Federal Court of Appeal Decisions

Date: 20060517

Docket: A-664-04

Citation: 2006 FCA 180

CORAM:        NOËL J.A.

                        SHARLOW J.A.                    

                        MALONE J.A.

BETWEEN:

CANADIAN GRAIN COMMISSION & HER MAJESTY THE QUEEN

Appellants

and

JAMES RICHARDSON INTERNATIONAL LIMITED

Respondent

Heard at Winnipeg, Manitoba, on April 25, 2006.

Judgment delivered at Ottawa, Ontario, on May 17, 2006.

REASONS FOR JUDGMENT BY:                                                                              MALONE J.A.

CONCURRED IN BY:                                                                                                       NOËL J.A.

                                                                                                                                  SHARLOW J.A.

Date: 20060517

Docket: A-664-04

Citation: 2006 FCA 180

CORAM:        NOËL J.A.

                        SHARLOW J.A.                    

                        MALONE J.A.

BETWEEN:

CANADIAN GRAIN COMMISSION & HER MAJESTY THE QUEEN

Appellants

and

JAMES RICHARDSON INTERNATIONAL LIMITED

Respondent

REASONS FOR JUDGMENT

MALONE J.A.

I. INTRODUCTION

[1]                This is an appeal and cross-appeal of an order made by a judge of the Federal Court (the Applications Judge) that allowed, in part, the application for judicial review of James Richardson International Limited (JRI) (reported as 2004 FC 1577). The Applications Judge set aside an order of the Canadian Grain Commission (CGC) dated November 8, 2002 (the November 8 Order). In that order, the CGC found JRI to have breached section 70 of the Canada Grain Act, R.S.C. 1985, c. G-10 (the Act)and imposed a one day suspension of JRI's license as a terminal operator together with a "weigh-over" or audit of all grain stocks at its Vancouver terminal.

[2]                These proceedings arise in the context of a four month labour dispute between JRI and its Vancouver union employees, who are members of the Grain Workers Union, Local 333 (the Union). The issues before the Court relate to the statutory obligations and business practices of the CGC in inspecting and weighing grain during such disputes and have ramifications on grain shippers as well as terminal owners such as JRI. In this case, the positions of the parties became acrimonious over time, and for that reason the factual matrix and legislative framework must be carefully developed before the various arguments on the appeal and cross-appeal are dealt with.

II. FACTS AND LEGISLATIVE FRAMEWORK

[3]                JRI carries on the business of handling, cleaning and shipping grain. It operates a grain terminal elevator at the port of Vancouver, British Columbia.

[4]                The CGC is the federal agency responsible for establishing and maintaining Canada's grain quality standards. It consists of three appointed Commissioners (the Commissioners). One of its purposes is to provide the grain industry with the fair and impartial inspection and grading of grain in order to ensure quality commodities for domestic and export markets.

[5]                JRI is one of five employers which constitute the British Columbia Terminal Elevators Operator's Association (the Association). The Association and Union were parties to a collective agreement that had expired at the end of December of 2000. Following the expiry of the Association's final offer, on August 25, 2002, the member employers, including JRI, commenced a lock-out of their unionized employees.

[6]                The Union established a picket line outside the JRI terminal which continued until the lock-out ended on December 14, 2002. At the start, JRI entered into an arrangement with a professional security firm to provide terminal security and transportation across the picket line as required. Throughout the lock-out, various JRI personnel, contractors and suppliers entered the terminal on a regular basis and crossed the picket line mostly without incident.

[7]                On August 25, 2002, JRI had 121 railcars of grain from 5 different shippers on its private rail siding located on the terminal premises. Subsection 69(1) of the Act required JRI to receive this grain into its elevator if there was space available. Space was available. Subsection 69(1) reads as follows:

[8]                Under the scheme of the Act, JRI was responsible for the grain from the time the railcars arrived on its premises, during storage and until it was loaded onto vessels for export.

