T-1810-95
BETWEEN:
K.F. EVANS LTD.,
Applicant,
- and -
THE MINISTER OF FOREIGN AFFAIRS,
Respondent.
REASONS FOR ORDER
REED J.
The applicant challenges a decision made by the respondent Minister under section 7 of the Export and Import Permits Act, R.S.C. 1985, c. E-19. The applicant was refused permits to export a quantity of unprocessed logs from Canada because the applicant had not obtained approval, from the British Columbia Timber Export Advisory Committee ("TEAC"), to export the logs. TEAC is an advisory committee established by the British Columbia government to advise the provincial Minister of Forests on whether or not to exempt timber from the provisions of section 135 of the British Columbia Forest Act, R.S.B.C. 1979, c. 140.1
The logs were purchased by the applicant from a private landowner and do not fall under section 135 of the Forest Act. The logs, however, are subject to section 7 of the federal Export and Import Permits Act. They cannot be exported unless a permit is obtained from the Minister of Foreign Affairs and International Trade ("the Minister").2 The applicant's position is that the TEAC process is flawed, and that, in any event, by deferring to decisions made by that body the Minister has abdicated his decision-making responsibility or, at least, fettered his discretion.
Federal Legislative Framework
Section 3 of the Export and Import Permits Act provides that the Governor in Council may establish an Export Control List and include thereon any article that the Governor in Council deems it necessary to control for certain listed purposes.3 One of the purposes for which the Governor in Council may place a product on the list, and that used in this case, is "to ensure that there is an adequate supply and distribution of the article in Canada for defence or other needs".4
Logs were placed under federal export control in 1940, pursuant to provisions of the War Measures Act, because of supply concerns existing at that time. Control of export was continued under the Export and Import Permits Act when this legislation was first enacted in 1947.5 The relevant provision is now subsection 3(e). What is now subsection 3(b) of the Export and Import Permits Act, allowing products to be controlled to promote further processing in Canada, was added in 1974.6 Subsection 3(c.1), allowing products to be controlled to support the enforcement of the Softwood Lumber Products Export Charge Act, was added in 1985.7 While the 1947 legislation allows for the control of logs to ensure an adequate supply and distribution of such in Canada or in order to implement an intergovernmental arrangement or commitment, the relevant affidavit filed on behalf of the respondent states that the logs were put on the Export Control List for the former purpose.8
Process Re: Permit Requests
At the time the applicant made applications to the Minister for export permits, one dated February 21, 1995, and another dated April 4, 1995, (applications numbered 228989 and 228991 respectively) the applicant knew that the practice followed by the officials of the Department of Foreign Affairs and International Trade ("the Department"), with respect to the exportation of logs harvested in British Columbia, was to defer to what is referred to as "the TEAC process".
The applicant was highly critical of the TEAC process, for a number of reasons. The applicant applied to the Minister for export permits without first making an application to the British Columbia Ministry of Forests (the first step of the TEAC process). In response to the applicant's February 21, 1995 application, a letter, dated April 5, 1995, was sent to the applicant by Mr. Hobson, the Director General, Export and Import Controls Bureau of the Department, telling the applicant that the Minister had decided that the application was incomplete because the applicant had not gone through the TEAC process. The processing of the many requests for permits that are received by the Minister is normally done by departmental officials, as the Minister's delegates, without direct reference to the Minister. In this case, however, since Mr. Evans was challenging the basis of the decision-making process being used, his application and letter of February 21, 1995, was brought to the attention of the Minister before the April 5, 1995 reply was sent. This was done under cover of a memorandum, dated March 21, 1995, from department officials to the Minister.
This memorandum explained the use of the TEAC process for deciding whether a federal export permit should be issued. The memorandum explained that it was only in British Columbia that a supply test was used, for a federal export permit to be issued, because British Columbia was the only province to restrict the export of logs for the purpose of ensuring an adequate supply to provincial processors. The memorandum stated that it was federal policy to work closely with the provinces so that exports from federal lands were treated equally with exports from provincial lands. The memorandum acknowledged that the practice being followed might be challenged because it did not embody a federal policy distinct from that applied by the provincial government and because federal officials were not represented on the responsible bodies. The memorandum suggested, however, that no full review of the procedure presently in place be undertaken because of likely political reaction by the British Columbia government and because sensitive consultations were underway with the United States concerning softwood lumber. The memorandum discussed the possibility of granting the applicant the permit he sought but recommended against it because that course of action would open the floodgates to other similar applications and it would lead to criticism from the British Columbia government as well as from environmental groups.
