Slater v Pedigree Poultry Ltd., 2022 SKCA 113

Court of Appeal for Saskatchewan Dockets: CACV3635; CACV3636; CACV3638 Citation: Slater v Pedigree Poultry Ltd. , 2022 SKCA 113 Date: 2022-10-07 Docket: CACV3635 Between: Mervin Slater Appellant (Defendant) And Pedigree Poultry Ltd. and Ronald Dubois Respondents (Plaintiffs) And Saskatchewan Broiler Hatching Egg Producers’ Marketing Board and Victor Loewen Respondents (Defendants) Docket: CACV3636 Between: Victor Loewen Appellant (Defendant) And Pedigree Poultry Ltd. and Ronald Dubois Respondents (Plaintiffs) And Saskatchewan Broiler Hatching Egg Producers’ Marketing Board and Mervin Slater Respondents (Defendants) Docket: CACV3638 Between: Saskatchewan Broiler Hatching Egg Producers’ Marketing Board Appellant (Defendant) And Pedigree Poultry Ltd. and Ronald Dubois Respondents (Plaintiffs) And Victor Loewen and Mervin Slater Respondents (Defendants) Before: Ryan-Froslie, Schwann and Kalmakoff JJ.A.

Disposition: CACV3636 allowed in part, all other appeals dismissed Written reasons by: The Honourable Madam Justice Schwann In concurrence: The Honourable Madam Justice Ryan-Froslie The Honourable Mr.

Justice Kalmakoff On appeal from: 2020 SKQB 100 and QBG 2590 of 2001, Regina Appeal heard: October 14 and 15, 2021 Counsel: Michael Scharfstein and Bonnie Cherewyk for Mervin Slater Robert Kennedy, K.C., and Lauren Wihak for Victor Loewen Jeremy Ellergodt and Bo Carter for the Saskatchewan Broiler Hatching Egg Producers’ Marketing Board Daniel Maddigan and John Beke, K.C., for Pedigree Poultry Ltd. and Ronald Dubois Schwann J.A. I. INTRODUCTION [ 1 ] The action that gives rise to these appeals concerns the tort of misfeasance in public office.

It raises the difficult question of where the appropriate balance should be struck between curbing questionable behavior on the part of a regulatory body and its public officials and protecting those officials from claims brought by individuals who are adversely affected by their decisions.

[ 2 ] The factual backdrop in which this tort was alleged to have occurred is in connection with the supply management regime for the broiler hatching egg producers’ industry in Saskatchewan, which is established pursuant to provincial legislation. In broad-brush terms, the legislative scheme creates a regulatory tribunal to oversee the production and marketing components of the industry, principally through a licensing regime and quota limits. [ 3 ] The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board [Board] is the regulator of that program.

The individual defendants, Mervin Slater and Victor Loewen, were directors of the Board at the relevant time as well as active producers in the broiler hatching egg industry. The plaintiffs in the action, Pedigree Poultry Ltd. [Pedigree] and Ronald Dubois [collectively, the respondents], were producers whose businesses fell under the oversight of the Board. [ 4 ] The respondents commenced an action for compensatory damages against the Board as well as Messrs.

Slater and Loewen in their individual capacities as directors of the Board in relation to actions that the Board took, or omitted to take, in the discharge of its regulatory function. The respondents alleged that their actions and behavior rose to the level of misfeasance in public office. [ 5 ] The Court of Queen’s Bench trial judge who heard the matter found each of the Board and the individual defendants liable for misfeasance in public office. He awarded the respondents substantial damages and imposed a punitive damage award against Mr.

Slater personally: Pedigree Poultry Ltd. v Saskatchewan Broiler Hatching Egg Producers’ Marketing Board , 2020 SKQB 100 , 87 Admin LR (6th) 66 [ Trial Decision ]. [ 6 ] The Board, Mr. Slater and Mr. Loewen [collectively, the appellants] have each appealed from the Trial Decision . They say the trial judge committed numerous errors of law, fact, and mixed law and fact. For the reasons that follow, I find their appeals must be dismissed, apart from one aspect of Mr. Loewen’s appeal (CACV3636). II. BACKGROUND A.

The regulation of the broiler hatching egg producers’ industry [ 7 ] The chicken industry is supply managed. It is composed of two streams: the production and marketing of broiler hatching eggs by breeder producers and the production and marketing of broiler chickens by broiler producers . The issue at trial involved the former. [ 8 ] In on-the-ground terms, the broiler hatching egg producers’ industry works in this way. A hatchery in Saskatchewan (at the relevant time, Sunnyland Poultry Products Ltd. [Sunnyland]) purchases day-old chicks from a grower in the United States.

The hatchery then sells those chicks to licenced Saskatchewan broiler hatching egg producers, who have available quota to accept the hatchery’s placement. Those producers then raise the day-old chicks (called pullets) in what is known as a pullet barn, until they mature and become capable of laying eggs. This process takes roughly 20–22 weeks. [ 9 ] The pullets are then placed in laying barns, where they lay eggs for 55 to 65 weeks. At this point in their development, the chicks are called layers. The eggs from the laying barns are then delivered to the hatchery, where they were incubated.

Chicks hatched from those eggs (called broilers) are sent to broiler producers who raise the birds for slaughter. [ 10 ] The broiler hatching egg producers’ industry was created by The Natural Products Marketing Act , RSS 1978, c N-3 [ 1978 Marketing Act ]. Among other things, that legislation authorized the Lieutenant Governor in Council to constitute a board to administer plans for the promotion, control and regulation of the marketing of a natural product within Saskatchewan.

A natural product is defined to mean “any product of … animals including poultry whether alive or killed …” ( 1978 Marketing Act , s 2). [ 11 ] In 1985, The Broiler Hatching Egg Marketing Plan Regulations , RRS c N-3 Reg 1 [ Regulations ], was enacted to create a regulatory framework for the production and marketing of the hatching egg industry. The Regulations created the Board and assigned to it the responsibility for the administration of the Saskatchewan Broiler Hatching Egg Marketing Plan [Marketing Plan], the purposes of which are set out in s. 6 of the Regulations : Purposes 6

(1) The general purpose and intent of the plan is to provide for orderly marketing in the Saskatchewan hatching egg industry.

(2) Without limiting the generality of subsection (1), the specific purposes of the plan are: (

a) to regulate the production and marketing of hatching eggs in an orderly manner in Saskatchewan; (

b) to maintain a stable price for hatching eggs that is relative to the cost of production; (

c) to ensure the availability of an adequate supply of hatching eggs to meet the market demand; (

d) to establish marketing quotas for producers; (

e) to initiate, or co-operate in, research and education relating to the production and marketing of hatching eggs; and (

f) to co-operate with federal and extra-provincial marketing bodies with similar purposes. The Board is vested with a broad array of powers, including the authority to issue, cancel or suspend any licence, require information from producers relating to the production and marketing of hatching eggs, inspect records and make any order considered necessary or advisable to promote, control and regulate the production and marketing of hatching eggs. The Board’s powers are set out in s. 8 of the

Regulations : Powers of board 8

(1) The board is vested with the power: (

a) to regulate the time and place at which and the agency through which hatching eggs are marketed; (

b) to regulate the manner of distribution, quantity, grade and class of hatching eggs that are marketed by any producer at any time; (

c) to prohibit, in whole or in part, the transportation, packing, storing or marketing of any quantity, grade or class of hatching eggs; (

d) to market, including grading, hatching eggs either as principal or agent; (

e) to exempt from any order any person or class of persons engaged in the production or marketing of hatching eggs or any class, variety or grade of hatching eggs; (

f) to require any or all producers to register with and obtain licences from the board and provide any guarantees of financial responsibility that it considers necessary; (

g) to issue licences, fix and collect licence fees, collect charges for services rendered by it and collect penalities from any or all producers, and for those purposes to classify such producers into groups and fix the licence fees and charges payable by the members of the different groups, and to recover any such licence fees, charges or penalities by suit in any court of competent jurisdiction; (

h) to cancel or suspend any licence for violation of any part or provision of the plan, of any order of the board or of the regulations and to reinstate any cancelled or suspended licence; (

i) to require from all producers full information relating to the production or marketing of hatching eggs, as well as periodic information in any form that it may determine; (

j) to inspect the records of production of hatching eggs and the premises of producers at its discretion; (

k) to fix or determine the price or prices or minimum price or prices at which hatching eggs, or any quality, grade or class thereof, may be bought or offered for sale in Saskatchewan; (

l) to require the person in charge of any vehicle in which hatching eggs may be transported to permit any person designated by the board to search the vehicle; (

m) to seize, remove and dispose of any hatching eggs marketed in violation of an order of the board and retain or otherwise dispose of the proceeds thereof; (

n) to use any moneys it receives in carrying out the purposes of the plan and paying its expenses; (

o) to borrow, raise or secure the payment of money in any manner that it considers appropriate for the proper administration of the plan; (

p) to draw, make, accept, endorse, execute, issue, hypothecate or assign promissory notes, bills of exchange and other negotiable or transferable instruments; (

q) to purchase, take on lease or in exchange or otherwise acquire real property for the purpose of its business and to sell or otherwise dispose of, or mortgage, real property acquired by it; (

r) subject to the approval of the council, to make such orders as in its opinion are necessary or advisable to promote, control and regulate the production and marketing of hatching eggs and to amend or revoke such orders; and (

s) to carry out educational and research programs relating to hatching eggs.

