Judgments

[1993] 3 F.C. 199

T-2448-90

The Canadian Association of Regulated Importers, Parkview Poultry Ltd., Bertmar Poultry Ltd., George Tsisenpoulos, Henry Neufeld, Zigmond Tibay, Henry Kikkert, Eva Szasz Peterffy, Paul Dinga, C & A Poultry Ltd., Zoltan Varga, Jake Drost, George Drost, Joe Drost, Melican Farms Ltd., Joe Speck, Marinus Kikkert, Checkerboard Hatchery, Brampton Chick Hatching Co. Ltd., Zoltan Koesis, Roe Poultry Ltd., Gabe Koesis, Henry Fois (Applicants)

v.

Attorney General of Canada, Canadian Broiler Hatching Egg Marketing Agency, Canadian Hatchery Federation (Respondents)

Indexed as: Canadian Assn. of Regulated Importers v. Canada (Attorney General) (T.D.)

Trial Division, Reed J.—Toronto, January 29; Ottawa, April 1, 1993.

Judicial review — Prerogative writs — Certiorari — Application to quash import quota allocation for hatching eggs and chicks — Allocation based on market share rather than historical record of imports — Indirect notice of proposed system to some hatcheries, no notice to importing broiler chicken producers — Requirements of fairness varying with nature of decision under review — Minister exercising delegated statutory authority — Implied principle Parliament intending statutory powers would be exercised in accordance with administrative law rules of fairness, including notice to those affected and opportunity to comment thereon — Established market position, economic viability based thereon sufficient interest to found claim for judicial review — Not impractical to give notice — Decision applied as binding — Based on irrelevant considerations — Not unauthorized subdelegation.

Foreign trade— Minister for International Trade deciding to allocate import quotas for hatching eggs and chicks based on market share, rather than on historical record of imports — Export and Import Permits Act, s. 5(1)(b) providing for control of importation of products “for the purpose of supporting any action taken under the Farm Products Marketing Agencies Act” — Reallocation of economic rent main focus of new system — Improper purpose for exercise of Minister’s authority pursuant to Export and Import Permits Act, s. 8(1) — Secretary of State adopted as his own decision made by Minister for International Trade — Not unauthorized subdelegation of authority.

This was an application to quash the decision of the Minister for International Trade and its adoption by the Secretary of State for External Affairs to allocate import quotas for hatching eggs and chicks to hatcheries across Canada based on market share rather than to traditional importers on the basis of their historical record of imports. Market share is the percentage of the total Canadian production of hatching eggs and chicks which a particular hatchery produces. The applicants also sought an order requiring the Secretary of State for External Affairs to allow them to make representations and submissions on any proposed quota allocation scheme before it is adopted, and an interim order directing the Minister to issue quotas for hatching eggs and chicks to those who have historically imported eggs and chicks. The grounds for the challenge were that the rules of natural justice were not met because the applicants did not have an effective opportunity to make representations with respect to the allocation scheme before it was decided upon; the Minister considered extraneous and irrelevant considerations in reaching his decision; and the Minister who had the authority under the Act to make the decision was not the Minister who made the decision.

Some of the hatcheries had indirect notice of the allocation system being contemplated, but no formal notice was given or representations sought by the Minister. The importing broiler chicken producers did not receive any notice.

The Export and Import Permits Act, paragraph 5(1)(b) provides that the importation of products may be controlled “for the purpose of supporting any action taken under the Farm Products Marketing Agencies Act”. The applicant argued that similarly a system of quota allocation should support that purpose.

Export and Import Permits Act, subsection 8(1) provides that “the Minister” may issue a permit to import goods which have been placed on the Import Control List, subject to “such other terms and conditions as are described in the permit or in the regulation”. The Secretary of State for External Affairs was the designated Minister for the purpose of that subsection and issued the permits, but the Minister for International Trade initially made the decision as to how quota would be allocated. Government Organization Act, 1983, section 4 provides that a Minister for International Trade shall be appointed to assist the Secretary of State for External Affairs in carrying out his responsibilities relating to international trade. Section 6 provides that a minister appointed pursuant to section 4 shall act with the concurrence of the Minister in carrying out his responsibilities.

Held, the application should be allowed.

The Minister, in deciding how to allocate import quotas, was exercising a statutory power which had been delegated to him. It caused considerable economic harm to the applicants and others. There was an implied principle that Parliament intended that the statutory powers being exercised in this case would be exercised in accordance with the administrative law rules of fairness, which included notice to the applicants of what was being proposed and an opportunity to comment thereon. There need not exist a “right” to bring an application for judicial review. It is sufficient if the applicant can demonstrate an “interest” which justifies the application for judicial review. In some cases that interest may be only a “legitimate expectation”. The applicants may not have had a “right to import”, but for many years they had been importing in an unregulated environment. They had established a position in the market and an economic viability based on this practice of importing. They established an interest sufficient to found a claim for review of the Minister’s decision respecting the allocation of import quotas. It would not have beeen impractical to give those affected by the allocation decision an opportunity to comment thereon. There were not a large number of persons affected and they were known. Although personal and individual notice to every person affected was not required, some sort of general notice, perhaps by newspaper notice, and an opportunity to submit representations was required before a decision was taken. Policy decisions are not necessarily immune from judicial review. What is important is an assessment of the effects of the decision. The decision was treated as setting down rules according to which permits would be and were strictly issued. These were not guidelines for internal administrative use. It was applied as a binding decision with respect to the issuance of permits. No discretion was left to an official acting in the name of the Minister to depart from the system of quota allocation detailed in the notice to importers. It was clear from the Minister’s responses to representations after hatching eggs and chicks were added to the Import Control List that his mind was closed. The responses were framed to justify the decision.

