Reasonable Apprehension of Bias Strikes Farm Tribunal

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

Courts and tribunals in Canada are to be held to the highest standards of impartiality.  This is not just a matter of decision makers subjectively acting fairly and impartially (i.e. actually being fair and impartial) but just as importantly a matter of fairness and impartiality being demonstrated to the public.  As articulated by the English Chief Justice Lord Hewitt: “[it] is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.”  A hearing will be unfair, and justice will not be seen to be done, if the words or actions of the decision maker give rise to a “reasonable apprehension of bias” to the “informed and reasonable observer”.  Decision makers must be fair and impartial and must also appear to be fair and impartial.  If there is an appearance of bias, then the decision maker is subject to review.

Impartiality has been described by the Supreme Court of Canada as “a state of mind in which the adjudicator is disinterested in the outcome, and is open to persuasion by the evidence and submissions.”  Bias is the opposite: “a state of mind that is in some way predisposed to a particular result, or that is closed with regard to the particular issues.”  The words or actions of a decision maker will give rise to a reasonable apprehension of bias where “an informed person, viewing the matter realistically and practically – and having thought the matter through” would conclude that the decision maker was not impartial.  That “informed person” must have knowledge of all relevant circumstances, including “the social reality that forms the background to a particular case”, and must have more than a “mere suspicion” of impartiality.  The threshold for finding actual or perceived bias is high because it calls into a question an element of judicial integrity.

Reasonable apprehension of bias became an issue recently in a matter before the Normal Farm Practices Protection Board (the “NFPPB”).  The NFPPB is a tribunal with the power “to inquire into and resolve a dispute respecting an agricultural operation and to determine what constitutes a normal farm practice” and “to make the necessary inquiries and orders to ensure compliance with its decisions.”  A person directly affected by a disturbance from an agricultural operation can apply to the Board for a determination “as to whether the disturbance results from a normal farm practice.”  Farmers directly affected by a municipal by-law or “persons who want to engage in a normal farm practice as part of an agricultural operation on land in the municipality and have demonstrable plans for it” can apply to the Board for a determination “as to whether a practice is a normal farm practice for purposes of the non-application of a municipal by-law.”

Following a seven-day hearing in 2022, the NFPPB dismissed an application made by cottage owners who complained of nuisances caused by a neighbouring farm operation.  The Applicants alleged improper storage of manure, an increase in manure odour and flies as a result of the farm’s damage to and/or removal of hedgerows and other vegetative buffers, nuisance caused by manure laden dust, and odour and flies caused by deadstock disposal.  The respondent farm had been operating in the same location for 50 years and the NFPPB noted that the cow calf farm was operated using practices similar to other cow calf operations.  The NFPPB dismissed the application on the basis that the Applicants did not show “substantial interference and discomfort which would not be tolerated by the ordinary occupier in their location” and did not demonstrate “unreasonable interference with the use and enjoyment of the Applicants’ land.”

The respondent farm applied for a costs award against the unsuccessful applicants, arguing that the application was “frivolous and/or vexatious”.  The NFPPB agreed that the application was frivolous because, while the Applicants alleged that the respondent farm had altered its practices intentionally to aggrieve the Applicants, the NFPPB determined that the respondent farm’s operations were “normal farm practices”.  The NFPPB also took note of the fact that the Applicants were pursuing other legal actions against the respondent farm outside of the NFPPB process, that the Applicants had raised a multitude of issues without presenting evidence on particular issues, and that the Applicants had through their conduct throughout the proceedings attempted to malign and vilify the respondent farm.  In the end, the NFPPB ordered that the Applicants pay the respondent farm $40,000 in costs.

The Applicants requested a review of the decision on costs, both on the issue of the amount of the costs awarded and on the issue of reasonable apprehension of bias.  On the latter issue, the Applicants raised a concern about the appearance of a conflict of interest on the part of one of the three members of the NFPPB panel who heard the application and delivered the decision on costs.  It turned out that one of the panel members had sat as an adjudicator on a panel of the Agriculture, Food and Rural Affairs Appeal Tribunal (“AFRAAT”) that also included as a member a senior partner in the law firm representing the respondent farm in the NFPPB proceeding.  That AFRAAT proceeding was taking place at or around the very same time as the NFPPB hearing in 2022. 

