A forestry company (“Irving”) was partly successful on appeal from a finding of the respondent, North Shore Forest Products Marketing Board (the “Board”), which had held that the various forest product marketing boards had the authority to regulate stumpage agreements

Administrative law – Decisions of administrative tribunals – Marketing Boards – Natural resources – Forestry – Stumpage fees – Judicial review – Jurisdiction – Bias – Standard of review – Correctness – Reasonableness simpliciter

J.D. Irving Ltd. v. North Shore Forest Products Marketing Board, [2014] N.B.J. No. 162, 2014 NBCA 42, New Brunswick Court of Appeal, June 26, 2014, A. Deschênes, J.T. Robertson and J.C.M. Richard JJ.A.

Irving had entered a stumpage agreement with a private woodlot owner over land located within the administrative boundaries of the Board. The Board sought to review the agreement and to offer its approval. It then refused to approve the agreement and the decision was appealed to the New Brunswick Forest Products Commission (the “Commission”).

The refusal of the Board to approve the stumpage agreement was the first time any of the seven respondent marketing boards in the Province of New Brunswick had required Irving to seek such an approval.

Irving was unsuccessful on appeal to the Commission, and this led to an appeal to the Court questioning whether the Board had the jurisdiction to regulate stumpage agreements under the Natural Products Act and its Regulations. Prior to seeking Court intervention, Irving and the marketing boards engaged in some correspondence and ultimately the Boards issued a joint decision under their umbrella organization’s letterhead (the New Brunswick Federation of Woodlot Owners) in which they declared that they did have the requisite jurisdiction.

On the statutory appeal, Irving alleged that both the Boards and the Commission were biased. Irving argued that the legislation allowed for the appointment of board members, who are competitors of Irving and would then have access to Irving’s proprietary information. With respect to the Commission, an allegation of bias was also made.

The allegation of Commission bias was abandoned at the hearing of the statutory appeal.

Looking at the allegation of Board bias, the Court showed no deference to the Commission’s ruling. However, there was not a sufficient factual record to establish bias.

With respect to the Commission’s decision more generally, deference was owed and the threshold test ought to be reasonableness.

While an allegation of tribunal bias falls within the duty of fairness and therefore is subject to a correctness standard, the interpretive issue decided by the Commission with respect to their jurisdiction under the law would only attract a reasonableness standard. While the question of whether the marketing boards possess the jurisdiction to regulate stumpage agreements does raise a question of law, the question of law arose through a right of appeal anchored within the tribunal’s home statute. The correctness standard only applies to questions of law of central importance to the legal system that are outside the relative expertise of the tribunal. There is a rebuttable presumption that a tribunal’s interpretation of its own home statute is owed deference. The Commission’s interpretation of its own act is the exercise of a specialized tribunal dealing with its own regulatory scheme, and one that is foreign to most reviewing courts. The issue is not one that raises a constitutional question or a true jurisdictional question.

However, with respect to the allegation of bias, there is no room for a decision maker’s subjective appreciation of whether he or she is biased. Correctness applies to such allegations.

Irving did not deal with whether the act expressly or implicitly allowed for the appointment of marketing board members who are or could be competitors of Irving. Irving did not raise the issue of structural or institutional bias, but Irving could have raised these issues de novo on appeal to the Commission from the decision of the Boards.

The only evidence on bias was an affidavit evidence that fell short of establishing that one of Irving’s competitors, with an appointee on the Board, was in fact entering into agreements with private woodlot owners for stumpage. However, the Court indicated concern that board members were elected from among those who were private owners of woodlot of 10 hectares or more within the regulated area that was the subject of this dispute. However, the Court indicated that the onus would fall on the Minister responsible for the administration of the legislation, or on the Commission, to properly address the merits of an allegation of institutional or structural bias, which had not been fully explored before the Court, because of the lack of factual foundation.

The Court further observed that this allegation of structural or institutional bias also suffered from the flaw that the Boards had been asked to collectively rule on whether they possess the jurisdiction to regulate stumpage agreements generally. Thus, their decision would affect Irving and Irving’s competitors.

The Court then applied the standard of review of reasonableness and found that the Commission’s interpretive decision of the legislation should be upheld. The marketing boards possessed the statutory authority as long as each board adopts the marketing order setting out the criteria upon which stumpage agreements will be assessed. If the proper marketing orders are not adopted, the Boards do not have power to regulate stumpage agreements. Irving argued that stumpage was not a regulated product within the meaning of the legislation, since trees standing on a private woodlot were not transformed into a primary forest product until they were cut. However, the Court disagreed. Once the trees were cut, Irving would incur contractual obligation to pay the woodlot owner in accordance with the agreement which the marketing board may or may not approve. This did not make practical stance and therefore approval must be sought prior to cutting the trees.  Irving’s agreement granted it an exclusive right to enter the vendor’s land, and to cut and remove trees for a fixed price based on the “metric tonne” of woodchips derived from the trees. The agreement therefore creates an interest in land but the interest acquired does not transform the purchaser of the right into the owner of the land. The vendor retains the fee simple title to the woodlot. Irving becomes an owner of the interest in the land, but not the owner of the land itself. Therefore, Irving could not avail itself of an argument that woodlot owners who also operate a wood‑processing facility were outside the regulatory ambit of the act. Irving did not become a woodlot owner through the stumpage agreement. The Commission’s decision was therefore upheld, although the appeal was allowed for the limited purpose of eliminating an inconsistency in the Commission’s reasons for decision. No costs were awarded.

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