Section 70 required JRI to have the grain received in its elevator officially weighed and inspected forthwith on receipt, except where otherwise authorized by the CGC. Paragraph 30(1)(a) of the Act further required that a CGC inspector conduct an official inspection upon the application of a terminal operator, such as JRI. These provisions read as follows:

[9]                JRI believed that the lock-out could be prolonged and its management was concerned about deterioration of the grain's quality if it remained unloaded, as well as the potential for vandalism or damage to both the railcars and their contents.

[10]            In years prior to September 2002, there had been several labour disputes in the grain industry involving JRI and other terminal operators. In those instances, the CGC continued to provide inspection and weighing services at the terminals throughout the labour disputes. The CGC inspectors and weighers crossed picket lines to provide such services.

[11]            In other cases involving labour disputes with CGC employees that had affected its ability to provide inspection and weighing services to terminal operators, the CGC had granted exemption orders effectively waiving the official inward inspection and weighing requirements of the Act on certain conditions. These exemption conditions were developed by the CGC in consultation with various companies, including JRI, that were in the grain elevator business. In effect, these exemptions allowed terminal operators to satisfy the requirements for official weighing by submitting their scale tapes to the CGC and to satisfy the requirements for official inspection by submitting samples to the CGC for grading, as long as terminal operators had received the written agreement of the grain shippers to proceed in this fashion.

[12]            The power of the CGC to grant exemption is found in subsection 117(b) of the Act which reads as follows.

As examples, due to a strike by CGC weighers in 1999 at Vancouver, exemptions were granted by the CGC for the inward weighing of grain. Again, during a further work stoppage by both CGC weighers and inspectors in August of 2001 at Vancouver, CGC granted an exemption to terminal operators, including JRI, from the requirements of inward inspection and weighing under the same conditions as in 1999.

[13]            During the week of September 2, 2002, JRI advised the CGC that it intended to unload the 121 railcars on September 10 and 11. JRI asked the CGC to inspect the grain in the normal way while it was being unloaded, or failing that, to grant an exemption from inward inspection and grading on the same conditions as in the past. JRI had expected that, based on past practice, it would be granted an exemption and accordingly had already obtained the written agreement of the grain shippers to accept grades based on samples taken by JRI and weights based on scale tickets recorded by JRI at the time of unloading.

[14]            On September 6, 2002, Gordon Miles, the Chief Operating Officer of the CGC advised Nicholas Fox, the Vice President, Terminal Operations of JRI, that the request for exemption was not necessary as CGC employees had been assigned to provide the normal inspection and weighing services on the dates requested by JRI. However, at about the same time, Kenneth Nash, CGC's Regional Director, advised Phillip Hulina, the Regional Manager of JRI, that due to the picket line outside the terminal that the CGC might not provide official inspection and weighing services and would not grant an exemption from the requirements of section 70. No reasons were given for the possible refusal to give the exemption. Mr. Hulina was advised to keep the scale tapes and appropriate samples in the event that the CGC agreed to officially certify the samples at a later date.

[15]            On September 9, Mr. Hulina again requested of Mr. Nash that the CGC provide weighing and inspection services or an exemption, indicating that the services of the professional security firm were available to escort or drive CGC employees across the picket lines. Mr. Nash repeated his September 6 message.

[16]            On September 10, eight JRI staff members, including Mr. Hulina, crossed the picket line without incident. Mr. Hulina then telephoned Mr. Nash to determine whether the CGC would be attending the planned unloading. Mr. Nash advised that he and other members of CGC's management and its union would approach the picket line to make their own assessment as to whether it is safe to cross. Mr. Hulina informed Mr. Nash that JRI's employees were all onsite and ready to start the unloading.

[17]            A few hours thereafter, Mr. Nash telephoned Mr. Hulina to advise that he considered crossing the picket line to be unsafe and that he could not ensure the safety of his staff. Once again, Mr. Nash offered to provide security service to transport the CGC staff across the picket line but Mr. Nash declined. At this point it was obvious that the CGC would neither provide official inspection and weighing services nor grant an exemption.

[18]            Two hours later, JRI non-union employees commenced the unloading of the grain. JRI made one further request later on September 10 for the CGC to attend to perform official inspection and weighing services, while using the services of the security firm, but this offer was refused, as was another request for an exemption.

