Date: 20090409
Docket: T-1153-08
Citation: 2009 FC 365
Vancouver, British Columbia, April
9, 2009
PRESENT: The Honourable Madam Justice Dawson
BETWEEN:
C.B.
CONSTANTINI LTD.
Appellant
and
JAMES NEULS and HER MAJESTY
THE QUEEN
IN RIGHT OF CANADA, as represented by
the ATTORNEY-GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT AND JUDGMENT
[1]
By
order dated July 2, 2008 (order) the Canadian Grain Commission (Commission)
ordered C.B. Constantini Ltd. (Constantini) to pay to James Neuls the sum of
$19,430.62. Constantini is a licensed grain dealer under Part III of the Canada
Grain Act, R.S., 1985, c. G-10 (Act) and Mr. Neuls is a producer of
western grain as that term is defined in the Act. The order was made pursuant
to section 97 of the Act.
[2]
Constantini
has appealed the order. It argues that:
(a)
The
Commission exceeded its jurisdiction, or acted without jurisdiction, in
ordering it to pay $19,430.62 to Mr. Neuls.
(b)
The
Commission erred in law and in fact in finding that:
(i)
Constantini
made an improper deduction and failed to make payment for grain delivered by
Mr. Neuls.
(ii)
Constantini
failed to provide a grain receipt to Mr. Neuls in the prescribed time and
prescribed manner, thus violating subsection 81(1) of the Act.
(iii)
In
the result, Mr. Neuls suffered loss or damage in the amount of $19,430.62.
[3]
This
appeal is dismissed because the Commission acted within its jurisdiction and
its decision was reasonable.
The evidence before the Commission
[4]
On
November 13, 2007, Mr. Neuls made a complaint to the Commission concerning
certified organic flaxseed he had delivered to Constantini. Mr. Neuls provided
a number of documents to the Commission in support of his complaint. In sum,
Mr. Neuls asserted that:
(a)
He
made two deliveries of certified organic flaxseed to Constantini. The first
delivery was made on September 12, 2007, the second was made on October 24, 2007.
(b)
The
first delivery was made in accordance with an oral agreement between Mr. Neuls
and Constantini made in September of 2007. In this agreement, Mr. Neuls
agreed to deliver to Constantini one load of certified organic flaxseed at a
price of $16.00 per bushel. Mr. Neuls reached this agreement with David Smythe
of the Constantini organization by telephone on September 7, 2007.
(c)
Prior
to this, in June of 2007, Constantini had sent a written "Confirmation of
Contract #12-11334" to Mr. Neuls that purported to require him to deliver
four loads of certified organic flaxseed. One load was to be delivered in each
of June, July, August and September, 2007. Mr. Neuls advised that he never
agreed to provide four loads and he never signed or returned the “Confirmation
of Contract” document to Constantini.
(d)
Constantini
issued a document entitled "Settlement" in respect of the first
delivery. This document confirmed to Mr. Neuls that the sum of $20,304.50 was
owing in respect of that delivery. Mr. Neuls was paid that amount for the
first delivery.
(e)
A
separate written agreement was concluded between Constantini and Mr. Neuls
(Contract #12-11735) in October of 2007. By this agreement Mr. Neuls agreed to
deliver, in the month of October 2007, one load of certified organic flaxseed
at a price of $25.00 per bushel.
(f)
Pursuant
to that agreement, on October 24, 2007, Mr. Neuls made the second delivery of
certified organic flaxseed to Constantini.
(g)
As
of November 13, 2007, Constantini had neither paid Mr. Neuls nor provided
documentation of its receipt of the October 24, 2007 delivery.
[5]
On
November 14, 2007, a compliance officer with the Commission telephoned and then
faxed a letter to Constantini. The letter reminded Constantini of its
obligations under the Act. Specifically Constantini was advised that:
- Licensed grain dealers are required upon
receipt of grain offered by a producer to issue either a grain receipt or
a cash purchase ticket.
- A grain dealer is not entitled to set off
payment against any alleged debt owed to the grain dealer by the producer
without clear evidence of the producer’s explicit consent.
[6]
That
same day, Constantini purported to write to Mr. Neuls complaining that he had
only delivered two of the four loads he had "contracted" to deliver
under Contract #12-11334. There was no evidence of any prior demand for
compliance with Contract #12-11334, notwithstanding that it purported to have
required deliveries in each of June, July, August and September of 2007.