The Minister’s decision was based on irrelevant considerations. The quota allocation system adopted had a destabilizing effect on the market. It was not evident that the Ministers were apprised of the fact that the end product market for broiler chickens was a closed market, the effect on the concentration of the markets, or of the disruptive effects which the system would likely cause to the market. There was evidence that the purpose of the allocation system was to remove economic rent from the small number of chicken producers, who operated in Ontario and from hatcheries who depended upon imports, and to transfer that rent arising from imports to the hatcheries generally. The reallocation of economic rent was the main focus of the new system. That was not a proper purpose for an exercise of the Minister’s authority pursuant to subsection 8(1) of the Export and Import Permits Act.

While the Minister for International Trade may have made the decision in question, it was done with the approbation of the Secretary of State for External Affairs. The Secretary of State adopted as his own the decision made by the Minister for International Trade. It was not an unauthorized subdelegation of authority.

An interim order that quota be allocated to historical importers may no longer be reasonable as certain shifts of allocation have already taken place. But not to grant the interim order seemed to deny a remedy to which the applicants are entitled: to be retained in the positions they were in prior to the decision which has been successfully challenged, was taken, until a decision is properly made. Therefore an interim order issued directing the Minister not to effect any more retrieval or “claw back” of quota from the historic importers, without prejudice to a revision to that order being made after arguments from the parties with respect to the practicality of issuing an interim order in the terms sought by the applicants.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Export and Import Permits Act, R.S.C., 1985, c. E-19, ss. 5(1)(b), 8(1).

Farm Products Marketing Agencies Act, R.S.C., 1985, c. F-4.

Government Organization Act, 1983, S.C. 1980-81-82-83, c. 167, ss. 4, 5, 6.

Interpretation Act, R.S.C., 1985, c. I-21, s. 24(2).

CASES JUDICIALLY CONSIDERED

applied:

Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311; (1978), 88 D.L.R. (3d) 671; 78 CLLC 14,181; 23 N.R. 410; Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441; (1985), 18 D.L.R. (4th) 481; 12 Admin. L.R. 16; 13 C.R.R. 287; 59 N.R. 1; Schmidt v. Secretary of State for Home Affairs, [1969] 2 Ch. 149 (C.A.).

distinguished:

Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2; (1982), 137 D.L.R. (3d) 558; 44 N.R. 354; affg Maple Lodge Farms Ltd. v. R., [1981] 1 F.C. 500; (1980), 114 D.L.R. (3d) 634; 42 N.R. 312 (C.A.).

considered:

Regina v. Liverpool Corpn., Ex parte Liverpool Taxi Fleet Operators’ Association, [1972] 2 Q.B. 299 (C.A.); Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1992] 2 F.C. 130; (1991), 87 D.L.R. (4th) 730; 135 N.R. 217 (C.A.).

referred to:

Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304; Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374 (H.L.); Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.).

AUTHORS CITED

Oliver, Dawn. “Is the Ultra Vires Rule the Basis of Judicial Review?”, [1987] Pub. L. 543.

Reid, Robert F. and Hillel, David. Administrative Law and Practice, 2nd ed., Toronto: Butterworths, 1978.

Wade, E. C. S. and A. W. Bradley, Constitutional and Administrative Law, 10th ed., Longman Inc., New York, 1985.

Walker, Clive. “Review of the Prerogative: The Remaining Issues”, [1987] Pub. L. 62.

APPLICATION to quash the decision of the Minister for International Trade and its adoption by the Secretary of State for External Affairs to allocate import quotas with respect to hatching eggs and chicks to hatcheries based on market share rather than to traditional importers based on the basis of their historical record of imports. Application allowed.

COUNSEL:

Paul J. Stott and John T. Pepall for applicants.

P. Christopher Parke for respondent Attorney General of Canada.

François Lemieux for respondents Canadian Broiler Hatching Egg Marketing Agency, Canadian Hatchery Federation.

SOLICITORS:

Abraham, Duggan, Hoppe, Niman, Stott, Toronto, for applicants.

Deputy Attorney General of Canada for respondent Attorney General of Canada.

Osler, Hoskin and Harcourt, Ottawa, for respondents Canadian Broiler Hatching Egg Marketing Agency, Canadian Hatchery Federation.

EDITOR’S NOTE

The Executive Editor has decided that Her Ladyship’s 42-page reasons for order should be reported as abridged. Omitted are some 20 pages under the heading “Some of the Relevant Facts and the Legislative Framework”. An Editor’s note provides the substance of the deleted material in a condensed form.

The following are the reasons for order rendered in English by

Reed J.: The applicants challenge a decision made by the Minister for International Trade to allocate import quotas with respect to hatching eggs and chicks to hatcheries across Canada on the basis of market share rather than to traditional importers, including the applicants, on the basis of their historical record of imports. Market share in this regard means the number of hatching eggs and chicks which a particular hatchery produces and which are used in the broiler chicken production market as a percentage of the total number of hatching eggs and chicks produced in Canada which are used in that market. The applicants seek an order quashing the import allocation quota decision.

The applicants seek an order in the nature of mandamus directing the Minister to issue (at least temporarily) quotas for hatching eggs and chicks to those individuals who have historically imported eggs and chicks. The applicants seek an order of mandamus directing the Minister to give them an opportunity to be heard and make submissions on any scheme for the distribution of import quotas for hatching eggs and chicks before its implementation.