The NFPPB Vice-Chair considering the review request determined that an appearance of bias did result from the fact that one of the NFPPB panelists had sat on another tribunal panel with a lawyer who indirectly was the lawyer for the respondent farm (that is, the respondent farm was technically a client of the lawyer’s law firm and, therefore, of the lawyer himself).  The Vice-Chair concluded: “When viewed from that perspective, an informed reasonable person viewing the matter realistically and practically, would conclude that the decision maker whether consciously or unconsciously would not decide fairly. There is the appearance of bias at the original hearing that would continue to exist for the subsequent costs decision.”  The Vice-Chair ordered a re-hearing on costs before a full panel of the NFPPB.

Read the decision at: 2023 ONNFPPB 3 (CanLII).

 

No Free Ride on Expropriation Costs

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

In the oft-cited case of Toronto Area Transit Operating Authority v. Dell Holdings Ltd. from 1997, Justice Cory of the Supreme Court of Canada wrote of expropriation:

The expropriation of property is one of the ultimate exercises of governmental authority.  To take all or part of a person’s property constitutes a severe loss and a very significant interference with a citizen’s private property rights.  It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected.  This principle has been stressed by eminent writers and emphasized in decisions of this Court.

The presumption is that there will be no expropriation without compensation, and expropriation statues such as Ontario’s Expropriations Act are to be read, as noted by Justice Cory, “in a broad and purposive manner in order to comply with the aim of the Act to fully compensate a land owner whose property has been taken.”

Full compensation is normally understood to include reimbursement of the reasonable costs incurred by a landowner incurred in the determination of the amount owing for the expropriation.  The landowner will not be “made whole” if he or she is left out of pocket for legal, appraisal and other costs expended in disputing the amount of compensation offered by an expropriating authority.  Section 32 of the Expropriations Act requires the Local Planning Appeal Tribunal (the statutory tribunal that arbitrates expropriation compensation, formerly the Ontario Municipal Board or “OMB”) to order payment of a landowner’s reasonable legal, appraisal and costs “actually incurred by the owner for the purposes of determining the compensation payable” where the compensation amount recovered by the landowner is “85 per cent, or more, of the amount offered by the statutory authority”.  If the amount recovered is less than 85 percent of what was offered in compensation by the authority, the Tribunal has discretion to award costs as it sees fit.

The 85 percent rule, which is a common one across Canadian jurisdictions, means that the landowner does not need to accept the compensation offered by the authority solely out of fear of the costs of arbitrating the compensation.  The landowner will still be entitled to recover his or her reasonable costs even if the Tribunal determines that the compensation payable is up to 15 percent less than what was offered by the expropriating authority.  Only where a landowner turns down an offer by the expropriating authority that ends up to be more than 15 percent higher than the actual compensation payable (as found by the Tribunal) does the landowner risk not recovering his or her own costs and perhaps having to pay costs to the expropriating authority.

Where land is taken by an expropriating authority, Section 25 the Expropriations Act requires that the expropriating authority serve on the registered owner of the land “an offer of an amount in full compensation for the registered owner’s interest”.  In a recent decision, the Court of Appeal for Ontario confirmed that this mandatory offer is not the only offer that may be relevant to the determination of costs under Section 32 of the Act.  It is open to the expropriating authority to make subsequent offers to settle the issue of compensation, and a landowner will have to consider those offers reasonably on an ongoing basis.   The landowner cannot sit back and reject an updated offer that ends up being more than 15 percent higher than the actual compensation awarded on the assumption that his or her entitlement to costs is safe because the initial offer was too low.  At least not without putting that entitlement to costs at risk.

Writing for the Court of Appeal, Justice Hourigan explained that, “the objective of full and fair compensation cannot be divorced from the objective of the efficient resolution of claims.”  He rejected the landowner’s position in the case on appeal that only the Section 25 offer counted.  In Justice Hourigan’s view, the landowner’s proposed interpretation:

… would permit the prospect of an unreasonable claimant delaying proceedings, running up legal costs, and wasting the [former] OMB’s resources, all the while safe in the knowledge that unreasonable refusals of subsequent offers cannot adversely affect its entitlement to legal costs.

Put another way, “the statutory protection provided by the Act is not a blank cheque that permits a claimant to act unreasonably.”

And it must be remembered that unreasonable conduct by a landowner does not only put the landowner’s entitlement to costs at risk, but also exposes the landowner to possible liability to the expropriating authority for its costs.  In the case before the Court of Appeal, the landowner was appealing a decision by the OMB (upheld on appeal by the Divisional Court) that awarded the expropriating authority its partial indemnity costs incurred after the date of its offer to the landowner that ended up being far more than 15 percent higher than the expropriation compensation awarded.

