Tribunal upholds rejection of milk from farm's bulk tank

The Ontario Agriculture, Food and Rural Affairs Tribunal has dismissed an appeal by an Ontario dairy farm from the rejection of milk from its operation by the Dairy Farmers of Ontario ("DFO").  The farm has operated for 30 years and, in the fall of 2010, was carrying out three milkings a day.  A transport company picked up the milk from a farm bulk tank on every second day, representing six milkings.

On November 28, 2010, the transporter (a certified Bulk Tank Milk Grader) arrived to pick up milk.  He rejected the milk "because of an off odour "malty" smell".  He took two samples and declined to pick up the milk, leaving a "Red Tag" at the farm.

The farm appealed the rejection of the milk on the basis that the DFO had not followed the proper procedure.  However, the Tribunal ruled that procedural errors made by DFO and its agent, the transporter (not properly filling out the Red Tag and not proving that DFO had adopted a policy of "no second opinions" with respect to the rejection of milk), did not negate the determination that the milk should be rejected. 

Read the decision at: La Gantoise Inc. vs. Dairy Farmers of Ontario (DFO).

Farm Property Class for legal owners, not beneficial owners

The Ontario Divisional Court heard a "stated case" from the Agriculture, Food and Rural Affairs Appeal Tribunal (the "Tribunal") concerning the appeal of property tax assessments of various properties.  The applicants had appealed on the basis that they should have been assessed in the farm property class under Section 8(2) of Regulation 282/98.  The questions on the stated case to the Divisional Court boiled down to whether lands that are beneficially, but not legally, owned by Canadians, qualify for farm property class.  In general, a property is legally owned by the named registered owners of the property; other individuals or entities may hold unregistered equitable ownership interests in the property.  The Divisional Court concluded that the favourable tax treatment applies only to lands legally owned by Canadians.

The properties at issue in this case were purchased for commercial investment purposes by Walton International Group Inc.  They are currently being used for farming, but the long-term plan is to develop them for non-farming purposes. 

Read the decision at: Walton International v. Farm Property Class Tax Rate Program.

Landowner has to pay engineer's cost for withdrawn Drainage Act petition

The Agriculture, Food and Rural Affairs Appeal Tribunal has ruled that a landowner who petitioned a municipal drain and then withdrew the petition is still on the hook for engineer's costs already incurred before the withdrawal.  The landowner had petitioned to have his property added to another municipal drain that was being petitioned by neighbouring landowners.  However, when he learned of the cost of joining the drain and when his drainage problems appeared to be alleviated by a neighbour's private drainage works, the landowner sought to withdraw his own petition.

 

The Tribunal found that the landowner should be responsible for the added costs of the engineer related to surveys and designs for extending the drainage works onto the withdrawing landowner's lands.  A ruling was made that the $7,500 cost would be assessed to the non-participating landowner as a special benefit assessment.

 

Read the decision at: Van Driel Drain.

Drainage Tribunal decides it has no jurisdiction to rule on prescriptive easement rights

In a recent drainage appeal case, the Agriculture, Food and Rural Affairs Tribunal has decided that it does not have jurisdiction to determine property and prescriptive rights; this jurisdiction rests exclusively with the Ontario Superior Court of Justice pursuant to Sections 97 and 100 of the Courts of Justice Act and, on a limited basis, with the Director of Titles on an application to convert a property to Land Titles Absolute under the Land Titles Act.

One of the appellants in the drainage case alleged that he had acquired a prescriptive right in the form of an easement.  The easement, it was alleged, allowed for the construction of a built up roadway crossing of the natural watercourse on the appellant's property.  The building up dammed the water, causing drainage problems.

The Tribunal noted that it is a creature of statute (a creation of the Province) and has no inherent jurisdiction or authority.  It's only jurisdiction in this case arose from the Drainage Act and, in the absence of a decision of the Superior Court determining the prescriptive rights alleged (or in the absence of title documents demonstrating those rights), the Tribunal has no jurisdiction to determine whether a prescriptive right exists.

Read the decision at: David Adams Municipal Drain.

Landowner loses bid to shift drainage costs to Highway 401

An Oxford County farmer asked the Agriculture, Food and Rural Affairs Appeal Tribunal to increase the assessment of drainage costs to the Ontario Ministry of Transportation related to a widening of Highway 401.  An engineer's report had been prepared for various improvements to the Laister Drain required in connection with the widening of the 401 from four lanes to six lanes in the area.  The work would include construction of a section of tile drain from the southern limit of Highway 401, northward under the highway and then approximately 450 metres through agricultural land to an outlet in an open channel on the side of Blandford Road. 