The applicants challenge the Minister for International Trade’s import allocation decision on the grounds that: (1) the rules of natural justice were not met because the applicants did not have an effective opportunity to make representations with respect to the allocation scheme before it was decided upon; (2) the Minister took into account extraneous and irrelevant considerations in reaching his decision; (3) the Minister who has the authority under the Act [Farm Products Marketing Agencies Act, R.S.C., 1985, c. F-4] to make the decision was not in fact the Minister who made that decision.

The Farm Products Marketing Agencies Act provides for the establishment of a National Farm Products Marketing Council which can recommend to the Minister the establishment of marketing agencies for farm products. Public hearings have to be held prior to the making of such recommendation. The Act further provides that marketing agencies may be established by a proclamation of the Governor in Council.

By 1983, the importation of hatching eggs and chicks had become a concern for those in the industry who did not import. It was in October of that year that the Canadian Broiler Hatching Egg Producers Association proposed to the Council that a marketing agency for hatching eggs be established. Following public hearings, Council recommended creation of such an agency to the Governor in Council. The Canadian Broiler Hatching Egg Marketing Agency was established, by proclamation, in late 1986. It had authority to establish a quota system. The Agency’s powers related only to interprovincial and export trade. Since intraprovincial trade falls under provincial jurisdiction, a comprehensive plan could not be put in place absent the co-operation of the provinces. When the Agency was first set up, but three provinces bought into the scheme. Two others came on board later, such that 90% of Canadian broiler hatching egg production was covered. The Agency cannot regulate imports: that is controlled under the Export and Import Permits Act, R.S.C., 1985, c. E-19. That Act provides for the establishment by the Governor in Council of an Import Control List and gives the Minister power to issue any Canadian resident a permit to import goods included in the List. The Act defines “Minister” as “such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act”. At the relevant time, the Rt. Hon. Joe Clark, the Secretary of State for External Affairs, was the designated Minister.

In 1987 the Agency approached the Agriculture Minister to get eggs and chicks added to the Import Control List. There could not, however, be a blanket prohibition of imports as this would contravene GATT. Also, the Canadian market had traditionally relied upon imports when domestic production fell short of demand. The Agency’s recommendation was that the provincial share of global import be allocated on the basis of historic imports to historic importers with redistribution to be carried out at a later time. Under redistribution, hatcheries within a province would get an allocation based on provincial market share. The industry was thus aware that eggs and chicks might be added to the List and the Government was advised to move quickly to establish import controls to forestall importers from building up their historic import records before imposition of controls. The Government did not, however, act with alacrity and certain producers did exactly as had been anticipated.

At a 1989 meeting held in Ottawa at External Affairs, federal officials put forward a proposition that the first-year quotas be allocated on an historical basis but that in subsequent years the quotas would be gradually removed and given to hatcheries across the country based on percentage of national market share held. The Agency and the Canadian Hatchery Federation were allowed one week to respond. The Agency took the position that the proposal would undermine its provincial allocation efforts. The Federation replied that it had been given inadequate time to consult its membership. The importing broiler chicken producers had no notice at all that a non-traditional import quota allocation was under consideration.

A few months later, hatching eggs and chicks were added to the List and importers were notified that quotas would be set with reference to an applicant’s average level of annual imports from 1984 to 1988 and that in each subsequent year the amount available to historic importers would be decreased by 25% and re-allocated to federally-registered hatcheries across Canada based on national market share. Operators who complained to the Minister that the new quota arrangements would put them out of business were advised to either buy farms with existing hatcheries or purchase import quota from hatcheries in British Columbia allocated quotas for which they had no use.

Natural Justice—Opportunity to be Heard

The applicants concede that some of the hatcheries had indirect notice of the allocation system being contemplated. The Canadian Hatcheries Federation had notified their member associations and there was clearly some trickling down of this information to the hatcheries. At least two hatcheries, the two who are applicants in this case, learned of the proposal and sent the Minister unsolicited representations. No formal notice was given or representations sought however by the Minister.

I think it is conceded that the importing broiler chicken producers did not even receive this indirect notice. Indeed, even if the Ontario Chicken Producers’ Marketing Board had been consulted (there is no evidence that this occurred), that organization, the majority of whose members were in competition with those broiler chicken producers who imported chicks, had no interest in either alerting or representing the importing producers. The import activities were not looked upon with favour by that organization.

Counsel for the applicants argues that the principles of natural justice (fairness) require that individuals in the position of the applicants should have been given an opportunity to be heard before a decision adopting a system of allocation was taken, the effect of which was to transfer economic advantages held by them to their competitors and which was potentially to put at least some of them out of business. Counsel argues that the obligation to be fair is not met by consulting only those who will profit from the proposed decision.

Counsel for the respondents argues that: (1) the type of decision made by the Minister was not one which raises obligations to consult with the various individuals who might be affected—it is of a legislative as opposed to an administrative or judicial nature—what is more, to expect consultation with all those who might be affected is impractical; (2) in any event, the notice to importers was not a decision—it was a policy directive and as such could be changed at any time—the Supreme Court decision in Maple Lodge Farms Ltd. v. Government of Canada , [1982] 2 S.C.R. 2, is relied upon for the characterization of the notice; (3) even if adequate notice had not been given before May 8, 1989, when the notice to importers was issued, any defect on that account was as a practical matter cured because there was adequate opportunity after that date to make representations to the Minister and to have the positions considered before quotas were taken from the traditional importers and allocated to the hatcheries on a nation-wide basis in proportion to their national market share.

