Henry Bos vs. Chicken Farmers of Ontario (CFO)

In the matter of Section 16 of the Ministry of Agriculture, Food and Rural Affairs Act, R.S.O. 1990 Chapter M. 16, as amended.

And in the matter of: An appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Henry Bos, Stevensville, Ontario, from a decision of the Chicken Farmers of Ontario declining his requests for the revocation of Chicken Farmers of Ontario Quota Policy 175-2009; sections 1, 2, 4 and 6 of Supplemental Quota Policy 171-2005; and sections 2 and 3 of Regulation 2073-2005.

And in the matter of: A Pre-hearing Conference held November 1, 2010 pursuant to Rule 24 of the Tribunal's Rules of Procedure for the purpose of considering a preliminary challenge motion of Chicken Farmers of Ontario.

Before:
John O'Kane, Vice Chair; Kirk Walstedt, Chair; Tim Mousseau, Member

Appearances:
Henry Bos, appellant
Geoff Spurr, counsel for the respondent

Pre-Hearing Conference Decision of the Tribunal

Background

Mr. Bos is an Ontario chicken producer with quota issued by the Chicken Farmers of Ontario (CFO) (intra-provincial quota) and the Chicken Farmers of Canada (CFC) (extra-provincial quota). Mr. Bos sells his chicken production to chicken processors in Ontario and Quebec.

A decision of the CFO in the Fall of 2009 to amend certain of its policies and regulations resulted in a moratorium on any new chicken processing contracts between Ontario producers and out-of-province processors. Existing extra-provincial contractual arrangements, like that of Mr. Bos, were "grandfathered" as part of the moratorium and therefore not affected.

On November 1st, 2010 the Tribunal heard a motion by the CFO to dismiss or refuse to continue with that part of the appeal of Henry Bos that seeks a revocation of sections 1, 2, 4 and 6 of CFO's Supplemental Quota Policy 171-2005 and sections 2 and 3 of Regulation 2073-2005.

The motion was the fifth pre-hearing conference in Mr. Bos' appeals to the Tribunal under the Ministry of Agriculture, Food and Rural Affairs Act, (MAFRAA).

The appeals to this Tribunal started on March 8th, 2010 when Mr. Bos appealed to the Tribunal the CFO's Regulation 2274-2009, enacted on October 22nd, 2009. The appeal to the Tribunal arose after Mr. Bos had first taken his complaint about Regulation 2274-2009 directly to CFO pursuant to section 17 of the MAFRAA. After conducting a hearing in February 2010, CFO declined to address Mr. Bos' complaint. Mr. Bos' March 8th appeal to the Tribunal then ensued.

The first pre-hearing conference of the Tribunal in April addressed whether Mr. Bos' appeal operated to stay Regulation 2274-2009. As part of the Tribunal's Order of May 8th, 2010, Mr. Bos and CFO were directed to exchange issues statements to particularize the issues on appeal.

The second pre-hearing conference of the Tribunal in May addressed the statement of issues filed by Mr. Bos and CFO. Mr. Bos' statement of issues broadened his challenge beyond Regulation 2274-2009 to include CFO Policy 175-2009, enacted on October 22nd, 2009 and CFO's quota allocation policy, including its "assurance of supply policy" for chicken processors, both of which policies had been enacted in 2005. Mr. Bos' statement of issues raised his concern that those CFO policies enacted in 2005 did not allow for differential growth amongst Ontario's primary chicken processors and the policies restricted a producer's ability to contract freely with processors within Ontario. He argued that those two reasons caused increased volumes of chicken moving extra-provincially. Mr. Bos' argued that the 2005 policies have created a situation where extra-provincial marketing is based on open contracting while intra-provincial marketing is based on guarantees and fixed market shares (assurance of supply). This situation, he argued, called into question CFO's authority to implement the 2005 policies and conflicted with CFC's regulatory authority. Mr. Bos referred to the provincial allocation system as "broken". The impact of those 2005 policies on Mr. Bos is that he cannot contract with the Ontario chicken processor of his choice and he cannot move any more of his chickens extra-provincially.

As part of the Tribunal's Order of June 8th, 2010, Mr. Bos was directed to take his broader policy concerns about Policy 175-2009, the 2005 quota allocation policy and the assurance of supply policy to CFO pursuant to section 17 of the MAFRAA.

