Judgments

[1997] 1 F.C. 405

T-1810-95

K.F. Evans Ltd. (Applicant)

v.

The Minister of Foreign Affairs (Respondent)

Indexed as: K.F. Evans Ltd. v. Canada (Minister of Foreign Affairs) (T.D.)

Trial Division, Reed J. — Vancouver, September 3; Ottawa, October 28, 1996.

Foreign trade — Foreign Affairs Minister denying permit to export unprocessed logs under Export and Import Permits Act, applicant not having secured approval of provincial advisory committee — Committee established by B.C. government to advise provincial Minister of Forests regarding exemptions from provincial legislation requiring use or processing in B.C. of timber harvested from certain lands — Applicant’s logs not caught by provincial statute but requiring federal export permit — Logs under federal export control since 1940 (War Measures Act) — Minister’s officials adopting practice of deferring to provincial advisory committee regarding B.C. logs — Applicant making application, under protest, to B.C. Ministry of Forests — Provincial advisory committee recommending to Minister export permits be refused as fair offer received for purchase of logs by B.C. processor — Price lower than available on international market — Minister’s decision quashed upon judicial review as Minister, delegates fettering discretion, abdicating decision-making responsibility.

Administrative law — Judicial Review — Certiorari — Application for federal export permits denied as applicant not having obtained approval of provincial export advisory committee — Discretionary powers — Adoption of general policies — Policy of using provincial committee’s expertise — Neither Minister nor delegates making independent decision — Treating provincial committee’s decision as determinative — Fettering discretion — Abdicating decision-making responsibility — Principles of fairness breached in reliance upon evidence prejudicial to applicant without notice given of existence.

Construction of statutes — Export and Import Permits Act — Logs placed on Export Control List “to ensure … an adequate supply … in Canada for defence or other needs” — Minister arguing “other needs” allowing export control to uphold provincial policies, for environmental considerations or for reasons of international trade — Phrase “for … other needs” to be interpreted in accordance with ejusdem generis rule of statutory construction — “Other needs” must have national or federal character — Must be a “need” — Difficult to accept existence of provincial policy within “defence or other needs”.

This was an application to set aside the Minister’s decision under section 7 of the Export and Import Permits Act, refusing permits to export a quantity of unprocessed logs from Canada because the applicant had not obtained approval from the British Columbia Timber Export Advisory Committe (TEAC). The Committee had been established to advise the provincial Minister of Forests with respect to exemptions from legislation requiring the processing in British Columbia of certain timber harvested in that Province. Although the logs came from private rather than federal lands and were not caught by the provincial statute, they are subject to section 7 of the Act which prohibits their exportation unless a permit is obtained from the Minister of Foreign Affairs and International Trade. Logs have been under federal export control since 1940 (War Measures Act) when their supply was a matter of concern. The applicant applied to the Minister for export permits without first making an application to the British Columbia Ministry of Forests; it was advised that the applications were incomplete because the TEAC process had not been gone through. Under that process, notice of an application for permission to export logs is sent by the British Columbia Ministry of Forestry to processors of logs within the Province who wish to purchase the logs that are the subject of the notice. If offers are received, they are referred to TEAC for determination as to whether they are fair. If TEAC determines that the offers are fair, there is determined to be a lack of supply in British Columbia and federal permission to export is not given. Applicant made application, under protest, to the provincial Ministry of Forests. Offers for applicant’s logs were received and TEAC determined them to be fair. Applicant could have obtained a much higher price on the international market. The applicant submitted that the TEAC process is flawed and that, by deferring to decisions made by that body, the Minister has abdicated his decision-making responsibility or, at least, fettered his discretion. Three issues were raised: 1) whether there was a fettering of discretion in making the decision; 2) whether extraneous and improper considerations were taken into account in making the decision; and 3) whether the applicant was denied an adequate opportunity to be heard.

Held, the application should be allowed.

1) Neither the Minister nor his delegates made an independent decision on the merits of the applicant’s applications. Documents describing the role of the TEAC process demonstrate that its role was treated as determinative of whether to grant or refuse an export permit. There was in essence a turning over of the whole decision-making authority to TEAC. The acceptance that other exporters of logs, of the same type and from a similar location as the applicant’s logs, could be granted permits to export, as a result of a decision that there was a surplus of logs available, while on the same day the applicant was denied a permit because there was an “extreme shortage of logs” also indicates a “hands-off” approach, an abdication of decision-making responsibility, by the Minister and his delegates.