Dunford Royal Cattle Company Inc. asked the Tribunal to amend the assessment against its lands and to allocate a higher assessment against the MTO drainage area (i.e. the highway).  On the issue of the amount of assessments allocated to the various property owners, the drainage engineer stated that he had used the Todgham Method to distribute the cost of the work. This method involves breaking the drain up into sections and assigning the cost of each section as benefit and outlet assessments to the lands using each section of the drain.

The Tribunal found that Dunford did not provide any evidence to contradict the findings or the testimony of the Engineer nor was any evidence put forward to show that the MTO watershed area had been inappropriately assessed.  It ruled that Dunford failed to provide the Tribunal with sufficient evidence that would support any amendment to the Schedule of Assessments for the project and, therefore, the appeal was dismissed.

Read the decision at: Laister Drain.

Appeal Tribunal denies request to waive chicken over-production levy

The Ontario Agriculture, Food and Rural Affairs Appeal Tribunal has denied an appeal by La Primavera Farms of an over quota levy imposed by the Chicken Farmers of Ontario (CFO).  When La Primavera produced 78,513Kg of chicken in quota period A-99 (July 16 - September 11, 2010), it exceeded its quota allotment by 24,671Kg.  La Primavera was assessed an Excess Production Levy ("EPL") of $21,978.99 by CFO, pursuant to CFO Regulation BQ-2010.  La Primavera objected, and in a decision of CFO dated December 16th, 2010, CFO affirmed the EPL.  CFO was requested by La Primavera to reconsider its decision. CFO denied La Primavera's request for a waiver of the EPL and affirmed its previous decision. La Primavera then appealed to the Appeal Tribunal from the decision rendered by CFO and seek a waiver, or a reduction of the EPL.            

The owner of La Primavera has been involved in the production of chicken under the current supply management system for the last 30 to 35 years.  In 2010, the owner decided to entrust to his daughter the responsibility to plan and order chicks from the hatchery to stock La Primavera's barn for the quota period at issue on the appeal.  When a Notice of Maximum Crop Quota Allotment arrived from CFO, the owner did not explain the significance of the notice to his daughter.  She attempted to calculate the number of chicks needed to fill the quota allotment. 

A second document was sent by CFO later in the same month in an envelope labeled in bold Important Crop Quota Enclosed.  This was the official communication from CFO determining the net allotment of quota for La Primavera for the period.  The owner's daughter did not appreciate the significance of this document and did not look at the document in deciding upon the number of chicks to be ordered.  The owner was not involved in reviewing the document with his daughter.  Production by La Primavera ended up based on an assumed quota of 65,240 kg when it should have been only 53,842 kg.  An excess production levy of almost $22,000 was imposed.

La Primavera asked for the levy to be waived on the basis that the over production resulted from a "clerical error".  However, in the Tribunal's view, the responsibility rested on the President of La Primavera to properly guide his daughter/employee through the process to calculate La Primavera's needs to fulfill its quota allotment for the quota period in question. In failing to properly guide her      to take over the responsibility, La Primavera assumed the risk which resulted from her lack of knowledge and familiarity with this process.  The appeal was denied.

Read the decision at: La Primavera Farms vs. Chicken Farmers of Ontario (CFO).

Appeal Tribunal awards costs against landowner in drainage case

The Agriculture, Food and Rural Affairs Appeal Tribunal has ordered an appellant landowner, Alan Webster of Thornhill, Ontario to pay costs related to a motion brought by the City of Kawartha Lakes.  Although the motion to dismiss by the City was unsuccessful, the Tribunal found that Webster had failed to abide by procedural directions made by the Tribunal, which led to the need for the motion.

Those procedural directions were given in the context of an agricultural drainage project that has been under appeal since 2006.  The project involves the drainage of about 21,000 acres of land at approximately 400 landowners.  There have been a total of 72 appeals to either the Drainage Referee or to the Appeal Tribunal.  The only remaining outstanding proceeding is Webster's appeal to the Tribunal under section 48 of the Drainage Act.  The Tribunal had exercised its discretion to intervene with procedural directions to case manage the remaining appeal through to an expeditious resolution.  The Tribunal stated that expeditious resolution would benefit all of the 21,000 acres and 400 landowners potentially affected by the drainage project. 