(2) The board may accept and exercise any power or authority delegated to it by or pursuant to the Agricultural Products Marketing Act (Canada) , as amended from time to time, in relation to any power, authority or function that may be conferred or imposed pursuant to that Act. [ 12 ] Although the 1978 Marketing Act was repealed in 1990, the Board and the Regulations were carried forward under The Agri- Food Act , SS 1990-91, c A-15.2 [ 1991 Agri-Food Act ], and ultimately its successor legislation, The Agri-Food Act, 2004 , SS 2004, c A- 15.21 .

Under the 1991 Agri-Food Act , the Board is required to give licence holders notice and the right to be heard when it seeks to suspend or cancel a licence. The 1991 Agri-Food Act also established an appeal committee to “hear appeals from any person aggrieved by

an act or omission of an agency” (s. 22(1)(a)). Among other things, an appeal committee is empowered to “confirm, vary, disallow or stay” any Board decision or “refer the matter back to the agency for its consideration” (s. 22(3)(b)(iii)). A significant feature to the Regulations , enacted under the 1991 Agri-Food Act , is the prohibition against the sale of the quota per se. [ 13 ] Quota is an important feature of this regulatory scheme. Pursuant to s. 21 of the Regulations , the Board may, by order, provide for the fixing and allotting of quota to producers for the production and marketing of hatching eggs.

Where there is an increase in Saskatchewan’s overall allotment of quota, or where any quota has reverted to the Board, s. 21(4) requires half of it to go to individuals who wish to enter the industry and the other half to existing producers. [ 14 ] Until July of 2000, producers were not allowed to transfer quota other than as part and parcel of the sale of a production unit and, further, only if the Board was satisfied that no remuneration had been paid for the quota itself. The Board orders most relevant to

the issue of quota are as follows: ORDER NO. 1 (1986) … 1. The Board shall, on coming into force of this order, establish a quota system based upon the number of eggs to be marketed from a given number [of] chicks placed on an annual basis. … 4. A quota that is allocated to a registered producer shall relate to and be attached to a particular production unit. Only one production unit shall be situated on a legally defined parcel of land. … 6. No person or persons shall own, control or have an interest in more than one production unit, without the written permission of the Board. 7.

The maximum annual quota shall be 1,450,000 eggs per production unit, except for production units with capacity over 1,450,000 eggs prior to August 12, 1985. Producers who are allocated quota equal to or in excess of 1,450,000 eggs per production unit are not eligible for future quota expansion. … ORDER NO. 6/86 PRODUCTION INTERRUPTION … 1.a. A producer who wishes not to produce part or all of his annual quota of broiler hatching eggs shall apply to the Board for permission before December 1st of the year prior to the year the interruption of production and marketing is to occur. b.

The Board may approve or reject any applications for interruption in the production and marketing of part or all of a producer’s annual quota. c. The Board may cancel all or part of the producer’s quota if the producer fails to produce and market all or part of the quota without the permission of the Board. d. Before quota is cancelled the producer shall be given 14 days notice by registered or certified mail. Where the producer is not satisfied with the Board’s decision he might proceed to appeal the case to the Natural Products Marketing Council. … ORDER NO. 8/86 QUOTA TRANSFER … 1.

Transfer of quota shall be approved by the Board when the following conditions have been met: a. The production unit is sold or leased by one person to another person. b. Except where quota is being transferred within the family, the production unit shall have been advertised through the Board. … ORDER NO. 12/98: QUOTA ALLOCATION … 4.

In the event of industry expansion and pursuant to section 21(4) of the Plan (where 50% of the total amount of quota expansion will be offered to new producers) the majority of the remaining new quota shall be offered to existing units currently placing less than 30,000 breeder chicks. The maximum individual allotments will be determined by the Board following discussion at a general meeting of producers and industry representatives. [ 15 ] In November of 1998, Order No. 1 was repealed and replaced with Order No. 18/98: Quota and Licence Transfer.

This order allowed for the transfer of licence and quota, subject to Board approval. B. The key players [ 16 ] When the industry became regulated in the mid 1980s, James Glen, the principal of Pedigree, was grandfathered into the program. This resulted in Pedigree being granted a licence and receiving a quota of 18,000 bird units, or 2,610,000 hatching eggs based

on 145 eggs per bird. Because Pedigree was grandfathered into the regulatory program, its initial quota exceeded the maximum available limit established by Board Order No. 1, which, at that time, was 1,450,000 eggs per year, based on 10,000 bird units. [ 17 ] Mr. Dubois became a licenced producer in 1991 when he purchased an existing production unit at Pike Lake, Saskatchewan. His quota was set at 8,400 bird units (or 1,218,000 eggs). Shortly thereafter, Mr. Dubois leased a hatching barn from Prairie Properties Limited, a company owned by Mr. Glen, which was located on the same quarter

section as Pedigree’s barns in the Regina Beach area. Pedigree administered the day-to-day operations for Mr. Dubois, including arranging for the placement of chicks from Sunnyland. [ 18 ] Mr. Dubois also entered a management services contract [management agreement] with Pedigree on December 31, 1996, pursuant to which Pedigree agreed to “provide complete management services for [Mr. Dubois’s] hatching egg production operations …”. The trial judge accepted as fact that Mr. Dubois had little hands-on involvement in the business. [ 19 ] Mr.

Slater was a founding director of the Board and remained in that capacity from August of 1985 until December 31, 1999, when he became the Board’s manager. As mentioned, Mr. Slater was the first Board chair and retained that position for most of his tenure on the Board. During that time, he assumed responsibility for the Board’s day-to-day administration, supervised employees, and was the contact person when people called the Board. He organized the meetings, signed cheques, answered correspondence and so forth. In short, he was the face of the Board. [ 20 ] Mr.

Slater was also the Board’s representative on the Broiler Industry Committee [BIC]. The raison d’être of the BIC was to work with the chicken marketing boards to realize on opportunities to increase the production capacity of breeders and broilers. Other members of the BIC were Eugene Bendig (an official with Saskatchewan Agriculture and Food), Lanny Weiler (the general manager of Sunnyland) and David Keet (a farmer who represented the Chicken Farmers of Saskatchewan). [ 21 ] In addition, Mr. Slater was a producer at the relevant time.

His production unit, called Spruce Hill Livestock Ltd., was first licenced in 1986 for 28,500 bird units. Spruce Hill received an additional quota of 1,500 bird units in 1999. [ 22 ] Mr. Loewen was a Board director from 1991 to 2001, and its chair for a brief period in 2000. He, too, was in the hatching business, operating under the name Pine Grove Poultry. His business’s initial quota was 7,500 bird units. [ 23 ] Tim Keet was also a director of the Board at the material time. He was not named as a party in the respondents’ lawsuit. C. The Board’s early relationship with Pedigree and Mr.

Dubois [ 24 ] Soon after the Board was established in the mid 1980s, difficulties arose between it and Messrs. Glen and Dubois. They were the genesis of this action. As the trial judge described it, these difficulties “affected Mr. Slater’s attitude toward both Mr. Glen and Mr. Dubois”, and, given Mr. Slater’s leadership role on the Board, “the Board’s actions were affected by Mr. Slater’s antipathy for both of them” ( Trial Decision at para 41). According to the trial judge, these points of conflict set the stage for the allegations of misfeasance that were eventually levelled at Mr. Slater, Mr.

Loewen and the Board. I will briefly recount the back story as it provides the necessary foundation for the respondents’ allegations. [ 25 ] The first point of difficulty that arose between Mr. Glen and the appellants occurred in 1993, shortly after Mr. Glen was elected to the Board. He requested the release of certain Board records. The Board resisted. Mr. Glen was also at odds with Mr. Slater over the implementation of a policy to deal with the temporary surplus of hatching eggs in the early 1990s. They differed on how to implement a responsive policy and associated compensation program. Mr.

