Pender Farms Ltd. v. Canada (Canadian Grain Commission), 2004 FC 641

Date: 20040429

Docket: T-856-03

Citation: 2004 FC 641

Ottawa, Ontario, this 29th day of April, 2004

PRESENT:      THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE

BETWEEN:

                                                         PENDER FARMS LTD.

                                                                                                                                            Appellant

                                                                         - and -

                                              CANADIAN GRAIN COMMISSION

                                                                                                                                        Respondent

                                            REASONS FOR ORDER AND ORDER

O'KEEFE J.

[1]                This is an application by Pender Farms Ltd., the appellant, (the "applicant" herein), a grain producer, for judicial review of the April 23, 2003 decision of the Canadian Grain Commission (the "respondent") which denied the applicant's claim against security held under the Canada Grain Act, R.S.C. 1985, c. G-10.

[2]                The applicant seeks an order directing the respondent to accept its claim against the security of API Grain Processors Limited Partnership, as well as costs of this application.

Background

[3]                The Canada Grain Act, supra (the "Act") protects grain producers that sell to grain dealers who are or become bankrupt, or otherwise refuse to pay, by establishing a monetary security system.

[4]                The respondent, who administers the scheme of the Act, is authorized to require grain dealers to post security in order to be issued a grain dealer's licence. With limited exceptions, only those who hold grain dealer licenses are authorized to deal in grain.

[5]                Under the Act and the Canada Grain Regulations, C.R.C. c. 889, grain producers who hold a grain ticket or cheque can realize on the security held by the respondent, should the grain dealer fail or refuse to pay. Time limitations are in place for the respondent to be notified of a claim.

[6]                In the fall of 2002, the applicant, via its agent, Farm Corp. Marketing International ("Farm Corp"), contracted to sell wheat to API Grain Processors Limited Partnership ("API"), a grain dealer.

[7]                The applicant delivered wheat worth $8,062.40 to API on October 18, 2002. In consideration, API gave the applicant a grain receipt dated October 18, 2002. API then mailed a cheque dated October 29, 2002 to the applicant's address in Meath Park, Saskatchewan in satisfaction of the account.

[8]                Rick Pender, the applicant's president, resides in Calgary, Alberta and did not receive API's cheque until December 4, 2002, when his Meath Park mail was forwarded to him.

[9]                On December 5, 2002, Farm Corp informed the applicant that API was bankrupt. The applicant had not yet deposited API's cheque. Farm Corp contacted API's trustee in bankruptcy, who advised the applicant not to cash API's cheque but to file a claim with the respondent against API's security.

[10]            On December 12, 2002, the applicant faxed the respondent a claim, together with the October 18, 2002 grain receipt. A copy of the October 29, 2002 cheque issued by API was faxed to the respondent on December 31, 2002 to support the applicant's claim.

[11]            The respondent held security of $750,000 with respect to API.

[12]            On April 2, 2003, the respondent denied the applicant's claim on the basis that it was filed after the thirty day limitation period specified in paragraph 49(6)(e) of the Act.

[13]            Rick Pender signed a form indicating that he disagreed with the decision, and asked Farm Corp to appeal on the applicant's behalf. Farm Corp did so by letter dated April 3, 2003. The respondent, per Catherine Jaworsky, Manager of Policy, Planning and Producer Protection ("Jaworsky"), responded on April 23, 2003. Jaworsky indicated that the respondent's Commissioners had considered the matter on April 15, 2003 and decided that they were unable to pay the money requested because the applicant was outside of the eligibility requirements under the Act.

[14]            The applicant initially challenged the respondent's decision by bringing an appeal pursuant to section 101 of the Act. After counsel agreed section 101 was not applicable to this case, the applicant filed a notice of application for judicial review on August 7, 2003, after being granted an extension of time to file the application.

[15]            This is the judicial review of the respondent's decision to deny the applicant's claim.

