Date: 20091030
Docket: T-1290-07
Citation: 2009 FC 1113
Ottawa, Ontario, October 30,
2009
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
ROBERT
VOSTERS
Applicant
and
ATTORNEY GENERAL OF CANADA
ON BEHALF OF AGRICULTURE
& AGRI-FOOD CANADA and
THE CANADIAN AGRICULTURE INCOME
STABILIZATION (CAIS) ADMINISTRATION
Respondents
REASONS FOR JUDGMENT AND JUDGMENT
[1]
On
this application Robert Vosters challenges a decision by the Minister of
Agriculture & Agri-Food Canada (Minister) to implement a commodity
valuation method which excluded breeding livestock under a 2006 agricultural
income stabilization program known as the CAIS Inventory Transition Initiative
(CITI). Mr. Vosters asserts that this decision contravenes the Farm Income
Protection Act, S.C. 1991, c. 22 (FIPA), the Federal-Provincial-Territorial
Framework Agreement on Agricultural and Agri-Food Policy, various provisions of
the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (ITA) and s. 15 of the
Canadian Charter of Rights and Freedoms, 1982, R.S.C. 1985, App. II, No.
44, Schedule B (Charter). Mr. Vosters also challenges an administrative
decision made by the CAIS Administration to refuse his appeal to the CITI
Appeals Committee.
a.
Background
[2]
The
purpose of the FIPA is to provide for the Minister to enter into agreements
with the Provinces for the establishment, inter alia, of agricultural
stabilization programs. In 2003 the Minister entered into such an agreement
with the Province of Manitoba
called the Canadian Agricultural Income Stabilization (CAIS) Program. That
program was intended to assist agricultural producers to stabilize income in
the face of unexpected revenue declines.
[3]
In
2006 after independent review and industry consultation, a change was made to
the method of valuing participants’ inventory under the CAIS Program
guidelines. This new approach (called the hybrid inventory valuation method) calculated
the increase or decrease in the value of inventory between the year-opening
price and the year-end price instead of the prior method which only took
account of the year-end price. The change, however, was only applicable to
producers of market commodities. It did not include breeding livestock which
was characterized as a non-market commodity not owned or intended for sale.
[4]
In
2006 the Minister, acting under ss. 12(5) of the FIPA, created a new special
measures program to provide grants to the agricultural sector (the CAIS
Inventory Transition Initiative or “CITI”). The CITI Program was exclusively
funded by the Federal government and supplemented the benefits payable under the
CAIS Program. It also relied upon the hybrid inventory valuation method in its
treatment of inventory. The CITI Program was described in a June 29, 2006
administrative bulletin as follows:
CITI is a one time initiative that will
provide $900 million in federal funding to CAIS participants. Producers do not
need to apply for a CITI payment as CAIS information already submitted for
2003, 2004 and 2005 will be used to recalculate benefits using a new method of
inventory valuation. If producers are entitled to more money after the
recalculation, they will receive additional payments. Recalculations will be
done beginning with the 2003 program, followed by 2004 and finally 2005.
[5]
As
an owner of breeding livestock, Mr. Vosters was largely unable to benefit from
the CITI hybrid inventory valuation method and his net CITI benefit was limited
at $99.75. Mr. Vosters brought an appeal from the decision limiting his net
CITI benefit based on the following submission:
I will be appealing the exclusion of breeding
livestock from this calculation. This exclusion is discriminatory to livestock
producers and fails to meet the statutory requirements spelled out in the Farm
Income Protection Act and the Agriculture Policy Framework.
This exclusion fails to meet generally
accepted accounting principles and does not apply the principals [sic] of
accrual accounting uniformly across all commodities. The intent of a P1 / P2
valuation, and the supplementary forms in general, is to apply an accrual
adjustment to the program year margin. This has been done in all previous
programs, as well as in CAIS. This exclusion may constitute a violation of the
green status afforded CAIS under existing WTO agreements.
Finally, livestock has always been
treated as a marketable commodity and is not a capital asset, as suggested by
some within this department. The Canada Revenue Agency has ample documentation
to illustrate that sales of any breeding livestock is consider [sic] income in
the year of sale, as too with expenses. Prior to CAIS, previous programs such
as NISA, AIDA and CFIP all treated cattle as a marketable commodity, and in the
exact same manners as other commodities.
I look forward to this appeal and to
having this decision overturned. This is / was a blatant attempt to exclude
livestock producers from the benefits of CITI; especially during the most
stressful time experienced by this section (i.e. BSE).
Mr. Vosters’ appeal was denied under a
decision dated June 13, 2007 for the following reasons:
Thank you for your letter dated April 13,
2007 requesting an appeal of your 2003 CITI payment. You have requested that
breeding livestock be included in the CITI calculation.