Slater favoured pro rata cuts by all producers, whereas Mr. Glen advocated for a system that called for early slaughter and compensation for the oldest breeder broiler flocks. [ 26 ] Even after Mr. Glen left the Board, like all producers, his approval was required to address any temporary surplus. Despite Mr. Glen and others having refused to provide their consent for the Board’s surplus removal program, the Board adopted Mr. Slater’s policy direction and put a surplus removal program in place, describing it as having been passed when in fact it had not obtained the necessary approval from all producers. Mr.

Glen laid a complaint with the Agricultural and Food Products Development and Marketing Council [Council] over that misrepresentation. The Council is responsible to the Minister for the supervision of the operation of all agencies, including the Board. As noted by the trial judge, the Council sided with the producers ( Trial Decision ): [47] In the result, Council intervened. A meeting was held in January 1996, where Mr. Glen was again a vocal opponent of the Board’s actions. On March 9, 1996, Mr.

Slater, as board chair, wrote to advise all producers – despite being aware of the fact that orders were not effective unless they had been approved by Council – that Council “has rescinded Order 12/95”. In fact, and as he well knew, Council had never approved that order. [ 27 ] The third incident between Mr. Glen and the Board related to Pedigree’s reduced production following a fire in 1994, which destroyed its barns. Pedigree immediately rebuilt but its new barns could only handle 40% of its prior capacity, or roughly 8,000 to 8,500 birds. Because of the fire, Mr. Slater had urged Mr.

Glen to apply for a stand down. This form of order authorizes a temporary reduction in the amount of production without relinquishing quota. Some correspondence passed between the parties, but nothing further came of the issue. Notwithstanding the fire and its disruptive effects on Pedigree’s hatching business, the Board continued to licence it in 1996, 1997 and 1998, without any reduction in quota, even though the Board knew that Pedigree was underproducing. Pedigree attempted to return to full production in 1998 and 1999 but, as discussed below, was unable to do so. [ 28 ] Mr.

Dubois’s difficulties with the Board began in 1991, when he purchased his production unit and then sought to transfer his operation to the Regina Beach area, near the Pedigree operation. Mr. Dubois’s acquisition of that production unit was financed by a company owned by Mr. Glen. Mr. Slater saw this as a red flag, and, as the trial judge put it, this resulted in “the first skirmish” in what was referred to at trial as the “sham producer” war that “would end only when the Board was finally put under the control of an administrator in 2000” (at para 52). Mr.

Slater, for the Board, said the transfer could not be approved without assurance from Mr. Glen that Pedigree would not gain an interest in or control of more than one production unit. The Board asked Mr. Dubois to file an application identifying all persons who held an interest in his operation. When he refused to do so, the Board rejected his transfer request,

characterizing it as “a scheme to enlarge a farm [Pedigree’s] more than 10,000 units” and that it was unfair “for one producer to use the other producers work … to further benefit himself with no respect for the others” (at para 54). [ 29 ] Mr. Dubois took his dispute with the Board to a conciliation committee as required by s. 11(2) of the Regulations . A compromise was struck, whereby the Board agreed to approve Mr. Dubois’s transfer on the condition that he kept his operation “separate and apart from any other production unit” and that it not exceed 10,000 bird units. [ 30 ] The second dispute between Mr.

Dubois and the Board related to his 1996 request to advertise his quota for sale. Once again, the Board pressed for further information from Mr. Dubois as to the identity of the proposed purchaser. Mr. Dubois did not clarify his position and again asked for his quota to be advertised (notwithstanding that a Board order at that time only permitted the advertising of a production unit not a quota). Mr. Dubois took his complaint to the Council for a mediated solution. [ 31 ] The lawyer retained by Mr. Dubois sent multiple letters to the Board, reiterating Mr. Dubois’s request and demanding a response.

None came and an Appeal Committee hearing was scheduled. [ 32 ] In October of 1997, despite being informed that all communication with Mr. Dubois was to be through his lawyer, Mr. Slater called Mr. Dubois directly, who, at that time, resided in Texas. Mr. Slater did not immediately identify himself; however, his identity became obvious to Mr. Dubois once Mr. Slater started quizzing him about his operation. The trial judge understood the purpose of Mr. Slater’s call was to confirm his suspicion that Mr.

Dubois owned nothing and was a mere pawn operating under the umbrella of Pedigree. [ 33 ] At the Appeal Committee hearing held on November 3, 1997, the Board once again asserted that Mr. Dubois was not actively involved as a producer and that Pedigree was behind his operation and accessing his quota. Nonetheless, the Appeal Committee allowed Mr. Dubois’s appeal and directed the Board to proceed with advertising Mr. Dubois’s production unit.

It also rejected the Board’s sham producer argument, writing as follows ( Dubois v The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board (3 November 1997) Saskatoon, Agri-Food Appeal Committee at 5): The Board raised a concern that the unit might be under control by another producer. The Committee noted that this is a separate issue and again does not relieve [the] Board from its obligation to advertise the unit.

If the Board sees evidence that another producer is contravening orders dealing with controlling interest, then it is the Board’s responsibility to fully investigate the matter and take appropriate action. [ 34 ] The trial judge did not accept Mr. Slater’s testimony about the purpose of his telephone discussion with Mr. Dubois. The trial judge also rejected Mr. Slater’s evidence about the production quota and advertising dispute, describing it as “cut from whole cloth” ( Trial Decision at para 62). The trial judge found the real reason why the Board responded as it did to Mr.

Dubois was because it took the position, as it had at the Appeal Committee hearing, that “Mr. Dubois was not an active producer, was not actively involved in the production unit” and that Pedigree was contravening Board orders (at para 65). D. The specific allegations of misfeasance in public office [ 35 ] The trial judge determined the appellants had committed misfeasance in public office in three ways: (

a) by Mr. Slater interfering with Pedigree’s June of 1998 placement, (

b) by authorizing a May 24, 1998, letter purporting to significantly affect the respondents’ licences and quota, and (

c) by failing to award expansion quota to them. A somewhat in-depth recitation of the factual matrix is necessary to understand the parties’ positions at trial and the Trial Decision . 1. The industry expansion and prelude to the June placement issue [ 36 ] The broiler hatching egg producers’ industry was in an aggressive expansion mode in 1998. The Chicken Farmers of Canada was prepared to substantially increase Saskatchewan’s market share, provided the province’s industry was able to respond swiftly.

To that end, the Board determined that it should increase quota capacity quickly, knowing it would take time for producers to ramp up production. The Board conveyed the news of the proposed expansion to all Saskatchewan producers by a letter dated January 19, 1998, in which it inquired whether they wished to take

part in this one-time opportunity. [ 37 ] In addition to seven other producers, both Mr. Glen and Mr. Dubois received the Board’s January 19, 1998, letter. They each responded in writing to express their interest. In a follow-up telephone conversation, regarding Pedigree’s proposed expansion, Mr. Slater told Mr. Glen that he was under pressure to increase the production of hatching eggs and asked for Mr. Glen’s placement information. He told Mr. Glen that the cap of10,000 bird units imposed by Order No. 1 would be increased to 30,000. Mr. Glen responded by letter of March 24, 1998.

He expressed an interest in an additional 12,000 bird units, of which 7,500 were to be placed in June of 1998 [June placement] and the balance at different intervals in 1998 and into 1999. Mr. Glen’s letter stipulated that his proposal was subject to the hatchery’s

schedule and obtaining financing for poultry house construction. He emphasized that time was “of the essence and thus [he] would appreciate [Mr. Slater’s] timely response”. [ 38 ] Mr. Glen communicated news of his anticipated quota expansion and June placement to Bob Kowalchuk, an official with Sunnyland. He also expressed a willingness to build a broiler breeder farm close to Sunnyland’s operation in Wynyard. Sunnyland confirmed that it could arrange for an enhanced June placement of pullets. On April 14, 1998, Mr. Glen also met with the Farm Credit Corporation to discuss financing.

The trial judge accepted that Pedigree would have been able to obtain financing, if not through the Farm Credit Corporation, then through the Glen family, as it had substantial assets. He then made this important finding: “Mr. Glen was ready, willing and able to carry out this plan to expand Pedigree and to make the placements identified in his March 24 letter” (at para 75). [ 39 ] Mr. Slater sent another letter about the quota expansion to producers on April 14, 1998, seeking further details about their financing arrangements and placement schedules. Mr. Dubois was not included in this mailout, but Mr. Glen was.

Mr. Glen, however,

did not respond because he felt that he had already supplied the sought-after information and had informed Mr. Slater personally of Pedigree’s ability to ramp up quickly. Financial details were not provided because Pedigree could not finalize arrangements without confirmation that it would get additional quota. However, in Mr. Glen’s subsequent letter to the Board on April 28, 1998, he confirmed his request for an additional 12,000 bird units, and his intention to expand his facilities. [ 40 ] Mr.

