Date: 20090318
Docket: T-909-08
Citation: 2009 FC 281
Ottawa, Ontario, March 18,
2009
PRESENT: The Honourable Madam Justice Hansen
BETWEEN:
C.B.
CONSTANTINI LTD.
Appellant
and
RANDALL PIERCE and HER MAJESTY
THE QUEEN IN RIGHT OF
CANADA, as represented by the ATTORNEY
GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT AND JUDGMENT
[1] C. B. Constantini Ltd. (Appellant), a licensed grain dealer
under Part III of the Canada Grain Act, R.S. 1985, c. G-10 (Act), appeals from
a May 8, 2008 Order of the Canadian Grain Commission (Commission) in which the
Commission ordered the Appellant to pay Randall Pierce (the producer)
$17,500.00.
[2] On
August 23, 2007, the Appellant and the producer entered into a written
agreement entitled “Confirmation of Contract #12-11574 (the first contract)
pursuant to which the producer agreed to supply the Appellant with a minimum of
4,100 bushels of Certified Organic Wheat to be shipped to the Appellant between
September and October 2007. The agreed upon price was $9.50 per bushel, less
dockage FOB, on “Net Cash” terms. The contract also provided that the
Appellant was authorized to deduct from any amounts payable to the producer any
amounts owing by the producer to the Appellant resulting from the producer’s
breach or non-performance of any of his obligations under the contract.
[3] According
to the Appellant, on September 6, 2007, the Appellant and the producer entered
into a second contract pursuant to which it was agreed that the producer would
supply the Appellant with a minimum of 10,000 bushels of Certified Organic
Wheat to be shipped between October and December 2007 at a price of $11.25 per
bushel, less dockage FOB, on “Net Cash” terms. The terms of the alleged second
contract are found in a document entitled “Confirmation of Contract
#12-11617”. This document contains the same provision as in the first contract
permitting the deduction of amounts owing by the producer for a breach or the
non-performance of an obligation.
[4] On
September 10, 2007, the producer delivered 1,257 bushels of grain (first
delivery) against the first contract. On September 18, 2007, the Appellant
provided the producer with a document entitled “Settlement” in which the first
delivery is acknowledged and shows an amount payable to the producer of $11,
947.97.
[5] On
September 20 and October 2, 2007, the producer delivered a further 1,282 and
1,273 bushels of grain respectively (the second and third deliveries) against
the first contract.
[6] On
October 4, 2007, the Appellant provided the producer with a document entitled
“Settlement” in which the second delivery and an amount due to the producer of
$12,186.03 are acknowledged. As well, on October 4, 2007, the Appellant issued
a cheque to the producer for $6,634.00 representing payment for the first two
deliveries less a deduction of $17,500.
[7] On
October 5, 2007, the Appellant issued a “Debit Note” to the producer for “the
washout against Contract #12-11617” in the amount of $17,500. The Debit Note
also states “Seller reneged on contract. Unwilling to execute. Contract bought
in at a C$1.75/bu penalty to seller”.
[8] Although
the precise date is not known, at some point between October 11 and October 22,
2007, the producer lodged a complaint with the Commission regarding the Appellant’s
conduct and the deduction of the $17,500 from the amount due to him. In his
complaint, the producer acknowledges receipt of the alleged second contract on
September 22, 2007, but claims he threw it away without signing it because he
had not been paid in full for grain that had already been delivered.
[9] On
October 16, 2007, the Appellant paid the producer and his father the full
amount due for the third delivery. On October 30, 2007, the Appellant issued a
grain receipt for the third delivery.
[10] The
Commission investigated the producer’s complaint and on May 8, 2008 issued the
decision and Order at issue in this proceeding. In its decision, the
Commission concluded that the Appellant was in violation of subsection 81(1) of
the Act for having failed to provide a cash purchase ticket or a grain receipt
in connection with the purchase of grain from the producer. The Commission
also found that the Appellant had failed to make payment for grain delivered
resulting in a loss or damage to the producer of $17,500. The Commission
ordered the Appellant to pay the producer, the amount of the loss.
[11] The
Appellant frames the issues on this judicial review as follows:
a) Did the
Commission err in law and fact in finding that:
i.
the Appellant failed to issue a proper grain receipt as required under
section 8 (1) of the Act;
ii.
the Appellant failed to make payment for grain delivered; and,
iii.
the Respondent sustained loss or damage in the amount of $17,500.00 as a
result of a contravention of or a failure to comply with any provision of the
Act or any regulation within the meaning of section 97 of the Act; and,
b) Did the Commission exceed its jurisdiction or act without
jurisdiction in ordering that the Appellant pay the Respondent $17,500.00.
