Docket: T-1472-19
Citation: 2021 FC 71
Ottawa, Ontario, January 21, 2021
PRESENT: The Honourable Justice Fuhrer
| BETWEEN:
|
| TASLAR TRADING CORPORATION
|
| Appellant
|
| and
|
| ATTORNEY GENERAL OF CANADA AND R.C. FARMS LTD.
|
| Respondents
|
JUDGMENT AND REASONS
I.
Overview
[1]
Taslar Trading Corporation [Taslar Trading], is a grain dealer and licensee under the Canada Grain Act, RSC 1985, c G-10 [CGA or Act]. A producer, R.C. Farms Ltd. [RC Farms], complained to the Canadian Grain Commission that Taslar Trading failed to make full payment for green lentils that RC Farms delivered under contract. Upon investigation, including a teleconference with Taslar Trading and RC Farms to discuss the investigation results, the Commission found Taslar Trading failed to provide timely, requisite grain receipts. The Commission thus held Taslar Trading failed to comply with subsection 81(1) of the Act and ordered Taslar Trading to pay RC Farms for the loss or damage that resulted from such failure in the amount of $161,116.32, including interest. Pursuant to section 101 of the Act, Taslar Trading now appeals the Commission’s Order No. 2019-53 dated August 7, 2019 and requests that it be set aside. A joint Appeal Book was prepared and submitted by Taslar Trading and the Commission submitted a certified tribunal record. These materials overlap substantially.
[2]
Two main issues arise. First, did the Commission err in deciding that Taslar Trading should have provided grain receipts by these dates? Second, in concluding Taslar Trading made an improper deduction on the grain delivered, did the Commission err in failing to consider or did it misapprehend certain evidence, namely, industry practice, and the existence of a verbal agreement between Taslar Trading and RC Farms (in addition to their written contract)?
[3]
I find there are no questions of law or extricable legal principles in issue. Thus, in light of the statutory appeal mechanism in the Act, the applicable appellate standard of review in the case before me is palpable and overriding error: Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov] at paras 36-37 (citing Housen v Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras 8, 10, 19, 26-37; see also ING Bank NV v Canpotex Shipping Services Limited, 2017 FCA 47 at para 48). “Palpable”
means an obvious error, while an “overriding”
error is one that affects the decision-maker’s conclusion; it is a highly deferential standard of review: Mahjoub v Canada (Citizenship and Immigration), 2017 FCA 157 at paras 61-64.
[4]
For the reasons that follow, I am not persuaded that the Commission made any palpable and overriding errors concerning the dates by which the grain receipts should have been delivered nor did the Commission fail to consider or misapprehend certain evidence. I therefore dismiss the appeal. My analysis below follows a summary of the factual background and the applicable provisions and principles.
II.
Background
[5]
Taslar Trading and RC Farms signed Purchase Contract WMTC1708 dated November 10, 2017. Taslar Trading, as Buyer, agreed to purchase from RC Farms, as Seller, 5 railcars of 460mt of green lentils at a price of 33.5 cents per pound for #1 grade lentils and 32 cents per pound for #2 grade lentils, net to producer, delivered to Frontier, with delivery Nov-Dec 2018. The payment terms were 15 days after unload at port. The only other condition or term indicated in the short Purchase Contract was that failure to sign does not void a verbal agreement.
[6]
The Purchase Contract does not mention White Mud Trading Company [White Mud]. It is, however, the only grain elevator in Frontier, Saskatchewan. RC Farms delivered the green lentils to White Mud in several truckloads from December 15 to December 20, 2017. White Mud cleaned the grain and loaded five railcars shipped, in two shipments, to Ray-Mont Logistics Vancouver, Inc. [Ray-Mont Logistics] located in Richmond, British Columbia. Ray-Mont Logistics received the first shipment on January 19, 2018 and the second shipment on February 8, 2018. The railcars were unloaded and packaged in various ways for export by ocean shipping containers.
[7]
White Mud took samples for grading from all five railcar loads and sent the samples to SGS Saskatoon for assessment. The second shipment of three car loads came back as grade #2. Taslar Trading did not provide the SGS grading certificates for the first two car loads. Only the final three car loads, comprising the second shipment, were sampled and assessed again in British Columbia by SGS Vancouver which came back as grade #3. The first two car loads were not graded because they had been shipped already to Turkey. The Turkish buyers disputed the grading, resulting in a quality discount of the payments owed to Taslar Trading.