Slater testified that the April 14, 1998, Board letter was sent to all producers and that those who responded provided everything he had asked for. The trial judge rejected his evidence. Regarding Mr. Dubois, the trial judge stated, “Mr. Dubois did not respond to the April 14 letter because Mr. Slater did not send it to him , having concluded he was a sham producer” (emphasis added, at para 78). He also rejected Mr.

Slater’s testimony that all producers who eventually received additional allocation on September 9, 1998, had, in fact, responded to the April 14, 1998, letter. [ 41 ] Despite there being conflicting evidence as to the length of time it would take for a placement to occur, the trial judge accepted that Mr. Glen’s June placement would have occurred but for the events that followed. His finding was based, in part, on Mr. Loewen’s testimony that placements could take anywhere from a month to a few months and the fact that Mr. Loewen was personally able to secure a placement of 20,000 chicks in five weeks. 2.

Cancellation of Pedigree’s June placement [ 42 ] Although there was conflicting evidence about whether the June placement was logistically possible, the trial judge accepted Mr. Glen’s testimony that Sunnyland had agreed to the placement and would have been able to place the chicks with Pedigree. However, on April 21, 1998, Mr. Glen was informed by Mr. Kowalchuk that, because of what he had heard at a BIC meeting held on April 17, 1998, Pedigree’s proposed June placement was in jeopardy. Mr. Glen called Mr. Slater immediately. As the trial judge put it, Mr. Slater “responded angrily that Mr.

Glen had not responded to his April 14 letter, and told Mr. Glen that if he failed to respond, he would be ‘out of luck’” (at para 83). Mr. Glen insisted that Pedigree had already provided the Board with a placement

schedule and had confirmed that financing would be in place. According to Mr. Glen, Mr. Slater remained agitated when he reiterated that his placement

schedule did not include anything for Mr. Dubois. The trial judge inferred that this discussion confirmed that, in Mr. Slater’s mind, Mr. Glen had an interest in Mr. Dubois’s operation and Mr. Dubois was little more than a sham producer. [ 43 ] When Mr. Glen spoke with Mr. Slater again on April 27, 1998, about the June placement, Mr. Slater said the quota for the June placement did not exist because Pedigree had not been granted a stand down. This was the first time the stand down issue had come up since it was raised by Mr. Slater after Pedigree’s 1994 fire. Mr.

Slater also flagged several other long-standing grievances with Mr. Glen. Mr. Glen raised his concerns about getting a June placement from the hatchery with Mr. Weiler (the general manager of Sunnyland), who deferred to the Board. [ 44 ] Mr. Glen wrote to the Board on April 28, 1998, and again on May 5, 1998, to confirm that Pedigree had made the necessary arrangements for the June placement and that, pursuant to its 1998 licence, it already had sufficient quota for that placement. When his request for an immediate response went unanswered, Mr.

Glen appealed the Board’s lack of response. [ 45 ] On May 11, 1998, Mr. Kowalchuk informed Mr. Glen that Pedigree’s June placement was cancelled. The trial judge made the following findings about that cancellation: [91] I nonetheless find that the June placement was cancelled by Sunnyland on May 11 because Mr. Slater made statements to Mr. Weiler at the BIC meeting which were intended to and in fact led Sunnyland to conclude that Pedigree may lack the quota for that placement, and then failed to set Sunnyland straight . I concluded that Mr. Slater so advised Mr. Weiler because Mr.

Weiler said at the BIC meeting that he did not know Mr. Dubois, which Mr. Slater took as confirmation that [Mr. Dubois] had never placed chicks. Mr. Slater believed he had the smoking gun which confirmed Mr. Dubois was not operating a separate production unit from Pedigree. (Emphasis added) The trial judge gave numerous reasons to support his determination that “Mr. Slater, Mr. Loewen and the Board had continued to believe Mr.

Dubois was a sham producer before the April 17 BIC meeting” (at para 92) and that their actions throughout “are properly understood as continuing attempts to win the sham producer war” (at para 94). [ 46 ] According to Mr. Glen, at a mediation session held on May 22, 1998, which took place prior to his appeal of the June placement issue, Mr. Slater indicated that the Board had no problem with the June placement. The trial judge accepted Mr. Glen’s evidence. The Board was asked to confirm that position in writing, but it failed to do so, as promised.

Instead, two days later, on May 24, 1998, the Board sent a rather stunning letter, the specifics of which are discussed below. 3. The May 24 cancellation and amalgamation letter [ 47 ] The Board’s May 24, 1998, letter, signed by Mr. Slater, purported to (

a) cancel Pedigree’s “unused quota” of 10,300 bird units, (

b) transfer Mr. Dubois’s entire production unit (including quota) to Pedigree, and (

c) require Pedigree to find a market for its product. The letter reads as follows: Dear Mr. Glen, Re: Board’s decision following May 20 [ sic ], 1998 meeting with yourself, the board, and council representative. 1. The production unit referred to as Pedigree Poultry managed by Jim Glen has produced eggs from 8500 chicks placed per year for the last four years. No stand down permission was granted. The cancellation of the unused quota 18,000 - 7,700 = 10,300 takes place as of now. 2. With the information supplied from Ron Dubois and the history of this production unit. The quota and production unit known as Ron

Dubois which has always been managed, administered and shares the same grow barns, egg room, and office, [will] be rolled into Pedigree Poultry with an annual quota of 7700 + 8500 = 16,200. 3. The province is in need of more hatching eggs and is in the process of giving out quota to existing producers and new producers, as you have requested an increase of 7500 chicks per year the Board is willing to look at this request if you find a legitimate market for your product to be produced at the same building complex. [ 48 ] Neither Pedigree nor Mr.

Dubois had been given prior notice of these decisions nor were they afforded the opportunity to be heard. The trial judge made the following significant observations and findings in connection with the letter: [98] The May 24 letter was fundamentally inconsistent with Mr. Slater’s statement at the mediation that the Board had no problem with the June placement. It confirmed that all Board members knew Mr. Glen wanted expansion quota. It incorrectly said he wanted only 7,500 more bird units, when he had very clearly asked for 12,000. It also called for him to find a market.

That requirement was not imposed on any other producer as a condition of being considered for expansion quota. [ 49 ] Pedigree appealed the Board’s decisions as expressed in the May 24, 1998, letter. The Board did not arrange for mediation as required by the Regulations . At the Appeal Committee hearing, conducted on September 2, 1998, the Board advanced the position that it was entitled to cancel 10,300 bird units of Pedigree’s quota on 14 days’ notice on the footing that Pedigree had underproduced without a stand down order. Its position was advanced despite there being no correspondence between Mr.

Glen and the Board over this issue for many years. [ 50 ] The Board also argued that it had no choice but to cancel Pedigree’s quota as Sunnyland had decided not to make further placements. Mr. Slater attempted to buttress the Board’s position by referring to a conversation he had had with Mr. Weiler and the latter’s correspondence to him of July 23, 1998, two months after the cancellation of the June placement , in which Mr. Weiler was said to be dissatisfied with Pedigree. [ 51 ] The trial judge concluded the timing of Mr.

Weiler’s July of 1998 letter had no bearing on the decision expressed in the Board’s May 24, 1998, letter and that it was little more than “a transparent attempt to justify its actions, tailored to fit the defence narrative” (at para 104). From the whole of the evidence, including the Appeal Committee’s conclusions, the trial judge drew the following inference in relation to the Board’s actions: [105] Further, the Board did not cancel Pedigree’s quota because Pedigree had underproduced, as it claimed in the May 24 letter. It cancelled Pedigree’s quota and transferred Mr.

Dubois’ license because it decided to rearrange Pedigree’s and Mr. Dubois’ licenses and quotas to line them up with what it had concluded was really happening: that is, the operation of a single Pedigree production unit that had been making two placements a year.

The Board did so despite having been explicitly directed by the Appeal Committee in the advertising appeal decision – which closed the book on the first of the Board’s misguided attempts to deal with the sham producer issue without taking the steps required by the Act , Regulations and orders – that if it was concerned with this issue, it should fully investigate and then take further action . [ 52 ] The Appeal Committee ruled in favour of Pedigree and Mr.

Dubois in a decision rendered in November of 1998: Pedigree Poultry Ltd. v The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board (2 September 1998) Regina, Agri-Food Appeal Committee. It ordered the Board to rescind the May 24, 1998, letter and return Pedigree’s quota allocation. The trial judge summarized the conclusions of the Appeal Committee in this way: [107] Pedigree received the decision of the Appeal Committee relating to its September 2 appeal in November 1998 [November 1998 decision]. The decision was clear, blunt and fully vindicated Pedigree’s position.