[12] The
Appellant submits that the Commission’s finding that it had not provided grain
receipts for the grain received in the first and second deliveries is not
supported by the evidence. The Appellant maintains that although the receipts
it issued and supplied to the producer for the first and second deliveries were
not on Form 1 of the Regulations, they provided all of the required
information. The Appellant points out that the receipts a) stated the grade
name, grade and dockage of the grain as required under section 81(1) of the
Act; b) contained the material particulars listed on Form 1 of the Regulations;
and, c) were issued within 15 days of the delivery.
[13] The
Appellant also submits that the Commission erred in finding that it had failed
to pay for the first and second deliveries. The Appellant characterizes this
finding as, in effect, a determination as to whether the Appellant and the
producer had entered into the second contract and a ruling on the Appellant’s
right to a set-off arising from the second contract. The Appellant submits
that the Commission had no authority to consider the validity of the second
contract. Further, relying on the decisions in Saskatchewan Wheat Pool v.
Feduk (2003), 232 Sask. R. 161 (Sask. C.A.) (leave to appeal to S.C.C.
dismissed) and Pioneer Grain Co. v. Goy, 2005 FC 530, the Appellant
takes the position that the Act and the Regulations do not preclude a
contractual set-off to be made between a licensed grain dealer and a
purchaser. The Appellant argues that having regard to the loss it had
sustained by reason of the producer’s breach of the second contract, the
Appellant was entitled to make a set-off as against the first and second
deliveries. Accordingly, the producer was properly paid the amount due to him.
[14] The
Appellant also argues that the Commission exceeded its jurisdiction in ordering
the Appellant to pay damages to the producer. Although section 97 of the Act
provides that the Commission may make an order requiring a licensee to pay
compensation to any person for loss or damage sustained by reason of a
contravention or failure to comply with any provisions of the Act or
Regulations, in the present case, there had been no breach or failure to comply
with any of the legislative or regulatory provisions.
[15] Alternatively,
the Appellant argues that even if the Commission was correct in finding that
the Appellant had violated the Act by failing to provide grain receipts, the
producer did not suffer any damages as a result of the violation since the
producer was paid in full pursuant to the terms of the first and second
contract.
[16] The
Respondent, the Attorney General of Canada, submits that the questions arising
from the issues on appeal are ones of mixed fact and law. As such, as stated
in Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190 at paragraph 53,
the Commission’s determinations on these questions should be reviewed against a
reasonableness standard. The Respondent points out that although the Supreme
Court of Canada decision in Dunsmuir dealt with judicial review, recent
jurisprudence makes it clear that the principles articulated in that decision
are equally applicable to statutory appeals from administrative tribunals:
see, for example, Whitney v. Shuniah, [2008] O.J. No. 2823.
[17] Although
the Appellant did not address the standard of review in its written
submissions, in reply to the Respondent’s submissions, the Appellant attempted
to reformulate the issues as questions of law attracting a correctness
standard. I reject these submissions. In my view, the issues raise questions
of mixed fact and law reviewable on a reasonableness standard.
[18] At
this point, it should be noted that the producer did not make written or oral
submissions on this appeal.
[19] Before
considering the issues raised by the Appellant, a brief overview of the
relevant aspects of the legislation is useful. The Act establishes a statutory
scheme that governs the handling of grain delivered by grain producers to
licensed grain dealers. As a condition of being licensed, a grain dealer is
required to post security with the Commission in an amount fixed by the
Commission based on the dealer’s “potential obligations for the payment of
money” to grain producers. This security, available to a grain producer in the
event that a grain dealer fails to make a payment for a grain delivery, is
contingent upon the grain producer holding either a grain receipt or a cash
purchase ticket.
[20] As
to the Commission’s role, section 13 of the Act states that it “… shall, in the
interests of the grain producers, establish and maintain standards of quality
for Canadian grain and regulate grain handling in Canada, to ensure a
dependable commodity for domestic and export markets.”
[21] To
carry out its role, the Act empowers the Commission to conduct investigations
and to hold hearings with respect to a number of matters including allegations
concerning the failure of a licensed grain dealer to comply with the provisions
of the Act. The Commission may also make orders for the payment of
compensation by a licensed grain dealer to any person for loss or damage as a
result of a contravention or a failure to comply with any provision of the Act.