[19]            JRI unloaded the grain in accordance with the methods and equipment approved on other occasions by the CGC and following the conditions of the prior exemption orders granted in 1999, 2000 and 2001. JRI then submitted the grain samples and weigh scale tapes to the CGC which were accepted only as unofficial samples. The CGC later inspected the samples, with the ultimate results showing that 56 cars had grain with a dangerous level of moisture content, requiring special attention and confirming JRI's concerns about quality deterioration if the grain was left in the railcars. It should also be noted that after the lockout JRI unloaded an additional 300 railcars that had been parked outside of its terminal premises during the lockout. This grain had deteriorated significantly due to rot, excessive moisture and infestation.

[20]            Immediately following the events of September 10 and 11, 2002, the CGC ordered JRI to show cause why it should not be found to have contravened the Act. Following a lengthy and detailed exchange of correspondence, the CGC in its November 8 Order, found that JRI had breached section 70 of the Act and ordered the suspension and weigh-over as referred to in paragraph 1. JRI filed its application for judicial review on December 10, 2002, some four days before the end of the lockout.

[21]            While the license suspension was served and the weigh-over completed before February 7, 2003, JRI still sought declarations before the Applications Judge that various actions and decisions of the CGC were unlawful, citing a lack of jurisdiction or authority, as well as a breach of procedural fairness and a reasonable apprehension of bias. All of JRI's arguments were rejected by the Applications Judge except the allegations surrounding procedural fairness and reasonable apprehension of bias.

[22]            Reviewing on a correctness standard, the Applications Judge determined that JRI had been denied full disclosure of the case it had to meet and therefore was not given a proper opportunity to be heard by the CGC prior to the issue of its November 8 Order. In particular, the CGC had indicated that it could take counsel from certain senior officials and that this advice would not be shared with JRI (reasons at paragraphs 78-83). The Applications Judge also noted that there were specific facts in the Commissioners reasons that were not in the materials previously provided to JRI (reasons at paragraph 84). Collectively, this amounted to a breach of procedural fairness (reasons at paragraph 90) that was also sufficient to create a reasonable apprehension of bias on the part of the Commissioners (reasons at paragraphs 127-129). The November 8 Order was accordingly set aside and the issue of JRI's alleged breach of the Act was remitted to the CGC for redetermination.

III. ANALYSIS OF ISSUES ON APPEAL

[23]            The CGC now appeals on the basis that the Applications Judge erred by inferring, without evidence, that the CGC consulted with its senior officials without advising JRI of the details; a matter said to be inconsequential in any event and certainly not the basis on which to found a determination of a reasonable apprehension of bias. The appellants also argue that the Applications Judge also erred by remitting the matter of the section 70 breach back to the Commissioners for rehearing; JRI's defence of justification being moot and irrelevant in the face of its admission that it had been free to leave the grain in the railcars during the lockout as other terminal operators had done.

[24]            At the outset, it is important to note that the record before the Applications Judge consisted of two affidavits provided by JRI, through its employees, Mr. Hulina and Mr. Fox, who both had first hand knowledge of the events surrounding the lockout. The CGC offered no affidavit or other evidence in the application for judicial review.

[25]            The deponents on behalf of JRI attached as exhibits to their affidavits all of the material that JRI had in its possession relating to the correspondence, memoranda and other material that had been provided to the CGC and used as a basis for the November 8 Order. This included a chronology by Mr. Nash as to his unsworn version of the events of September 10 and 11. As JRI had no opportunity to cross-examine the authors of any of these exhibits, neither party can rely on the contents of such documents to establish the truth of the underlying facts relevant to this dispute (see Wang v. Canada (Minister of Employment and Immigration), [1991] 2 F.C. 165 (FCA); Chou v. Canada (Minister of Citizenship and Immigration), 2001 FCA 299).

[26]            I will deal first with the issue of the alleged improper inference based on the evidence filed by JRI. In my analysis, the Applications Judge correctly found that the Commissioners may have consulted with and received ex parte information from senior officials of the CGC that was not disclosed to JRI. In particular, counsel for the CGC specifically advised JRI in writing that the Commissioners would take counsel from their senior officials that would not be disclosed and the order of November 8, 2002, refers to matters that could only have been received from senior CGC officials and which were never disclosed to JRI. Since the appellants filed no contrary evidence, this factual inference drawn by the Applications Judge was proper based on the record before her. No palpable and overriding error has been demonstrated and the factual inference, in my analysis, must stand (see Housen v. v. Nikolaisen, [2002] 2 S.C.R. 235).