While reference is made in the memorandum to the lands as federal lands, the lands from which the applicant's logs came are private lands, the underlying crown grant for which was originally federal. They are not federal lands. Also, with respect to the floodgates argument it must be noted that only 6% of British Columbia land falls outside provincial control and of this only 1.5% of the timber harvested in British Columbia is from private lands originating from federal crown grants. With respect to possible concerns by environmental groups, the logs the applicant sought to export were not from old-growth forests. In any event, the Minister endorsed the recommended response that had been prepared for him, by officials, and the April 5 letter was sent to the applicant, informing him that the application was incomplete, but if TEAC approved his application, department officials would reconsider that application.
On April 10, 1995, the applicant responded to the April 5 letter reiterating the position that the process being used was legally flawed. The applicant's February 21, 1995 letter had noted that logs harvested anywhere else in Canada were automatically granted federal export permits. The April 10, 1995 letter reiterated that even in British Columbia not all applicants for export permits for British Columbia harvested logs were required to go through the TEAC process - permits for the export of logs harvested from Indian lands were not subject to that process nor were logs harvested from any lands that had been exempted from the TEAC process by a British Columbia Order in Council. Mr. Evans also pointed out that he had been given no opportunity to respond to whatever representations had been put before the Minister, by department officials, before the April 5, 1995 reply was sent to him. The applicant had requested that opportunity. The applicant stated that it would make an application to TEAC, as the Minister had instructed, but this was being done under protest. (In fact, such applications had already been made.) The applicant also stated that once the initial advertising stage of that process was over, it would again ask the Minister to make the decision required. The applicant's letter reads, in part:
| ... Your ministry, not TEAC, must decide under the Export and Import Permit Act whether to grant us our permit using the same criteria as applied to all Canadians. You will then decide whether you wish to grant our permit. ... |
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As noted, what is referred to as the TEAC process is the procedure used by the British Columbia government for section 135, Forest Act, purposes. An application is made to the British Columbia Ministry of Forestry for permission to export the particular quantity and type of logs in question. Notice of this application is sent by the provincial Ministry to processors of logs who are listed with the Ministry as having requested that they be given such notice. If any processor wishes to purchase the logs that are the subject of the notice, an offer to purchase is tendered at the price the would-be purchaser is willing to pay. If no offers are tendered, the logs are deemed to be surplus to the needs of timber processing facilities within the province. Notice of that fact is given to federal officials and an export permit is issued. If offers are received, they are referred to TEAC for determination as to whether they are fair. If TEAC determines that the offers are not fair, there is also an assumption that the logs are surplus to provincial needs. Federal permission to export is given. If TEAC determines that the offers are fair, there is determined to be a lack of supply in British Columbia. Federal permission to export is not given. TEAC assesses fairness by reference to the domestic market, not the international market. In the applicant's case, offers were received and TEAC determined them to be fair. Had the applicant been able to sell its logs on the international market it would have received substantially more for them.
As noted, the applicant had decided, under protest, to make applications to the British Columbia Ministry of Forests. These applications were made on March 21, 1995. Notice of the logs the applicant wished to export was issued to British Columbia processors on April 4, 1995. The deadline for submitting offers to purchase closed on April 21, 1995. On April 21, 1995, the applicant wrote again to the Minister reiterating the objection that there had been no opportunity to make submissions directly to him, "nor had the applicant been made aware of what representations were being put to the Minister in opposition to the applicant's position." (The Deputy Minister of Foreign Affairs, however, had met with the applicant on April 19, 1995, to discuss the matter.) The applicant's April 21 letter again detailed the applicant's concern about the TEAC process and restated the view that the requirement that the applicant receive TEAC approval as a precondition for a federal export permit was ultra vires. The letter urged the Minister not to abdicate his duty to make the relevant decision. This letter contained a vigorous attack on the TEAC process. The letter alleges that the process is used by "purchasers" to obtain concessions, from a person wishing to export logs, as a quid pro quo for withdrawing what the applicant calls "blocking offers"; a practice the applicant calls "blockmail". A second letter was sent to the Minister on April 27, 1995, stating that the applicant had made counter offers to those bidding on the logs he wished to export and none had been accepted. He put this forward as evidence that the TEAC process was really a price-fixing mechanism.