With the advent of decisions such as Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311, the importance of distinguishing between administrative and judicial or quasi-judicial decision-making has become less important than was previously the case. The law has departed from pigeonholing decisions into compartments carrying functional labels and according rights of judicial review or fairness to some but not to others. The question to be asked now, regardless of the classification of function, is whether the requirements of fairness have been met with respect to the decision-making process in question. These will vary with the nature of the decision under review.

Even before the Nicholson decision, there was considerable criticism of the use of function classification as a determinative factor in administrative law. In Reid and David, Administrative Law and Practice (2nd ed., 1978), at page 118, the following passage is found:

The usual method of answering any question that arises, such as whether there is a right to receive notice, a right to a hearing, or a right to cross-examine, is to classify the function, which in turn will be the determinative factor on the question asked. This two-fold method is objectionable because it interposes an artificial and unnecessary system of classification between the question and answer sought. It causes the relevance and weight of the various tests available in this branch of the law to be graded for the purpose of classification of the function, rather than for the purpose of answering the question in issue.

That text, as has been noted, was written in 1978 and therefore it refers extensively to the classification of administrative, judicial or quasi-judicial and legislative functions. At the same time, the authors’ criticism of the traditional administrative law approach to determining whether rules of natural justice or fairness apply by relying on classification of function is significant.

In a recent article, D. Oliver, “Is the Ultra Vires Rule the Basis of Judicial Review?”, [1987] Pub. L. 543, the following commentary is found [at pages 543-545]:

[The] substantive rules that are applied when exercising a supervisory jurisdiction could be grouped together as, … “principles of good administration.” They include the requirement of “fairness” in its various guises, and they prohibit the fettering or delegation of discretion, abuse of power, arbitrariness, capriciousness, unreasonableness, bad faith, breach of accepted moral standards, and so on. They require, in other words, legality, rationality, procedural propriety and possibly proportionality.

…

It means that an authority will be regarded as acting ultra vires if in the course of doing or deciding to do something that is intra vires in the strict or narrow sense, it acts improperly or “unreasonably” in various ways: these ways include disregard of the rules of natural justice, unfairness, taking into account irrelevant considerations, ignoring relevant considerations, bad faith, fettering discretion, attempting to raise taxation, interfering with the free exercise of individual liberties, and so on.

This second limb of the ultra vires rule rests on the interpretation of the instrument granting the power: Parliament, or the “donor” of the vires of the authority, is presumed not to have intended that the authority should act in breach of these principles of good administration. This presumption is, in theory at least, rebuttable, in the sense that if, but only if, the instrument granting the power clearly intends that these principles are not to apply, the courts will give precedence to the terms of the Act or other instrument. However, the cases on ouster clauses indicate that the courts are very reluctant to allow statute to override these principles. [Footnotes omitted.]

Wade and Bradley in the text Constitutional and Administrative Law, (10th ed., 1985), at page 594, describe the underlying principle of judicial review as:

Notwithstanding the supremacy of Parliament, the courts impose standards of lawful conduct upon public authorities as a matter of common law, and it is arguable that the power to impose such standards is a constitutional fundamental.

With the breaking down of the boundary between administrative and quasi-judicial decisions, one would expect that, in a similar way, the boundary between so-called legislative decisions and administrative or quasi-judicial decisions would also fall. The respondents refer to the decision in Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735, for the proposition that such is not the case. This decision however must be read in the light of subsequent jurisprudence such as Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441. In that case, it was held that decisions taken in exercise of the royal prerogative are reviewable. In the United Kingdom a similar, although less adventuresome[1] approach is being taken; see Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374 (H.L.). I think the question to be asked is whether, in exercising a statutory authority, the decision-maker has acted fairly in giving those who will be affected thereby an effective opportunity to make representations before the decision is made.

Traditionally, a decision has been classified as being of a legislative nature if it sets out general rules which apply to a large number of persons. This is counterpoised to a decision respecting one specific individual. In the present case, the decision which is challenged sets down rules which govern a very limited segment of the populace. I am not convinced that even under the pre-Nicholson jurisprudence, where classification according to function was a primary consideration, that the present decision would have been characterized as being legislative in nature. I note, for example, that in Regina v. Liverpool Corpn., Ex parte Liverpool Taxi Fleet Operators’ Association, [1972] 2 Q.B. 299 (C.A.), a decision which was general in nature and which affected 300 taxi drivers was held to be subject to judicial review. While the main focus of that decision was the fact that representations had been made that a decision would not be taken without an opportunity to be heard being given to the taxi drivers who would be affected (the reasonable expectations doctrine), review was not refused by characterizing the decision as being as a legislative or policy one.

I think it is sufficient in this case to say that the Minister in deciding how to allocate import quota, was exercising a statutory power which had been delegated to him. While the decision made may have been general, it was general only for a small segment of the population and, in its application, it was very particular. The effect of the decision was to cause considerable economic harm to the applicants and others. There surely is an implied principle that Parliament intended that the statutory powers being exercised in this case would be exercised in accordance with the administrative law rules of fairness. These rules surely include notice to the applicants of what is being proposed and an opportunity (an effective opportunity) to comment thereon. This they did not have.