[22] The
first issue raised by the Appellant is whether the Commission erred in finding
that it had failed to provide grain receipts to the producer. The statutory
obligation imposed on a grain dealer to issue a grain receipt or a cash
purchase ticket is found in subsection 81(1) of the Act. It reads:
|
81. (1) With respect to
the purchase of western grain from a producer of that grain, every licensed
grain dealer shall, at the prescribed
time and in the prescribed manner, issue a grain receipt or cash purchase
ticket stating the grade name, grade and dockage of the grain, and
immediately provide it to the producer.
|
81. (1) Tout négociant en grains
titulaire de licence établit, pour l’achat de grain de l’Ouest auprès du
producteur de celui-ci, selon les modalités de temps et autres modalités
réglementaires, un accusé de réception ou un bon de paiement faisant état du
grade du grain, de son appellation de grade et des impuretés qu’il contient
et le délivre sans délai au producteur.
|
[23] In
addition to requiring the inclusion of the grade name, grade and dockage of the
grain in a grain receipt and that it be provided immediately to the producer
upon being issued, subsection 81(1) also requires the licensed grain dealer to
issue the grain receipt “at the prescribed time and in the prescribed manner.”
Subsection 45(2) of the Canada Grain Regulations, C.R.C., c.889 sets out
the time and the manner for the issuance of a grain receipt. It provides:
|
45. (2) A grain receipt or a cash
purchase ticket that is required by subsection 81(1) of the Act to be issued
by a licensed grain dealer shall be issued on receipt of western grain
delivered by a producer or on being entitled to western grain delivered to an
elevator by a producer, and shall be in Form 1 or Form 6 of Schedule 4, as
appropriate.
|
45. (2) L'accusé de réception ou le bon
de paiement à établir par le négociant en grains titulaire d'une licence aux
termes du paragraphe 81(1) de la Loi sur réception de grain de l'Ouest livré
par le producteur ou sur l'établissement d'un droit sur du grain de l'Ouest
livré à une installation par le producteur doit être conforme à la formule 1
ou à la formule 6 de l'annexe 4, selon le cas.
|
[24] The
Appellant concedes that the “Settlement” documents are not in the form
contemplated by the Regulations. However, the Appellant argues that a grain
receipt does not have to be in Form 1 of Schedule 4 provided that the
information required by subsection 81(1) of the Act is included in the
receipt. The Appellant points out that the Form 1 provided in Schedule 4 of
the Regulations states that it is an “example” only.
[25] While
the Form found in the Regulations indicates that it is an “example”, it is
clear that it is an example in the sense of being a “sample layout” as stated
in the Form. There is nothing in the Form to indicate that any of the content
is optional or not required.
[26] While
I am prepared to accept that it is not essential for the purpose of compliance
with the legislation that a grain receipt must conform to the Form 1 layout,
having regard to the mandatory language of the relevant provisions and the
significance of a grain receipt within the statutory scheme, a grain receipt
must contain all of the information required by Form 1. In the present case,
it is evident from a comparison of the “Settlement” documents and the form of
grain receipt found in the regulations that the Settlement documents do not
contain the requisite information. Accordingly, the Commission did not err in
finding that the Appellant had not provided the requisite grain receipts to the
producer.
[27] As
an aside, as noted earlier, the Appellant also stated that it had provided the
receipts to the producer within fifteen days of the grain deliveries. At the
hearing, counsel for the Appellant acknowledged that neither the Act nor the
Regulations give the grain dealer fifteen days within which to issue a grain
receipt.
[28] The
Appellant’s argument on the second issue, namely, that the Commission erred in
finding that it had failed to pay for delivered grain is premised on its
characterization of the decision as being a determination by the Commission
regarding the validity of the second contract and the Appellant’s entitlement
to a set-off. This characterization is incorrect. The Commission did not make
a finding with respect to the validity of the second contract.
[29] It
is evident from the Commission’s reasons that it was fully aware that it did
not have the authority to determine the validity of a contract nor did it have
the authority to determine whether there had been a breach of contract by one
of the parties. It was also cognizant of the jurisprudence in which the Courts
have held that a deduction or a set-off in relation to a payment for grain is
permissible. The Commission found, however, that there was no evidence of the
existence of either a verbal or written second contract.
[30] There
is no dispute between the parties that the value of the grain in the first two
deliveries was $24,134.00. Given that the Appellant only paid the producer
$6,634.00 for these deliveries and there was no evidence of an entitlement to a
set-off, the Commission did not err in finding that the Appellant had failed to
pay for grain.
[31] Finally,
on the question as to whether the loss of $17,500.00 was sustained as a result
of a violation of subsection 81(1), the Appellant had a statutory obligation to
issue grain receipts for the first two deliveries. Had the grain receipts been
issued, the producer could have made a claim against the statutory security. Without
the grain receipts, the producer’s only recourse would have been to commence an
action in contract against the Appellant. In these circumstances, the finding
that the loss was sustained as a result of a violation of the Act was
reasonable. Further, in making the Order pursuant to subsection 97(1) the
Commission was acting within its statutory authority and enforcement mandate.
[32] For
the above reasons, the appeal will be dismissed. As the Respondent did not
request costs, no costs will be ordered.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that the appeal is dismissed
without costs.
“Dolores
M. Hansen”
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