[27]            As to the issue of whether the breach of procedural fairness was of such consequence so as to set aside the November 8 Order, I am satisfied that it was. The circumstances surrounding the refusal to inspect or exempt the disputed grain and the potential for spoilage were clearly relevant, on both the issues of justification and penalty being considered on the show-cause hearing. Again, in the absence of evidence from the CGC, the Applications Judge correctly found that it was not possible to determine the full extent of the ex parte information communicated and the order could not stand. I can find no error in that analysis.

[28]            The appellants also argue that the finding of a reasonable apprehension of bias was based solely on a suspicion of ex parte communications. However, there was evidence on the record that the Commissioners engaged in ex parte communications with their senior officials and received information that was not disclosed to JRI (reasons at paragraph 84). Again, given the absence of evidence from the CGC, it is not possible to ascertain from the record the full extent and nature of the communications and the information received. In these circumstances it was proper for the Applications Judge to draw the inference of ex parte communication and to find that there was a reasonable apprehension of bias on the part of the Commissioners who made the order of November 8. I accordingly agree that the November 8 Order could also be set aside on that basis.

IV. ANALYSIS OF ISSUES ON THE CROSS-APPEAL

[29]            In its cross-appeal, JRI again raised the issues rejected by the Applications Judge including the timeliness of its application for judicial review, her failure to grant declarations surrounding the refusals to inspect or exempt, as well as the utility of remitting the section 70 breach to new Commissioners for re-hearing.

[30]            I must first deal with the discretionary order made by the Applications Judge in refusing the application for an extension of time for JRI's application for judicial review. First of all, the Applications Judge was right to conclude that the refusals to inspect or exempt on September 9 and 10, 2002, were two clearly identifiable decisions communicated to JRI on those dates. The application for judicial review brought on December 10, 2002, was therefore well beyond the 30 day time limit established by subsection 18.1(2) of the Federal Courts Act,R.S.C. 1985, c. F-7.

[31]            The question then is whether the Applications Judge was correct in the exercise of her discretion in not granting an extension of time. In her analysis, based on the lack of any evidence of a continuing intention to bring its application for judicial review, JRI could not succeed as the lack of continuing intention on its part was in and of itself fatal.

[32]            As this is a discretionary decision, this Court will not interfere unless it is demonstrated that the Applications Judge misapplied a principle of law or applied an erroneous principle of law (see VISX Inc. v. Nidek Co. (1997), 209 N.R. 342 at paragraph 10 (FCA)).

[33]            Regrettably, the attention of the Applications Judge was not drawn to the seminal case of Grewal v. Canada (Minister of Employment and Immigration), [1985] 2 F.C. 263 (CA), which has long stood for the proposition that a number of factors should be considered in the exercise of discretion to extend the time established under subsection 18.1(2) of the Federal Courts Act. These include a continuing intention to bring the application, any prejudice to the party opposite, the reason for the delay, whether the application has merit and all other relevant factors particular to the case. All are to be considered; ie. the test is not conjunctive (see Thurlow C.J. at page 11 and Marceau J.A. at page 13). Accordingly, the Applications Judge erred in the exercise of her discretion by misapplying a principle of law.

[34]            In addition to the four factors mentioned in paragraph 33, I would also consider the following matters particular to this case; the failure of the CGC to follow its exemption protocol based on its past practices, the need to establish certainty as to the conduct of the CGC during labour disputes, and the financial impact of the CGC decision on JRI.

[35]            In my analysis, after considering all such factors, paramount consideration should be given to the lack of prejudice to the CGC and the importance of establishing certainty in the conduct of the CGC during labour disputes. This leads me to the conclusion that the JRI should be entitled to the extension of time which is sought.