[7]
By
letter dated January 17, 2008, the Commission requested that the parties
provide any additional information or submissions to it.
[8]
In
response, Mr. Neuls provided a six page summary and three documents provided to
him by Constantini. Those documents were a document entitled
"Confirmation of Washout #12-11334", a grain receipt issued to Mr.
Neuls on January 2, 2008 in respect of the second delivery and a photocopy of a
cheque and counterfoil showing payment to Mr. Neuls in the amount of $8,522.54
in respect to the second delivery.
[9]
The
grain receipt showed a gross amount payable of $27,986.71 in respect of the
second delivery. The sum of $19,430.62 was deducted from that total as a
non-performance charge for the failure to deliver three truckloads of certified
organic flaxseed pursuant to Contract #12-11334. Constantini had resiled from
its earlier position that the second delivery had been made pursuant to
Contract #12-11334. Instead, it now agreed that the second delivery had been
made pursuant to Contract #12-11735.
[10]
Constantini
made no response to the Commission's letter.
[11]
On
February 20, 2008, the Commission again wrote to Mr. Neuls and Constantini.
The letter set out the relevant facts as understood by the Commission. The
Commission advised that it would contact each party by telephone by March 7,
2008. At that time each party should be prepared to advise whether it disputed
any fact set out in the Commission's letter of February 20, 2008. The parties
were advised that further oral or written submissions could be made to the
Commission.
[12]
Constantini
responded that it had complied with the Act, that its dispute with Mr. Neuls
was contractual in nature, that Mr. Neuls had explicitly and implicitly agreed
to its right of set off, and that the Commission lacked jurisdiction to
determine whether a producer or a grain dealer was in breach of contract. It
was the position of Constantini that Mr. Neuls should seek relief in the
courts. In its view, no subsequent telephone call was necessary.
[13]
There
followed further correspondence that debated the jurisdiction of the
Commission.
The decision of the Commission
[14]
After
summarizing its decision and setting out the facts, the Commission addressed
the statutory scheme governing the handling of grain delivered by grain
producers to grain dealers. The Commission observed that the purchase and sale
of grain is not only governed by the agreement between the parties. It is also
governed by the Act. The Commission highlighted the importance of cash
purchase tickets and grain receipts.
[15]
Under
subsection 45(1) of the Act, grain dealers are to give security to the
Commission to cover any outstanding liabilities to producers who hold grain
receipts or cash purchase tickets issued by a grain dealer. Any security given
by the dealer entitles the holder of a cash purchase ticket or grain receipt to
up to the full value of the grain delivered should the dealer be unable to pay.
[16]
The
security system is in place to protect producers and depends upon the use of
grain receipts or cash purchase tickets as proof of claims against security
given to the Commission by the grain dealer. The grain dealer has an obligation
to make payment for the grain notwithstanding that the dealer may be of the
view that a debt is owed from the producer to the dealer with respect to
related or unrelated transactions.
[17]
A
grain producer may waive its statutory right and consent to a dealer deducting
amounts from cash purchase tickets in relation to cash or supply advances as
well as in respect of a failure to make subsequent deliveries of grain. The
consent to deduction, or waiver of the right to full payment, need not be
explicit, but can be inferred from the circumstances surrounding the
transaction. The Commission acknowledged that courts have held that applying a
deduction or set off in relation to grain is therefore permissible.
[18]
The
Commission further acknowledged that it has no authority to determine whether a
party is in breach of a contract. However, it noted that it may examine the
dealings between parties and the provisions of the contract in the course of
determining whether there has been a violation of the Act or the Regulations.
[19]
The
Commission stated that there were two grain deliveries made by Mr. Neuls. With
respect to the first, Constantini issued the proper documentation and paid Mr.
Neuls $20,304.50. With respect to the second delivery, Constantini reflected
the value as being $27,986.71 and then deducted an amount of $19,464.17. In
the result it paid the sum of $8,522.54 to Mr. Neuls.
[20]
The
Commission concluded there was insufficient evidence that Mr. Neuls had agreed
to Contract #12-11334, including insufficient evidence that Mr. Neuls verbally
agreed to the contract, signed the contract, or returned the contract to
Constantini.
[21]
The
Commission noted that Mr. Neuls took the position that he made the second
delivery pursuant to the provisions of a contract that he verbally agreed to,
signed, and returned to the Constantini (Contract #12-11735). Mr. Neuls
further took the position that he fulfilled his obligations under the contract
and was entitled to full payment for the grain delivered.