The Decision Under Review

[16]            The Jaworsky letter, which is the decision under review, does not explain the respondent's reasoning, only that the Commissioners reviewed the claim and found it to be ineligible because it was made later than thirty days after "the date of issue of the company cheque". Jaworsky later informed Farm Corp that the respondent relied on paragraph 49(3)(b) and subsection 49(6) of the Act in reaching its decision.

Applicant's Submissions

[17]            The applicant submits that the "failure and refusal" of API to meet its payment obligations so as to trigger subsection 49(6) did not occur in this case. The cheque from API was never presented to a bank, so the condition precedent to the operation of subsection 49(6) was never fulfilled, as no bank "subsequently refused to honour the cheque". Therefore, the applicant contends, the 30 day limitation period was not applicable and the respondent erred in applying it to deny its claim.

[18]            The applicant submits that if API's trustee in bankruptcy's advice not to cash API's cheque constitutes a "failure or refusal" to make payment, notice of this failure was presented to the respondent within 30 days so its claim should be accepted.

[19]            The applicant submits that the word "given" in subsection 49(6) should be interpreted as the date on which payment was received by a grain producer, rather than the date on which payment was issued by the grain dealer. The applicant argues that the issue date that appears on a cheque in no way proves when the cheque was mailed, when it arrived in a post office box, or when it was received by a grain producer.

[20]            In urging an interpretation of the 30 day limitation in subsection 49(3) more favourable than taken by the respondent, the applicant relies on Canada v. J. D. Irving Ltd., [1999] 2 F.C. 346 (T.D.), where Hugessen J. stated that:

. . . prescription will not toll against a claimant until such time as he or she knew or should have known that a claim existed.

[21]            Following J. D. Irving, supra, the applicant submits that it is contrary to the law of discoverability that the limitation period in the Act should begin to run and then expire against a person before that person has received any indication that a claim exists. In the applicant's view, the use of the word "given" in the Act operates as a statutory discoverability principle, and therefore should be interpreted to mean the time when the claimant receives the cheque.

[22]            The applicant further argues that if the respondent wants to use subsection 49(6) as a deeming provision, it should insist that grain payments be mailed using registered mail.

[23]            In this case, the applicant argues there was no reason for it to be concerned about not having received a cheque from API prior to December 5, 2002, as the Act and Regulations protect grain producers from a grain dealers's failure to pay for up to 90 days after the delivery of grain. If, after 90 days, the applicant had not received payment from API, the applicant would then have 30 days to file a claim with the respondent.

[24]            When API's trustee advised the applicant not to deposit the cheque due to the bankruptcy of API, the applicant submits that it acted diligently in forwarding notice of the claim to the respondent.

Respondent's Submissions

[25]            The respondent submits that the applicant is not eligible to make a security claim under the Act because its notice of claim was received outside the 30 day window provided for in subsection 49(3).

[26]            The respondent argues that the applicant's claim, received December 12, 2002, was out of time because API's cheque was dated October 29, 2002. API mailed it to the address on file for the applicant. The cheque was ultimately not honoured due to API's insolvency, therefore, subsection 49(6) of the Act deems API's failure to meets its payment obligation as the date the cheque was mailed to the applicant.

[27]            The respondent submits that the discoverability principle in J. D. Irving, supra, is not applicable in this case. The applicant received notice of its claim when API's cheque was mailed to the address provided by the applicant for payment. The respondent contends it is therefore appropriate to consider that the limitation period began to run at that time. The applicant's failure to act on the cheque for over one month is not a defence to the statutory limitation period clearly set out in the Act.

[28]            The respondent submits that the applicant's contention that the deeming rule only makes sense in the context of registered mail cannot stand. The respondent cannot control how producers are paid - they may be given a cheque at the grain elevator.

[29]            The respondent disputes the applicant's contention that in this case, since API's cheque was never deposited, subsection 49(6) does not apply. The respondent questions how the applicant can argue it has a valid claim when no attempt has been made to ascertain whether the cheque would be honoured. The respondent further submits that the intention of subsection 49(6) is to encourage grain producers who are paid by cheque to attempt to cash it in a timely way, which was not done in this case.