[8]
Taslar Trading issued grain receipts for the first and second shipments dated January 19, 2018 (Nos. 00400 and 00405) and February 8, 2018 (Nos. 00415, 00416 and 00417) respectively. A copy of receipt No. 00405 is not included in the Appeal Book. The remaining receipts, and a summary provided of all the receipts, indicate that the lentils were graded #3. Copies of all the receipts in the Appeal Book show deductions for a “levy”
(0.67%+GST) and a “tariff”
or handling fee ($8/TON), neither of which is mentioned in the Purchase Contract, and a price of $374.79 per tonne.
[9]
On January 29, 2018, Taslar Trading paid an initial amount of $125,000 to RC Farms. Taslar Trading called RC Farms on March 13 or 14, 2018 and advised the lentils were downgraded at unload to #3 and offered a reduced price of $0.16 per pound on all five railcars which RC Farms did not accept. Taslar Trading paid a subsequent amount of $36,575.94 on March 28, 2018. There is no dispute that Taslar Trading paid these amounts.
[10]
Despite the dates of the grain receipts, Taslar Trading admitted it took 4 or 5 days to receive the grading results; the SGS grading certificates themselves are dated April 18, 2018. Taslar Trading alleges that it mailed the grain receipts but RC Farms claims it did not receive any grain receipts until the Commission’s Compliance Officer, who conducted the investigation, provided copies. Taslar Trading admitted during the teleconference with Taslar Trading and RC Farms, held on May 30, 2019, that it took longer than the two-week window Taslar Trading normally has to conclude payment and they made sincere efforts to generate the receipts.
[11]
There are two points on which Taslar Trading and RC Farms agree. First, the correct weight, in so far as the grain receipts are concerned, is that of the unload at Ray-Mont Logistics of 443.64 tonnes. The Purchase Contract is silent about when or how the delivery weight was to be determined. Second, they also accept that the Saskatchewan Pulse Growers Levy of 0.67% plus GST is fair and reasonable. Similarly, the Purchase Contract is silent about such levy.
III.
Applicable Provisions and Principles
[12]
The Commission’s broad mandate includes regulating grain handling in Canada, in the interests of grain producers, to ensure a dependable commodity for domestic and export markets: CGA s 13. In furtherance of its mandate, the Commission can conduct investigations and hold hearings on matters within its powers including the alleged failure of a licensed grain dealer to comply with the provisions of the Act. The Commission also can make payment orders to compensate a grain producer for loss or damage because of a licensed grain dealer’s contravention or failure to comply with any provision of the Act or Regulations: CGA, ss 14, 91 and 97(a); C B Constantini Ltd v Pierce, 2009 FC 281 at para 21.
[13]
As noted by the Commission in its reasons for decision: “The purchase and sale of grain is not only governed by the agreement between the parties, but also by statute.”
To be licensed under the Act, a grain dealer is required to provide security to the Commission for the grain dealer’s potential payment obligations to grain producers: CGA, s 45(1)(b). Every licensed grain dealer who purchases western grain from a producer must issue a grain receipt or cash purchase ticket stating the grade name, grade and grain dockage, and provide it immediately to the producer: CGA, s 81(1). If the grain dealer defaults on its payment obligation, resulting in loss or damage to the grain producer, and if the grain producer holds a grain receipt or cash purchase ticket, the grain producer can access the security: CGA, s 49(2)(b).
[14]
The Regulations clarify that the licensed grain dealer must issue the grain receipt or cash purchase ticket upon receipt of the grain delivered by the producer or on entitlement to the grain delivered by the producer to an elevator: subsection 45(2) of Canada Grain Regulations, CRC, c 889 [CGR or Regulations]. In sum, “[t]he 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”
: C B Constantini Ltd v Neuls, 2009 FC 365 at para 40.
[15]
These provisions of the Act and Regulations, reproduced in Annex A below, provide significant protections to grain producers in line with the Commission’s mandate. As further noted by the Commission, “[t]he Act protects the producer’s right to receive payment for grain delivered for sale to a licensee.”