On May 2, 1995, the Minister responded to the letters of April 21 and April 27 indicating that the TEAC process (and similar processes to it) had been used for many years as a means of facilitating decisions at the federal level and that he was not prepared to consider the applicant's export permit applications without the benefit of a recommendation from TEAC. This response by the Minister was preceded by a memorandum to him, from department officials, restating that while there were good reasons to review the department's policy and to tighten the relevant procedures, such a review was not being recommended at that time. With respect to the applicant's allegations of "blockmail" and price fixing, the memorandum recommended that the Minister respond to those concerns in only a very general way by saying "While I do not agree in a number of instances, I have noted the points raised in your letters ...". The May 2, 1995 letter signed by the Minister referred to the applicant's concerns with the TEAC process using the words recommended, and stated, as well, "I am not prepared to consider further your export permit applications without the benefit of a recommendation from TEAC".
TEAC held a meeting on May 8, 1995, to consider whether the offers to purchase the applicant's logs were fair offers. It was decided they were. The applicant had sought leave, on May 5, to attend this meeting as an observer. TEAC responded to that request, stating that only TEAC members and government representatives were allowed to attend its meetings. Because of Mr. Evans' challenge to the Minister's reliance on the TEAC process, a representative from the Department attended the May 8, 1995 meeting as an observer.
Following the May 8, 1995, TEAC meeting, a third memorandum was sent to the Minister concerning the Evans' applications. It recommended that they be refused because TEAC had found that fair offers to purchase the logs had been made by log processors. Thus, the logs were not surplus to provincial domestic needs. The officials reported to the Minister that TEAC had told them there was a log shortage on the British Columbia coast at the time; a copy of a letter that had been provided to TEAC, by CIPA Lumber Co. Ltd., was appended to the memorandum. The letter stated that there was "an extreme log shortage on the coast of B.C.". This letter was never seen by the applicant, either when it was given to TEAC, or when it was given to the Minister. CIPA was one of the processors that had made offers to purchase the applicant's logs. The memorandum to the Minister recommended that the applicant's requests for export permits be denied because there were "no exceptional circumstances" upon which to base a decision to override TEAC. The Minister approved the recommendation. A letter, dated May 15, 1995, was sent to the applicant, by the Director General, Export and Import Controls Bureau. It stated that TEAC had found that fair offers had been made for the applicant's logs, and the applications for federal export permits were therefore refused.
In the same week that the applicant was refused export permission for his logs, logs of basically the same type and from a similar location to the applicant's, were found by TEAC to be surplus to provincial needs. Federal export permits were issued for them, automatically, by officials of the Department. While offers to purchase those logs had been filed with the British Columbia Ministry of Forests, the offers had been withdrawn before TEAC considered them. A letter from the applicant to the Minister, dated May 23, 1995, reads in part:
| d) TEAC recommended against our export permits while recommending that export permits be granted to B & I Forest Products Ltd. for logs of similar type and location to our logs notwithstanding that there were unfilled "fair" offers for our logs. In other words, TEAC found at one and the same time that in the case of our logs, there was not a "surplus" of logs, but in the case of B & I's logs there was a "surplus" of logs and recommended their export; |
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Further correspondence passed between the parties. I do not find it necessary to refer to any of this except to note that the fees the applicant had paid to file the permit applications were returned under cover of a letter dated May 31, 1995.