In the present case, arguments were made with respect to the nature of the applicants’ “right”. The applicants referred to Mr. Justice Le Dain’s comments in Maple Lodge Farms Ltd. v. R., [1981] 1 F.C. 500 (C.A.), at page 509, where he spoke of a “common law right to import”. I have not been referred to any authority which discusses the common-law right to import. At the same time, I do not think the classification of the applicants’ interest as a “right” is necessary in order that they should be accorded an opportunity to make comments on and representations with respect to the particular quota system which was being adopted before it was imposed. As I read the present jurisprudence, it is not necessary to find that a “right” exists in order to bring an application for judicial review. It is sufficient if the applicant can demonstrate an “interest” which justifies the bringing by him or her of the application for judicial review. Indeed, in some cases that interest may be only a “legitimate expectation”. In Schmidt v. Secretary of State for Home Affairs, [1969] 2 Ch. 149 (C.A.), at page 170, it was said that a person’s right to be heard before an “administrative body … depends on whether he has some right or interest, or, I would add, some legitimate expectation, of which it would not be fair to deprive him without hearing what he has to say.”

In the present case the applicants may not have had a “right to import” but, for many years, they had in an unregulated environment been importing. They had established a position in the market and an economic viability based on this practice of importing. There is no doubt they have established an interest sufficient to found a claim for review of the decision taken by the Minister with respect to the allocation of import quotas.

With respect to the argument that it was impractical to give those affected by the allocation decision an opportunity to comment thereon before its adoption, Mr. Drohomereski states in his affidavit that the traditional importers of hatching eggs were approximately 8 to 10 hatcheries out of approximately 65 across the country and that the traditional importers of chicks were a small number of chicken producers in southern Ontario. Counsel for the applicants contests the accuracy of these statements. He notes that the evidence shows that there were a larger number of importing hatcheries (39 out of 47-50), and my reading of the evidence is that there were approximately 32 (or perhaps 45) chicken producers who imported chicks. In any event, it is clear that even if all chick producers, both importing and non-importing, and all hatcheries should have had an opportunity to comment, the number of persons affected was not large. They were known. It would not have been impractical to have provided for notice and an opportunity to make recommendations.

It is trite law that the requirements of fairness differ depending upon a variety of factors including the type of decision being made. I would not want to imply that personal and individual notice to every person affected was required in the present case. But some sort of general notice, perhaps by newspaper advertisement, and an opportunity to submit representations was surely required before a decision was taken. I note that even the umbrella representative organizations, who were consulted, complained about insufficient notice being given to allow for proper consideration of the proposal. (Counsel for the applicants notes that these umbrella organizations now support the scheme since they have discovered how much of a “win” the new system is for them.) I go no further than to say that the rules of fairness require that the persons affected by the decision taken, particularly those who were going to have economic rents which they enjoyed taken away and given to their competitors, should at least have had general notice of what was contemplated and an opportunity to respond thereto and comment thereon before the decision was taken.

With respect to the argument that the May 8, 1989, notice to importers was a policy decision only and therefore no notice was required, this characterization relies heavily on the Supreme Court decision in Maple Lodge Farms. I note first of all that the decision in Maple Lodge Farms dealt with a particular aspect of the allocation of import quota which is not in issue in this case. It dealt with the issuance of supplementary import permits. These permits, the directive stated, would “normally” be issued if the product it was sought to import was not available domestically. The chicken producers in that case sought to import live chickens (a different product as far as the usual classification was concerned from eviscerated chickens). The supplementary permit was refused because, while live chickens were not available domestically, a significant quantity of eviscerated chicken was available.

I am not convinced that the decision in the Maple Lodge Farms case addresses the present fact situation. As I have indicated, the decision in that case was addressed to the issuance of supplementary import permits with respect to which the Minister clearly had a discretionary decision-making authority. That discretion was provided for by the very terms of the notice. It indicated that if certain conditions were met such permits would “normally” be issued. Secondly, however, I am not convinced that classifying a decision as being of a “policy” nature necessarily immunizes it from judicial review; see, for example, Regina v. Liverpool Corpn., supra. For the same reasons that I do not think classifying the decision as “legislative” is useful in the present case, equally I do not think that classifying a decision as a policy decision is helpful either. What is important is an assessment of the effects which actually follow from the decision. In the present case, the decision was not treated as one according the Minister residual discretionary authority although it is not contested that he could have changed the decision. The decision was treated as setting down rules according to which, permits would be and were strictly issued. These were not administrative guidelines for internal administrative use. After the notice to importers was issued, its terms for issuing permits were followed automatically. The decision was being applied as a binding decision with respect to the issuance of permits. No discretion was left to an official acting in the name of the Minister to depart from the system of quota allocation which was detailed in the notice. The effect of the decision was to visit considerable economic loss on the applicants.

With respect to the last argument, whether the ability to write to the Minister after May 9, 1989, constituted notice and an effective opportunity to be heard, this is easily dealt with. It is clear from the responses of the Minister to representations sent to him after May 8, 1989, that his mind was closed. The responses are framed to justify the decision which had been taken. There is no openness to representation exhibited in them. I could not conclude that the fact that the Minister was theoretically able to change his mind after May 8, 1989, meant that letters sent to the Minister after that date constituted a process of effective representation.

The applicants are entitled to an order quashing the decision in issue and requiring that any decision which is subsequently taken is taken in a context which observes the rules of fairness to the extent of giving those affected thereby an opportunity to respond to and comment on the proposed allocation system.