The Act does not prohibit a producer from agreeing or consenting deductions or set-off: Pioneer Grain Company v Goy, 2005 FC 530 at para 22. Absent explicit or inferred agreement or consent, however, the producer is entitled the payment owed for the delivered grain.
IV.
Analysis
[16]
As a preliminary matter, I note that the Respondent, Attorney General of Canada made no submissions in his memorandum of fact and law, nor at the hearing, regarding the order sought by Taslar Trading. The Attorney General noted his limited role in this matter to provide legislative interpretation or guidance but not to defend the Commission.
[17]
There was no disagreement among the parties at the hearing regarding the standard of review applicable to this statutory appeal. Having regard to the above background and applicable provisions and principles, I am not persuaded that the Commission made any palpable or overriding errors in concluding that:
(i)
Taslar Trading should have issued and delivered the grain receipts for all of the grain to RC Farms by January 19, 2018 and February 8, 2018 for the first and second shipments respectively; because it did not do so, Taslar Trading failed to comply with CGA s 81(1) [Grain Receipts Finding];
(ii)
there was no mention in the Purchase Contract, nor evidence of agreement regarding, the deduction of a handling levy of $8.00 per tonne from the grain receipts [Handling Levy Finding]; and
(iii)
Taslar Trading made an improper deduction on the grain delivered that was not agreed to by RC Farms [Improper Deduction Finding].
(1)
(i) Grain Receipts Finding
[18]
Taslar Trading submits that the delivery of the grain was not completed until the grain reached the unload facility or the terminal elevator (at Ray-Mont Logistics in British Columbia) nor was Taslar Trading entitled to the grain while the grain was still with RC Farms’ alleged agent, White Mud. Further, the Commission’s decision that the grain receipts ought to have been delivered to the producer no later than January 19, 2018 and February 8, 2018 for the first and second shipment respectively was wrong because the perceived calculation was based on the date the grain was delivered to White Mud.
[19]
RC Farms, on the other hand, submits that White Mud was an agent or mandatary of Taslar Trading and, therefore, the grain receipts were due in the December 15-20, 2017 timeframe when RC Farms delivered the lentils to White Mud. The Commission makes no determination about whether White Mud acted as an agent for either party. I find it was unnecessary to do so, however, because of the Commission’s finding that the grain receipts were due no later than the dates by which the grain reached Ray-Mont Logistics in British Columbia and was unloaded. Further, there was no calculation involved. Rather, as I noted above, the Act and the Regulations require delivery of the grain receipts contemporaneously with the delivery of the first and second shipments to British Columbia.
[20]
I further find that that Taslar Trading appears to have conflated the payment terms of the Purchase Contract (15 days) with the date by which the receipts are due, in addition to admitting that while the grain receipts are dated as of the unload dates they were generated later. This is confirmed by the following statements of Taslar Trading’s principal during the May 30, 2019 teleconference:
So the date on the receipt, is actually the date of the unloading, but not when we, when we generate them. We typically generate them as we finish the results, and, we get it, from SGS. And we put it in, and put it in, and that typically takes two weeks, that it why we have two weeks grace period to pay.
[21]
In its reasons for decision, the Commission noted that the Purchase Contract contained no provision for sampling (at port) for grading and dockage, nor did the Purchase Contract contain any dispute resolution mechanism for any dispute over grading. The Commission held, therefore, that when the first and second shipments were delivered on January 19, 2018 and February 8, 2018, the information available to the parties was that the lentils were graded at #2 (pursuant to the grading reports completed in Saskatchewan). Further, Taslar Trading expressed no reservation about the grading information to RC Farms until over a month later. Had Taslar Trading issued the grain receipts at the required time, RC Farms would have been entitled to payment of the shipped lentils at grade #2 (i.e. $0.32 per pound). I find no palpable and overriding errors in the Commission’s reasons and conclusions regarding this issue.
