Tribunal upholds rejection of milk from farm's bulk tank

The Ontario Agriculture, Food and Rural Affairs Tribunal has dismissed an appeal by an Ontario dairy farm from the rejection of milk from its operation by the Dairy Farmers of Ontario ("DFO").  The farm has operated for 30 years and, in the fall of 2010, was carrying out three milkings a day.  A transport company picked up the milk from a farm bulk tank on every second day, representing six milkings.

On November 28, 2010, the transporter (a certified Bulk Tank Milk Grader) arrived to pick up milk.  He rejected the milk "because of an off odour "malty" smell".  He took two samples and declined to pick up the milk, leaving a "Red Tag" at the farm.

The farm appealed the rejection of the milk on the basis that the DFO had not followed the proper procedure.  However, the Tribunal ruled that procedural errors made by DFO and its agent, the transporter (not properly filling out the Red Tag and not proving that DFO had adopted a policy of "no second opinions" with respect to the rejection of milk), did not negate the determination that the milk should be rejected. 

Read the decision at: La Gantoise Inc. vs. Dairy Farmers of Ontario (DFO).

Quebec farmer wins appeal against fines for exceeding poultry quota

Ferme Avicole Rodier Bombardier Inc. and Rock Bombardier have successfully challenged quota penalties imposed by the "Éleveurs de volailles du Québec" (the poultry marketing board in Quebec) in the Quebec Court of Appeal.  Bombardier was charged penalties for having exceeded chicken quota production levels by producing chickens for export from Quebec without a purchase contract in place.  In other words, with no contract in place, all of the production was counted against the quota and resulted in over-production in the eyes of the marketing board.

Bombardier contested the allegations on the basis that there was an export contract in place with a company called Volaille Giannone Inc.  Before the marketing tribunal in Quebec, Bombardier sought to have Giannone added to the case (interpleaded) to exercise a "recourse in warranty" against Giannone.  The Tribunal rejected this request and rejected a request by Bombardier to have the penalties dismissed on the basis that they were imposed outside of the applicable limitation period.  Bombardier argued that the penalty imposed falls under the authority of the Penal Code of Procedure in Quebec (rather than the Civil Code of Procedure) so that the limitation period is one year.

The Quebec Court of Appeal has found that the marketing tribunal (la Regie) was not expressly authorized by its constituting statute (the Act of the Legislature that creates the tribunal and delegates to the tribunal its powers) to impose a penalty set by the marketing board.  It did not have authority to be seized of the board's claim for a penalty.  Neither could the tribunal be seized of the producers' claim that they had a valid contract with Giannone.  On this basis, the Court of Appeal allowed the application for judicial review and overturned the decision of the Quebec Superior Court that upheld the penalties imposed by the tribunal.

However, the Court of Appeal declined to award costs to any party of the appeal/judicial review.  The Court rejected the primary argument of the producers that the fines were a penal matter that had to be addressed according to Quebec's Penal Code of Procedure (and, therefore, the board would be out of time to impose the penalties).  In the Court's view, the cost of making this argument did not facilitate the Court's study of the case. 

The decision in French is available at: Bombardier c. Éleveurs de volailles du Québec.

Appeal Tribunal dismisses challenge to poultry export rules in Ontario

Henry Bos is a chicken producer from the Niagara peninsula who wanted to sell more of his production to chicken processors in the province of Quebec. Since November 2009, as a result of a moratorium created by regulation, Mr. Bos has been capped at selling about 20% of his production to a Quebec processor and the balance of his production to Ontario processors.

Amendments to a 2005 regulation governing contractual arrangements between Ontario chicken producers and out of province processors, and a 2005 policy governing chicken production and marketing quotas implemented the 2009 moratorium.  Mr. Bos challenged the policy and regulation amendments.  The essence of his challenge was that the effect of those amendments removed his freedom to sell his chicken to whomever he chooses.  He explained, in his evidence and his arguments, that the "core character" of the impugned policy amendment and regulation amendment is to control the inter-provincial movement of chicken, and that control was beyond the jurisdiction of the marketing agency, the Chicken Farmers of Ontario (CFO).  He testified the impugned policy amendment and regulation amendment prevent him the freedom to market more than 9,025 quota units inter-provincially.  The 9,025 quota units reflected the level of Mr. Bos' contracts with a Quebec processor at the time when CFO introduced the moratorium in November 2009.