2) The use of the word “may” in section 3 of the Act grants the discretionary decision-making authority but does not establish the scope of factors that should be taken into account in rendering decisions. In so far as paragraph 3(d) is concerned, there is no agreement or memorandum of understanding between the federal government and British Columbia concerning the control of the export of logs from that Province. As to paragraph 3(e), the export of logs was placed on the Export Control List “to ensure that there is an adequate supply and distribution of the article in Canada for defence or other needs”. Phrases such as “for … other needs”, when used in the context of paragraph 3(e), must be interpreted in accordance with the ejusdem generis rule of construction. The words “other needs” are not synonymous with “for any other purpose”; they must at least have a national or federal character and there must be a “need”.

3) Neither an oral hearing nor individual consideration by the Minister personally was required. A copy of a letter stating that there was an extreme log shortage on the British Columbia coast had been provided to TEAC by CIPA Lumber Co. Ltd. In using that letter, TEAC and the Minister relied on evidence prejudicial to the applicant without notice having been given to the latter that it existed. The use of that evidence without notice and an opportunity to respond constitutes a breach of the principles of fairness.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

An Act to amend the Export and Import Permits Act, S.C. 1974, c. 9, s. 1.

Export and Import Permits Act (The), S.C. 1947, c. 17.

Export and Import Permits Act, R.S.C., 1985, c. E-19, ss. 3 (as am. by R.S.C., 1985 (3rd Supp.), c. 12, s. 26), 7 (as am. by S.C. 1991, c. 28, s. 3; 1994, c. 47, s. 107).

Federal Court Rules, C.R.C., c. 663, R. 1618 (as enacted by SOR/92-43, s. 19).

Forest Act, R.S.B.C. 1979, c. 140, ss. 135, 136.

Softwood Lumber Products Export Charge Act, R.S.C., 1985 (3rd Supp.), c. 12, s. 26.

War Measures Act, R.S.C. 1927, c. 206, s. 3.

CASES JUDICIALLY CONSIDERED

DISTINGUISHED:

Teal Cedar Products (1977) Ltd. v. Canada, [1989] 2 F.C. 158 (1988), 19 F.T.R. 35; 92 N.R. 308 (C.A.).

REFERRED TO:

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; Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875; (1972), 26 D.L.R. (3d) 216; Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106; (1983), 143 D.L.R. (3d) 577; 46 N.R. 91; Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.); Rex v. Port of London Authority. Ex parte Kynoch, Limited, [1919] 1 K.B. 176 (C.A.); Capital Cities Communications Inc. v. Canadian Radio-Television Commn., [1978] 2 S.C.R. 141; (1977), 81 D.L.R. (3d) 609; 36 C.P.R. (2d) 1; 18 N.R. 181; In re North Coast Air Services Limited, [1972] F.C. 390; (1972), 32 D.L.R. (3d) 695 (C.A.); British Oxygen Co. Ltd. v. Board of Trade, [1971] A.C. 610 (H.L.); Saunders Farms Ltd. v. British Columbia (Liquor Control and Licensing Branch, General Manager) (1995), 122 D.L.R. (4th) 260; 1 B.C.L.R. (3d) 12; 54 B.C.C.A. 60; 88 W.A.C. 60 (C.A.); Koopman v. Ostergaard (1995), 12 B.C.L.R. (3d) 154 (S.C.); Lavender (H.) & Son Ltd. v. Minister of Housing and Local Government, [1970] 1 W.L.R. 1231 (Q.B.); Starlight Drive-In (1978) Ltd. and Hewitt, Re (1984), 12 D.L.R. (4th) 391; 57 B.C.L.R. 250; 8 Admin. L.R. 49 (S.C.).

APPLICATION to set aside the Minister’s decision under section 7 of the Export and Import Permits Act, refusing permits to export a quantity of unprocessed logs from Canada because the applicant had not obtained approval from the British Columbia Timber Export Advisory Committee. Application allowed.

COUNSEL:

David P. Church and Andrew J. Pearson for applicant.

Darlene M. Patrick for respondent.

SOLICITORS:

Camp Church & Associates, Vancouver, for applicant.

Deputy Attorney General of Canada for respondent.

