Federal Court Decisions

     T-1499-95

     IN THE MATTER of the Agricultural Products

     Cooperative Marketing Act, R.S.C. 1985, c. A-5, as amended

     AND IN THE MATTER of an application by Bank of Montreal

     and Coopers & Lybrand Limited for judicial review against

     the Respondents

     AND IN THE MATTER of the Federal Court Act, R.S.C.

     1985, c. F-7, as amended

BETWEEN:

     BANK OF MONTREAL and

     COOPERS & LYBRAND LIMITED

     Applicants

     - and -

     THE ATTORNEY GENERAL OF CANADA,

     THE MINISTER OF AGRICULTURE OF CANADA and

     THE MINISTER OF FINANCE OF CANADA

     Respondents

     REASONS FOR ORDER

JEROME A.C.J.:

     This application by the applicants for mandamus came on for hearing at Toronto, Ontario, on December 10, 1996. The applicants seek an Order compelling the respondents to exercise their jurisdiction pursuant to the Agricultural Products Cooperative Marketing Act, R.S.C. 1985, c. A-5 ("APCMA") and forthwith pay to the applicants the agreed upon amount of $405,000.00 in relation to a claim submitted by the applicant, Coopers & Lybrand Limited, on October 27, 1993 to Agriculture Canada pursuant to a guarantee given by the Ministry of Agriculture of Canada to the Eastern Ontario Vegetable Growers' Co-operative Inc. ("EOVG"). At the close of argument, I took the matter under reserve and indicated that these written reasons would follow.

BACKGROUND

     The objective of the APCMA is to provide a marketing incentive program to assist and encourage co-operative marketing of agricultural products for the benefit of primary producers. In furtherance of this objective, the APCMA provides the framework by which the Ministry of Agriculture may enter into agreements to guarantee the prices received by cooperative associations for their products.

     EOVG consisted of approximately one hundred thirty farmers in the Trenton, Ontario area who grew, primarily, peas and corn. It was incorporated to assist its members in the financing and marketing of their crops.

     The Bank of Montreal, EOVG's banker for a number of years, advanced EOVG the sum of $4,706,000.00 to permit EOVG to make initial payments to its members. By agreement dated September 11, 1991, the Minister entered into an APCMA Guarantee with EOVG for the 1991 crop year whereby the Minister agreed to pay to EOVG the amount, if any, by which the initial payment by EOVG for the purchase of produce from its primary producers, together with such costs, exceeded the average wholesale price received by EOVG from the sale of such product. As security for its advance, the Bank of Montreal received an assignment from EOVG of its right to payment under the APCMA Guarantee.

    

     On May 11, 1993, Coopers & Lybrand became the court-appointed receiver for EOVG. On October 27, 1993, Coopers & Lybrand submitted a claim to Agriculture Canada under the 1991 APCMA Guarantee in the amount of $622,814.00 which related to the deficit between the initial payment made by EOVG for peas and corn in the 1991 crop year and the actual amount received by EOVG for peas and corn in this year. The Minister has not paid the claim by Coopers & Lybrand.

STATUTORY FRAMEWORK

     The APCMA provides as follows:

3(1).      The Minister may, with the approval of the Governor in Council, by agreement with a cooperative association, processor or selling agency, undertake that if the average wholesale price of an agricultural product of any grade or quality produced during the year and delivered to a cooperative association, processor or selling agency under only one cooperative plan is less than the initial payment together with the actual processing, carrying and selling costs, which shall not exceed the maximum to be fixed under the agreement in the case of each grade of the agricultural product, there shall be paid to the cooperative association, processor or selling agency the amount, if any, by which the initial payment together with those costs exceeds the average wholesale price computed on the amount of the agricultural product of the grade or quality so delivered.

9.      Where at any time the Minister becomes liable under any approved agreement under this Act, the Minister of Finance may, out of the unappropriated moneys forming part of the Consolidated Revenue Fund and with the approval of the Governor in Council, pay the amount for which the Minister may be liable under the agreement.