Among other things, it said the Appeal Committee reached the following conclusions: (

a) The Board failed to take expedient action in relation to the mediation. (

b) The Board’s cancellation of Pedigree’s quota based on the lack of a stand down agreement was “a complete turnabout from the agreement at the mediation meeting”. (

c) The [ 1991 Agri-Food ] Act , the Regulations and the orders require that the Board provide a producer the opportunity to be heard before cancelling quota, and no such opportunity was provided before the May 24 cancellation. (

d) The Board may have had justification for cancelling quota, although that remained questionable based on the evidence at the hearing. However, it failed to take appropriate action. It failed to follow up after Pedigree was not granted a stand down in 1995, but instead issued licenses in 1996, 1997 and 1998. (

e) The Board failed to respond to repeated inquiries from Pedigree, and gave no notice “as to its concerns about underproduction from Pedigree until the May 24th letter cancelling 10,300 hens ‘as of now’”. (

f) The Board failed to operate in good faith when an attempt was made to mediate a resolution to Pedigree’s concern. (

g) The Board acted contrary to the intent of the orders and Regulations , which require a fair opportunity for a producer to be heard upon the cancellation of quota rights. [ 53 ] Pedigree sought to restore its placements with Sunnyland but was told none were available for 1998 and possibly into 1999. When Pedigree applied to the Board for its 1999 licence, the Board did not issue it for four months, being two months beyond the usual time it had taken in the past.

As things turned out, Pedigree only received placements for half of its existing quota in 1999. [ 54 ] Pedigree experienced further difficulties in obtaining its 2000 licence. In 2000, Mr. Slater repeatedly rejected Pedigree’s applications for licensing and requested additional information, which Mr. Glen dutifully provided. Further, the Board refused to take

Mr. Dubois’s payment for his licence because it would not accept a cheque from anyone other than Pedigree, “stating that Mr. Dubois did not place the flock, and that it would look to Pedigree for payment” (at para 111). [ 55 ] When the Board indicated that it would not grant Pedigree a licence for 2000, Pedigree appealed. The Board once again pushed the theory that Pedigree and Mr. Dubois were a single production unit and supplemented its submissions with the suggestion that Pedigree had bad business relations with Sunnyland.

The Appeal Committee once again ruled in favour of Pedigree and ordered the Board to immediately issue the 2000 licence: The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board (Re) (November 2000) Saskatoon, Agri-Food Council [ 2000 Council Decision ]). While the 2000 Council Decision was under reserve, Mr. Slater wrote to Lilydale (the company that had taken over the hatchery business from Sunnyland) to inform it that Pedigree did not have authority to produce and market eggs in 2000 and that the Board would not allow the May of 2000 placement. The Board approved that letter. 4.

The Board’s dealings with Mr. Dubois [ 56 ] I have already alluded to Mr. Dubois’s early difficulties with the Board and will not repeat that history. However, what transpired from 1998 to 2000 was highly relevant to the trial decision. [ 57 ] From the time Mr. Dubois received his 1998 licence in February of that year, until the May 24, 1998, cancellation letter, no correspondence of any significance passed between him and the Board. As discussed above, the May 24, 1998, letter purported to roll Mr. Dubois’s entire production unit into Pedigree’s. Astonishingly, Mr.

Dubois was not copied on that letter and was not advised by the Board in advance that it was even contemplating that course of action. [ 58 ] The Board’s purported cancellation drew an immediate response from Mr. Dubois’s legal counsel, who took issue with its failure to provide notice and for not sending him the April 14, 1998, letter about the expansion quota. When the Board did not respond to this, and several follow up letters from Mr. Dubois’s legal counsel, Mr. Dubois appealed. [ 59 ] Mr. Dubois’s appeal was heard on September 2, 1998, in conjunction with Pedigree’s appeal.

At the appeal hearing, and contrary to the May 24, 1998, letter, Mr. Slater informed the Appeal Committee that the Board had not altered Mr. Dubois’s quota. This about face led Mr. Keet (a Board director) to write the following handwritten apology from the Board: “We Are Addressing your concerns to the Misbelief that your quota and licence was taken away from you. This is not true and we apologize for any inconvenience”. [ 60 ] The trial judge found that the Board’s so-called apology misrepresented its position: [124] … The Board was well aware the May 24 letter purported to “take away” Mr.

Dubois’ license by “rolling” his quota and production unit into Pedigree. I concluded that the Board made this ill-conceived attempt to claim there was “nothing to see here” because Mr. Slater and Mr. Loewen, at least, and thus the Board, knew what the Board had done was unlawful, as it did not comply with the regulatory framework. The Board had finally rolled over, three months after it was first told by counsel for Mr. Dubois that it had acted unlawfully. [ 61 ] Like Pedigree, Mr. Dubois did not receive his 1999 licence in a timely way. The Board refused to accept his fees.

On April 28, 1999, the Board cancelled Mr. Dubois’s quota and licence. The cancellation letter provided as follows: This is your official notice that your quota and license is being cancelled.

Note: Saskatchewan Broiler Hatching Egg Marketing Plan 8(1) (h), 8(1)(i), 8(1)(j), and Order No. 12/98(6). 1) You have not asked for a stand down. 2) You have not purchased any breeders for at least 3 years, if not longer. 3) You have not satisfied the board that you have any interest in the poultry industry, attached letter dated April 8, 1999. 4) You stated on October 27, 1997 when you talked to the chairman by phone that you had nothing to do with the Regina Beach operation. Your cancellation is in effect June 04, 1999. [ 62 ] Mr. Dubois appealed. The Appeal Committee found that while Mr.

Dubois’s relationship with Mr. Glen was relevant to the cancellation issue, neither party had conclusively proved their positions one way or the other. While the Appeal Committee was satisfied that the Board had cause to doubt Mr. Dubois, it ultimately allowed Mr. Dubois’s appeal because the Board had failed to provide reasonable notice.

Of significance, the Appeal Committee concluded by stating as follows ( Dubois v The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board (17 August 1999) Saskatoon, Agri-Food Appeal Committee at 6 [ 1999 Dubois Appeal Committee Decision ]): Should the board wish to re-initiate a new cancellation process, the board should provide adequate prior notice to Mr. Dubois and an opportunity to be heard as required under

Section 9 of The Agri-Food Act , before any cancellation occurs. The notice should set out the grounds for any proposed cancellation, the time within which he must respond and the consequences of failing to do so. [ 63 ] The Board appealed the 1999 Dubois Appeal Committee Decision to the Court of Queen’s Bench. That appeal was dismissed: Saskatchewan Broiler Hatching Egg Producers’ Marketing Board v Dubois , 1999 SKQB 228 , [2000] 5 WWR 269. Mr. Dubois’s 1999 licence was finally issued on December 14, 1999. Shortly thereafter, the Board renewed its efforts to cancel Mr.

Dubois’s licence by requesting further documentation and evidence from him. By letter of February 14, 2000, the Board informed him that it would cancel his licence after the expiration of four weeks. [ 64 ] Following an exchange of correspondence, Mr. Dubois filed another appeal on February 28, 2000, alleging that the Board had

exceeded its jurisdiction and was maliciously harassing him. The Appeal Committee once again found in favour of Mr. Dubois: The Saskatchewan Broiler Hatching Egg Producers’ Marketing Board (Re) (11 May 2000) Saskatoon, Agri-Food Appeal Committee. It determined that Mr. Dubois was a producer within the meaning of the Marketing Plan and that “the Board’s actions were intrusive and bordered on harassment ” (emphasis added, at 4). The Appeal Committee ordered the immediate reinstatement of Mr. Dubois’s licence. Despite this decision, the Board continued to slow walk Mr.

Dubois’s 2000 licence and dealt with him as if he were not a licenced producer. 5. Allocation of the expansion quota [ 65 ] As mentioned above, in the midst of the aforementioned interactions between the Board, Pedigree and Mr. Dubois, the Board was tracking an expansion strategy for the industry to align itself with the possibility of an increased, province-wide market share.

The Board’s January 19, 1998, and April 14, 1998, letters were integral to its interactions with all Saskatchewan producers. [ 66 ] The Board held a meeting on September 9, 1998, where it allocated an expansion quota of 58,220 bird units to seven of the existing producers. All who had requested an expanded quota – other than Pedigree, Mr. Dubois and another entity – were granted what they had requested, either unconditionally or on a conditional basis. Mr. Loewen (Pine Grove Poultry), for instance, received 18,000 new units.

As it turned out, of the 58,220 bird units that were allocated at the September meeting, only 36,920 were eventually taken up. From this, and the other evidence about how and why some quota was not fully taken up, the trial judge drew the following conclusions: [147] No additional quota was allocated or offered to [Mr. Dubois] or Pedigree by the Board at the September 9 meeting, or at any time before the administrator took control. I concluded there was no discussion at the September 9 meeting of granting additional quota to [Mr.

