Administrative law – Decisions of administrative tribunals – Marketing Boards – Penalties – Judicial review – Evidence – Witnesses – Bias – Standard of review – Reasonableness simpliciter – Correctness
Stetler v. Agriculture, Food and Rural Affairs Appeal Tribunal,  O.J. No. 2817, Ontario Court of Appeal, July 8, 2005, S. Borins, K.N. Feldman and E.A. Cronk JJ.A.
The Respondent Stetler was a tobacco farmer who had been found to have engaged in the unlawful sale of tobacco outside the auspices of the Ontario Flue-Cured Tobacco Growers’ Marketing Boards quota system, resulting in the cancellation of the tobacco quota allotted to the Respondent. The Board’s decision was substantially confirmed on appeal by the Respondent Appeal Tribunal. On judicial review, applying a standard of correctness, the Divisional Court quashed the decisions of both the Board and the Appeal Tribunal and declined to send the matter back to the Tribunal for a further hearing. The Appellant Board appealed the decision of the Divisional Court and sought to have the decision of the Tribunal reinstated or the matter referred back to the Tribunal for a new hearing.
The evidence before the Board consisted of transcripts of wiretapped conversations, truck rental records, witness statements and videotapes gathered by the RCMP during their investigation into illegal tobacco sales, as well as testimony from an RCMP constable investigating the matter and Mr. Stetler. The Board ultimately concluded that Mr. Stetler had engaged in the unlawful sale of tobacco on at least three occasions, that he would have continued to do so had his customer agreed to pay an advance for the tobacco, and he had previously engaged in unlawful sales to his neighbours.
The Appeal Tribunal was authorized to hold a hearing to which the Statutory Powers Procedures Act, R.S.O. 1990, c. S22, applies, and may substitute its opinion for that of the Board. The Appeal Tribunal received certain written documentation as evidence and also heard the evidence of four witnesses. The Appeal Tribunal upheld the Board’s finding that Stetler had engaged in illegal sales of tobacco on two of the three occasions in question and upheld the penalty imposed by the Board.
On judicial review, the Divisional Court concluded that the applicable standard of review was the correctness standard. It upheld the procedure adopted by the Appeal Tribunal, a trial de novo, which it was entitled to use pursuant to the Ministry of Agriculture, Food and Rural Affairs Act, s. 16(11). The Divisional Court found, however, that the Tribunal had committed three errors of law: (1) it had failed to properly answer the question before it – whether Stetler participated in the illegal sale of tobacco; (2) since the case was quasi criminal in nature, involving a person’s livelihood and potential penalty of licence revocation, the standard of proof required was not proof on a balance of probabilities but clear and convincing proof based on cogent evidence; (3) the evidence before the Tribunal was not sufficient to entitle the Tribunal to make its findings. The Divisional Court also found that the Tribunal had permitted itself to be tainted by a clear apprehension of bias by accepting and relying on the evidence of a vice-chair of the Board who had participated in the original Board decision. The Divisional Court quashed the decisions of both the Tribunal and the Board and declined to refer the case back to the Tribunal because of its conclusion regarding the insufficiency of the evidence.
The Court of Appeal considered first the appropriate standard of review to apply to the Tribunal’s decision. The Court found that the Divisional Court had failed to conduct the pragmatic and functional analysis addressing all four contextual factors. Balancing the four factors from the pragmatic and functional analysis, the Court of Appeal found that the appropriate standard of review of the Tribunal’s decision on the issue before it, which was whether the Respondents engaged in the unlawful sale of tobacco outside the auspices of the Board and quota system, was a standard of reasonableness. On pure questions of law, however, which did not involve the discretion or expertise of the Tribunal, the appropriate standard of review was correctness.
The first alleged error of law was the Tribunal’s treatment of hearsay evidence contained in the transcripts of wiretapped conversations that did not involve Stetler, but which referenced him. The Court of Appeal found that an administrative Tribunal is entitled to admit and rely on hearsay evidence and that the Tribunal did not exercise that discretion unreasonably in admitting the evidence. There had also been agreement between counsel for the admission of such evidence, so the Respondents cannot complain about it at this stage.
The second alleged error of law was that the Appeal Tribunal failed to employ the correct standard of proof which, the Respondent’s argued, was proof by “clear, cogent and convincing evidence”. The Respondents argued that this higher degree of proof was required in all cases where a person’s professional standing or livelihood is at risk. The Court of Appeal held that there are only two standards of proof used in legal proceedings: proof on a balance on probabilities in civil and administrative proceedings, and proof beyond a reasonable doubt in criminal matters. Within the administrative context, however, it is accepted that strong and unequivocal evidence within the civil standard of proof is required where the issues, or the consequences for the individual, are very serious.
The third alleged area of law was that the Appeal Tribunal had allowed itself to be tainted by a reasonable apprehension of bias by hearing the evidence of a member of the Board, whose decision was being appealed. The Court of Appeal held that it was not entirely clear how an apprehension of bias could arise in the Appeal Tribunal because it heard evidence from a member of the Board. The record, however, established that the Board member was not called as a witness in his capacity as a Board member, but rather to give evidence within in the domain of his extensive, and unchallenged, experience as a tobacco grower. In the result, the Court of Appeal held that a reasonable apprehension of bias was not made out in this case. Moreover, any objection was waived by the Respondents when they did not raise any issue regarding the witness before the Appeal Tribunal.
Finally, regarding the merits of the case, the Court of Appeal found that the Appeal Tribunal’s factual findings, including its decisions on credibility and its application of the standard of proof to the evidence, were not unreasonable. The Divisional Court’s decision to quash the Appeal Tribunal’s decision on liability was set aside.
The Court of Appeal also considered the penalty to be imposed on Stetler. The issue of the appropriate penalty for infractions within a profession or industry is one that is uniquely within the experience, expertise and discretion of the relevant disciplinary tribunal and is therefore subject to a high degree of deference. The penalty imposed by the Appeal Tribunal, nevertheless, is subject to a reasonableness standard of review. A court must inquire whether the tribunal “properly considered all relevant factors in determining the appropriate penalty”.
The Court of Appeal held that it was not clear that in imposing the original penalty set by the Board and in the face of its different findings, the Appeal Tribunal had considered all relevant factors. Thus, the Appeal Tribunal’s penalty decision was unreasonable. The matter was referred back to the Appeal Tribunal only for the purpose of reconsidering the issue of penalty and providing reasons for whatever penalty is imposed.
To stay current with the new case law and emerging legal issues in this area, subscribe here.