Pursuant to section 17 of the MAFRAA, Mr. Bos asked CFO to reconsider and revoke Policy 175-2009 and section 1, 2, 4 and 6 of Supplemental Quota Policy 171-2005 and sections 2 and 3 of Regulation 2073-2005. On August 26th, 2010 CFO denied Mr. Bos' reconsideration request and Mr. Bos appealed to the Tribunal.

During the fourth pre-hearing conference on September 9th, 2010, CFO indicated that in response to Mr. Bos' appeal to the Tribunal of the broader policy issues, it wished to make a preliminary motion challenging Mr. Bos' standing to appeal the broader policy issues as framed by Mr. Bos.

CFO's preliminary challenge motion was scheduled for hearing on November 1st, 2010.

Preliminary Challenge Motion

The CFO's preliminary challenge motion relates only to those parts of Mr. Bos' appeal that seek to revoke sections 1, 2, 4 and 6 of Supplemental Quota Policy 171-2005 and sections 2 and 3 of Regulation 2073-2005. The Tribunal will refer to these collectively as the "2005 policies".

The CFO's preliminary motion does not challenge Mr. Bos' original appeal as it relates to Regulation 2274-2009, nor does the motion challenge Mr. Bos' subsequent appeal as it relates to Policy 175-2009. The Tribunal will refer to these collectively as the "2009 policies".

CFO based its preliminary challenge motion on the following three reasons:

1. The appellant has known of the 2005 policies for more than a year and the Tribunal should therefore exercise its discretion to refuse to hear the appeal under subsection 16(4) of the MAFRAA.
2. The appellant is not aggrieved by the 2005 policies within the meaning of subsection 16(2) of the MAFRAA.
3. The appeal of the 2005 policies is vexatious within the meaning of subsection 16(4)(b) of the MAFRAA.

 

Motion Evidence and Findings Fact

The evidence CFO filed in support of its motion was the affidavit of Jan Rousell sworn October 1st, 2010. Mr. Bos confirmed that he took no exception to Ms. Rousell's evidence as it related to the issues that were material to the Tribunal's consideration of this motion. Mr. Bos filed no affidavit evidence on the motion but did file written submissions, supplemented by his oral submissions during the hearing. Therefore, the Tribunal concluded there was no challenge or contradiction to Ms. Rousell's evidence.

Ms. Rousell's affidavit evidence sets out some of the historical context for the 2005 policies. Part of that historical context was that since 1994, processors in Ontario have had some form of assurance of supply. Assurance of supply means that generally, processors do not have to compete for a supply of chicken since the system assures each processor a predictable supply of chicken under the rules set out in the policy.

Since 1994, there have been at least four different assurance of supply approaches to processor allocation:

• 1996-98 - graduated volume increases
• 1998-2002 - pro rata increases based on market share
• 2002-2005 - the Tribunal System
• 2006-present - the 2005 policies
  

That context is important since part of the relief sought by Mr. Bos' appeal is to move away from the assurance of supply system to an open contracting system between producers and processors.

Another part of that historical context was that CFO developed the 2005 policies through a process established by the Ontario Farm Products Marketing Commission (the Commission). The Commission appointed a facilitator who assisted CFO, the Association of Ontario Chicken Processors (AOCP) and the Ontario Independent Poultry Processors (OIPP) in tri-partite negotiations to reach an agreement on the allocation process in 2005. CFO implemented that agreement through the 2005 policies.

CFO distributes Ontario's proportion of the national chicken allocation among approximately 1,100 chicken producers like Mr. Bos in Ontario.

The last important part of that historical context was that Henry Bos was a member of the Board of Directors of CFO during the period that CFO adopted and implemented the 2005 policies.

Based on that historical context, the Tribunal made the following findings of fact:

• First, there is no doubt that Mr. Bos had knowledge of the 2005 policies for more than one year before he started his appeal to the Tribunal.

• Second, moving to an open contracting system would be a fundamental change after sixteen years of some form of assurance of supply.

• Third, in the four years since CFO implemented the 2005 policies, chicken producers and processors in Ontario have ordered their affairs based on that allocation approach.

• Fourth, there are approximately 1,100 chicken producers operating under the 2005 policies.

Should the Tribunal Refuse to Hear the Appeal of the 2005 Policies?

Subsection 16(4) of the MAFRAA grants discretion to the Tribunal to refuse to hear an appeal or, where an appeal hearing has commenced, refuse to continue the hearing or make a decision. That discretion arises in the following four circumstances:

1. If the appeal relates to an order, direction, policy, decision or regulation the appellant has had knowledge of for more than one year before filing the appeal.