Natural Justice—Irrelevant Considerations

Counsel for the applicant argues that the Minister, in reaching his decision, took into account irrelevant considerations, in fact based his decision on irrelevant considerations, and did not consider relevant factors. The decision in Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.) is relied upon. The Export and Import Permits Act [R.S.C., 1985, c. E-19], paragraph 5(1)(b), provides that the importation of products may be controlled “for the purpose of supporting any action taken under the Farm Products Marketing Agencies Act”. Counsel argues that, similarly, a system of quota allocation should support that purpose. In the present case, it is noted that the allocation system did not support the system of marketing chicks and eggs which had been adopted pursuant to the Farm Products Marketing Agencies Act. It did exactly the opposite. It gave quota to hatcheries who did not need it and had never used imports. It assigned quota to hatcheries in provinces where there had never been much, if any, importing of chicks and hatching eggs. It denied quota to chicken producers and hatcheries who had traditionally imported, placing them in a position where they could not obtain supply. The two-year prospective contracting system for supply reflects the life of a hatching egg flock. Thus when import supply was taken away, it could not be immediately replaced by domestic supply.

There is absolutely no evidence demonstrating how the quota system which was adopted would support the domestic or interprovincial supply management of hatching eggs and chicks. Catherine McKinley, First Vice Chair of the Canadian Hatchery Federation, was cross-examined on her affidavit concerning the effects of imports on the Canadian market. She was asked to identify specific instances in which hatcheries had had contracts cancelled at the last moment because purchasers switched to imports. She could not identify a single instance. Counsel asked:[2]

Q.   So paragraph 12, first sentence, is basically false? “When large chick imports arrive from the U.S., chicken producers … cancel deliveries from the … hatcheries”

She answered:

A.   That’s right.

Similarly she was unable to identify any instance of a chicken producer deferring delivery from a hatchery because of large chick imports from the United States.[3]

Q.  Now, hatcheries are under contract to their grower; right?

A.   To the hatching egg producer?

Q.  Yes.

A.   Yes.

Q.  Were hatcheries cancelling the purchase of domestic eggs? Did they cancel their contracts?

A.   In Ontario they take out a two-year contract.

…

Q.  So the bottom line, ma’am, is paragraph twelve:

“When this happens, hatcheries roll back or cancel their purchases of domestic hatching eggs, leaving the hatching egg producer with surplus hatching eggs.”

In fact, no hatchery cancelled the purchase of surplus hatching eggs when large chick imports arrive from the United States, did they?

A.   “When this happens” refers to the fact that producers who import chicks do not use domestic production …

Ms. McKinley stated in her affidavit that the increase of imports by a relatively small number of importers disrupted the orderly flow of chicks to the market and “[T]his is referred to as bunching in the industry”. On cross-examination when asked to explain how this occurred, she stated:[4]

You are absolutely right that they don’t cause the problem and they are not the sole reason for the problem in any way … bunching is a problem for the whole industry.

…

Q.  Isn’t the real problem here that these 32 chicken producers were customers of hatcheries and they have gone directly to the source of supply that the hatcheries themselves were using for chicks? Isn’t that just the problem? They went around the Canadian hatchery and went directly to the U.S. hatchery for the chick?

A.   That is basically —

…

A.   I have no personal knowledge of how those 34 importers learned how to do it.

Ms. McKinley’s affidavit also alleges that leaving import quota in the hands of traditional importers would allow holders of import quota to put hatcheries without quota out of business because of the lower price of imports. On cross-examination, she admitted that no hatchery had been put out of business. She was unable to explain how this could in fact happen given that the quantity of imports was controlled and the quantity of end product (broiler chickens) was also controlled by quota and price.[5]

Counsel for the applicants notes that the Minister, in his letter of July 11, 1989 to the Canadian Importers’ Association, answers the concerns that have been raised about the allocation system, which has been put in place, by stating that since the system will be phased in over time, there will be time for “new trading patterns to develop”. Counsel for the applicants argues that the creation of new trading patterns is not one of the purposes for which the Minister is entitled to exercise his authority.

There is some difficulty in this case ascertaining exactly what considerations were taken into account by the Minister and upon which he made his decision. The Government has refused to disclose the documentation which was in fact considered by the Ministers. Production of that documentation was sought by the applicants. The respondents claimed privilege on the ground that it was a confidence of the Queen’s Privy Counsel. That the Court could not require production of that document was decided in Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1992] 2 F.C. 130 (C.A.). Leave to appeal was refused by the Supreme Court, [1992] 2 S.C.R. v. Mr. Justice Hugessen in rendering his decision in that case stated, at pages 135-140:

… I am extremely concerned by the government’s invocation of section 39 of the Canada Evidence Act (R.S.C., 1985, c. C-5, in the circumstances of this case. To understand my concern it is necessary to have in mind the scheme of sections 37, 38 and 39 which are grouped together under the heading “Disclosure of Government Information”:

…

It can be seen that this scheme sets out an ascending hierarchy of protected categories. The first category, dealt with in section 37, covers the general “public interest” privilege against disclosure. It requires that the person objecting to disclosure specify the type of public interest which is claimed to be endangered; it then subjects that objection to a judicial examination to determine if the public interest in disclosure, which is at the foundation of our system of justice, outweighs the public interest on which the objection is based. The judicial balancing is required to be made by a superior court and is subject to appeal to the relevant court of appeal, and, with leave, to the Supreme Court of Canada.