While some of the documentation sent to the applicant by the Minister, or his officials, or sent by officials to the Minister refer to the Minister receiving "advice" from TEAC and TEAC's "recommendations", these documents were written after the applicant had notified officials that he was challenging the process that was being used and that he considered the process to be either an abdication by the Minister of his decision-making responsibility or a fettering of his discretion. Less guarded wording was used in correspondence carrying an earlier date. The applicant filed in evidence a letter from the Department, dated August 23, 1991, which stated:
| Once the B.C. Ministry of Forests has given a favourable recommendation for the export of logs, exporters should forward by telecopier, copies of the valid provincial permit (form FS-34) and the relevant form FS-38 to (613)996-9933. Once these documents are received in the Export Import Permits Bureau, the federal export permit will be issued and sent to the applicant by courier or telecopier. We wish to assure exporters that the Export Import Permits Bureau will issue permits in the briefest time possible once the above mentioned forms have been duly completed. |
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Correspondence dated December 21, 1993, from the Department states:
| We have reviewed your request and can confirm that the Federal export permit would be issued upon the issuance of a Provincial export permit (form FS34). In this regard, we will hold in abeyance your federal export permit application pending receipt of the FS34. I have enclosed an additional copy of Notice to Exporters No. 23, dated January 1, 1986 which details the process for obtaining a federal permit. |
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A notice of July 21, 1994, from the Export Controls Division (federal) to Exporters of Forest Products from British Columbia reads:
| ... Exporters should note that logs proposed for export from the province of British Columbia require both a Federal and Provincial permit. The Federal permit (form EXT 1042) cannot be issued without this Division receiving a valid B.C. permit (FS 34) and the relevant B.C. application (FS 38). For woodchips exported from B.C., exporters should submit to this office a copy of the relevant "Order Of The Lieutenant Governor In Council" issued by the Province of British Columbia along with the federal application (EXT 1042). Once these documents are received, the federal export permit will be issued and returned to the applicant/exporter whichever the case may be. |
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The Director General of the Export and Import Controls Bureau was asked on cross-examination whether, to his knowledge, there were any occasions when a federal export permit had been issued despite a TEAC refusal. He responded that he knew of three occasions. One was when a permit had been issued by mistake. There had been a mis-communication and federal officials thought that TEAC had approved the exportation of the logs. On another occasion, federal export permits had been granted for logs harvested from adjacent lands, those lands having been exempted from the TEAC process by Order in Council of the British Columbia government. Thus, despite a negative TEAC decision with respect to logs harvested from neighbouring lands that had not been so exempted, it was decided to allow the export of those logs. This was described as an unusual situation.9 On the third occasion, it was discovered, after TEAC had found that fair offers had been made and the departmental officials (in the Minister's name) had refused approval of a federal export permit, that the offers on which TEAC had based its decision had expired before the TEAC decision was made.
The Director General, Export and Import Controls Bureau, filed an affidavit for the purposes of this litigation, stating that the federal government had for many years acknowledged provincial constitutional responsibility for resource management and the regulation of primary production therefrom. In accordance with that policy, he states that where provinces have supply concerns, federal polices have been coordinated to complement and support the provincial measures. Insofar as the exportation of unprocessed British Columbia logs is concerned, the Minister has chosen and chooses to rely upon the expertise of TEAC to determine whether there is an adequate supply for domestic purposes. This practice is motivated by a desire to ensure that logs from federal and provincial lands are treated equally and because it would be costly and wasteful to duplicate the TEAC process to duplicate the adequacy of supply determination. I note again that the use of the term "federal lands" is confusing in this context because the lands are, in fact, private lands.
Arguments and Analysis
The applicant challenges the decision refusing it permits to export logs on four grounds: (1) there was a fettering of discretion in making the decision; (2) extraneous and improper considerations were taken into account in making the decision; (3) the decision-making process was discriminatory; (4) the applicant was denied an adequate opportunity to be heard in relation to the applications.
a) fettering of discretion - abdication of decision-making responsibility
The respondent argues that there was no fettering or abdication of the Minister's decision-making authority, that the Minister personally made a decision on the respondent's applications, that a decision-maker in the position of the Minister can create or adopt general policies to be applied in decision-making provided he keeps an open mind and decides whether the policy should be modified in individual cases. The respondent notes that the Courts do not dictate policy to decision-makers and, in this case, a policy of using TEAC procedures and expertise was adopted. The following decisions were referred to: [1982] 2 S.C.R. 2">Maple Lodge Farms v. Government of Canada, [1982] 2 S.C.R. 2, [1974] S.C.R. 875">Boulis v. Minister of Manpower an Immigration, [1974] S.C.R. 875 at 877; Thorne's Hardware Ltd. v. R. (1983), 143 D.L.R. (3d) 577; Padfield and Pulhofer, [1968] A.C. 997; R. v. Port of London Authority Ex Parte Kynoch Ltd., [1919] 1 K.B. 176 at 184; [1978] 2 S.C.R. 141">Capital Cities Communication Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141; Re: North Coast Air Services Ltd., [1972] F.C. 391 (F.C.A.); British Oxygen Co. v. Board of Trade, [1971] A.C. 610 (H.L.).