2. If the subject matter of the appeal is trivial, in the Tribunal's opinion.

3. If the appeal is frivolous or vexatious or not made in good faith, in the Tribunal's opinion.

4. If the appellant does not have sufficient interest in the subject matter of the appeal, in the Tribunal's opinion.

CFO argued that Mr. Bos had knowledge of the 2005 policies since 2005 and therefore the Tribunal should not permit him to continue with his appeal of those policies.

Mr. Bos argued that the "one-year" consideration in section 16(4) of the MAFRAA does not create a limitation period such that policies or regulations become immutable after the passage of one year.

While policies and regulations may not be immutable after one year, it is clear that the legislation considered that an appellant knowing of policies and regulations for more than one year as the threshold to engage the Tribunal's discretion to refuse to hear an appeal or refuse to continue an appeal.

Therefore, subsection 16(4) of the MAFRAA grants the Tribunal discretion to refuse to hear an appeal in these very circumstances where Mr. Bos has had knowledge of the 2005 policies for about four years before he started his appeal.

However, that subsection does not contain criteria to guide the Tribunal in exercising that discretion. The Tribunal concludes that the legislature omitted specific criteria in order to leave the Tribunal with as much flexibility as possible to determine, in the unique circumstances of each case, whether it should hear an appeal.

Since the legislature selected a one-year threshold in subsection 16(4), the Tribunal considers that the timing of an appeal is an important factor. Generally, the further away from the one-year threshold in subsection 16(4) that an appeal is started, the more likely the Tribunal will exercise the discretion to refuse to hear or continue an appeal.

Apart from timing however, the Tribunal also considers the contextual genesis of those 2005 policies important. CFO derived the 2005 policies from an agreement negotiated between the regulator, producers and processors. Therefore, the process used to derive the 2005 policies involved a means to balance the interests of approximately 1,100 chicken producers and the chicken processing industry. The use of that type of process does not necessarily guarantee that all stakeholders will be satisfied, but if not, those stakeholders would still have a right of appeal once the CFO had implemented those 2005 policies during 2006. The Tribunal concludes that the legislature's use of a one-year appeal threshold in subsection 16(4) reflects an intention that appeals of broad industry policies should be made close in time to when policy changes are implemented.

The Tribunal had no evidence on this motion about any appeals in the year after CFO implemented the 2005 policies, or since. Therefore, the Tribunal concludes that the industry generally adopted the 2005 policies as the basis for business decisions and business planning since that time.

In the regulatory environment, there is a premium on stability and certainty. The Tribunal recognizes that on the facts of this case, as time passed, an appeal of this nature about the 2005 policies would introduce an element of instability and uncertainty to the industry. The Tribunal concludes that enhancing stability and certainty in regulated industries by limiting appeals as time passed was in part behind the legislature's intention in the one-year threshold.

The Tribunal also considers the nature of the relief sought in the appeal as an important factor in this analysis. The relief Mr. Bos seeks in his appeal of the 2005 policies does not just involve his business operation. Moving from assurance of supply to open contracting will affect the interests of approximately 1,100 chicken producers in Ontario and the chicken processing industry. The Tribunal concludes that as part of the flexibility the legislature provided in subsection 16(4) was the ability to weigh the nature of the relief sought against the time beyond the one-year threshold. For sixteen years, the chicken industry has utilized some form of assurance of supply. Mr. Bos' appeal seeks to change from that assurance of supply system to an open contracting system. The Tribunal finds that requested change would be a fundamental change within the Ontario chicken industry.

The Tribunal concludes that the following factors combine to militate against permitting Mr. Bos to continue with this appeal of the 2005 policies:

• the fact that CFO developed the 2005 policies in a negotiated process directed by the Commission and involving the regulator representing producers (CFO) and the processors (OIPP and AOCP)

• producers and processors alike have ordered their business affairs based on the 2005 policies and have operated under that system for the past four years

• the fact that at least four years have passed since CFO enacted the 2005 policies

• the fact that Mr. Bos did not appeal the 2005 policies before the introduction of the 2009 policies suggests that his real complaint lies with the 2009 policies and not the 2005 policies

• the prospect of a fundamental change in the processor allocation system after sixteen years of some form of assurance of supply

Is the Appealant Aggrieved by the 2005 Policies?