The CITI hybrid inventory valuation
method is applied to market commodities, however it is not applied to
productive assets such as breeding livestock. Market commodities are defined
as those which are intended for sale and are valued using the change in value
from the beginning to the end of the fiscal year (the beginning quantity
multiplied by the beginning price and the ending quantity multiplied by the
ending price). Non-market inventories are defined as those commodities which
are intended for use in the production of other commodities and are commonly
retained and utilized over several production periods and are valued using the
P2 method (using the change in quantity from the beginning to the end of the
year and valuing the change at the year end price). Breeding livestock is not
intended for market and therefore no actual market loss can be realized.
Therefore, the change in inventory is valued using the P2 method.
The purpose of the appeals process is to
ensure that the Administration correctly applied the CAIS program rules and
regulations. The appeal process does not provide a forum to make new policies
or to change policies currently in existence. Upon reviewing the documentation
you provided and the circumstances surrounding your case, the Administration
has determined that the program policy, as outlined above, was followed in the
processing of the CITI calculation related to your file. As a result, you
appeal has been closed.
[6]
On
this application for judicial review Mr. Vosters challenges the decision
by which his net CITI benefit was determined including the decision to deny his
appeal.
II. Issue
[7]
Was
the decision to deny Mr. Vosters’ claim to CITI benefits unlawful, ultra
vires the FIPA or in breach of s. 15 of the Charter?
III. Analysis
[8]
The
CITI policy excluding the producers of breeding livestock was based on a
distinction that breeding livestock are ordinarily not kept as a commodity for
resale. Mr. Vosters points out with some justification that in difficult
times these animals may be sold with an actual realized loss. This occurred in
his operation in 2003 when he sold 25 head of breeding livestock.
[9]
Mr. Vosters
argues that the Respondents’ justification for excluding breeding livestock was
never before recognized in the earlier programs providing agricultural support
and that this change in approach is inequitable. He also points to the IBM
report where some stakeholders took issue with this eligibility distinction.
[10]
The
essential problem with Mr. Vosters’ argument is that the adoption of the
eligibility distinction in question was a very deliberate policy choice.
Mr. Vosters does not agree with the wisdom of this limitation on the
support available to breeding livestock producers, but absent a Charter breach
or an incompatibility with the underlying legislation, it is not for the Court
to interfere with choices made by the Minister on such matters of policy. This
point has been repeatedly made in the authorities and is well expressed by
Justice Danièle Tremblay-Lamer in Campbell v. Canada (Attorney General)
(2006),
2006 FC 510, 147 A.C.W.S. (3d) 1072 at para. 44:
The applicants' arguments are once again
sourced in the perceived deviation by DFO staff from the recommendations
adopted by the Minister. In this regard, the applicants rely on the case of Carpenter
Fishing Corp. v. Canada, [1997] 1 F.C. 874 (T.D.) rev'd [1998] 2 F.C. 548
(C.A.). Unfortunately, that decision was overturned on appeal on the very
grounds on which the applicants seek to rely. Justice Décary, for the Federal
Court of Appeal, decided that when examining an exercise of the Minister's
discretion in relation to the establishment and implementation of fishing quota
policy, courts must recognize the intent of Parliament and only intervene when
the Minister's actions are beyond the purposes of the Fisheries Act.
Quotas may carry with them some element of arbitrariness and unfairness, but
the imposition of such a quota does not amount to reviewable action. It is not
the function of the courts to question whether a quota policy is good or bad: Carpenter,
FCA, above, at paras. 28, 37, 39 and 41. Moreover, I borrow the words of
Justice Nadon in Assoc. des Senneurs du Golf Inc. v. Canada (Minister of
Fisheries and Oceans), [1999] F.C.J. No. 1449, that within the scheme of
the Fisheries Act, there is nothing wrong with the "Minister
favouring one group of fishers at the expense of another" (at para. 25).
Also see Maple Lodge Farms Ltd. v.
Canada (1982), [1982] 2 S.C.R. 2 at 6-8, 137 D.L.R. (3d) 558 (S.C.C.).
[11]
Very
simply, this is the type of issue that is not justiciable because there is no
objective standard by which a Court can properly assess the wisdom of pure
policy choices routinely made by governments. I have no doubt the CITI Program
did not address the financial problems experienced by many primary livestock
producers, but that is ultimately a political issue that the Court has neither
the means nor the authority to resolve.
[12]
I
also do not accept the argument that because previous agricultural support
programs did not limit access to primary livestock producers a precedent had
been set that was required to be repeated for later support programs. Subject
to the limits imposed by the underlying legislation, it is always open to the
government to change its policies including the eligibility requirements for
obtaining financial support under a new or even an existing support program.