The following are the reasons for order rendered in English by

Reed J.: The applicant challenges a decision made by the respondent Minister under section 7 of the Export and Import Permits Act, R.S.C., 1985, c. E-19 [as am. by S.C. 1991, c. 28, s. 3; 1994, c. 47, s. 107]. The applicant was refused permits to export a quantity of unprocessed logs from Canada because the applicant had not obtained approval, from the British Columbia Timber Export Advisory Committee (TEAC), to export the logs. TEAC is an advisory committee established by the British Columbia government to advise the provincial Minister of Forests on whether or not to exempt timber from the provisions of section 135 of the British Columbia Forest Act, R.S.B.C. 1979, c. 140.[1]

The logs were purchased by the applicant from a private landowner and do not fall under section 135 of the Forest Act. The logs, however, are subject to section 7 of the federal Export and Import Permits Act. They cannot be exported unless a permit is obtained from the Minister of Foreign Affairs and International Trade (the Minister).[2] The applicant’s position is that the TEAC process is flawed, and that, in any event, by deferring to decisions made by that body the Minister has abdicated his decision-making responsibility or, at least, fettered his discretion.

Federal Legislative Framework

Section 3 of the Export and Import Permits Act provides that the Governor in Council may establish an Export Control List and include thereon any article that the Governor in Council deems it necessary to control for certain listed purposes.[3] One of the purposes for which the Governor in Council may place a product on the list, and that used in this case, is “to ensure that there is an adequate supply and distribution of the article in Canada for defence or other needs”.[4]

Logs were placed under federal export control in 1940, pursuant to provisions of the War Measures Act, because of supply concerns existing at that time. Control of export was continued under the Export and Import Permits Act when this legislation was first enacted in 1947 [S.C. 1947, c. 17].[5] The relevant provision is now paragraph 3(e). What is now paragraph 3(b) of the Export and Import Permits Act, allowing products to be controlled to promote further processing in Canada, was added in 1974.[6] Paragraph 3(c.1), allowing products to be controlled to support the enforcement of the Softwood Lumber Products Export Charge Act, was added in 1985.[7] While the 1947 legislation allows for the control of logs to ensure an adequate supply and distribution of such in Canada or in order to implement an intergovernmental arrangement or commitment, the relevant affidavit filed on behalf of the respondent states that the logs were put on the Export Control List for the former purpose.[8]

Process Re: Permit Requests

At the time the applicant made applications to the Minister for export permits, one dated February 21, 1995, and another dated April 4, 1995, (applications numbered 228989 and 228991 respectively) the applicant knew that the practice followed by the officials of the Department of Foreign Affairs and International Trade (the Department), with respect to the exportation of logs harvested in British Columbia, was to defer to what is referred to as “the TEAC process”.

The applicant was highly critical of the TEAC process, for a number of reasons. The applicant applied to the Minister for export permits without first making an application to the British Columbia Ministry of Forests (the first step of the TEAC process). In response to the applicant’s February 21, 1995 application, a letter, dated April 5, 1995, was sent to the applicant by Mr. Hobson, the Director General, Export and Import Controls Bureau of the Department, telling the applicant that the Minister had decided that the application was incomplete because the applicant had not gone through the TEAC process. The processing of the many requests for permits that are received by the Minister is normally done by departmental officials, as the Minister’s delegates, without direct reference to the Minister. In this case, however, since Mr. Evans was challenging the basis of the decision-making process being used, his application and letter of February 21, 1995, was brought to the attention of the Minister before the April 5, 1995 reply was sent. This was done under cover of a memorandum, dated March 21, 1995, from department officials to the Minister.

This memorandum explained the use of the TEAC process for deciding whether a federal export permit should be issued. The memorandum explained that it was only in British Columbia that a supply test was used, for a federal export permit to be issued, because British Columbia was the only province to restrict the export of logs for the purpose of ensuring an adequate supply to provincial processors. The memorandum stated that it was federal policy to work closely with the provinces so that exports from federal lands were treated equally with exports from provincial lands. The memorandum acknowledged that the practice being followed might be challenged because it did not embody a federal policy distinct from that applied by the provincial government and because federal officials were not represented on the responsible bodies. The memorandum suggested, however, that no full review of the procedure presently in place be undertaken because of likely political reaction by the British Columbia government and because sensitive consultations were underway with the United States concerning softwood lumber. The memorandum discussed the possibility of granting the applicant the permit he sought but recommended against it because that course of action would open the floodgates to other similar applications and it would lead to criticism from the British Columbia government as well as from environmental groups.