[22]
The
Commission concluded that Constantini violated subsection 81(1) of the Act in
respect of the second delivery, in that it failed to provide a cash purchase
ticket or grain receipt in the prescribed time and prescribed manner with
respect to the purchase of western grain from a producer of that grain.
[23]
The
Commission also concluded that Constantini made an improper deduction on grain
delivered which was not agreed to by Mr. Neuls.
[24]
The
Commission held that these failures resulted in loss or damage to Mr. Neuls in
the amount of $19,430.62. Consequently, pursuant to section 97 of the Act, the
Commission ordered Constantini to pay Mr. Neuls $19,430.62.
The alleged jurisdictional error
[25]
Constantini
argues that its dispute with Mr. Neuls was contractual in nature. As a result,
Constantini asserts that the Commission lacked jurisdiction to make any determination
with respect to the complaint and lacked jurisdiction to order that it pay
"damages" to Mr. Neuls. This is characterized to be a jurisdictional
error which is reviewable on the standard of correctness.
[26]
Constantini
acknowledges that in a recent decision rendered by my colleague Justice Hansen,
reported as C.B. Constantini v. Pierce, 2009 FC 281 (Constantini
#1), this Court upheld a decision of the Commission which found that
Constantini had failed to make payment for grain delivered to it because it had
improperly asserted a set off. This case is said to be distinguishable from
the one now before the Court because there the Commission found "no
evidence" of the existence of the contract relied upon by Constantini to
justify its set off. In the present case, the Commission found
"insufficient" evidence. According to Constantini, the Commission
may make orders where the facts are not in dispute or where there is no
document which purports to allow a set off. Where, however, there exists
evidence of a bona fide dispute, the Commission lacks jurisdiction to
make an order.
[27]
I
see no merit in this submission. In my view, this submission is based upon a
mischaracterization of the Commission's decision. The Commission made no
finding as to whether Mr. Neuls had entered into Contract #12-11334 with
Constantini and thereby agreed to deliver four loads of certified organic
flaxseed. Indeed, the Commission stated:
The
Commission has no authority to determine whether one party is in breach of a
contract. It may, however, examine the dealings between the parties and the
provisions of a contract in the course of determining whether there has been a
violation of the Act or the Regulations.
[28]
The
Commission was careful to make no finding with respect to the existence of
Contract #12-11334. Rather, the Commission referred to the
"insufficiency" of the evidence of agreement. There remains an issue
as to the unfulfilled obligations, if any, of Mr. Neuls under Contract
#12-11334 that Constantini may pursue in the appropriate court.
[29]
What
the Commission did find was that with respect to the second delivery of grain,
Constantini violated subsection 81(1) of the Act by failing to provide a grain
receipt in the prescribed time and the prescribed manner. The Commission went
on to find that Mr. Neuls suffered loss or damage as a result of that
violation.
[30]
This
was a decision within the jurisdiction of the Commission.
[31]
In
this regard, the section 13 of the Act mandates the Commission to "in the
interests of the grain producers … regulate grain handling in Canada." Part VI of the
Act deals with "Enforcement and Enforcement procedures." Sections 91
and 97 of the Act are found in Part VI of the Act and are relevant to this
appeal. Subsection 91(g) of the Act authorizes the Commission to
investigate the failure of a licensed grain dealer to comply with any provision
of the Act or its associated regulations. Subsection 97(a) of the Act
allows the Commission, after an investigation under section 91 of the Act and
after affording all interested parties a full opportunity to be heard, to make
an order "for the payment, by any […] licensee […] of compensation to any
person for loss or damage sustained by that person resulting from a
contravention of or failure to comply with any provision of the Act or any
regulation […]."
[32]
There
is nothing in the language of the statute which suggests, as submitted by
Constantini, that the Commission's investigation must not proceed when disputed
facts are encountered.
[33]
Indeed,
such a conclusion is contrary to the decision of this Court in Pioneer Grain
Co. v. Goy, [2005] 4 F.C.R. 687. There, my colleague Justice Snider
considered whether the Commission had authority to determine set off amounts.
After reviewing the applicable legislation, she wrote as follows, concerning
the powers of the Commission:
24 Although
not clearly articulated, it appears that the Commission concluded that it did
not have the jurisdiction to assess amounts of set-off. In its decision, the
Commission asserted that the Commission has no authority to determine the
validity of a contract or to interpret or enforce the provisions of a valid
contract. It also stated that they have "neither the training nor the
expertise to make determinations with respect to the complexities of contract
law". And, later in the decision, the Commission states that it "is
not equipped to make decisions with respect to the law of set-off".