SUBMISSIONS OF THE PARTIES

     The applicants submit that following numerous discussions between themselves and Agriculture Canada, represented primarily by Mr. Simon Thiboutot, Director of Agriculture Canada, concerning adjustments to the amount claimed by the applicants, the parties agreed to a payment in the amount of $405,000.00 to resolve the claim. The applicants state that Agriculture Canada was aware that the basis for EOVG's actual average wholesale price in the claim was the selling price of EOVG's selling arm, County Pride Foods Limited, after a deduction of County Pride's selling costs. The applicants state that all issues regarding the best prices for the 1991 crop year and concerns related to Agriculture Canada's legal liability to pay the applicants' claim had been resolved by the time Mr. Thiboutot agreed to the "approved" amount of $405,000.00. The applicants further state that Agriculture Canada has acknowledged its unreasonable delay in paying the applicants' claim and that this is clearly a proper case for an order of mandamus.

     The respondents submit that the applicants' mandamus application should be dismissed because: the applicants are unable to demonstrate that their claim complies with the APCMA; the Minister still has discretion under subsection 4(3) to determine the average wholesale price under the Agreement which, in turn, would determine the amount, if any, of the applicants' claim; and there is a large amount of conflicting evidence before the Court relating to whether the best possible price was obtained, whether the price issue was resolved when the amount of the claim was reduced to $405,000.00, and what costs should be allowed. The respondents state that Agriculture Canada understood that the vast majority of EOVG's selling costs under the 1991 Agreement were disclosed in the application and that any costs incurred by its selling agency County Pride would be limited to brokerage fees and minor market development costs in the range of thirteen per cent of the selling price. Instead, the respondents state that County Pride's selling costs were significantly higher, being 37.7% to 40.3% of the total selling price. In the alternative, the respondents seek an Order pursuant to section 18.4 of the Federal Court Act directing a trial of the issues raised in this application.

ANALYSIS

     The Federal Court of Appeal in Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742 (C.A.), affirmed (1994) 176 N.R. 1 (S.C.C.), set out the principal requirements which must be satisfied before mandamus will issue:

1.      There must be a public legal duty to act;

2.      The duty must be owed to the applicant;

3.      There is a clear right to performance of that duty, in particular:

a. the applicant has satisfied all conditions precedent giving rise to the

duty;

b. there was (i) a prior demand for performance of the duty; (ii) a reasonable time to comply with the demand unless refused outright; and (iii) a subsequent refusal which can be either expressed or implied, e.g. unreasonable delay;

4.      Where the duty sought to be enforced is discretionary, the following rules      apply:

a. in exercising a discretion, the decision-maker must not act in a manner which can be characterized as "unfair", "oppressive" or demonstrate "flagrant impropriety" or "bad faith";

b. mandamus is unavailable if the decision-maker's discretion is characterized as being "unqualified", "absolute", "permissive" or "unfettered";

c. in the exercise of a "fettered" discretion, the decision-maker must act upon "relevant", as opposed to "irrelevant", considerations;

d. mandamus is unavailable to compel the exercise of a "fettered discretion" in a particular way; and

e. mandamus is only available when the decision-maker's discretion is "spent"; i.e., the applicant has a vested right to the performance of the duty.

5.      No other adequate remedy is available to the applicant;

6.      The order sought will be of some practical value or effect;

7.      The court in the exercise of its discretion finds no equitable bar to the      relief sought; and

8.      On a "balance of convenience" an order in the nature of mandamus should      issue.

     Nothing about this case is simple. The facts will depend on the Court's interpretation of a number of technical documents and, of course, on the credibility and reliability of oral testimony. In turn, the law involves resolution of difficult questions requiring the examination and extent of the Minister's duty under the statute which has been rendered even more complex because of the receivership of those who were to be the beneficiaries of this loan guarantee programme. It would be inappropriate to attempt to resolve these kinds of issues on the basis of documentary evidence by motion. The application for mandamus is therefore dismissed with costs in the cause.

     Hopefully, however, the steps taken by the parties up to this point should not be wasted. Once the parties have read these reasons, I am prepared to meet with them at their request to discuss directions for transforming this into an appropriate kind of hearing and to expedite the process.     

O T T A W A

March 7, 1997                      "James A. Jerome"

                             A.C.J.