Subsection 16(2) provides a right of appeal to the Tribunal by a person "aggrieved" by policies or regulations or orders, decisions and directions of a local board like CFO.
CFO challenged Mr. Bos' standing as a person "aggrieved" by the 2005 policies. CFO argued the 2005 policies do not affect Mr. Bos any more than any other of the approximately 1,100 chicken producers in Ontario. CFO argued that Mr. Bos' appeal, as originally framed, challenged the extra-provincial chicken movement moratorium introduced by CFO in 2009. CFO argued that Mr. Bos has since broadened his appeal into a more general inquiry into the provincial processor allocation system. CFO argued that the Tribunal can address the issue of the moratorium without inquiring into or altering the processor allocation system.

Mr. Bos argued that he has been aggrieved by the 2005 policies. His main complaint is that CFO policies prevent him from selling his chickens extra-provincially and he has no freedom of choice about who he sells his chickens to within the province of Ontario.

The Tribunal confirmed with Mr. Bos that he continues to sell a portion of his chicken production to a Quebec processor under the "grandfather" provisions of the moratorium. Mr. Bos also confirmed to the Tribunal that he sells the balance of his production to chicken processors in Ontario as determined under CFO's assurance of supply policy.

As noted under the consideration of subsection 16(4), the CFO enacted the policies in 2005 and implemented the policies in 2006. Mr. Bos has operated his business under those rules since that time, as have all other approximately 1,100 chicken producers and the processors. The Tribunal has difficulty understanding how Mr. Bos is substantively aggrieved by the 2005 policies. On his own admissions, under those 2005 policies, he has a market for his production quota. Mr. Bos has not provided evidence of any loss or harm because of those 2005 policies. He has argued that the loss or harm relates to his right to sell his chicken production where he chooses and to whom he chooses.

Is the Appeal of 2005 Policies Vexatious?

CFO did not spend any time arguing this point and therefore the Tribunal need not spend any time analyzing this issue.

For the purposes of this motion, the Tribunal considers that CFO withdrew this ground for its motion.

Analysis and conclusion

CFO's primary position on this motion relied on the subsection 16(4) issue related to the one-year threshold.

As detailed in the discussion under that heading above, the Tribunal concludes that it should exercise its discretion under subsection 16(4) and refuse to hear Mr. Bos' appeal of the 2005 policies. That means the Tribunal refuses to hear Mr. Bos' appeals of sections 1, 2, 4 and 6 of CFO's Supplemental Quota Policy 171-2005 and sections 2 and 3 of Regulation 2073-2005.

Given the Tribunal's determination on CFO's primary position, it is unnecessary for the Tribunal to rule on CFO's secondary position on the subsection 16(2) issue related to a person "aggrieved". While, unnecessary, we would have determined that in these circumstances, Mr. Bos is not sufficiently "aggrieved" by the 2005 policies.

During the course of submissions, Mr. Bos argued that CFO had lead him on something of a circular path by insisting that he take his complaint about the 2005 policies first to CFO, when it knew all along it would challenge his standing to bring the appeal of the 2005 policies. Mr. Bos argued that strategy by CFO was all part of a delaying tactic to buy time for a negotiation process that is apparently underway. CFO submitted that the MAFRAA required Mr. Bos to take his complaint first to CFO under section 17 as a pre-condition of the Tribunal's jurisdiction under subsection 16(5). The Tribunal determined that in the absence of a waiver by CFO as contemplated in subsection 16(5)(b), it was a pre-condition of subsection 16(5)(a) that Mr. Bos seek a determination of his complaint from CFO. Therefore, CFO's position on this point is legally correct.

Order of Tribunal

Therefore, the Tribunal Orders:

1. Pursuant to subsection 16(4) of the MAFRAA, the Tribunal exercises its discretion and refuses to hear Henry Bos' appeal relating to sections 1, 2, 4 and 6 of CFO's Supplemental Quota Policy 171-2005 and sections 2 and 3 of Regulation 2073-2005.

2. Henry Bos' appeal of CFO Regulation 2274-2009 and CFO Policy 175-2009 will continue before the Tribunal.

3. The Tribunal will conduct a further telephone pre-hearing conference with the parties on Monday, December 13th, 2010, starting at 10:00 a.m. to consider further procedural issues and scheduling.

Dated at Brampton, Ontario this 5th day of November, 2010