a broken eggshell sitting in tall grass.

Ackron Egg Farms Ltd. v. Manitoba Egg Farmers et al., 2020 MBQB 187

Case Reporter

Written by Nick Noonan, JD, LLM

This case underscores the volatility of consumer demand during a pandemic, and the challenges this presented for industry. Manitoba Egg Farmers et al., 2020 MBQB 187, is a complex and multifaceted dispute that emerged in the context of the COVID-19 pandemic, involving the Manitoba Egg Farmers (MEF) and an applicant who was part of the Egg Farmers Program (EFP) in Manitoba.

The case centers on the decision made by MEF to terminate the EFP Program and issue a depopulation order during the pandemic. This decision was met with legal challenges by the applicant, who had entered into an EFP Agreement with MEF. The applicant’s arguments were twofold: firstly, that the EFP Agreement was void as MEF had no statutory authority to enter into it, and secondly, that MEF failed to give reasonable notice of its termination.

The court’s examination of the case delved into the broad powers given to MEF under the Farm Products Marketing Act (FPMA), CCSM, c F47 to regulate all production of eggs in Manitoba. It scrutinized the discretionary powers of MEF, which were broad-ranging and included the right to impose drastic remedies. Section 17 of the Laying Hen Quota Order, Man. Reg. 128/98 specifically provided discretionary powers to MEF to suspend, reduce, or cancel a quota on various grounds.

The court also considered the specialized and unique expertise of MEF, a board consisting only of egg producers, and the complex statutory relationship between MEF  and Egg Farmers Canada, a federal regulatory agency. It recognized the multifaceted and sensitive weightings by the various boards of complex information, using criteria that may shift and be weighed differently from time to time, depending on changing and evolving circumstances.

The court found that MEF’s decision to terminate the EFP Program was within its statutory mandate, and that the EFP Agreement was not outside of, or parallel to, the quota scheme. It noted that the applicant knew the EFP Program did not offer security of quota, and that the EFP Agreement was subject to cancellation if demand exceeded supply.

The court concluded that the decision contained in the Council Order was justified in relation to the facts and the law that constrains the Council. The applicant’s arguments were dismissed, and the court found that the Council applied the correct standard on the internal appeal, and its decision to deny the applicant’s appeal was reasonable.  Therefore, the court dismissed the application.

The decision in this case weaves together various strands of administrative law, contractual obligations, and the unique challenges posed by the COVID-19 pandemic. The court’s deference to the specialized expertise of MEF underscores the importance of recognizing the legislative intent and the broad discretionary powers granted to regulatory bodies. It also reflects an understanding of the complex and evolving nature of the egg industry, particularly during a global crisis.

The case highlights the delicate balance between private contractual agreements and statutory mandates. The court’s refusal to find a breach of contract in the termination of the EFP Agreement emphasizes the primacy of statutory authority and the need for flexibility in interpreting legislation, especially during times of unprecedented turmoil.

The decision underscores the importance of the reasonableness standard in judicial review. The burden was on the applicant to demonstrate that the decision was unreasonable, and the court was mindful not to overturn the administrative decision for minor missteps. This approach reflects a respect for the specialized knowledge of administrative bodies and a recognition of the need to balance legal rights with broader public interest considerations. As well, it serves as a microcosm of the broader challenges posed by the COVID-19 pandemic to traditional economic and regulatory frameworks. The drastic decision to terminate the EFP Program and issue the depopulation order was a response to a significant change in consumer demand for eggs. The court’s decision recognizes the necessity for regulatory bodies to have the flexibility to respond to rapidly changing economic conditions.

The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.