While reference is made in the memorandum to the lands as federal lands, the lands from which the applicant’s logs came are private lands, the underlying Crown grant for which was originally federal. They are not federal lands. Also, with respect to the floodgates argument it must be noted that only 6% of British Columbia land falls outside provincial control and of this only 1.5% of the timber harvested in British Columbia is from private lands originating from federal Crown grants. With respect to possible concerns by environmental groups, the logs the applicant sought to export were not from old-growth forests. In any event, the Minister endorsed the recommended response that had been prepared for him, by officials, and the April 5 letter was sent to the applicant, informing him that the application was incomplete, but if TEAC approved his application, department officials would reconsider that application.

On April 10, 1995, the applicant responded to the April 5 letter reiterating the position that the process being used was legally flawed. The applicant’s February 21, 1995 letter had noted that logs harvested anywhere else in Canada were automatically granted federal export permits. The April 10, 1995 letter reiterated that even in British Columbia not all applicants for export permits for British Columbia harvested logs were required to go through the TEAC process—permits for the export of logs harvested from Indian lands were not subject to that process nor were logs harvested from any lands that had been exempted from the TEAC process by a British Columbia order in council. Mr. Evans also pointed out that he had been given no opportunity to respond to whatever representations had been put before the Minister, by Department officials, before the April 5, 1995 reply was sent to him. The applicant had requested that opportunity. The applicant stated that it would make an application to TEAC, as the Minister had instructed, but this was being done under protest. (In fact, such applications had already been made.) The applicant also stated that once the initial advertising stage of that process was over, it would again ask the Minister to make the decision required. The applicant’s letter reads, in part:

Your ministry, not TEAC, must decide under the Export and Import Permit Act whether to grant us our permit using the same criteria as applied to all Canadians. You will then decide whether you wish to grant our permit ….

As noted, what is referred to as the TEAC process is the procedure used by the British Columbia government for section 135, Forest Act, purposes. An application is made to the British Columbia Ministry of Forestry for permission to export the particular quantity and type of logs in question. Notice of this application is sent by the provincial Ministry to processors of logs who are listed with the Ministry as having requested that they be given such notice. If any processor wishes to purchase the logs that are the subject of the notice, an offer to purchase is tendered at the price the would-be purchaser is willing to pay. If no offers are tendered, the logs are deemed to be surplus to the needs of timber processing facilities within the province. Notice of that fact is given to federal officials and an export permit is issued. If offers are received, they are referred to TEAC for determination as to whether they are fair. If TEAC determines that the offers are not fair, there is also an assumption that the logs are surplus to provincial needs. Federal permission to export is given. If TEAC determines that the offers are fair, there is determined to be a lack of supply in British Columbia. Federal permission to export is not given. TEAC assesses fairness by reference to the domestic market, not the international market. In the applicant’s case, offers were received and TEAC determined them to be fair. Had the applicant been able to sell its logs on the international market it would have received substantially more for them.

As noted, the applicant had decided, under protest, to make applications to the British Columbia Ministry of Forests. These applications were made on March 21, 1995. Notice of the logs the applicant wished to export was issued to British Columbia processors on April 4, 1995. The deadline for submitting offers to purchase closed on April 21, 1995. On April 21, 1995, the applicant wrote again to the Minister reiterating the objection that there had been no opportunity to make submissions directly to him, “nor had the applicant been made aware of what representations were being put to the Minister in opposition to the applicant’s position.” (The Deputy Minister of Foreign Affairs, however, had met with the applicant on April 19, 1995, to discuss the matter.) The applicant’s April 21 letter again detailed the applicant’s concern about the TEAC process and restated the view that the requirement that the applicant receive TEAC approval as a precondition for a federal export permit was ultra vires. The letter urged the Minister not to abdicate his duty to make the relevant decision. This letter contained a vigorous attack on the TEAC process. The letter alleges that the process is used by “purchasers” to obtain concessions, from a person wishing to export logs, as a quid pro quo for withdrawing what the applicant calls “blocking offers”; a practice the applicant calls “blockmail”. A second letter was sent to the Minister on April 27, 1995, stating that the applicant had made counter offers to those bidding on the logs he wished to export and none had been accepted. He put this forward as evidence that the TEAC process was really a price-fixing mechanism.

