Irving showed 'disdain' for law, court hears in wood-marketing case

The province's largest forestry company was accused of showing "disdain" for the law Thursday during a New Brunswick Court of Appeal hearing on the future of New Brunswick's wood-marketing system.

Lawyer David Duncan Young argued J.D. Irving Ltd. had repeatedly "ignored or challenged" the authority of SNB, the Sussex-based wood marketing board for much of southern New Brunswick.

The board finally issued a firm order in 2015 that woodlot owners must sell their wood to the board and Irving can only buy wood from the board an order that was the subject of Thursday's hearing.

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Irving challenged the board's order, and last December the New Brunswick Forest Products Commission ruled in the company's favour. The board now wants the commission ruling overturned.

Young argued that Irving and other forest companies are trying to undermine a system designed to put small woodlot owners "on a level playing field" with the large companies that buy wood.

Law is clear

"That is obviously not something that those who espouse the free market, including some of the respondents, were in favour of," Young said.

He said the law is clear, and he quoted sections saying all producers of private wood "shall sell the regulated product to the board" and all buyers of wood are "prohibited" from buying and processing product "not sold by the board."

Irving started going around the SNB in 2012, negotiating wood deals with landowners or contractors individually and paying a levy to the board. The company argued that gave it greater "certainty of supply."

The company later expanded the practice to elsewhere in the province, bypassing other regional marketing boards.

Young told the panel of three justices Thursday that Irving's repeated circumventing of the board forced it to issue a firm order.

"Is it an abuse of the board's power to try to get J.D. Irving to come back to the board to negotiate?" he asked.

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One of the justices, Barbara Baird, seemed open to Young's argument that the board only acted after years of frustration.

"There's definitely a backdrop here," she said, noting the "tenor" of correspondence between the board and Irving became increasingly tense over several years.

"The wheels started coming off the cart, so to speak, when that order was issued, but it was building up before that," she commented.

Order flawed, argues Irving lawyer

But Irving lawyer Paul Steep argued the board's order was flawed because it was too vague and left "a huge amount of discretion" with a board employee who also worked for the co-operative of woodlot owners selling to the board.

"You start with a very basic conflict of interest," he said.

He said the order did not give Irving or woodlot owners any direction on what to do if there was a surplus or shortage of wood.

In the case of a surplus, there was no guidance on which woodlot owners got to sell to Irving first. In the case of a shortage, it was not clear how to allocate a limited supply of wood among mills owned by Irving and their competitors.

"All of these are issues which are unaddressed by the order but which are essential to giving the order any meaning," he said.

Given all that, the forest products commissioner's decision to overturn the board order was reasonable, Steep argued.

"This is not a fair process. It did not produce a fair outcome. The commission did the right thing here."

'Good airing of issues'

Justice Raymond French seemed to agree with Steep.

"To enforce [the order] in the absence of precision would be arbitrary," he said.

But Young said the law "could not be more precise" in requiring all sales to go through the board.

Steep refused to do an interview at the end of the hearing. SNB chair Bill Richards called the hearing "a very good airing of the issues" with lots of "good questions" from the panel of three justices.

He said Baird's questions were relevant.

"This board order that we put out in 2015 was not just a one-off reaction to one issue. It's a culmination to a series of moves and changes which have taken place over several years."

The panel of three justices reserved its decision in the case and said it will rule at a later date.