Section 38 deals with situations in which Parliament has clearly decided that there is a higher public interest against disclosure. It applies when the objection is based on possible harm to Canada’s international relations, national defence or security. The objection can only be determined by the Chief Justice of this Court or a judge designated by him …

Finally, in section 39, Parliament has decreed an absolute privilege with respect to confidences of the Queen’s Privy Council for Canada. The mere taking of the objection by the production of the requisite certificate forecloses not only the disclosure of the information sought but also any inquiry into whether or not the protected interest outweighs the interests of the administration of justice. Indeed the section, by implication, denies that there can be any competing interest. No judge of any court may question the fiat of a Minister of the Crown or the Clerk of the Privy Council, no matter how insignificant the protected communication or how vital it may be to the proper resolution of a question before the Court.

We have some clues as to the nature of the documents objected to in this case. They may be briefly described as communications from senior civil servants to the responsible Minister regarding the proposed exercise of a ministerial discretion under the Export and Import Permits Act (R.S.C., 1985, c. E-19).

…

The objection, however, was in fact taken under section 39. The only possible justification for this appears to be in the wholly fortuitous circumstance that the internal organization of the Department of External Affairs was such that two Ministers were nominally responsible for the decision. It seems clear from the material that the decision was in fact taken by the Minister for International Trade, but that it required the concurrence of the Secretary of State for External Affairs. That fortuitous circumstance alone could serve to bring the documents within the ambit of paragraphs (d) and (e) of subsection 39(2), as certified by the Clerk of the Privy Council.

In the circumstances, we can, of course, only guess at the true nature of the documents objected to from the few bits of information available. If, however, I am correct in thinking that the documents are as I have described them to be, I consider this case to be a gross abuse of executive power, but one which Parliament, sadly, has clearly intended to be out of reach of judicial scrutiny.

Counsel for the applicants argues that where the Ministers have refused to disclose pertinent information, by relying on a technicality (that the document went to two Ministers instead of one) in order to assert absolute privilege, this should lead to inferences being drawn against the Minister. At the very least he argues that the burden of proving that the Minister took into account only relevant considerations should be borne by the Minister.

As I have noted, there is no evidence demonstrating how the system of allocation was designed to support a domestic supply management program apart from some general statements from self-interested groups that this would be so. The objective evidence is that the quota allocation system adopted had a destabilizing effect on the market(s). It is not evident that the Minister considered factors such as the increased concentration to the market which would arise from the system adopted, the fact that the umbrella organizations which were consulted stated that the time which was given for them to respond was inadequate, had information communicated to them concerning the destabilizing effect of the scheme. There is no evidence that the Minister considered the Deloitte, Touche study upon which counsel for the applicants relies as a possible ground for the adoption of the allocation system which was chosen. That study did not include a consideration of allocation on the basis of national market share and Mr. Gosselin who was cross-examined on the affidavit he had filed, in support of the respondents’ position, stated that he had not read the report and asked why he would.[6] Counsel for the applicants argues that the respondents’ reliance on that study as having been a consideration in reaching a decision on the allocation system is a complete “fairy story” given that there is no evidence that, at the time, it was considered by either the relevant departmental officials or the Minister.

Counsel for the applicants argues that the system of allocation which was chosen had as its purpose the transfer of profits earned by the broiler chick importers to the hatcheries. He argues that an income redistribution system is not a purpose which falls within the Farm Products Marketing Agencies Act. He argues that the main, if not the only, purpose of the allocation system which was adopted was this reallocation of economic rents. It is useful to quote some of the cross-examination of Pierre Gosselin, who at the time was Director General of the Special Trade Relations Bureau of the Department of External Affairs. Counsel for the applicants continually pressed him to identify the factors which were taken into account in coming to the decision to adopt the allocation system in question. Some of that cross-examination follows:[7]

The reason we did what we did is, as I expressed it to you, we thought that this would be the most equitable and least disruptive approach to a difficult problem of allocation.

Q.236    Q. Was one of your purposes to eliminate an economic advantage over competitors?

A.   Yes.

Q.239    Q. Hatcheries now control 41 percent of the production in Ontario by ownership, and about that percentage all across the country? Why target one group and not another?

A.   Well, I guess—I can’t answer that question. What I am saying is that they saw the people who raise the hatching eggs as separate from the hatchery function. All they are saying here is that—

Q.  I don’t understand that.

A.   They are saying, don’t give the right to import to chicken growers.

Q.310    A. What we were trying to deal with is to make sure that the economic rent that could result from importing would be spread in such a way as it would not be disruptive to the market.

Q.  What evidence did you have in hatching eggs that an historical system would be disruptive to the market?

A.   I guess we come back to the same old sources, but we had advice from the people in the trade that that could be the case. We had our own observations—

Q.  Where is that advice that the economic rent would be disruptive?

A.   The fact that you import confers on you economic rent the moment the domestic price is different from the import price. So by implication that is what the whole allocation issue turns on.

I find counsel’s characterization of the evidence persuasive: there is no evidence as to how the allocation system supports any domestic supply management program; there is positive evidence that it had and could be expected to have a disruptive effect on the market; it is not clear that the Ministers were apprised of the fact that the end product market for broiler chickens was itself a closed market; it is not clear that they were made aware of the effect on the concentration of the markets which the system would have; it is not clear that they were made aware of the disruptive effects which the system would likely cause to the market. There is evidence that the purpose of the allocation system was to remove economic rent from the small number of chicken producers, who operated in Ontario and from hatcheries who depended upon imports. There is evidence which make it clear that a purpose, if not the main purpose, of the allocation system was to transfer that rent arising from imports to the hatcheries generally and to take it away from the chicken producers. The fact situation in this case is not one where a reallocation of economic rent is a side effect of a system which is designed to primarily focus on supply management. It is to be expected that such management schemes will always involve some redistribution of rents. The facts in this case however, disclose that the main focus of the allocation was simply the transfer of profits from one segment of the market to another. As such, it is not a proper purpose for an exercise of the Minister’s authority pursuant to subsection 8(1) of the Export and Import Permits Act. The applicants are entitled to an order quashing the Minister’s decision because it was based on irrelevant considerations and requiring that any subsequent decision be made taking into account relevant considerations only.