On May 2, 1995, the Minister responded to the letters of April 21 and April 27 indicating that the TEAC process (and similar processes to it) had been used for many years as a means of facilitating decisions at the federal level and that he was not prepared to consider the applicant’s export permit applications without the benefit of a recommendation from TEAC. This response by the Minister was preceded by a memorandum to him, from department officials, restating that while there were good reasons to review the department’s policy and to tighten the relevant procedures, such a review was not being recommended at that time. With respect to the applicant’s allegations of “blockmail” and price fixing, the memorandum recommended that the Minister respond to those concerns in only a very general way by saying “While I do not agree in a number of instances, I have noted the points raised in your letters”. The May 2, 1995 letter signed by the Minister referred to the applicant’s concerns with the TEAC process using the words recommended, and stated, as well, “I am not prepared to consider further your export permit applications without the benefit of a recommendation from TEAC”.

TEAC held a meeting on May 8, 1995, to consider whether the offers to purchase the applicant’s logs were fair offers. It was decided they were. The applicant had sought leave, on May 5, to attend this meeting as an observer. TEAC responded to that request, stating that only TEAC members and government representatives were allowed to attend its meetings. Because of Mr. Evans’ challenge to the Minister’s reliance on the TEAC process, a representative from the Department attended the May 8, 1995 meeting as an observer.

Following the May 8, 1995, TEAC meeting, a third memorandum was sent to the Minister concerning the Evans’ applications. It recommended that they be refused because TEAC had found that fair offers to purchase the logs had been made by log processors. Thus, the logs were not surplus to provincial domestic needs. The officials reported to the Minister that TEAC had told them there was a log shortage on the British Columbia coast at the time; a copy of a letter that had been provided to TEAC, by CIPA Lumber Co. Ltd., was appended to the memorandum. The letter stated that there was “an extreme log shortage on the coast of B.C.”. This letter was never seen by the applicant, either when it was given to TEAC, or when it was given to the Minister. CIPA was one of the processors that had made offers to purchase the applicant’s logs. The memorandum to the Minister recommended that the applicant’s requests for export permits be denied because there were “no exceptional circumstances” upon which to base a decision to override TEAC. The Minister approved the recommendation. A letter, dated May 15, 1995, was sent to the applicant, by the Director General, Export and Import Controls Bureau. It stated that TEAC had found that fair offers had been made for the applicant’s logs, and the applications for federal export permits were therefore refused.

In the same week that the applicant was refused export permission for his logs, logs of basically the same type and from a similar location to the applicant’s, were found by TEAC to be surplus to provincial needs. Federal export permits were issued for them, automatically, by officials of the Department. While offers to purchase those logs had been filed with the British Columbia Ministry of Forests, the offers had been withdrawn before TEAC considered them. A letter from the applicant to the Minister, dated May 23, 1995, reads in part:

d) TEAC recommended against our export permits while recommending that export permits be granted to B&I Forest Products Ltd. for logs of similar type and location to our logs notwithstanding that there were unfilled “fair” offers for our logs. In other words, TEAC found at one and the same time that in the case of our logs, there was not a “surplus” of logs, but in the case of B&I’s logs there was a “surplus” of logs and recommended their export;

Further correspondence passed between the parties. I do not find it necessary to refer to any of this except to note that the fees the applicant had paid to file the permit applications were returned under cover of a letter dated May 31, 1995.

While some of the documentation sent to the applicant by the Minister, or his officials, or sent by officials to the Minister refer to the Minister receiving “advice” from TEAC and TEAC’s “recommendations”, these documents were written after the applicant had notified officials that he was challenging the process that was being used and that he considered the process to be either an abdication by the Minister of his decision-making responsibility or a fettering of his discretion. Less guarded wording was used in correspondence carrying an earlier date. The applicant filed in evidence a letter from the Department, dated August 23, 1991, which stated:

Once the B.C. Ministry of Forests has given a favourable recommendation for the export of logs, exporters should forward by telecopier, copies of the valid provincial permit (form FS-34) and the relevant form FS-38 to (613) 996-9933. Once these documents are received in the Export Import Permits Bureau, the federal export permit will be issued and sent to the applicant by courier or telecopier. We wish to assure exporters that the Export Import Permits Bureau will issue permits in the briefest time possible once the above mentioned forms have been duly completed.