Dubois] or Pedigree, despite that the Board knew that both were licensed producers that wanted additional quota. [148] I also concluded – based on the regulatory history relating to the plaintiffs prior to September 9, but the defendants’ actions after that meeting – that the failure to allocate quota to Pedigree or Mr. Dubois on September 9 was part and parcel of their ongoing attempt to have their way in relation to the sham producer issue, despite knowing the Board had not taken the steps necessary to cancel Mr. Dubois’ license . Mr. Slater and Mr.

Loewen, at least, and thus the Board, did not wish to deal with Mr. Dubois and Mr. Glen as separate producers who were entitled to share in the new quota or in the quota that would be returned as a result of conversion. Their goal was to achieve the outcome that they failed to achieve on May 24. They wanted Mr. Dubois gone, and Mr. Slater to be licensed as the operator of a single production unit located at Regina Beach . (Emphasis added) [ 67 ] The trial judge found as fact that neither Mr. Glen nor Mr. Dubois were informed of the September 9, 1998, meeting in advance or of its results.

He then said as follows: [160] … neither [Mr. Glen] nor Mr. Dubois knew the particulars of the new quota allocations until November 2000. Mr. Glen learned those particulars on November 24 and 27, 2000, when he attended a Board strategic planning session, and was given a copy of a report titled “Quota Issuance by SBHEPMB”. That report contained the details of the new quota allocations listed above. [ 68 ] Finally, the evidence showed that the expansion project resulted in Mr. Slater’s operation receiving an additional 1,500 bird units and Mr. Loewen’s an additional 20,000 bird units. 6.

Subsequent actions [ 69 ] In late 1998, negotiations took place between Mr. Glen and Mr. Bendig of BIC – purportedly on behalf of the industry at large – about the possible expansion of Pedigree’s quota: but the offers were geared toward treating the Regina Beach operations (i.e., Pedigree’s and Mr. Dubois’

s) as one entity. Mr. Glen saw this as an attempt to achieve what the Board had intended to realize by its May 24, 1998, letter. Mr. Dubois was never part of those discussions. The negotiations were eventually terminated. [ 70 ] As noted above, Pedigree and Mr. Dubois experienced difficulties obtaining their licences in 1999 and 2000. The Board delayed issuance of their respective licences and was persistent in its pursuit of the cancellation of Mr. Dubois’s licence. On May 18, 2000, Mr.

Glen wrote to the Saskatchewan Minister of Agriculture and Food, alleging that the Board was not acting within the scope of its authority and was engaging in harassment. By order of the Lieutenant Governor in Council, dated June 8, 2000, the Board was stripped of its powers, which were assigned to the Minister of Agriculture and Food. Pedigree and the new administrator attempted to negotiate a resolution to Pedigree’s claim for damages for the loss of the 1998 placement and expansion quota. Those discussions proved unfruitful, and the matter proceeded to trial, resulting in the Trial Decision now under appeal.

III. THE TRIAL DECISION [ 71 ] After comprehensively reviewing the evidence and the law pertaining to misfeasance in public office, the trial judge turned to Pedigree’s and Mr. Dubois’s core allegations. [ 72 ] Dealing first with Pedigree’s allegation of the misfeasance that it said led to the loss of its June placement, the trial judge found that Mr. Slater’s attendance at the BIC meeting of April 17, 1998, was in his capacity as a public officer as a member of the Board and that his discussions with Mr.

Weiler about Pedigree’s quota status created concerns in the mind of Sunnyland, which eventually led to the cancellation of Pedigree’s placement. In sharing information, and undertaking those discussions with Mr. Weiler, Mr. Slater spoke in his capacity as Board chair and member. As such, the trial judge concluded he “had a legal obligation not to knowingly or recklessly misrepresent Pedigree’s status as a licensed producer” (at para 194). Similarly, when Mr. Slater heard Mr.

Glen’s representations relating to the June placement, he was also acting in a public capacity and was under an obligation to address the uncertainty he had created: “He was not entitled to do nothing” (at para 195).

[ 73 ] The trial judge found Mr. Slater guilty of “sins of omission and sins of commission” in relation to his handling of the June placement: [199] … He knowingly or with the necessary subjective reckless disregard for his duties as chair and a member of the Board both acted and failed to act, in a manner that was unlawful and was likely to cause damage to Pedigree. He was guilty of Category B misfeasance and that misfeasance caused the cancellation of the June placement. Further, Pedigree was unable to secure placements in 1999 to mitigate the damage resulting from that cancellation.

As Pedigree said, the Board had by then awarded quota to Pine Grove that would prevent such a placement. [ 74 ] While the trial judge was not prepared to infer that the Board had authorized what Mr. Slater had done or that Mr. Loewen knew what had happened before May 11, 1998, when the June placement was cancelled, he found those facts largely irrelevant to the question of their liability: “If the Board had acted properly as soon as it became aware of the problem, rather than doing what it did on May 22 and May 24, Pedigree would have been able to complete a placement and avoid suffering a loss. As such, Mr.

Loewen and the Board are also liable for the damage suffered on that account” (at para 203). [ 75 ] The trial judge turned next to the respondents’ misfeasance allegations concerning the May 24, 1998, letter, which, as mentioned, purported to roll Mr. Dubois’s production unit (i.e., licence and quota) into Pedigree’s, cancel Mr. Dubois’s licence, and cancel 10,300 bird units of Pedigree’s quota for underproduction due to its failure to obtain a stand down order. The trial judge concluded that the Board took this measure, even though no proposal had been made for this course of action.

As he put it, “The May 24 letter was out of the blue” (at para 204). [ 76 ] The trial judge found Mr. Slater, Mr. Loewen and Mr. Keet “participated fully in the decisions reflected in the May 24 letter” (at para 205) and that “Mr. Loewen, like Mr. Slater, had actual knowledge that they and the Board could not do what they did on May 24 without giving Mr. Dubois and Pedigree a right to be heard” (emphasis added, at para 206). In addition, if he had not found direct knowledge, the trial judge was satisfied that they acted in “reckless disregard for the lawfulness of their actions” (at para 206).

He also found that both Mr. Loewen and Mr. Slater were aware that the decisions reflected in the May 24, 1998, letter “would cause the affected producer to suffer damages” (at para 207). [ 77 ] In response to the Board’s argument that it was motivated by a higher public interest and properly exercised its regulatory responsibilities, the trial judge found it to be “no defence that the [appellants] claim they had a reasonable suspicion [that Mr. Dubois’s operation] was a sham” (at para 209). Even if Mr.

Dubois had been found to have breached Board orders, such an action would not have been a defence: “The fact a public officer believes their cause is righteous does not mean they can ignore the law which governs the exercise of their public functions” (at para 210). Put bluntly, the trial judge was unpersuaded by the Board’s argument because, as a matter of law, it was required to operate lawfully. [ 78 ] A

summary of the trial judge’s conclusion on liability in connection with the May 24, 1998, letter is found at paragraph 211 of his decision: [211] … The Board sought to rearrange Pedigree’s and Mr. Dubois’ licenses and quotas to correspond with what it had concluded was really happening; that is, a single Pedigree production unit was making two placements a year. It did so without complying with the procedural requirements imposed by the regulatory framework. That is sufficient – given that damages of the right sort were caused – to make out misfeasance in these circumstances.

Further, they misled Pedigree as to the reason it cancelled its unused quota, as they did so because of the sham producer issue, which they were not entitled to take into account. [ 79 ] The final aspect of the respondents’ claim was the Board’s alleged failure to provide them with expansion quota. The trial judge made the following key findings of fact in connection with that issue: (

a) the Board granted an expansion quota – conditionally or otherwise – to seven of the producers who had expressed an interest; (

b) the Board was aware that Pedigree and Mr. Dubois had requested an additional quota, yet it failed to grant or even consider granting an expansion quota to them; (

c) Pedigree’s response to the Board’s January 19, 1998, solicitation of interest letter was more complete than the responses of others who had been awarded quota; and (

d) many of the producers who had received an expansion quota, including Mr. Loewen, had not provided the required information or assurances the Board had demanded. [ 80 ] Based on those findings, the trial judge determined that Pedigree and Mr. Dubois had not been dealt with in the same way or on the same basis as the other producers on September 9, 1998, nor had they been awarded an expansion quota after the first round of allocation ended. His

summary for why the appellants had acted as they did is as follows: [216] I have explained above why I have concluded the defendants took this route. The Board did not fail to allocate quota to the plaintiffs for any of the shopping list of reasons identified by the defendants – not because Mr.