Minister for International Trade—Not the Proper Decision-Maker?

As has been noted subsection 8(1) of the Export and Import Permits Act provides that “[t]he Minister” may issue a permit to import goods which have been placed on the Import Control List, subject to “such other terms and conditions as are described in the permit or in the regulation.” There is no dispute that the Secretary of State for External Affairs (Mr. Clark) was the designated Minister for the purpose of that subsection. There is also no evidence than anyone other than Mr. Clark issued the permits in question. Mr. Clark was not the Minister however who initially made the decision as to how quota would be allocated. It is conceded that this was done by the Minister for International Trade (Mr. Crosbie).

Sections 4, 5 and 6 of the Government Organization Act, 1983 [S.C. 1980-81-82-83, c. 167] provide:

4. A Minister for International Trade shall be appointed by commission under the Great Seal to assist the Minister [Secretary of State for External Affairs] in carrying out his responsibilities relating to international trade.

5. A Minister for External Relations may be appointed by commission under the Great Seal to assist the Minister in carrying out his responsibilities relating to the conduct of Canada’s international relations.

6. A minister appointed pursuant to section 4 or 5 shall act with the concurrence of the Minister in carrying out his responsibilities and shall make use of the services and facilities of the Department of External Affairs.

Subsection 24(2) of the Interpretation Act, R.S.C., 1985, c. I-21 states:

24. …

(2) Words directing or empowering a minister of the Crown to do an act or thing, or otherwise applying to that minister by his name or office, include

(a) a minister acting for that minister or, if the office is vacant, a minister designated to act in the office by or under the authority of an order in council;

(b) the successors of that minister in the office; and

(c) his or their deputy.

In the present case, it is argued that the decision of the Minister for International Trade was made in the context of this statutory framework and that in making the decision in question he did so with the concurrence of the Secretary of State for External Affairs. Alternatively, it is argued that the Secretary of State for External Affairs, at the very least, adopted the Minister for International Trade’s decision by issuing permits, or authorizing the issue of permits in accordance therewith.

I have been persuaded that while the Minister for International Trade may have made the decision in question, this was done with either the prior or, at least, the eventual approbation of the Secretary of State for External Affairs. I would characterize the decision-making process as one in which the Secretary of State for External Affairs adopted, as his own, the decision which had been made by the Minister for International Trade. I would not characterize this as an unauthorized subdelegation of authority.

Remedies

The applicants seek an order in the nature of certiorari quashing the decision of the Minister for International Trade and its adoption by the Secretary of State for External Affairs which established an import quota allocation system granting, on a phase-in basis, quota to hatcheries only, across Canada on a national market share basis. The applicants seek an order in the nature of mandamus requiring the Secretary of State for External Affairs to allow the applicants to make representations and submissions on any proposed quota allocation scheme before it is adopted.

The applicants ask that an order in the nature of mandamus be issued directing the relevant Minister, the Secretary of State for External Affairs, to issue import quotas for hatching eggs and chicks to those individuals and companies who have historically imported eggs and chicks. As I understand this last, the remedy is requested as an interim measure until the Minister’s decision is made pursuant to the above-noted mandamus order.

I assume as well that the applicants seek an order that the Minister, in making any future decision, must take into account only relevant considerations.

It is clear that the applicants are entitled to an order in the nature of certiorari quashing the decision which has been made. It is clear that the applicants are entitled to an order in the nature of mandamus requiring the Minister to make a decision only after the applicants have had an opportunity to make representations and on the basis of relevant considerations only. What is more difficult is the request for an interim order that quota be allocated to historical importers. While this may have been a reasonable interim order request in 1990, I have asked myself whether it continues to be so in 1993 when certain shifts of allocation have already taken place. In the circumstances, an interim order will issue directing the Minister not to effect any more retrieval or “claw back” of quota from the historic importers without prejudice to a revision to that order being made after I have heard argument from the parties with respect to the practicality of issuing an interim order in the terms sought by the applicants. Not to grant the applicants an interim order of the type they seek, does in a certain sense seem to deny them a remedy to which they are entitled: to be retained in the position they were in prior to the decision, which has been successfully challenged, was taken, until a decision is properly made. At the same time, the Court is concerned about practicality and effect of any order which might be given. This is the kind of situation in which an agreed solution by the parties would be useful.

Conclusion

In any event an order will issue, as requested by the applicants, quashing the decision of the Minister for International Trade, as adopted by the Secretary of State for External Affairs, allocating import quota for hatching eggs and chicks to hatcheries only, across Canada, on national market share basis.

An order will issue requiring that the responsible Minister, the Secretary of State for External Affairs, make a decision with respect to the system of import quota allocation only after having received submissions thereon from the applicants and by taking into account only relevant considerations.

An interim order in the nature of an injunction will issue requiring that the Secretary of State for External Affairs not implement any further retrieval or claw back of quota from historic importers until a decision as set out above is taken. The issuance of such an interim order is without prejudice to the right of the applicants to apply to me for a modification of this interim order so as to make it accord with the terms of that sought in their motion. Such application however must demonstrate that the interim order which is sought is a practical interim order.

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