The Agriculture, Food and Rural Affairs Appeal Tribunal found that the policy and regulation amendments were within the powers of the CFO as granted by the province of Ontario.  The moratorium, the Tribunal ruled, fell within the regulation of chicken marketing in Ontario.  The moratorium was part of the control of marketing transactions within Ontario.  The fact that it temporarily and incidentally capped exports out of province did not affect the finding that the regulation and policy amendments were ones the CFO was authorized to make.  The Tribunal also noted that the moratorium is being phased out.

Read the decision at: Henry Bos vs. Chicken Farmers of Ontario (CFO).

Appeal Tribunal refuses to reinstate tobacco quota

Gubbels Farms Ltd. has grown tobacco under the marketing-system-of-the-day in Ontario since 1962. In 2008, Gubbels Farms Ltd. was licensed to produce approximately 418,000 lbs of basic production quota ("BPQ"). Gubbels Farms Ltd. did not participate in the Tobacco Transition Program ("TTP") and intended to continue producing tobacco for market. In 2009, the Ontario Flue-Cured Tobacco Growers' Marketing Board ("Board") removed the existing quota-based system for the control of production and marketing of tobacco and moved to a licensed-based system. The effect of this change was that the 418,000 lbs of BPQ associated with Gubbels Farms Ltd. ceased to exist. Also, before a licence to produce tobacco could be issued under the new system to Gubbels Farms Ltd., they had to be an eligible applicant and meet criteria set out in the General Regulations 2009 - 2010. Although Gubbels Farms Ltd. did not agree with the implementation of the licensed-based system, they complied with the new requirements and were issued licenses to produce tobacco in 2009 and 2010.

Gubbels Farms Ltd. appealed to the Board on April 1, 2010, asking for an exemption from the licensing requirements under the General Regulations 2009 - 2010 and for a refund of license fees paid to the Board for 2009 and 2010. The Board denied the request on April 22, 2010.  Gubbels Farms Ltd. appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal for relief from the April 22, 2010, decision of the Board with the following request:

Gubbels Farms requests that their permanent BPQ be reinstated and that, as a result, they be licensed to grow tobacco under the previous system. Furthermore, Gubbels Farms requests that the Board refund to Gubbels Farms all monies that it paid to the Board for the redundant licences (#65) for the 2009 and 2010 growing seasons.

The Tribunal found that the legislative and regulatory framework relative to the Board's absolute authority over quota, which included the BPQ, was in effect when the Board made its decision to drop the quota-based system and move to the license-based system. In short, the Board had the authority to remove the BPQ.  The Tribunal also found that the relief sought by the Appellant to have their BPQ reinstated was impossible to grant under this appeal. Pursuant to the Ministry of Agriculture, Food and Rural Affairs Act, the Tribunal could direct the Board to take any action that it is authorized to take under the Farm Products Marketing Act, and for this purpose may substitute its opinion for that of the Board.

This appeal, however, requested the reinstatement of the BPQ previously associated with Gubbels Farms Ltd. The Board's authority to issue tobacco quota was removed by the Farm Products Marketing Commission under the Farm Products Marketing Act Ontario Regulation 208/09 Tobacco - Powers of Local Board effective June 1, 2009. Furthermore, since the previous quota-based system no longer exists, there is no present or future opportunity for the Appellant to be licensed to grow and market tobacco under that previous system. Therefore, the licenses issued to the Appellant for the 2009 and 2010 growing seasons were not redundant. The fees associated with said licenses complete the licensing requirements of the Board and were authorized by Ontario Regulation 208/09.

Read the decision at: Gubbels Farms Ltd v. Ontario Flue-Cured Tobacco Growers' Marketing Board.

Ontario Chicken Producer denied stay of out-of-province processing moratorium

Mr. Henry Bos filed a motion under section 25 of the Ministry of Agriculture, Food and Rural Affairs Act (the MAFRAA) for a stay of the Chicken Farmers of Ontario (CFO) Regulation 2274-2009 (the Regulation) and Policy 175-2009 (the Policy).  Mr. Bos proposed the stay operate until the Agriculture, Food and Rural Affairs Tribunal disposes of his appeal of the Regulation and Policy, and that the stay operate to exempt all kilograms allocated to him by CFO.

The Regulation imposed a moratorium on approval for any new processing contracts between Ontario chicken producers like Mr. Bos and out of province chicken processors. The Policy suspended chicken production quota allocations to Ontario chicken producers who entered into new processing contracts with out of province chicken processors. As part of the moratorium, CFO grandfathered any existing processing contracts between Ontario chicken producers and out of province processors.