25 A
tribunal, as a creature of statute, has only the powers given it by the
statute. This, of course, does not mean that every action of a tribunal must be
explicitly listed in the words of the statute. Rather, it means that the action
in question must either be contained in the explicit words of the enabling
legislation or be necessarily incidental to the mandate expressed in the
statute. It follows that the exercise of a broad mandate, by necessity, will
almost always bestow a number of incidental powers upon the tribunal.
Otherwise, it would be unable to carry out its statutorily-mandated functions.
26 The
mandate of the Commission is very broad; as set out in s. 13, "the
Commission shall, in the interests of the grain producers . . . regulate grain
handling in Canada, to ensure a dependable commodity for
domestic and export markets." Under s. 97, the Commission may make an
order for the payment of damages for a contravention of the Grain Act. It
follows that Parliament must have intended the Commission to make findings of
fact and law necessary to determine whether there has been a contravention of
the Grain Act. Such determinations are necessarily incidental to its broad
jurisdiction. In my view, the Commission may - and, in fact, is obliged to -
consider whether any amount claimed is actually owing. If this involves
interpreting certain provisions of a contract, this is completely within the
realm of the Commission's jurisdiction.
27 A
major concern of the Commission was an alleged lack of expertise in the area of
contract law. This is an irrelevant consideration. The Commission's mandate
is to determine whether an operator has acted properly in issuing a "cash
purchase ticket" for the delivery of grain to it. If the law allows
set-off in calculation of the "purchase price", it is up to the
Commission to address whatever it must to carry out its mandate under the Grain
Act. This may require, from time to time, that the Commission or its expert
staff carry out some analysis of underlying contracts. I do not see this as
requiring extraordinary resources. There may well be procedures that could be
put in place to assist the Commission. Specifically, I note that the Commission
has the ability, pursuant to s. 12 of the Grain Act, to "make by-laws
respecting . . . the regulation of its proceedings and generally for the
conduct of its activities." Through its by-laws, the Commission could, for
example, set out filing requirements in cases involving a claim to set off.
28 In
any event, the problems described by the Commission do not exist in this case,
since Mr. Goy is not disputing the amount he owes to Pioneer. Speculation about
future problems that may or may not arise and concern for lack of expertise are
not sufficient reasons for the Commission to decline to exercise its
jurisdiction in this case.
29 I
conclude that the Commission, in investigating a complaint under the Grain Act,
has the authority to examine underlying contracts as necessary to determine
whether there has been a contravention of the Grain Act. [emphasis added]
[34]
There
is nothing in this language that is consistent with the limitation asserted by Constantini.
Such a limitation would also be inconsistent with the provisions discussed
below which exist in order to afford payment protection to individual grain
producers.
[35]
Having
disposed of the jurisdictional argument, I now turn to the other errors asserted
by Constantini on this appeal.
Standard of review
[36]
In
oral argument counsel for Constantini conceded that the Commission's finding
that Constantini had failed to provide a grain receipt in the prescribed time
and prescribed manner raised a question of mixed fact and law that is
reviewable on the standard of reasonableness. I agree. Reasonableness is also
the standard of review to be applied to the Commission's finding that Mr. Neuls
suffered a loss in the amount of $19,430.62 as a result of a violation of the
Act.
[37]
These
conclusions with respect to the applicable standard of review are consistent
with Justice Hansen’s determination in Constantini #1 at paragraph 17.
They are also in accordance with the teachings of the Supreme Court of Canada
in Dunsmuir v. New
Brunswick,
[2008] 1 S.C.R. 190 at paragraphs 53 and 54.
Application of the standard of review
[38]
As
noted by the Commission in its decision, in order to be licensed as a grain
dealer an applicant dealer must pledge security fixed in an amount that
"has regard to the applicant's potential obligations for the payment of
money" to grain producers holding cash purchase tickets or grain receipts
issued under the Act. See: paragraph 45(1)(b) of the Act. A grain
producer may have recourse to this security if a grain dealer fails to pay for
the delivery of grain. In order to have access to that security, the grain
producer must hold a grain receipt or a cash purchase ticket. Key to producer
protection is subsection 81(1) of the Act which provides:
|
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. [emphasis added]
|
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.
|
[39]
Subsection
45(2) of the Canada Grain Regulations, C.R.C., c. 889 (Regulations)
prescribes the form of grain receipt and requires a grain receipt or cash
purchase ticket to be "issued on receipt of western grain delivered by a producer."