Counsel for the applicant does not disagree with the applicable principles of law cited by the respondent but refers to the jurisprudence demonstrating that while a decision-maker may adopt guidelines, these cannot be adopted so as to fetter the decision-maker's discretion or constitute an abdication of the decision-maker's responsibility. The following decisions were referred to: Saunders Farms Ltd. v. British Columbia (Liquor Control and Licensing Branch, General Manager) (1995), 122 D.L.R. (4th) 260 (B.C.C.A.) at pp. 270 - 274; Koopman v. Ostergard, Gevatkoff and Imperial Oil Resources Limited, Unreported, B.C.S.C. Action No. A952584, Vancouver Registry, August 21, 1995 (B.C.S.C.) at pp. 19 - 21; H. Lavender and Son Ltd. v. Minister of Housing and Local Government et al., [1970] 1 W.L.R. 1231 (Eng. Q.B.) at pp. 1240 - 1241; [1982] 2 S.C.R. 2">Maple Lodge Farms Ltd. v. Government of Canada and the Minister of Economic Development, [1982] 2 S.C.R. 2 at pp. 6 - 8; Starlight Drive-In (1978) Ltd. v. Hewitt (1984), 57 B.C.L.R. 250 (S.C.) at pp. 254 - 255.
While the applicant may at one time have been of the view that the Minister, personally, had to make the decisions with respect to the applicant's applications, I did not understand this to be argued at the hearing. The flaws in the process that are alleged apply whether it be the Minister himself, or an official of his department acting as his delegate, that makes the decision.
There is little dispute about the law applicable to the facts of this case. What is in dispute are the conclusions of fact to be drawn. I do not draw the same conclusions of fact as those upon which the respondent's position is based. The decision the Minister made, repeatedly, and that made by his officials, acting as his delegate, was that the TEAC process governed. Neither the Minister nor his delegates made an independent decision on the merits of the applicant's applications. Documents describing the role of the TEAC process, prior to the present challenge to that process, demonstrate that its role was treated as determinative of whether to grant or to refuse an export permit. The exceptions, which Mr. Hobson identified, reinforce the conclusion that there was in essence a turning over of the whole decision-making authority to TEAC. The lack of specificity in the responses to Mr. Evans' allegations that serious flaws existed in the system (e.g., the allegation of "blockmail") and the comments of officials thereon demonstrate a lack of awareness by federal officials as to exactly how that process operated. The acceptance that other exporters of logs, of the same type and from a similar location as the applicant's logs, could be granted permits to export, as a result of a decision that there was a surplus of logs available, while on the same day Mr. Evans was denied a permit because there was an "extreme shortage of logs" also indicates a "hands-off" approach, an abdication of decision-making responsibility, by the Minister and the Minister's delegates.
(b) extraneous considerations
I turn then to the arguments concerning the taking into account of extraneous considerations. Counsel for the applicant argues that to the extent the applicant's applications for permits were considered at all by the Minister or his delegates, those considerations were based on irrelevant and extraneous factors: the political reaction of the British Columbia government; the political reaction of the United States government; the claim that environmentalists would be upset; and, the risk that a decision in favour of the applicant would open the floodgates to other applications. The applicant states that these are all irrelevant considerations for the purpose of making a determination as to the adequacy of domestic supply and distribution for defence or other needs. In addition, the applicant argues that the factors relevant to the Minister's decision must relate to the purpose for which logs were placed on the Export Control List by the Governor General in Council.
The respondent argues that the Minister's discretion is not so limited: the statute says the Minister "may" issue a permit. It is argued that this gives very broad discretion to the Minister to take into account a variety of public policy factors. It is argued that the Minister is not limited to adequate supply and distribution purposes but may also consider broad general policy concerns. Alternatively, it is argued that he may at least take into account considerations relevant to the subsections of section 3 other than subsection 3(e). That is, it is argued that the Minister did not take into account extraneous factors because he is entitled to consider not only subsection 3(e) of the Export and Import Control Act but also subsection 3(b), 3(c.1) and 3(d). Alternatively if only subsection 3(e) is relevant, then that subsection should be broadly construed so that "other needs" encompasses the purposes of ensuring processing within one province or federal provincial commitments with that province or international trade considerations.
I am of the view that the use of the word "may" at the beginning of section 3 grants the discretionary decision-making authority. It does not, however, establish the scope of factors that should be taken into account in rendering decisions.