The Tribunal commented in its decision on the nature of a "stay":

The parties appear to agree that the controlling authority in Ontario in a fact situation with some parallels is the Divisional Court decision in Denby v. Ontario 2006 CanLII 63736. At paragraph 40, the Court stated:

A "stay in the matter" may refer to a maintenance of a status quo in terms of the conduct or entitlement of a party. It does not, to repeat ourselves for emphasis, result in the automatic "suspension" of legislation validly enacted or to be enacted in the future. To suggest otherwise would be patently illogical.

It is clear from that authority, that a stay is intended to preserve a "status quo". The Tribunal finds the corollary of that principle is that a stay is not intended to expand beyond the status quo prevailing when the appeal was commenced.

The Tribunal dismissed Bos' motion for a stay.  It found that a stay was not required to preserve the "status quo" for Bos as it existed at the time he filed his appeal of the Regulation and Policy.  Even though Bos' Ontario processor (which took 80% of his production) cancelled his contract, CFO maintained that it would be required to find a new processor to take up the slack. 

Note that this is an interim decision on the motion for a stay.  No decision has yet been made on the actual appeal of the Regulation and Policy.
Read the decision at: Henry Bos v. Chicken Farmers of Ontario - Motion Hearing.

Quebec poultry producer's appeal of quota penalties goes to Court of Appeal

Ferme Avicole Rodier Bombardier Inc. and Rock Bombardier are taking their appeal of quota penalties imposed by the "Éleveurs de volailles du Québec" (the poultry marketing board in Quebec) to the Quebec Court of Appeal.  Bombardier was charged penalties for having exceeded chicken quota production levels by producing chickens for export from Quebec without a purchase contract in place.  In other words, with no contract in place, all of the production was counted against the quota and resulted in over-production in the eyes of the marketing board.

Bombardier contested the allegations on the basis that there was an export contract in place with a company called Volaille Giannone Inc.  Before the marketing tribunal in Quebec, Bombardier sought to have Giannone added to the case (interpleaded) to exercise a "recourse in warranty" against Giannone.  The Tribunal rejected this request and rejected a request by Bombardier to have the penalties dismissed on the basis that they were imposed outside of the applicable limitation period.  Bombardier argued that the penalty imposed falls under the authority of the Penal Code of Procedure in Quebec (rather than the Civil Code of Procedure) so that the limitation period is one year.

Bombardier then asked the Quebec Superior Court to undertake a judicial review of the Tribunal decision and overturn it.  The Superior Court rejected this application.  Bombardier then went and obtained leave to appeal that decision from the Court of Appeal.  Bombardier's appeal was being heard June 9, 2010 before the Quebec Court of Appeal (coincidentally, the day before Guy Lafleur's appeal on a charge of perjury was to be heard in the same courtroom).

Read the Tribunal decision rejecting the request to add Giannone as a party at: Ferme avicole Rodier Bombardier inc. (French-language only).

Read the original Quebec Superior Court decision dismissing the application for judicial review at: Bombardier c. Régie des marchés agricoles et alimentaires du Québec (French-language only).

Manitoba introducing provincial surcharge on transfer of marketing quota

A reader of this blog has brought to my attention a budgetary measure being introduced in Manitoba which will see a 2% provincial surcharge imposed on the transfer of dairy, egg and poultry quota in the province.  I have reported on several cases involving the Dairy Farmers of Ontario quota transfer assessment (15%), but the Manitoba plan differs in that the levy is a provincial surcharge on top of any other assessment that may be imposed by the marketing board itself.  Is this a new tax?  Will other provinces follow Manitoba's lead?

The levy was announced as part of Manitoba's provincial budget earlier this year.  Read the AgCanada article on producer response to the levy at: AgCanada.

Read the response of the Canadian Federation of Independent Business (CFIB) at: Letter to Hon. Stan Struthers.

Ontario Minister of Agriculture releases decision on Ontario Pork

In February, I reported on a decision from the Agriculture, Food and Rural Affairs Tribunal reinstating Ontario Regulation 419, which required hog producers to sell their hogs through a marketing board, Ontario Pork: Ontario Pork recovers its marketing powers.  The Tribunal decision is available at: Minnema v. Ontario Farm Products Marketing Commission.