[40]
The
Act and the Regulations therefore require a grain dealer to provide a grain
receipt or cash purchase ticket to a producer contemporaneously with the
delivery of grain.
[41]
Constantini
did not provide either document to Mr. Neuls when he made the October 24, 2007
delivery. Constantini only delivered a grain receipt to Mr. Neuls in respect
of that delivery on January 2, 2008.
[42]
The
Commission's decision that Constantini failed to provide a grain receipt in the
prescribed time was reasonable as that term is described by the Supreme Court
of Canada in Dunsmuir at paragraph 47.
[43]
The
Commission also found that the grain receipt was not issued in the prescribed
manner. As I read the preantepenultimate and the antepenultimate paragraphs of
the Commission's reasons, the finding of a non-prescribed manner related to the
Commission's conclusion that Constantini made an improper payment deduction in
respect of grain delivered to it, which deduction was not agreed to by Mr.
Neuls.
[44]
As
set out above, Mr. Neuls advised the Commission that he never agreed to sell
four truckloads of certified organic flaxseed to Constantini and he never
signed Contract #12-11334. Mr. Neuls advised that in a telephone conversation
with David Smythe of Constantini on September 7, 2007, he orally agreed to
deliver one load of certified organic flaxseed at a cost of $16.00 per bushel.
Constantini provided no information from Mr. Smythe denying Mr. Neuls'
assertion.
[45]
In
order to determine that the set off made by Constantini was proper, the
Commission would have to have been satisfied that:
- The parties entered into Contract #12-11334
and this agreement required delivery of four loads of certified organic
flaxseed.
- This agreement was breached when Mr. Neuls
delivered only one load.
- The breach resulted in a loss to
Constantini of $19,430.62.
- It was a term of this agreement that any
amounts owing as a result of a breach of that agreement could be deducted
from monies owing pursuant to Contract #12-11735.
[46]
Given
the state of the information before it, it was not unreasonable for the
Commission to conclude that it had insufficient material on which to find that
Mr. Neuls had agreed to provide four loads of certified organic flaxseed as
alleged by Constantini and agreed to the right of set off. That finding was
justified on the evidence and the Commission's reasons were transparent and
intelligible. The decision falls within a range of possible, acceptable
outcomes which are defensible in respect of the facts and law. The decision is,
therefore, reasonable.
[47]
The
final issue that requires consideration is the Commission's finding that
Constantini’s violation of subsection 81(1) of the Act resulted in Mr. Neuls
suffering loss or damage in the amount of $19,430.62.
[48]
Constantini
had a statutory obligation to issue a grain receipt on October 24, 2007 in the
proper amount. Once the Commission found that there was insufficient evidence
to justify the purported set off, it followed that Mr. Neuls suffered a loss or
damage because of Constantini's failure to provide a grain receipt to him on
October 24, 2007 in the proper amount. Without such a grain receipt, Mr.
Neuls' only recourse would have been to sue Constantini in contract. The
Commission's finding that Mr. Neuls suffered a loss as a result of a violation
of the Act was reasonable.
[49]
It
follows that the appeal should be dismissed.
Costs
[50]
Mr.
Neuls seeks costs. The Attorney General of Canada does not. There is no
reason to depart from the general principle that costs follow the event.
[51]
Mr.
Neuls seeks costs at an elevated level. Relying upon Constantini #1 and
two decisions of the Commission involving Constantini (provided to the Court by
Constantini) he argues that Constantini has engaged in a pattern of conduct in
which it fails to make full payment to producers.
[52]
I am
not satisfied of improper conduct on the part of Constantini to the degree
required to justify an aggravated or extraordinary award of costs. I can see
no improper or vexatious conduct in the prosecution of this appeal. This is a
case of average complexity and there is no reason to depart from the principle
that Column III of Tariff B to the Federal Courts Rules reflects
appropriate compensation for a case of usual complexity.
[53]
The appellant
will therefore pay to the respondent Neuls costs, which I fix in the amount of
$3,000.00. This approximates an assessment based on the top of Column III,
inclusive of disbursements.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that
1. The appeal is dismissed.
2. C.B.
Constantini Ltd. shall pay to James Neuls costs fixed in the amount of
$3,000.00, inclusive of disbursements.
“Eleanor
R. Dawson”
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