The fact that Mr. Vosters had a certain historical entitlement to benefits
under the CAIS Program did not create an immutable right to benefits under that
or any other supplementary program such as CITI.
[13]
Mr. Vosters
argues that the spirit and purpose of the FIPA is to ensure complete equality
of treatment for all agricultural producers and thereby prevents the Minister
from introducing a selective eligibility limitation of the sort that was
applied in his case. This argument is based on a misreading of the FIPA. The
FIPA extends considerable discretion to the Minister in the adoption of
criteria determining program eligibility. Mr. Vosters is correct that s.
4 requires the Minister to take into consideration the principles that a
program not “unduly influence” production and marketing decisions and that
income support should be “equitable and reasonably consistent with all other
agreements”. This type of qualified language provides some degree of
discretion to the Minister, but of more significance are the provisions of s. 5
which allow the Minister, in conjunction with the Provinces to fix by agreement
“the criteria for determining the eligibility of producers for participation”
and “the circumstances in which and the conditions under which a payment will be
made to a producer or group of producers, the method of determining the amount
of a payment, and the manner in which the payment will be made”.
Mr. Vosters’ argument effectively ignores these provisions. In short, it
is up to the Minister to decide whether eligibility criteria are equitable and
the Court has no jurisdiction to rewrite those conditions.
[14]
Mr.
Vosters is not correct when he claims that all agricultural commodities are
covered by the FIPA or that all such commodities must be treated equally for
the purposes of the conferral of program benefits. By their very nature these
support programs make or allow for eligibility distinctions that are left, in
some measure, to the discretion of the Minister. Mr. Vosters and others may
consider these distinctions to be unfair, but that does not mean they are
unlawful.
[15]
Mr.
Vosters’ complaint that the Respondents failed to adequately consult with all
interested parties is not borne out by the evidence, but even if it was true,
it would provide no support to his claim: see Carpenter Fishing Corp. v.
Canada (1996), [1997] 1 F.C. 874, 67 A.C.W.S. (3d) 585 (F.C.T.D.), reversed
(1997),[1998] 2 F.C. 548 at para. 32, 155 D.L.R. (4th) 572 (F.C.A).
A. Income
Tax Act
[16]
I
do not accept Mr. Vosters’ argument that there must be compatibility between
the definition of common terms or accounting treatments found in the ITA and in
the FIPA. It is true that one statute may adopt or rely by reference upon
concepts or terms found in another, but there is nothing in the FIPA to suggest
that its provisions ought to be treated in common with the language used in the
ITA. It is enough to say that a word like “inventory” or certain specified
accounting treatments may well take on different meanings from one statutory
instrument to another particularly where one statute confers a financial
benefit and the other imposes a tax. The fact that the FIPA provides that the
calculation of a benefit may be based on information declared by a producer
under the ITA is not enough to support Mr. Vosters’ argument on this point.
B. Section
15 of the Charter
[17]
There
is no merit to Mr. Vosters’ argument that the differential treatment afforded
to primary livestock producers under the CITI Program violates his rights under
s. 15 of the Charter. Certainly that program allows for differentiation between
classes of agricultural producers, but most government programs make these kinds
of distinctions: see Law Society of British Columbia v. Andrews (1989), [1989]
1 S.C.R. 143 at paras. 31, 34, 56 D.L.R. (4th) 1 (S.C.C.). What is lacking
here is evidence that the denial of program relief to him as a primary
livestock producer violates his essential human dignity. The loss of the
modest financial benefit that Mr. Vosters seeks is undoubtedly of significance
to him, but it does not come remotely close to satisfying the requirements of
s. 15 of the Charter: see Health Services and Support – Facilities
Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27 at para. 165,
[2007] 2 S.C.R. 391.
C. The
CITI Appeal Decision
[18]
Mr.
Vosters’ CITI appeal was dismissed administratively because it challenged the
legal right of the Minister to restrict eligibility for benefits under the CITI
Program. Quite obviously his appeal did not fall within the scope of appellate
review under that program which was limited to whether the rules and
regulations were correctly applied. There was, accordingly, no error in the
decision not to refer Mr. Vosters’ challenge to a full appellate review
because, given the limited nature of his challenge, the denial of his claim at
that level was inevitable.
[19]
If
the Respondents are seeking costs against Mr. Vosters, I will accept a written
submission in that regard within 10 days. Mr. Vosters will have a further 7
days to respond in writing. Neither submission should exceed 5 pages in
length.
JUDGMENT
THIS COURT ADJUDGES that this application for judicial review is dismissed with the
issue of costs to be reserved.
“ R. L. Barnes ”
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