[36]            The next issue on the cross-appeal is whether the Applications Judge ought to have granted a declaration that on September 10 and 11, 2002, the CGC was in breach of its statutory duty to have inspectors officially inspect the grain pursuant to paragraph 30(1)(a) or to grant an exemption under section 117 of the Act. It is not disputed that the JRI requested an official inspection on September 10, 2002; however, the key question is whether on the basis of safety considerations by the CGC management and its union that the CGC was entitled to refuse to have its inspectors cross the picket line and complete the official inspection.

[37]            Under section 11 of the Financial Administration Act, R.S.C. 1985, c. F-11 and section 240 of the Public Service Labour Relations Act, 2003, c.22 s.2, the CGC and its employees are governed by Part II of the Canada Labour Code (CLC) and the guidelines, policies and directives of the Treasury Board of Canada respecting workplace health and safety matters.

[38]            The CLC contains detailed provisions governing the circumstances under which an employee may refuse to work for health or safety reasons and the process that must be followed by the employer in the event of a refusal to work. In particular, subsection 128(1) provides that a federal employee may refuse to work in a place or perform an activity if the employee while at work has reasonable cause to believe that a condition exists in the place that constitutes a danger to the employee or the performance of the activity constitutes a danger to the employee. "Danger" is defined in subsection 122(1) of the CLC to mean:

[39]            Any employee who refuses to work must report the circumstances to the employer without delay and the employer must take immediate action to protect the employee from the danger. The provisions of the CLC relating to refusals to work have been interpreted and applied by this Court in the context of refusals by employees to cross picket lines. It is well established that a federal employee may not refuse to cross a picket line to attend at work, including picket lines set up at third party premises. Moreover, threats by picketers to attack or use violence outside of the hours of work and outside of the workplace against an employee crossing a picket line do not constitute a "danger" within the meaning of the CLC.

[40]            As an example, in Bidulka v. Canada (Treasury Board), [1987] 3 F.C. 630 (CA) meat inspectors employed by the Department of Agriculture refused to cross picket lines at a strike-bound plant operated by Gainers Inc. to perform inspection services. The strike at the plant had degenerated into an extremely violent labour confrontation and the union informed the meat inspectors that they would not provide or honour safe conducts for them to cross the picket lines. One of the reasons for the refusal of the meat inspectors to cross the picket line was their fear that the strikers and their sympathizers would, outside of work hours, attack them and members of their families to punish them for permitting Gainers to continue to operate its plant.

[41]            Writing for the Court, unanimous on this point, Pratte J.A. decided that the only danger that may be subject of a refusal to work is one that exists at the place where the employee is required to work. Any danger to the meat inspectors of being the victims of revenge by strikers outside of the work place was not a condition existing at the place of work and could not be used to refuse to work. The meat inspectors were therefore not entitled to refuse to cross the picket lines to perform their inspection duties at the Gainers plant. Implicitly, a federal employee may have reasonable cause to believe that a dangerous condition exists at a picket line such as to cause injury to his person that could afford a valid reason to refuse to work. However, this fear must be reasonably based and readily demonstrable by oral or affidavit evidence.

[42]            Nor do considerations of union solidarity have any place in the decision as to whether a picket line should be crossed. Where a grain inspector who is a member of the union refuses to cross a picket line of another union to report to work, that inspector is engaged in an unlawful strike (see B.C. Terminal Elevator Operators Association v. International Longshore and Warehouse Union, Canada and Grain Workers' Union Local 333, [2001] FCA 78 ; as per Décary J.A.at paragraph 18 and 19).

[43]            In the present case, there is no evidence that any inspector personally refused to cross the picket line on September 10 and 11 or had reasonable cause to believe that a condition existed that would constitute a danger to the person as defined in the CLC. Nor was there any other evidence upon which the CGC management could reasonably have concluded that the picket line constituted a danger to the inspectors. Accordingly, the refusal of the CGC to have its inspectors cross the picket line and complete the official inspection under paragraph 30(1)(a) of the Act or to grant an exemption under section 117 constitute a breach of the statutory obligations which the CGC owed to JRI.