Last Thursday, the Minister of Agriculture in Ontario overturned much of the Tribunal's decision.  Ms. Mitchell treads lightly in her reasons for the decision, saying:

Before proceeding with my decision, however, I would first like to point out that my decision should not be taken to mean that I do not have confidence in the Tribunal. Indeed, I believe that the Tribunal serves an important function within Ontario’s regulated markets. However, and as the Tribunal readily pointed out in its decision, the adversarial process is not necessarily well-suited for resolving complex policy-laden questions. Often, the parties present their favored position(s) without examining or providing information to capture the larger policy issues in which their dispute(s) arise. This, in turn, leaves the decision-maker in a difficult position.

Ms. Mitchell then goes on to restore the earlier policy decision to open up the marketing of hogs in Ontario beyond Ontario Pork:

I support the Commission’s open market approach for the Ontario Hog Industry. The Commission’s decision provides for a clearer path forward. It will help to create stability in Ontario’s Hog Industry by resolving an outstanding issue that has been ongoing for more than 10 years now.

I also think that it is important to note that my policy choice of adopting an open market system for Ontario’s Hog Industry does not prohibit the Board from offering marketing services to hog producers. It is clear from the submissions I received that some producers would prefer to continue to use the Board’s marketing services if an open market system were to be implemented. For example, either party to an agreement would still be able to rely on the Board’s expertise to review and provide comments on contracts if they wanted. Further, I note that the Board’s submissions contemplate the Board continuing to offer marketing services in the near term. And, I would encourage the Board to continue to offer its marketing expertise to Ontario’s Hog Industry.

The Board would, however, have to operate somewhat differently. For example, the Board would have to administratively separate its marketing side from its regulatory side to eliminate any potential conflict of interest and/or bias issues of being both the regulator and the regulated. Such a division would also have to include separating any fees the Board may receive for its regulatory functions from its marketing functions in order to ensure that the Board is not receiving an unfair competitive advantage over others who may want to offer marketing services. If the Board is to continue to market hogs, I expect that it will consult with the Commission on how best to separate its marketing function from its regulatory function.

Read the full decision at: Minister's decision.

BC Court rejects challenge of marketing board ruling that farmers cannot rent out milk quota

Lilian and Sandy Stewart (the “Stewarts”), are dairy farmers and owners of milk quota. They had a contract milking agreement with a third party, Steven Verdonk, to “milk” their lower mainland quota rather than milk it themselves, in contravention of the rules of the quota system in British Columbia.  The British Columbia Farm Industry Review Board (the “BCFIRB”) and the B.C. Milk Marketing Board (the “Milk Board”), became aware that many quota holders, like the Stewarts, were renting out their quotas contrary to the rules of the quota system, and therefore began a process of regularizing the system, including dealing with the non-compliant quota holders and those who rented from them.  On November 7, 2008, the Milk Board made a decision to retract the Stewarts’ milk quota due to their non-compliance with the rules and to allocate the quota to Mr. Verdonk. The Stewarts appealed the Milk Board’s decision to the BCFIRB.  In a decision released on February 26, 2009, the BCFIRB dismissed the Stewarts’ appeal.  The Stewarts then made an application for judicial review of the Board's decision.

In its hearing of the judicial review application, the B.C. Supreme Court found that:

• the treatment of the Stewarts' issues by the Board was not unfair;
• the procedural aspects of the hearing by the Board did not demonstrate unfairness; and,
• the decision itself of the Board was not patently unreasonable (or unreasonable at all).

On this basis, the judicial review application was dismissed. 

Read the decision at: Stewart v. British Columbia Farm Industry Review Board.

Turkey farmer's appeal denied by the Agriculture, Food and Rural Affairs Tribunal

Ontario's Agriculture, Food and Rural Affairs Tribunal has dismissed an appeal by John Petropoulos of Smithville from a decision of the Turkey Farmers of Ontario (TFO) which denied his request for revision or revocation of an "over marketing penalty".

John Petropoulos, Angela Petropoulos and A & V Petropoulos of Smithville, Ontario are turkey producers and hold quota issued by the Turkey Farmers of Ontario (TFO) under two legal entities, 708022 Ontario Limited and A & V Petropoulos.  During the quota year which ended April 30, 2009, the Appellants discovered that 708022 Ontario Limited had not obtained the required lease and approval from TFO to produce turkeys on the property owned by A & V Petropoulos.

