Canada: Agricultural Law NetLetter - Friday, November 21, 2015 - Issue 336


  • The Ontario Superior Court of Justice (Divisional Court) has dismissed the application for judicial review of an Ontario hog producer in a case which involved a decision by AgriCorp (which administers the AgriStability program in Ontario) concerning the amount of AgriStability benefits the producer was entitled to receive. The producer appealed AgriCorp's decision to the Ontario AgriStability Review Committee, which issued a non-binding recommendation to reverse AgriCorp's decision. AgriCorp did not follow the Review Committee's recommendation. The hog producer sought judicial review on the grounds of reasonable apprehension of bias because two AgriCorp staff members who argued AgriCorp's case before the Review Committee also participated in and made recommendations with respect to the question of whether AgriCorp should accept the Review Committee's recommendations. The Court dismissed the hog producer's application because the Court found that AgriCorp had kept an "open mind" and remained "capable of persuasion" during its review of the Committee's recommendation. [Editor's note: There is very little case law concerning the AgriStability Program, and the ability of producers to challenge the decisions of the provincial agencies that deliver the program.]. (Sunwold Farms Ltd. v. AgriCorp, CALN/2015-026, [2015] O.J. No. 5774, Ontario Superior Court of Justice)


Sunwold Farms Ltd. v. AgriCorp; CALN/2015-026, Full text: [2015] O.J. No. 5774; 2015 ONSC 6111, Ontario Superior Court of Justice, K.E. Swinton, A. Mullins and J.S. Fregeau JJ., November 6, 2015.

AgriStability -- Appeal to Review Committees -- Implementation of Review Committee Recommendations -- Apprehension of Bias.

Sunwold Farms Ltd. ("Sunwold") applied for judicial review of a decision made by AgriCorp with respect to compensation payable to Sunwold under the AgriStability program.

AgriStability is a program created pursuant to a 2008 federal provincial agreement called the "Growing Forward Agreement" (the "Federal/Provincial Agreement") between Canada's Provincial, Territorial and Federal Governments.

The Federal/Provincial Agreement was been implemented in Ontario by two Orders in Council.

Order-in-Council 200-2011 permitted Ontario's Minister of Agriculture, Food and Rural Affairs (the "Minister") to designate a third party to administer the AgriStability Program.

The Minister designated AgriCorp, an Ontario Crown corporation, to do so.

AgriCorp receives and reviews AgriStability applications in accordance with the AgriStability Program Guidelines (the "Guidelines") and technical information circulars ("Circulars"). The Circulars are issued by the Minister to provide more detailed information on the application of the national AgriStability Program Guidelines in Ontario.

The Guidelines provide that income and expenses relating to farming activities outside Canada are not eligible for benefits, and that all transactions must be at fair market value to be considered allowable in the calculation of margins. AgriCorp has the power to adjust transactions to reflect fair market value.

The Federal/Provincial Agreement and the Guidelines provide access to an external review for unsatisfied applicants.

Order-in-Council 200-2001 provides for external review by the Ontario AgriStability Review Committee (the "Review Committee").

The Review Committee issues non-binding recommendations to AgriCorp.

Sunwold is an Ontario swine producer. Sunwold produced and sold "segregated early weaning pigs" ("Weaner Pigs") to a related company in the United States for finishing.

Sales were originally at a fixed contract price, but in 2008, the arrangement changed to a variable price approximating market prices.

Sunwold received AgriStability benefits in 2007 and 2008.

In 2010, during the processing of the application for benefits in 2009, AgriCorp's Claims Department became concerned that Sunwold's income for the Weaner Pigs was not at fair market value.

In order to set the benefit amount, AgriCorp had to determine the "at the border" fair market value of Sunwold's pigs because they were sold to a related American company.

After obtaining further information from Sunwold, AgriCorp's Claims Department reassessed the 2007 and 2008 payments, and assessed a lower payment for 2009 than Sunwold expected. In its April 23, 2010 decision, AgriCorp established an "at the border" fair market value using United States Department of Agriculture ("USDA") data for the Weaner Pigs for 2005 to 2008. From January to October, 2009, the Claims Department used price determinations from a private Phoenix firm.

Following discussions with Sunwold, AgriCorp's Claims Department changed its position in July of 2011. It decided to use the USDA composite price until March, 2008 and USDA cash prices after April, 2008.

In October of 2011, Sunwold sought a review of AgriCorp's decision by the Review Committee. Sunwold agreed with the use of the USDA composite pricing until March, 2008, but requested the use of data from the private Phoenix firm from April, 2008 on.

The Review Committee hearing was held before a panel of 5 producers. There were both written and oral submissions to the Review Committee. AgriCorp was represented by 2 staff Cathy Jones and Barbara Parker ("Jones" and "Parker").

On December 21, 2012, the Review Committee recommended that AgriCorp's decision be overturned. The Review Committee believed that the price of Weaner Pigs moving from Canada to the United States was lower post COOL [US Country of Origin Labelling legislation] than the USDA cash price. The Review Committee concluded that there did not appear to be an "accurate, public transparent, price available". The Review Committee suggested that there be a discount to the USDA cash price by, for example, using data supplied by Sunwold in a world trade report, or by a reasonable discount off the USDA cash price.

The Review Committee's decision was considered by an ad hoc committee of AgriCorp made up of representatives from management, senior staff including legal services divisions. Jones and Parker participated in the ad hoc committee. Jones prepared a brief for the committee.

The ad hoc committee reviewed the Review Committee recommendation and recommended AgriCorp not accept the Review Committee's recommendation.

Jones and Parker then prepared a briefing note for AgriCorp's Chief Executive Officer setting out Sunwold's position and the ad hoc committee's recommendation not to change AgriCorp's position. AgriCorp also contacted the Ministry with respect to its policy choice of using USDA cash pricing to determine fair market value and the Ministry of Agriculture supported this position.

AgriCorp's Chief Executive Officer decided to maintain AgriCorp's original position not to accept the Review Committee's recommendation.

A decision dated February 22, 2013 expressed the view that the average USDA cash price should be used "since it is public, transparent, verifiable, and in AgriCorp's view it is the best indicator of fair market value at the border". AgriCorp also indicated that it had not discounted the posted fair market value of any other livestock category due to the impact of COOL.

Sunwold did not challenge the merits of the AgriCorp decision. The only issue raised is whether the decision was tainted by a reasonable apprehension of bias because of the involvement of AgriCorp's staff members, and in particular Jones, in AgriCorp's decision-making process.

Decision: Swinton, Mullens and Fregeau, JJ of the Ontario Superior Court of Justice Divisional Court, dismissed the application for judicial review with costs [at para. 30].

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