(2)
(ii) Handling Levy Finding
[22]
The Purchase Contract similarly contains no provision for any handling levy. Taslar Trading points to an email exchange between Taslar Trading and White Mud, before the signing of the Purchase Contract on November 10, 2017, as the source of the negotiated “agreement”
between Taslar Trading and RC Farms’ alleged agent, White Mud, regarding the handling levy. I agree with the Respondent, RC Farms, that the email exchange is neither evidence of an agency relationship nor of an agreement regarding the handling levy. As stated by White Mud’s correspondent upon receiving Taslar Trading’s proposed pricing for the lentils, which mentions the handling levy, “Perfect, I will pass this on and let you know.”
I thus find it unnecessary to address RC Farms’ submission regarding the applicability of the parol evidence rule.
[23]
Further, as stated by RC Farms’ principal during the May 30, 2019 teleconference:
…I see that he [Taslar Trading’s principal] did have communication with White Mud on it [the handling levy]. I was never told. And why wasn’t it put in the contract. That, that is all I have to go. I am not trying to take advantage of the fact that the contract wasn’t complicated. This is what I have in front of me. That is what I signed.
[24]
Finally, I note that the Purchase Contract is on Taslar Trading’s letterhead and was signed by both Taslar Trading and RC Farms; it was not signed by White Mud, on behalf of or acting for RC Farms. I thus, find no palpable and overriding errors in the Commission’s reasons and conclusions regarding this issue.
(3)
(iii) Improper Deduction Finding
[25]
I find the reasons for decision are not clear about whether the Commission included the price discount on the grain receipts as part of its improper deduction conclusion, in addition to the handling levy. Although none of the parties argued the price discount specifically, I find the Amended Notice of Appeal broad enough to cover it in the following ground: “The Commission erred by failing to properly consider the current industry practice when the Commission held that the licensee (Appellant) has made improper deduction on the grain delivered.”
I therefore consider it for completeness.
[26]
In addition to the deduction of the handling levy on the grain receipts, the Commission also took issue with the price discount (grade #2 versus grade #3) to which RC Farms did not agree. The Commission noted the Purchase Contract does not provide a discount schedule or reference to grades lower than #2; the prices provided are for #1 and #2 grades only. Nor did RC Farms agree to a proposed discount when contacted, one month after the last unloading, about the quality of the lentils. When queried about the discount during the investigation, Taslar Trading mentioned “GrainShark Marketing Chart”
and “GrainShark Marketing discount schedule”
as reference for arriving at the discount. There is no evidence, however, in either the Appeal Book or in the certified tribunal record about what this reference is or whether it represents industry practice.
[27]
The Commission’s conclusion states simply, however: “Following its investigation the Commission is satisfied that the Licensee has made an improper deduction on grain delivered which was not agreed to by the Producer.”
I note the Commission refers to the handling levy as a discount as well: “The purchase contract makes no reference to this discount.”
[28]
Immediately following its finding of improper deduction, the Commission calculated the loss or damage to RC Farms with reference to the value of the green lentils for #2 grade at 32 cents per pound (or $705.48 per tonne versus the price per tonne of $374.79 shown on the grain receipts), removed the “$8.00 per tonne Levy discount,”
and accounted for the Saskatchewan Pulse Growers Levy discount. Because I found no palpable and overriding errors regarding the Commission’s conclusions regarding the issuance and delivery of the requisite grain receipts, I similarly find no palpable and overriding errors in this approach or on this issue.
V.
Conclusion
[29]
Finding the Commission made no palpable or overriding errors, I therefore dismiss this appeal of its Order No. 2019-53.
VI.
Costs
[30]
Taslar Trading and RC Farms agree that costs are in the Court’s discretion. I see no reason in this matter to depart from the general principle that costs follow the event.
[31]
The Attorney General does not seek costs. RC Farms seeks elevated costs and additional interest. While there have been some procedural missteps on the part of Taslar Trading, as well as delay because of unfortunate events that befell Taslar Trading’s counsel, I am not satisfied these factors warrant elevated or solicitor-client costs. Further, because Taslar Trading was entitled to appeal the Commission’s order, I am not satisfied that additional interest is warranted in the circumstances.
[32]
Exercising my discretion under Rule 400, I award costs to RC Farms payable by the Taslar Trading in accordance with the top of Column III, Tariff B, of the Federal Courts Rules, SOR/98-106.
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