Landowners facing expropriation can take comfort in knowing that the costs recovery rules are designed to afford them a fair chance to dispute the compensation amount offered by the expropriating authority.  However, the trade-off is that landowners must conduct themselves reasonably throughout the full course of the dispute.

Read the Court of Appeal's decision at:  2020 ONCA 490.

Not all Drainage Act appeals are decided on a without costs basis

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

Ontario's Drainage Act provides mechanisms to municipalities and landowners to implement drainage solutions on a collective basis.  On petition by landowners, a municipality may be compelled to construct a municipal drain; a municipality may develop a municipal drain on its own initiative; an existing municipal drain may be reconstructed, improved, or maintained.  Costs associated with the municipal drain, including engineering costs, are generally shared by the owners of the lands that outlet to the drain, with each owner responsible for an amount proportional to his or her respective share of the total drainage area.

Disputes related to municipal drains are often the subject of appeals by affected landowners to the Agriculture, Food and Rural Affairs Appeal Tribunal.  Landowners may challenge the necessity for the drainage work being proposed by a municipality and its drainage engineer, the scope or extent of the drainage work, the cost of the drainage work, or the portion of the cost of the drainage work being charged to the landowner.  In the normal course, the parties to a drainage appeal before the Tribunal bear their own costs of litigation, such as legal fees and disbursements; cost awards against a party are exceptional.  However, no party should assume that an adverse cost award might not be made in the right circumstances.

The Tribunal's Rules of Procedure include the following commentary on appeal costs:

Costs are a sum of money ordered to be paid from one party to another party in order to cover only this party's expenses incurred for preparation and attending the proceeding. This may include such things as preparation and hearing time for counsel, consultant and witness fees, and travel expenses. It does not include business or personal financial losses. If the party's conduct caused such losses, however, this conduct may be included in considering a cost order.

A cost order may be made if a party requests it, if one party has in the Tribunal's opinion acted inappropriately, as in Rule 28.04. Such orders and the amount awarded are to discourage conduct that wastes a great deal of the Tribunal's and parties' time as well as other resources. Note that for matters under the Drainage Act, costs are awarded only as provided in that Act.

An order for costs is very rare. Recovery of costs is not standard as in court proceedings. It is only where the Tribunal finds that a party wrongly brought the appeal or participated unacceptably in preparation or hearing events, that an award of cost will be made. Only a party may make a request for costs. Participants, witnesses or others without official party standing can request or receive costs only in the most unusual circumstances. [emphasis added]

According to the Rules, a party to a drainage appeal may ask for an award of costs where another party has "acted clearly unreasonably, frivolously, vexatiously or in bad faith considering all of the circumstances."  Conduct that might warrant an award of costs can include failing to attend the hearing, changing a position without notice, failing to prepare adequately for hearing events, failing to present evidence, acting disrespectfully or maligning the character of another party, or knowingly presenting false or misleading evidence.

In a drainage appeal decision released in January of this year, the Tribunal ordered an appellant landowner to pay the respondent municipality nearly $6,000 in costs.  The landowner had brought an appeal challenging the quality of construction of drainage works, which is a proper issue for appeal under the Drainage Act.  However, the Tribunal found that the landowner provided no reliable evidence of any quality of construction issue and, in fact, that the landowner's true complaint was about the design of the drainage works.  The design of the works was not something that could be appealed to the Tribunal by that point in time, and the Tribunal dismissed the appeal.

The respondent municipality had communicated to the landowner early in the appeal process that the appeal did not actually raise quality of construction issues, and warned the landowner that the municipality might seek costs if the appeal continued.  This communication apparently resulted in a settlement between the landowner and the municipality, but the landowner almost immediately rescinded the settlement.  In its costs decision, the Tribunal concluded that the landowner understood the deficiencies in its appeal, but continued nevertheless, "using the appeal process and potential associated costs as a negotiating tactic to get the Township to fund some or all of its private drainage works of approximately $25,000."

The Tribunal ordered the appellant landowner to pay the municipality its legal costs and engineering costs related to the appeal incurred after the failed settlement, and authorized the municipality to enter the cost award immediately on the tax roll of any land owned by the appellant assessed under the particular municipal drain at issue.  The Tribunal found that the landowner had failed to produce any evidence in support of its quality of construction appeal and, more importantly, that the landowner had unreasonably reneged on its settlement with the municipality.  But for this conduct, the municipality would not have incurred the costs awarded by the Tribunal.

Read the decision at: Ellis Drain Branch 'A' 2017.