[30]            The respondent submits that API's bankruptcy and the applicant's decision not to deposit the cheque were the equivalent of a refusal to honour the cheque. Accordingly, in the respondent's view, subsection 49(6) of the Act deems the failure to meet the payment responsibility to be the date the issued cheque was given to the applicant. Accordingly, the applicant's claim was out of time and properly refused.

[31]            The respondent requests that this application be dismissed.

Issues

[32]            The issues are:

1.          What standard of review should be applied to the respondent's decision?

2.          Should the applicant's claim be denied because of the limitation argument?

Relevant Legislative Provisions

[33]            The Canada Grain Act, supra, sets out at section 13, the objects of the respondent in administering the Act, and pursuant to section 49, places limits on the ability of grain producers such as the applicant to realize on the security held by the respondent:

Analysis and Decision

[34]            Issue 1

What standard of review should be applied to the respondent's decision?

The applicable standard of review to be applied will be determined by the application of the jurisprudence in Dr. Q. v. College of Physicians and Surgeons of British Columbia (2003), 223 D.L.R. (4th) 599, 2003 SCC 19">2003 SCC 19. I am of the view that the correct standard of review is one of reasonableness simpliciter based on the pragmatic and functional analysis set out below.

[35]            1. Privative Clause/ Statutory Appeal

There is no privative clause in the Act. This factor is therefore neutral with respect to the standard of review. Combined with the fact that this case could arguably have been brought as an appeal, in my view this standard points to less deference to the respondent's decision.

[36]            2. Expertise of the Court Relative to the Tribunal on the Issue in Question

The respondent is expert in administering the grain industry in Canada, and in particular in issues pertaining to its licensees. Indeed, cases of this sort date back to the turn of the century. The case involves the respondent's administration of its "home statute", however, the respondent is not more expert than the Court in statutory interpretation. Indeed, the Commissioners are not required to have any legal training as a prerequisite to their appointment to the Commission. Deciding between the respondent and Court with respect to the question of relative expertise therefore resolves into deciding the nature of the question.

[37]            In my view, the question in issue is of general application and it does not require specialized expertise in the administration of the Act. The question is more legal than administrative. The case involves deciding whether a cheque is "given" to someone when it is printed; when it is mailed; when some time has elapsed after the mailing; or when it is received. In my view, the Court is the appropriate place to decide a question like this, which could have precedential value in other circumstances.

[38]            3. Purpose of the Legislation and the Provision in Particular

The respondent performs a polycentric function of balancing the needs and interests of producers, grain dealers, transportation companies, and other players. In the case of bankrupt licensees, it must balance the rights of individual farmers vis-a-vis each other in the distribution of the security it holds in its licensee. In such a situation, the respondent must also address the need to efficiently and quickly distribute the funds it holds so as to compensate affected parties in a timely manner. This factor points to greater deference.

[39]            4. Nature of the Question

Finally, the nature of the question in this case is legal in nature. This case involves the interpretation of paragraph 49(3)(b) and subsection 49(6) of the Act, which is a legal question.

[40]            In my view, balancing these factors, a standard reasonableness simpliciter should be applied to the respondent's decision in this case.

[41]            Issue 2

Should the applicant's claim be denied because of the limitation argument?

The respondent decided that the applicant's claim for payment was not eligible for payment due to the operation of paragraph 49(3)(b) and subsection 49(6) of the Act. I will deal first with the subsection 49(6) argument.

[42]            Subsection 49(6)

For ease of reference, I will repeat subsection 49(6):

[43]            Subsection 49(6) of the Act provides that when a cheque is given to the producer and the bank on which the cheque is drawn refuses to honour it, the licensee's failure to meet its payment obligations to the producer occurs on the date that the cheque was given to the producer. In this case, the cheque was dated October 29, 2002. According to the respondent, the applicant would have to have made its claim within 30 days after October 29, 2002, the date on the cheque.