Correspondence dated December 21, 1993, from the Department states:

We have reviewed your request and can confirm that the Federal export permit would be issued upon the issuance of a Provincial export permit (form FS34). In this regard, we will hold in abeyance your federal export permit application pending receipt of the FS34. I have enclosed an additional copy of Notice to Exporters No. 23, dated January 1, 1986 which details the process for obtaining a federal permit.

A notice of July 21, 1994, from the Export Controls Division (federal) to Exporters of Forest Products from British Columbia reads:

Exporters should note that logs proposed for export from the province of British Columbia require both a Federal and Provincial permit. The Federal permit (form EXT 1042) cannot be issued without this Division receiving a valid B.C. permit (FS 34) and the relevant B.C. application (FS 38). For woodchips exported from B.C., exporters should submit to this office a copy of the relevant “Order Of The Lieutenant Governor In Council” issued by the Province of British Columbia along with the federal application (EXT 1042). Once these documents are received, the federal export permit will be issued and returned to the applicant/exporter whichever the case may be.

The Director General of the Export and Import Controls Bureau was asked on cross-examination whether, to his knowledge, there were any occasions when a federal export permit had been issued despite a TEAC refusal. He responded that he knew of three occasions. One was when a permit had been issued by mistake. There had been a miscommunication and federal officials thought that TEAC had approved the exportation of the logs. On another occasion, federal export permits had been granted for logs harvested from adjacent lands, those lands having been exempted from the TEAC process by Order in Council of the British Columbia government. Thus, despite a negative TEAC decision with respect to logs harvested from neighbouring lands that had not been so exempted, it was decided to allow the export of those logs. This was described as an unusual situation.[9] On the third occasion, it was discovered, after TEAC had found that fair offers had been made and the departmental officials (in the Minister’s name) had refused approval of a federal export permit, that the offers on which TEAC had based its decision had expired before the TEAC decision was made.

The Director General, Export and Import Controls Bureau, filed an affidavit for the purposes of this litigation, stating that the federal government had for many years acknowledged provincial constitutional responsibility for resource management and the regulation of primary production therefrom. In accordance with that policy, he states that where provinces have supply concerns, federal policies have been coordinated to complement and support the provincial measures. In so far as the exportation of unprocessed British Columbia logs is concerned, the Minister has chosen and chooses to rely upon the expertise of TEAC to determine whether there is an adequate supply for domestic purposes. This practice is motivated by a desire to ensure that logs from federal and provincial lands are treated equally and because it would be costly and wasteful to duplicate the TEAC process to duplicate the adequacy of supply determination. I note again that the use of the term “federal lands” is confusing in this context because the lands are, in fact, private lands.

Arguments and Analysis

The applicant challenges the decision refusing it permits to export logs on four grounds: (1) there was a fettering of discretion in making the decision; (2) extraneous and improper considerations were taken into account in making the decision; (3) the decision-making process was discriminatory; (4) the applicant was denied an adequate opportunity to be heard in relation to the applications.

a)         Fettering of discretion—abdication of decision-making responsibility

The respondent argues that there was no fettering or abdication of the Minister’s decision-making authority, that the Minister personally made a decision on the applicant’s applications, that a decision maker in the position of the Minister can create or adopt general policies to be applied in decision-making provided he keeps an open mind and decides whether the policy should be modified in individual cases. The respondent notes that the Courts do not dictate policy to decision makers and, in this case, a policy of using TEAC procedures and expertise was adopted. The following decisions were referred to: Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2; Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875, at page 877; Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106; Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.); Rex v. Port of London Authority. Ex parte Kynoch, Limited, [1919] 1 K.B. 176 (C.A.), at page 184; Capital Cities Communications Inc. v. Canadian Radio-Television Comm., [1978] 2 S.C.R. 141; In re North Coast Air Services Limited, [1972] F.C. 391 (C.A.); British Oxygen Co. Ltd. v. Board of Trade, [1971] A.C. 610 (H.L.).