As a result of 708022 Ontario Limited not having the lease in place, A & V Petropoulos, producers themselves, committed an over marketing of their quota by 57,034 kgs. The Board did not allow A & V Petropoulos to cover the over marketed kilograms with the unused kilograms from 708022 Ontario Limited. The Board's decision included forgiveness of the 57,034 kilogram reduction that would have been deducted from the marketing quota in the 2009/2010 quota period, and a fine of 22 cents per kg for the over production assessed against A & V Petropoulos. The total fine levied was $13,174.85.

Since the error did not actually result in an over-production of turkeys into the marketing system, Petropoulos asked that the fine be waived and in its place a late filing fee be imposed.  The Tribunal refused this request, finding that TFO's treatment of the situation was fair and reasonable, especially in light of the fact that no leases were in place for 2005, 2006 and 2007 either.

Read the decision at: John Petropoulos v. Turkey Farmers of Ontario.

Court allowing negligent misrepresentation suit to proceed against Tobacco Marketing Board

An Ontario Superior Court Judge has dismissed most of the claims brought by tobacco growers against their marketing board, but is allowing a claim of negligent misrepresentation to proceed.  Justice Thomas Heeney found that the following claims related to the dismantlement of the tobacco industry in Ontario raised no reasonable cause of action (i.e. there is no legal basis for the claims):

• Refusal to share information: It was alleged that the Board was privy to information that it did not share with the producers that was critical to the survival of the industry.
• Negotiating an exit strategy: It was alleged that the Board shifted its emphasis from its duties as a regulator and marketer of tobacco to one that it is not authorized by statute to do: that is, to negotiate with the federal and provincial governments for a compensation package for tobacco producers that would result in tobacco production ceasing permanently in Ontario. This involved seeking compensation for the lost value of tobacco quota, lost income, lost property values and transitional assistance.
  
• Failure to properly negotiate annual crop sizes and to seek other markets: It was alleged that the Board called for an end to tobacco production in Ontario in 2006, and initially refused to negotiate the size of the 2006 crop. This had a negative effect on the actual crop size that was ultimately arrived at. In so doing, the Board acted negligently.
  
• Passing a regulation that prevented renting or share-growing quota: It was alleged that, in 2006, the Board wrongfully and without statutory authority passed a regulation which prevented the plaintiff from renting or share-growing its production quota if it sold the tobacco kilns located on its farm.
  

The one claim that did survive the motion to dismiss brought by the Marketing Board was related to a kiln conversion program.  In 2001, the manufactures told the producers, through the Board, that the burners in their tobacco kilns had to be converted from direct to indirect heat, to eliminate cancer-causing nitrosamines in the cured leaf.  This would involve an expenditure on the part of the producers of approximately $7,000 per kiln.  Producers were told by the Board that 25% of the kilns had to be converted in 2001 and the remainder in 2002. Producers were given three year projections in relation to crop size and, based upon this, the plaintiff made its business decision to make the required investment.  The Board neglected to get a signed commitment from the manufacturers in relation to crop size, with the result that they ended up being significantly less than the plaintiff had been led to believe, and insufficient to justify or pay for the cost of conversion.

Justice Heeney found that the Statement of Claim issued against the Marketing Board did disclose a cause of action for negligent misrepresentation and ruled that this part of the claim could proceed toward trial.  One important difference between the surviving claim and those that were dismissed was that the kiln conversion decision by the Board was an operational decision as opposed to a policy decision.  Government bodies cannot generally be held liable for bad policy, but they can be held liable for negligently putting the policy into action.


Read the decision at: Marlor Farms Inc. v. The Ontario Flue-Cured Tobacco Growers' Marketing Board.

Agriculture, Food and Rural Affairs Appeal Tribunal decision on Ontario Pork now available

Earlier today, I posted a link to the Better Farming article on a recent appeal tribunal decision regarding Ontario Pork and marketing boards in Ontario. The decision is now available on-line at: http://www.omafra.gov.on.ca/english/tribunal/ofpmc-160210-dec.htm

Ontario Pork recovers its marketing powers

Better Farming is reporting that the Ontario Agriculture, Food and Rural Affairs Tribunal has reinstated Ontario Regulation 419, which required producers to sell hogs through a marketing board and required the board to review all buy and sell contracts between producers and processors. The Ontario Farm Products Marketing Commission had stripped these powers from Ontario Pork in 2008.

Read the Better Farming story at:
http://www.betterfarming.com/online-news/ontario-pork-gets-marketing-powers-back-2754

As soon as I can locate the Tribunal decision, I'll post it.