Dubois had said he wanted to sell his production unit, not because Sunnyland would not place chicks with Pedigree, not due to uncertainty as to their capacity to ramp up or their alleged failure to respond to the April 14 letter, not for biosecurity reasons, and not for any other reason related to the capacity of either of the plaintiffs. It failed to allocate quota to Pedigree or Mr.

Dubois on and after September 9 because it was committed to having its way in relation to the sham producer issue . (Emphasis added) The unfairness of it all, the trial judge said, was exacerbated by the fact that the Board kept Pedigree and Mr. Dubois “in the dark” throughout the quota expansion exercise (at para 218).

[81] The trial judge rejected the Board’s submission that the granting of a quota was a matter exclusively within its almostunfettered discretion. Pointing to s. 21(2) of the Regulations, he remarked on how the Board was obliged to offer new quota to existingproducers and to discharge that function fairly and “in an even-handed fashion, based on proper considerations, and in accordance withthe regulatory framework” (at para 223).

To conclude on this point, he said as follows: [226] In the result, the individual defendants either knew, or were reckless as to whether, they and the Board were acting unlawfullywhen they decided to exclude Pedigree and Mr. Dubois from the allocation of expansion quota. This was one more attempt to have theirway without the bother of providing proper notice and a fair hearing before deciding if Mr. Dubois was a sham producer, making anorder authorized by law if the Board decided he was a sham producer, and weathering the inevitable appeal.

The defendants also knew afailure to award expansion quota to the plaintiffs would likely cause them damage. (Emphasis added) [82] For all of those reasons, the trial judge was satisfied that the tort of misfeasance in public office had been made out againsteach of the appellants with respect to both Pedigree and Mr. Dubois. After a careful assessment of the expert evidence adduced by theparties on the quantification of loss, the trial judge found the appellants liable for the following damages: (

a) For Pedigree – (i) $20,394 for the loss of its June placement; (ii) $1,574,518 for loss of income from the Board’s failure to allocate expansion quota; and (iii) $540,000 for loss of the capital value of the unallocated quota. (

b) For Mr. Dubois – (i) $70,538 for loss of income from the Board’s failure to allocate expansion quota; and (ii) $900,000 for the loss of the capital value of the unallocated quota. [83] In addition to pre-judgment interest and costs, punitive damages in the amount of $50,000 were assessed against Mr. Slaterpersonally. IV.

THE LAW: MISFEASANCE IN PUBLIC OFFICE [84] The tort of misfeasance in public office is an intentional tort rooted in the principle that “those who hold public office andexercise public functions are subject to the law and must not abuse their powers to the detriment of the ordinary citizen” (Freeman-Maloyv Marsden (2006), (ON CA), 208 OAC 307 (CA) at para 10).

In Three Rivers District Council v Governor andCompany of the Bank of England (No 3), [2000] 2 WLR 1220 (HL) [Three Rivers], the House of Lords described the tort in a similar way(at 1230): The rationale of the tort is that in a legal system based on the rule of law executive or administrative power “may be exercised only forthe public good” and not for ulterior and improper purposes: Jones v. Swansea City Council [1990] 1 W.L.R. 54, 85F, per Nourse L.J.; adecision reversed on the facts but not on the law by the House of Lords [1990] 1 W.L.R. 1453, 1458.

The tort bears some resemblance tothe crime of misconduct in public office: Reg. v. Bowden [1996] 1 W.L.R. 98. [85] In its earliest formulation, the tort was limited to situations where the public office holder abused a power the officer actuallypossessed. In Canada, the tort was expanded, beginning with the formative decision Roncarelli v Duplessis, (SCC),[1959] SCR 121 [Roncarelli]. There, the premier of Quebec was found liable for directing the liquor licensing regulator to revokeMr. Roncarelli’s liquor licence, even though the premier had no statutory authority in the decision-making process.

In light of Roncarelli,the tort was broadened beyond allegations of abuse of a statutory or prerogative power to situations “where a public officer with actualknowledge of his lack of statutory power or authority acted in a manner that he knew would probably harm the plaintiff” (Philip H.Osborne, The Law of Torts, 6th ed (Toronto: Irwin Law, 2020) at 224).

In England, for example, the House of Lords in Three Rivers alsoenlarged the scope of the tort by giving effect to the idea that the tort can arise from a range of misconduct committed by a publicofficial, including “sins of omission” (at 1275). [86] The Supreme Court revisited the tort of misfeasance in public office in Odhavji Estate v Woodhouse, 2003 SCC 69, [2003] 3SCR 263 [Odhavji], which remains the leading authority on the matter.

Speaking for the court, Iacobucci J. concluded that the “ambit ofthe tort is not restricted” to situations where the public officer is engaged in the unlawful exercise of a statutory or prerogative power (atpara 19). The class of conduct to which the tort applies is “more broadly based on unlawful conduct in the exercise of public functionsgenerally” (at para 17). The focus on the alleged misconduct demands an examination of whether it was deliberate and unlawful.

In thisregard, the Supreme Court, adopting Three Rivers, said this: 24 Insofar as the nature of the misconduct is concerned, the essential question to be determined is not whether the officer has unlawfullyexercised a power actually possessed, but whether the alleged misconduct is deliberate and unlawful. As Lord Hobhouse wrote in ThreeRivers, supra, at p. 1269: The relevant act (or omission, in the sense described) must be unlawful. This may arise from a straightforward breach of the relevantstatutory provisions or from acting in excess of the powers granted or for an improper purpose. (Emphasis added)

[87] The broader ambit of this tort, as set out in Odhavji, now means that it can apply to situations “where the public officerwilfully injures a member of the public by: an abuse of power possessed; intentionally exceeding powers possessed; or the deliberatefailure to discharge a public duty” (Lisa Mrozinski, “Monetary Remedies for Administrative Law Errors” (2009) 22 Can J Admin L &Prac 133 at 138). [88] In Odhavji, Iacobucci J. set out the elements of the tort of misfeasance in public office as being these: “(

i) deliberate unlawfulconduct in the exercise of public functions; and (ii) awareness that the conduct is unlawful and likely to injure the plaintiff” (at para 32).Plaintiffs must also “prove that the tortious conduct was the legal cause of his or her injuries, and that the injuries suffered arecompensable in tort law” (at para 32). Lewis N. Klar et al, Remedies in Tort, loose-leaf (2020 Rel 10) vol 3 (Toronto: Thomson Reuters,2020), summarizes what a plaintiff needs to prove to succeed in a misfeasance in public office claim (at 24-21): 2.

Elements of Cause of Action §60 To establish the tort of misfeasance in public office a plaintiff must show: (1) the public official deliberately engaged in unlawfulconduct in his or her capacity as a public officer; (2) the public official was aware both that the conduct was unlawful and that it waslikely to harm the plaintiff; (3) the public official’s tortious conduct was the illegal cause of the plaintiff’s injuries; and (4) the injuriessuffered are compensable in tort law. (Footnotes omitted) [89] Justice Iacobucci, in Odhavji, formulated two ways in which the tort can be committed: (

a) Category A, also know as targeted malice, occurs where the public officer specifically intended to harm a person or class ofpersons; and (

b) Category B involves a situation where a public officer acts with the knowledge that they have no power to do the actcomplained of and that the act is likely to injure the plaintiff. [90] The difference between these two categories has often been described as a question of proof. In the Category B formulation,the plaintiff must prove the two ingredients independently, i.e., that the public officer was aware that their conduct was unlawful andthat it was likely to harm the plaintiff. With Category A, however, the fact that the officer expressly acted for the purpose of harming theplaintiff is sufficient proof.

Regardless of the formulation, there must still be proof of a “deliberate disregard of official duty coupledwith knowledge that the misconduct is likely to injure” (at para 23): see also The Law of Torts at 225. [91] As to the knowledge component of a Category B type situation, a plaintiff must establish that the defendant had actualknowledge that the conduct was unlawful and that the likely consequence of the alleged misconduct was harm to the plaintiff. Therequired mental element with a Category B form of the tort is said to include subjective recklessness.

In addressing the idea of subjectiveawareness of harm arising from the misconduct, Iacobucci J. said as follows: 38 The statement of claim also alleges that the defendant officers and the Chief “knew or ought to have known” that the allegedmisconduct would cause the plaintiffs to suffer physically, psychologically and emotionally.

Although the allegation that the defendantsknew that a failure to cooperate with the investigation would injure the plaintiffs satisfies the requirement that the alleged misconductwas likely to injure the plaintiffs, misfeasance in a public office is an intentional tort that requires subjective awareness that harm to theplaintiff is a likely consequence of the alleged misconduct.