Counsel for the applicant does not disagree with the applicable principles of law cited by the respondent but refers to the jurisprudence demonstrating that while a decision maker may adopt guidelines, these cannot be adopted so as to fetter the decision maker’s discretion or constitute an abdication of the decision maker’s responsibility. The following decisions were referred to: Saunders Farms Ltd. v. British Columbia (Liquor Control and Licensing Branch, General Manager) (1995), 122 D.L.R. (4th) 260 (B.C.C.A.), at pages 270-274; Koopman v. Ostergaard (1995), 12 B.C.L.R. (3d) 154 (S.C.), at pages 167-168; Lavender (H.) & Son Ltd. v. Minister of Housing and Local Government, [1970] 1 W.L.R. 1231 (Q.B.), at pages 1240-1241; Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2, at pages 6-8; Starlight Drive-In (1978) Ltd. and Hewitt, Re (1984), 12 D.L.R. (4th) 391 (B.C.S.C.), at pages 394-395.

While the applicant may at one time have been of the view that the Minister, personally, had to make the decisions with respect to the applicant’s applications, I did not understand this to be argued at the hearing. The flaws in the process that are alleged apply whether it be the Minister himself, or an official of his department acting as his delegate, that makes the decision.

There is little dispute about the law applicable to the facts of this case. What is in dispute are the conclusions of fact to be drawn. I do not draw the same conclusions of fact as those upon which the respondent’s position is based. The decision the Minister made, repeatedly, and that made by his officials, acting as his delegate, was that the TEAC process governed. Neither the Minister nor his delegates made an independent decision on the merits of the applicant’s applications. Documents describing the role of the TEAC process, prior to the present challenge to that process, demonstrate that its role was treated as determinative of whether to grant or to refuse an export permit. The exceptions, which Mr. Hobson identified, reinforce the conclusion that there was in essence a turning over of the whole decision-making authority to TEAC. The lack of specificity in the responses to Mr. Evans’ allegations that serious flaws existed in the system (e.g., the allegation of “blockmail”) and the comments of officials thereon demonstrate a lack of awareness by federal officials as to exactly how that process operated. The acceptance that other exporters of logs, of the same type and from a similar location as the applicant’s logs, could be granted permits to export, as a result of a decision that there was a surplus of logs available, while on the same day Mr. Evans was denied a permit because there was an “extreme shortage of logs” also indicates a “hands-off” approach, an abdication of decision-making responsibility, by the Minister and the Minister’s delegates.

(b)       Extraneous considerations

I turn then to the arguments concerning the taking into account of extraneous considerations. Counsel for the applicant argues that to the extent the applicant’s applications for permits were considered at all by the Minister or his delegates, those considerations were based on irrelevant and extraneous factors: the political reaction of the British Columbia government; the political reaction of the United States government; the claim that environmentalists would be upset; and, the risk that a decision in favour of the applicant would open the floodgates to other applications. The applicant states that these are all irrelevant considerations for the purpose of making a determination as to the adequacy of domestic supply and distribution for defence or other needs. In addition, the applicant argues that the factors relevant to the Minister’s decision must relate to the purpose for which logs were placed on the Export Control List by the Governor General in Council.

The respondent argues that the Minister’s discretion is not so limited: the statute says the Minister “may” issue a permit. It is argued that this gives very broad discretion to the Minister to take into account a variety of public policy factors. It is argued that the Minister is not limited to adequate supply and distribution purposes but may also consider broad general policy concerns. Alternatively, it is argued that he may at least take into account considerations relevant to the paragraphs of section 3 other than paragraph 3(e). That is, it is argued that the Minister did not take into account extraneous factors because he is entitled to consider not only paragraph 3(e) of the Export and Import Permits Act but also paragraphs 3(b), (c.1) and (d). Alternatively if only paragraph 3(e) is relevant, then that paragraph should be broadly construed so that “other needs” encompasses the purposes of ensuring processing within one province or federal provincial commitments with that province or international trade considerations.

I am of the view that the use of the word “may” at the beginning of section 3 grants the discretionary decision-making authority. It does not, however, establish the scope of factors that should be taken into account in rendering decisions.

With respect to paragraphs 3(b) and (c.1), as noted, these were added to the Act after logs were added to the Export Control List. In so far as paragraph 3(d) is concerned, there is no federal-provincial agreement or memorandum of understanding between the federal government and British Columbia concerning the control of the export of logs from that province. What is more the respondent’s own representative stated that it was for supply purposes that logs had been added to the Export Control List. Counsel for the respondent would have me characterize the practice that has developed of relying on the TEAC process and provincial expectations in relation thereto as an “arrangement” or “commitment” for the purposes of paragraph 3(d ). I do not draw that conclusion.