[44]            Having determined that the CGC was in breach of the Act, the next question to be decided is whether JRI was entitled to unload the grain, thus mitigating its economic loss due to possible spoilage or whether it should have sought an order of mandamus to compel the CGC to undertake an inspection or grant an exemption. The CGC argues that without having sought mandamus, this Court should not exercise its judicial discretion so as to grant JRI the declaration it now seeks. It relies on Kourtessis v. M.N.R. [1993] 2 S.C.R. 53 at pages 115-116 for the broad premise that a court is justified in refusing to entertain the action if there is another procedure available in which more effective relief can be obtained.

[45]            I am well satisfied that when all of the surrounding circumstances are considered that JRI should not be denied a declaration because it did not follow the mandamus option. After all, the CGC took an unusual amount of time in finally reaching a decision not to cross the picket line, it ignored its past exemption practices without giving reasons and it failed in its compliance with the CLC and ultimately the Act. To now insist on mandamus would reward the CGC for its past conduct, a step that I am not prepared to take.

[46]            One must also remember that JRI was also faced with its own statutory obligation under subsection 69(1) of the Act to accept the grain for storage, as well as separate contractual obligations to the grain shippers and owners. Mitigation of any damage to the grain was therefore of importance to JRI.

[47]            Finally, the Applications Judge ordered that the issue of JRI's alleged breach of the Act be remitted to the Commissioners of the CGC, other than those involved in making the November 8 Order. JRI challenges this disposition on its cross-appeal on the basis that the suspension of the license and the weigh-over have already been completed and the matter is moot; no remedy other than the quashing of the November 8 Order being necessary. The CGC submits that the Applications Judge appropriately remitted the JRI's alleged breach of the Act to the Commissioners, but should not have excluded the Commissioners who decided it at first instance.

[48]            Given that JRI was justified in unloading the grain due to the conduct of the CGC and also due to the fact that the penalty prescribed by the November 8 Order has been completed, there is no reason to remit the matter back to the Commissioners for redetermination. In my view, the issues raised by the show-cause hearing are now moot.

[49]            As indicated by Sopinka J. at paragraph 15 of Borowski v. Canada(Attorney General), [1989] 1 S.C.R. 342: "The doctrine of mootness is an aspect of a general policy or practice that a court may decline to decide a case which raises merely a hypothetical or abstract question. The general principle applies when the decision of the court will not have the effect of resolving some controversy which affects or may affect the rights of the parties." Given the above reasons, the rights of the parties would not be materially affected or advanced by a redetermination by the Commissioners on the section 70 issue.

[50]            Accordingly, the appeal should be dismissed and the cross- appeal should be allowed in part. The order of the Applications Judge dated November10, 2004, setting aside the November 8 Order of the CGC should be confirmed, except that the issue of JRI's alleged breach of section 70 of the Act need not to be remitted to the Commissioners of the CGC. JRI should be granted an extension of time to file its application for judicial review under subsection 18.1(2) of the Federal Courts Act and a declaration should issue to the effect that the CGC was in breach of paragraph 30(1)(a) and section 117 of the Act. JRI should be entitled to its costs on both the appeal and cross-appeal.

"B. Malone"

"I agree.

     Marc Noël J.A."

"I agree.

     K. Sharlow J.A."

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-664-04

(APPEAL FROM AN ORDER OF THE FEDERAL COURT DATED NOVEMBER 10, 2004, DOCKET NUMBER T-20-03.)

STYLE OF CAUSE:                                                               Canadian Grain Commission & Her Majesty the Queen

PLACE OF HEARING:                                                         Winnipeg, Manitoba

DATE OF HEARING:                                                           April 25, 2006

REASONS FOR JUDGMENT BY:                                      Malone J.A.

CONCURRED IN BY:                                                          Noël J.A.

                                                                                                Sharlow J.A.

DATED:                                                                                  May 17, 2006

APPEARANCES:

Brian H. Hay Department of Justice Winnipeg, MB	FOR THE APPELLANT
Ms. E. Beth Eva Winnipeg, MB	FOR THE RESPONDENT

SOLICITORS OF RECORD:

John H. Sims, Q.C. Deputy Attorney General of Canada	FOR THE APPELLANT
Fillmore, Riley LLP Winnipeg, MB	FOR THE RESPONDENT