With respect to subsections 3(b) and 3(c.1), as noted, these were added to the Act after logs were added to the Export Control List. Insofar as subsection 3(d) is concerned, there is no federal-provincial agreement or memorandum of understanding between the federal government and British Columbia concerning the control of the export of logs from that province. What is more the respondent's own representative stated that it was for supply purposes that that logs had been added to the Export Control List. Counsel for the respondent would have me characterize the practice that has developed of relying on the TEAC process and provincial expectations in relation thereto as an "arrangement" or "commitment" for the purposes of subsection 3(d). I do not draw that conclusion.
I turn then to subsection 3(e). The export of logs was placed on the Export Control List "to ensure that there is an adequate supply and distribution ... [of logs] in Canada for defence or other needs" (emphasis added). The respondent's argument is that "other needs" allows control of export in order to accord with provincial policies of restricting export to ensure a supply within the province, or to limit export for environmental purposes, or for reasons of international trade. Reference is made to the decision in Teal Cedar Products (1977) Ltd. v. Canada, [1989] 2 F.C. 158 (T.D.).
I do not think the Teal Cedar case assists the respondent. It was an Order in Council that was challenged in that case, not the exercise of a delegated decision-making authority. More importantly, the argument being made was that unless the timber in question was being added to the list to satisfy a need related to a national emergency, or some need similar thereto, the Order in Council would not be valid. The Court held that "other needs" could refer to needs other than defence. While this is clearly so, phrases such as "for ... other needs", when used as those words are used in subsection 3(e), must be interpreted in accordance with the "ejusdem generis" rule of construction. The words "other needs" are not synonymous with "for any other purpose". As I read the words of subsection 3(e), "other needs" must at least have a national or federal character and there must be a "need". I have difficulty accepting that the existence of a provincial policy, simpliciter, falls within the wording "... defence or other needs". In any event, I do not have to decide this issue.
While I have set out the arguments that were made by both counsel with respect to extraneous considerations, those arguments were put forward by the applicant as an alternative basis for a challenge to the decision under review. Given the decision reached above, concerning the abdication of decision-making responsibility, no definitive decision need be made with respect thereto. At the same time, I must note that what are referred to as extraneous considerations, in many instances, would more properly be characterized as part of the evidence that demonstrates the fettering of discretion that occurred. This is true with respect to the references to the reactions of the British Columbia government, the United States government and that of environmental groups, as well as the reference to possible floodgates effects. The consideration of these "extraneous" factors was not directed at the merits of the applicant's applications but were factors considered in the context of deciding whether or not to continue to defer to the TEAC process. As noted, as such, they are properly characterized as evidence of the fettering of discretion that occurred.
(c) Discrimination
The applicant argues that by automatically granting export permits to those who wish to export logs from other provinces, such as Alberta, and to those who wish to export logs from Indian lands, the discretionary authority to grant permits is being exercised in a discriminatory fashion. Having found that there was a fettering, or abdication, of decision-making authority I do not have to decide this issue.
I am persuaded, in any event, that this is a concern about which departmental officials are well aware and which they would consider on any review of the present practice. In the first memorandum that was presented to the Minister, it was noted by departmental officials that if a review of the existing practice were to be undertaken, a number of issues should be addressed. The writer of the memorandum stated:
| Several questions arise: does the Federal Government still have supply concerns? If so, what supply test is applied nation-wide? Does the Federal Government have further processing interests? If so, why simply in B.C.? What are the economic policy implications of such controls? Do our present law and practices reflect our real reasons for controls? Are there environmental and trade law/trade relations perspectives that should be factored in? |
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(d) Opportunity to be Heard
With respect to the arguments that were made, I note only that an oral hearing is clearly not required. Nor is individual consideration by the Minister personally required. The Department receives hundreds of applications for permits each day. As counsel for the respondent states, knowledge by an applicant of the policies and practices that are applied by the Department to the applications and the opportunity to make written submission with respect to the particular application in question is sufficient notice of the "case" the applicant has to meet. What is troubling about the procedure applied in the applicant's case, however, is the use of the CIPA letter. The use of the letter by TEAC, and by the Minister, constituted reliance by them on evidence prejudicial to the applicant without notice having been given to the applicant that it existed. Further, the evidence was received from someone adverse in interest to the applicant (i.e., a prospective purchaser of the applicant's logs) without the applicant being given an opportunity to respond. The use of this evidence without notice and an opportunity to respond constitutes a breach of the principles of fairness.