At the very least, according to a number of cases, the defendant must havebeen subjectively reckless or wilfully blind as to the possibility that harm was a likely consequence of the alleged misconduct: see forexample Three Rivers, supra; Powder Mountain Resorts, [2001 BCCA 619]; and Alberta (Minister of Public Works, Supply andServices) (C.A.), [2001 BCCA 619]. This, again, is not a sufficient basis on which to strike the pleading.

It is clear, however, that thephrase “or ought to have known” must be struck from the statement of claim. (Underline emphasis in original, italic emphasis added) [92] As can be seen from this discussion, by adopting the approach taken in Three Rivers and Powder Mountain Resorts Ltd. vBritish Columbia, 2001 BCCA 619, [2001] 11 WWR 488 [Powder Mountain], Odhavji expanded the ambit of the tort and clarified thepoint that subjective knowledge can include recklessness or wilful blindness on the part of the public officer.

The Ontario Court ofAppeal in Foschia v Conseil des Écoles Catholique de Langue Française du Centre-Est, 2009 ONCA 499, 266 OAC 17, synthesized thelaw on this point in this way: “In proving the third element [i.e., awareness], it is sufficient for the plaintiff to show that the publicofficial acted with reckless indifference to both the unlawfulness of his or her act and the likelihood that it would injure the plaintiff” (atpara 24): also see Meekis v Ontario, 2021 ONCA 534 at para 73, 461 DLR (4th) 307, and Ontario Racing Commission v O’Dwyer, 2008ONCA 446, 293 DLR (4th) 559 [O’Dwyer]. [93] The Supreme Court recently returned to the Odhavji principles in Ontario (Attorney General) v Clark, 2021 SCC 18, 456DLR (4th) 361 [Clark].

While the decision in Clark did not engage in an in-depth discussion of the tort of misfeasance in public office, itdid provide this

summary of the tort’s constituent elements: [22] The elements and proper scope of the tort of misfeasance are not disputed in this appeal. A successful misfeasance claim requiresthe plaintiff to establish that the public official engaged in deliberate and unlawful conduct in his or her capacity as a public official, andthat the official was aware that the conduct was unlawful and likely to harm the plaintiff (Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, at para. 23, per Iacobucci J.). [94] Clark is important in two fundamental respects. It affirmed (

a) the broad scope or ambit of the tort, and (

b) that subjectiveawareness can be established through subjective recklessness or a conscious disregard for the lawfulness of the conduct and its harmfulconsequences: [23] The unlawful conduct anchoring a misfeasance claim typically falls into one of three categories, namely

an act in excess of the

public official’s powers, an exercise of a power for an improper purpose, or a breach of a statutory duty (Odhavji, at para. 24). Theminimum requirement of subjective awareness has been described as “subjective recklessness” or “conscious disregard” for thelawfulness of the conduct and the consequences to the plaintiff (Odhavji, at paras. 25 and 29; Powder Mountain Resorts Ltd. v. BritishColumbia (2001), 2001 BCCA 619 , 94 B.C.L.R. (3d) 14 (C.A.), at para. 7; Three Rivers District Council v. Bank of England(No. 3) (2000), [2003] 2 A.C. 1 (H.L.), at pp. 194–95, per Lord Steyn). V. ANALYSIS A.

The tort of misfeasance in public office [95] Common to all three appeals is the assertion that the trial judge erred in his

interpretation and application of the subjectiveelement of the tort of misfeasance in public office. It is the appellants’ position that the mental element of the tort requires a positivefinding of dishonesty or bad faith and that an honest but mistaken belief in the lawfulness of the act, mere negligence, ormaladministration is not sufficient. The appellants also assert the trial judge misapplied the elements of the tort and thereby erred in lawbecause he overlooked or overemphasized the following: (

a) there was no statutory rule or regulation that was breached with regard to the way the Board awarded the expansion quota; (

b) the respondents were not entitled to an enhanced quota (or any quota, for that matter); (

c) the Board’s directors were motivated with the best interests of the industry at heart; (

d) if Saskatchewan producers could not ramp up production, the expansion quota would be taken away; (

e) the trial judge over-emphasised the sham producer issue; and (

f) the trial judge failed to consider the broader landscape of the industry and the Board’s regulatory responsibilities. 1. The subjective element [96] The trial judge’s articulation of the elements of the tort of misfeasance in public office is found at paragraph 171 of the TrialDecision: [171] What, then, are the elements of the tort? Misfeasance in public office is “an intentional tort whose distinguishing elements aretwofold: (

i) deliberate unlawful conduct in the exercise of public functions and (ii) awareness that the conduct is unlawful and likely toinjure the plaintiff”. (Odhavji, para 32) Those elements may be made out in either of the two ways identified by the House of Lords inThree Rivers District Council v Bank of England (No. 3), [2000] 3 ALL ER 1 (HL), which Odhavji characterized as Category A andCategory B misfeasance. Category A is made out if a public officer acts for the purpose of harming the plaintiff, which in and of itselfmakes out both distinguishing elements.

To make out Category B, the plaintiff must prove both elements of the tort; that is, that thepublic officer was aware the conduct was unlawful and that it was likely to harm the plaintiff (Odhavji, para 23). Here, we are concernedonly with Category B. [97] The trial judge went on to say that “proof of deliberate unlawful conduct” was not required and that, as he understood the law,proof of actual knowledge that the “act or omission was unlawful and likely to harm a plaintiff” was not necessary (at para 173).

Instead,he said, “It is sufficient to prove subjective recklessness or wilful blindness as to these two factors” (at para 173). The trial judge alsoaccepted that, as a matter of law, a breach of procedural fairness could ground the tort. That proposition appears to have been concededby the appellants at trial: see paragraph 177. [98] The appellants acknowledge that Odhavji remains the leading decision on the tort of misfeasance in public office and that thisdecision expanded the ambit of the tort to include an enlarged range of misconduct.

That said, as the appellants emphasize, the tort is notdirected to maladministration or even negligence by a public officer. The requirement for a deliberate course of action, they say, isanimated by the need to establish an element of bad faith or dishonesty. [99] The matter at hand involved an allegation of a Category B type of the tort. The appellants say that, to establish the mentalelement under this category, bad faith or dishonesty must be proven.

Put another way, they argue that a defendant’s subjectiverecklessness must be understood within the traditional confines of the tort – at bottom, the focus is on bad faith and dishonesty.

Somewould argue – as the appellants have – that proof of a bad faith type of threshold is necessary; otherwise, the alleged illegality or misuseof power is little more than the application of administrative law principles to a private law action for damages that will inevitably lead todelay, undue cost, and a chill on all public officers. [100] There is some support for the argument that bad faith is part of the liability analysis under Category B. Indeed, Odhavji says asmuch: 28 As a matter of policy, I do not believe that it is necessary to place any further restrictions on the ambit of the tort.

The requirementthat the defendant must have been aware that his or her conduct was unlawful reflects the well-established principle that misfeasance in apublic office requires an element of “bad faith” or “dishonesty”. [101] Support can also be drawn from J.P. v British Columbia (Children and Family Development), 2017 BCCA 308 at para 329,[2017] 12 WWR 639, leave to appeal to SCC refused, [J.P.].

There, the British Columbia Court of Appeal observedthat a finding of liability “requires ‘clear proof commensurate with the seriousness of the wrong’” and that “subjective recklessness orwilful blindness requires a higher standard of proof than objective foreseeability of harm for negligence” (at para 329, quoting Powder

Mountain at para 8). [102] While the majority decision in Clark did not expand on the mental element, Côté J. (writing in dissent but not on this point)framed the mental element along much the same lines. She said as follows: [162] In Odhavji, Iacobucci J. stated that the elements of misfeasance in public office create a high threshold that protects public officersfrom these risks (E. Chamberlain, Misfeasance in a Public Office (2016), at p. 4; Odhavji, at paras. 28–30). A plaintiff must establishdeliberate misconduct that demonstrates bad faith or dishonesty.

Inadvertent or negligent actions of public officers are not enough(Odhavji, at para. 26). There must be an intentional abuse of power (para. 30). (Emphasis in original) [103] All of that said, even if I accept the proposition that proof of an element of bad faith is required to make out a Category B typeof the tort, the question that remains is what constitutes bad faith. David Mullan, in his

article “Roncarelli v. Duplessis and Damages forAbuse of Power: For What Did It Stand in 1959 and For What Does It Stand in 2009?” (2010) 55 McGill LJ 587 [Mullan], suggests thatdebate came to a head in Odhavji – where the Supreme Court relied on case law that held reckless indifference to the legality of theactions was sufficient (Three Rivers and Powder Mountain) and found that formulation could establish the tort under Category B. Thisidea, Mullan says, is supported further by how the Supreme Court adopted a broad

interpretation of bad faith, which includesreckl

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