stopped recording the disposition of a further 200 head of cattle after March 2004 as he and his family were emotionally exhausted by the ordeal. He claims the total value of the euthanized cattle was between $1,700 and $2,000 per head, resulting in a loss in the range of $1,016,600 and $1,196,000.
[190] Aylmer also claims it sustained losses in the cattle sales it was able to achieve between November 2003 and January 2006. The losses were documented through a series of sales invoices that Mr. Clare maintained. He testified that with the closure of the Aylmer abattoir, he was forced to sell the cattle in a surplus market, which negatively impacted his options for sale and the price per pound. If he had been able to process the cattle at Aylmer, he would have received a higher value. Mr. Clare estimated the loss differential was in a range of $954,473 to $1,001,605.
[191] OMAF’s primary contention was that Mr. Clare’s evidence was generally unreliable and that his estimates as to the values of the cattle and consequent losses were speculative and ungrounded in the evidence.
[192] The court would have some reservation in accepting Mr. Clare’s bald assertions on their own to establish this loss. However, the court is satisfied that the plaintiff established the factual foundation for the losses with reasonable certainty as well as the quantum of those losses. Mr. Clare’s evidence had some documentary support. He also demonstrated a ready command of livestock pricing and an encyclopedic knowledge of the North American livestock and meat processing industry, arising from at least 40 years of experience.
[193] Mr. Clare’s evidence on the euthanizing of cattle was generally supported by his handwritten records showing the dates of slaughter and number of cattle destroyed. Those records were undisturbed on cross-examination. His explanation as to why the cattle needed to be destroyed and his evidence as to the locations and ages of the livestock and the dates over which they were slaughtered were also sufficiently detailed to satisfy the court that this loss is established on a balance of probabilities.
[194] The cattle sales were documented in a series of invoice summary sheets collected by Mr. Clare between approximately November 2003 and January 2006 showing cattle sales from Aylmer to various processors within Ontario, Quebec and Alberta. While the documents did not represent the complete sales order for each transaction, these cover pages reported the total number of pounds or head of cattle sold, the price and amount received.
[195] The defendant did not concede the authenticity of these records. Mr. Clare therefore spent well over one day of trial in chief and cross examination explaining the meaning of each of the 48 records of sale, including the number and breed of cattle, their size, age, the significance of their weight and how much Aylmer was paid per pound or per head. During this detailed review he provided consistent price ranges for the likely value of each of those sales had he been able to process the cattle at Aylmer. He readily identified and volunteered any discrepancies or corrections to be made on the invoice summaries. The defendant did not undermine those calculations on cross-examination and did not lead any evidence of market pricing to suggest that Mr. Clare’s estimates were unreasonable or unsound.
[196] The court finds that the value of the loss of the euthanized cattle is at the lower end of Mr. Clare’s estimated value, at $1,016,660, to reflect the fact that this was an estimate arising from an incomplete list of the destroyed cattle and that some of the cattle may not have passed inspection. Similarly, the damages from the cattle sold at a loss is also assessed at the low end of Mr. Clare’s estimated range, at $954,473.
Value of Detained Meat
[197] Although the court found that the detained meat could not be sold for human consumption or other commercial value, this claim will also be provisionally assessed on the assumption that the meat could have been released to the plaintiff for retail use. OMAF itself prepared a complete inventory of all of the condemned meat under detention prior to its destruction. From those records, Mr. Clare and his son Jeff Clare testified that the meat could have been sold for human consumption at between $1.30 and $1.60 per pound, which results in a loss in the range of $783,000 to $945,000. As animal feed, they testified Aylmer would have generated between $0.30 and $0.40 per pound, for a loss of $162,000 to $216,000.
[198] The defendant again submitted that the plaintiff’s valuation of the detained meat was entirely speculative and should be rejected due to general concerns about Mr. Clare’s reliability and credibility. Recall the court’s observations as to Mr. Clare’s demonstrated knowledge of the livestock industry. He and his sons operated a successful abattoir for 13 years before the licence suspension. Although the court rejected their evidence that no uninspected meat was processed at Aylmer, the court accepts that both witnesses had the demonstrated experience to testify to the values of the meat. Those values were not patently unreasonable and were simply a multiplier of the inventory prepared by the defendant. The defendant offered no specific evidence to contradict the reasonableness of the plaintiff’s estimates, nor did it suggest a different quantum.
[199] The damages from the loss of the detained meat are assessed at the low end of the plaintiff’s estimates to address any concerns about the reasonableness of the estimate: $783,000 if it was fit for human consumption and $243,000 if it was suitable for animal feed.
[200] The defendant submitted the court should exclude any award for prejudgment interest due to the plaintiff’s lack of diligence to advance its claim, which took 16 years to take to trial. In that time, material witnesses have either passed away or are no long available and evidence has been difficult to obtain. This matter was not addressed in oral argument and the plaintiff did not have an opportunity for response. In light of the court’s dismissal of the action on liability, there is no disposition on prejudgment interest.
Disposition
[201] The plaintiff’s action is dismissed. The parties may make written submissions with respect to costs if they are unable to reach an agreement in that regard. The plaintiff shall provide written submissions by December 8, 2020 and the defendant shall provide written submissions by January 8, 2021.
Justice K. Tranquilli
Released: October 5, 2020