Costs
The applicant seeks an award of costs if successful. The respondent, somewhat surprisingly, seeks costs in any event of the cause. Federal Court Rule 1618 states: "No costs shall be payable in respect of an application for judicial review unless the Court, for special reasons, so orders." There are no special reasons in this case for ordering costs.
Conclusion
For the reasons given, the decisions to which the letters of May 15, 1995, and May 31, 1995, relate will be quashed and the matter remitted back to the Minister for reconsideration in accordance with these reasons.
OTTAWA, Ontario.
October 28, 1996.
Judge
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1. Sections 135 and 136 of the Forest Act provide:
135. Unless exempted under this Part, timber that is harvested from Crown land, from land granted by the Crown after March 12, 1906 or from land granted by the Crown on or before March 12, 1906 in a tree farm licence area, and wood residue produced from the timber, shall be (a) used in the Province; or (b) manufactured in the Province into (i) lumber; (ii) sawn wood products, other than lumber, manufactured to an extent required by the minister; (iii) shingles, or fully manufactured shakes; (iv) veneer, plywood or other wood-based panel products; cont'd ...
... cont'd (v) pulp, newsprint or paper; (vi) peeled poles and piles having top diameters less than 28 cm and fence posts; (vii) Christmas trees; or (viii) sticks and timbers having diameters less that 15 cm. ties and mining timbers.
136. (1) The Lieutenant Governor in Council may exempt from section 135
(a) a species of timber or kind of wood residue and may limit the volume of a species of timber or kind of wood residue to which the exemption applies for a period or for successive periods of time; and
(b) a volume of timber, whether or not harvested, or a volume of a wood residue, on receiving an application in a form required by the minister.
(2) On receiving an application in the form required by him, the minister may exempt from section 135 a volume of timber that has been harvested, not exceeding 15 000 m3 for each application.
(3) An exemption shall not be given under this section unless the Lieutenant Governor in Council or the minister, as the case may be, is satisfied that
(a) the timber or wood residue will be surplus to requirements of timber processing facilities in the Province; (b) the timber or wood residue cannot be processed economically in the vicinity of the land from which it is cut or produced, and cannot be transported economically to a processing facility located elsewhere in the Province; or (c) the exemption would prevent the waste of or improve the utilization of timber cut from Crown land.
2. R.S.C. 1985, c. E-19, s. 7; am. S.C. 1991, c. 28, s. 3 and S.C. 1994, c. 47, s. 107:
7. (1) Subject to subsection (2), the Minister may issue to any resident of Canada applying therefor a permit to export goods included in an Export Control List or goods to a country included in an Area Control List, in such quantity and of such quality, by such persons, to such places or persons and subject to such other terms and conditions as are described in the permit or in the regulations.
(1.1) Notwithstanding subsection (1), the Minister may, by order, issue generally to all residents of Canada a general permit to export to any country specified in the permit any goods included on the Export Control List that are specified in the permit, subject to such terms and conditions as are described in the permit.
3. R.S.C. 1985, c. E-19, s. 3; am. R.S.C. 1985. c. 12 (3rd Supp.), s. 26.
4. 3. The Governor in Council may establish a list of goods, to be called an Export Control List, including therein any article the export of which the Governor in Council deems it necessary to control for any of the following purposes:
...
(b) to ensure that any action taken to promote the further processing in Canada of a natural resource that is produced in Canada is not rendered ineffective by reasons of the unrestricted exportation of the natural resource;
(c) to limit or keep under surveillance the export of any raw or processed material that is produced in Canada in circumstances of surplus supply and depressed prices and that is not a produce of agriculture;
(c.1) to restrict, for the purpose of supporting the enforcement of the Softwood Lumber Products Export Charge Act, the export of softwood lumber products set out in Part II of the schedule to that Act;
(d) the implement an intergovernmental arrangement or commitment; or
(e) to ensure that there is an adequate supply and distribution of the article in Canada for defence or other needs.
5. R.S.C. 1927, c. 206, s. 3.
6. S.C. 1974, c. 9, s. 1.
7. R.S.C. 1985 (3rd Supp.), c. 12, s. 26.
8. Affidavit of D.E. Hobson, dated October 5, 1995, paragraphs 8 and 13. See also Respondent's Supplementary Argument (misnamed - should be titled Respondent's Supplementary Application Record), at Tab 6, p. 5.
9. Respondent's Supplementary Argument (misnamed, supra n. 8), Tab 6, p. 4.
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