[44]            I am of the view that in order to have subsection 49(6) apply, the bank or other financial institution on which the cheque issued by the licensee to the producer was drawn, must refuse to honour the cheque. In the present case, there is no evidence that the cheque was ever presented to the bank. I do not consider the trustee's direction not to cash the cheque to be a refusal to honour by the bank. As a result, I am of the view that subsection 49(6) of the Act does not apply in this case so as to bar the applicant's claim.

[45]            In the alternative, even if subsection 49(6) does apply, I am of the view that the cheque was not, based on the facts of this case, "given to the producer" until he received the cheque on December 4, 2002. I have come to this conclusion based on the fact that the Act does not provide specifically for when a cheque is deemed to be received by a producer. The Act does not state that the cheque is deemed to have been received by the producer, for example, ten days after issue or ten days after mailing. An example of such a deeming provision is contained in Rule 141(1) of the Federal Court Rules, 1998, S.O.R./98-106 which states:

[46]            The only concrete date present in this case is the date of the cheque (October 29, 2002) and the date of receipt of the cheque by the applicant which was December 4, 2002. There is no evidence in the record to show when the cheque was mailed by the respondent.

[47]            In my opinion, subsection 49(6) of the Act does not apply so as to bar the applicant's claim.

[48]            Paragraphs 49(3)(a) and (b)

Again, for ease of reference, I will repeat paragraphs 49(3)(a) and (b):

[49]            By virtue of this section, the producer must give notice in writing to the respondent of the failure or refusal of the licensee within 30 days after the refusal or failure. The Regulations provide that payment must be made within 90 days after the grain was delivered to the licensee. The grain was delivered on October 18, 1992. On or about December 5, 2002, the trustee in bankruptcy told the applicant's representative not to deposit API's cheque, which was dated October 29, 2002. I am of the view that the failure or refusal to make payment by the licensee occurred on or about December 5, 2002 when the trustee gave instructions not to deposit the cheque. The applicant then made its claim in writing to the respondent on December 12, 2002. This is within the time frame of 30 days provided by the Act.

[50]            I find that the respondent was in error in rejecting the applicant's claim for being out of time under the Act.

[51]            The applicant's application is therefore allowed and the respondent's decision is quashed. The respondent is directed to process the applicant's claim against the security of API in accordance with these reasons. I would note that based on my perusal of the file material, the applicant's claim was denied solely on the basis of being out of time. Given that I have determined that the Act's time limitation does not bar the applicant's claim, it would appear that there is no further impediment to the applicant's claim being paid out.

[52]            The applicant shall have its costs of this application.

ORDER

[53]            IT IS ORDERED that:

1.          The applicant's application is allowed and the respondent's decision is quashed.

The respondent is directed to process the applicant's claim against the security of API Grain Processors Limited Partnership and to not deny the claim for being out of time under the Act.

2.          The applicant shall have its costs of this application.

                                                                               "John A. O'Keefe"              

                                                                                                   J.F.C.                     

Ottawa, Ontario

April 29, 2004

                         FEDERAL COURT OF CANADA

                                      TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  T-856-03

STYLE OF CAUSE: PENDER FARMS LTD.

- and -

CANADIAN GRAIN COMMISSION

PLACE OF HEARING:                                 Saskatoon, Saskatchewan

DATE OF HEARING:                                   January 15, 2004

REASONS FOR ORDER AND ORDER OF O'KEEFE J.

DATED:                     April 29, 2004

APPEARANCES:

Curtis Onishenke

FOR APPELLANT (APPLICANT)

Marvin Luther

Valerie Gilroy

FOR RESPONDENT

SOLICITORS OF RECORD:

McKercher McKercher & Whitmore

Saskatoon, Saskatchewan

FOR APPELLANT (APPLICANT)

Department of Justice

Saskatoon, Saskatchewan

FOR RESPONDENT