I turn then to paragraph 3(e). The export of logs was placed on the Export Control List “to ensure that there is an adequate supply and distribution of [logs] in Canada for defence or other needs” (emphasis added). The respondent’s argument is that “other needs” allows control of export in order to accord with provincial policies of restricting export to ensure a supply within the province, or to limit export for environmental purposes, or for reasons of international trade. Reference is made to the decision in Teal Cedar Products (1977) Ltd. v. Canada, [1989] 2 F.C. 158(C.A.).

I do not think the Teal Cedar case assists the respondent. It was an order in council that was challenged in that case, not the exercise of a delegated decision-making authority. More importantly, the argument being made was that unless the timber in question was being added to the list to satisfy a need related to a national emergency, or some need similar thereto, the order in council would not be valid. The Court held that “other needs” could refer to needs other than defence. While this is clearly so, phrases such as “for … other needs”, when used as those words are used in paragraph 3(e), must be interpreted in accordance with the ejusdem generis rule of construction. The words “other needs” are not synonymous with “for any other purpose”. As I read the words of paragraph 3(e), “other needs” must at least have a national or federal character and there must be a “need”. I have difficulty accepting that the existence of a provincial policy, simpliciter, falls within the wording “defence or other needs”. In any event, I do not have to decide this issue.

While I have set out the arguments that were made by both counsel with respect to extraneous considerations, those arguments were put forward by the applicant as an alternative basis for a challenge to the decision under review. Given the decision reached above, concerning the abdication of decision making responsibility, no definitive decision need be made with respect thereto. At the same time, I must note that what are referred to as extraneous considerations, in many instances, would more properly be characterized as part of the evidence that demonstrates the fettering of discretion that occurred. This is true with respect to the references to the reactions of the British Columbia government, the United States government and that of environmental groups, as well as the reference to possible floodgates effects. The consideration of these “extraneous” factors was not directed at the merits of the applicant’s applications but were factors considered in the context of deciding whether or not to continue to defer to the TEAC process. As noted, as such, they are properly characterized as evidence of the fettering of discretion that occurred.

(c)        Discrimination

The applicant argues that by automatically granting export permits to those who wish to export logs from other provinces, such as Alberta, and to those who wish to export logs from Indian lands, the discretionary authority to grant permits is being exercised in a discriminatory fashion. Having found that there was a fettering, or abdication, of decision-making authority I do not have to decide this issue.

I am persuaded, in any event, that this is a concern about which departmental officials are well aware and which they would consider on any review of the present practice. In the first memorandum that was presented to the Minister, it was noted by departmental officials that if a review of the existing practice were to be undertaken, a number of issues should be addressed. The writer of the memorandum stated:

Several questions arise: does the Federal Government still have supply concerns? If so, what supply test is applied nation-wide? Does the Federal Government have further processing interests? If so, why simply in B.C.? What are the economic policy implications of such controls? Do our present law and practices reflect our real reasons for controls? Are there environmental and trade law/trade relations perspectives that should be factored in?

(d)       Opportunity to be Heard

With respect to the arguments that were made, I note only that an oral hearing is clearly not required. Nor is individual consideration by the Minister personally required. The Department receives hundreds of applications for permits each day. As counsel for the respondent states, knowledge by an applicant of the policies and practices that are applied by the Department to the applications and the opportunity to make written submission with respect to the particular application in question is sufficient notice of the “case” the applicant has to meet. What is troubling about the procedure applied in the applicant’s case, however, is the use of the CIPA letter. The use of the letter by TEAC, and by the Minister, constituted reliance by them on evidence prejudicial to the applicant without notice having been given to the applicant that it existed. Further, the evidence was received from someone adverse in interest to the applicant (i.e., a prospective purchaser of the applicant’s logs) without the applicant being given an opportunity to respond. The use of this evidence without notice and an opportunity to respond constitutes a breach of the principles of fairness.

Costs

The applicant seeks an award of costs if successful. The respondent, somewhat surprisingly, seeks costs in any event of the cause. Rule 1618 of the Federal Court Rules [C.R.C., c. 663 (as enacted by SOR/92-43, s. 19)] states: “No costs shall be payable in respect of an application for judicial review unless the Court, for special reasons, so orders.” There are no special reasons in this case for ordering costs.

Conclusion

For the reasons given, the decisions to which the letters of May 15, 1995, and May 31, 1995, relate will be quashed and the matter remitted back to the Minister for reconsideration in accordance with these reasons.

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