More than five years had passed since delivery of the original Engineer's Report.  Webster had had more than five years to crystallize and refine his section 48 Appeal issues, marshal his evidence and defined his appeal strategy.  Webster was self represented in the proceeding.  The Tribunal found that Webster's failure to abide by simple and clear procedural directions was unreasonable.  The Tribunal found that Webster was an educated, sophisticated and articulate litigant.  The Tribunal was unable to suspend disbelief sufficient to accept the explanation Webster offered about why he failed to comply with the procedural order. 

The City sought recovery of costs for the dismissal motion.  The Tribunal ordered Webster to pay the costs of the City of Kawartha Lakein the amount of $7080.70.  The Tribunal also ordered that the cost award be credited to the drain account and added to the tax roll, therefore having priority lien status under section 61 of the Drainage Act and section 1 of the Municipal Act. 

Read the decision at: Short and No. 2A Drain, 2006 - Costs of Motion Decision.

Court throws out damages claims related to municipal drainage repairs

The Ontario Superior Court has dismissed a claim by a landowner for damages relating to a municipal drain (the "Cazabon Drain") located on the landowner's property.  The landowner claimed damages for nuisance (for unnecessary damage caused by undue delay by the municipality to remedy a drain problem), damages for negligence (for poor quality of workmanship in relation to repairs undertaken), and damages for "intentional infliction of economic harm" and "intentional infliction of mental suffering".  These last two claims were apparently related to the harm the landowner's reputation suffered after the municipality obtained a permanent injunction against him under the Drainage Act to prevent interference with efforts to repair the drain.

On a summary judgment motion by the municipality, the Court dismissed the landowner's claims for nuisance and negligence on the basis that insufficient notice of the claims as required by Section 111 of the Drainage Act had been given.  The judge allowed, however, that the landowner could commence new claims for nuisance and negligence.  The claims for economic harm and mental suffering were dismissed outright on the basis that there was no issue for trial. 

The Court also noted in the course of its decision that claims for damages related to the construction or repair of drainage works do not necessarily have to go to the Agricultural, Food and Rural Affairs Tribunal.  The Tribunal does not have exclusive jurisdiction over such claims.  The municipality had argued in this case that the landowner's claim based on negligence should be dismissed because it should have gone to the Appeal Tribunal.

Read the decision at: Hud v. West Nipissing.

Appeal tribunal dismisses Manitoulin Island farmer's bid for chicken quota

Max Burt, a second generation poultry farmer from Gore Bay on Manitoulin Island, has lost his appeal to the Agriculture, Food and Rural Affairs Tribunal on the issue of chicken quota.  He had requested that the Tribunal reverse the refusal of the Chicken Farmers of Ontario (CFO) to give him 2,040 units of quota to produce and market chicken to satisfy what he believes to be a local market demand.  In the alternative, Burt sought an exemption from the requirement for quota.  In asking to be provided with quota, Burt relied on the historical production of his father, Edward Burt, during the original qualifying period for broiler chicken quota in 1964-65. 

The Tribunal saw the essence of the appeal as a request either for free quota or an exemption from quota.  In its view, the absence of a compelling and satisfactory reason for the 46-year delay alone was sufficient reason to deny the request for a qualifying period chicken quota allotment.  Further, the Tribunal found that Max Burt failed to prove qualifying production during the 1964-65 period and that he was not actually a producer during that time (his father was).  The Tribunal was unable to find any authority on which it could extend the qualifying quota from father to son.

On the issue of the exemption, the Tribunal found that the request for an exemption was based on financial reasons - affordability.  In dismissing this request, the tribunal wrote:

In our view, affordability cannot be the basis for the Tribunal to grant Max Burt an exemption from the Regulation, so as to permit him to produce and market 2,040 units of chicken. If we were to use affordability as an exemption criterion, it would render CFO's existing exemption policy, as reflected in section 2.02 of the Regulation, meaningless. Further, treating affordability as an exemption criterion could open a flood of exemption applications from some, if not all the other 14,000 registered chicken growers in the province. Finally, treating affordability as an exemption criterion would eventually undermine the chicken quota system, which is the foundation of the chicken supply management system in Ontario.

Read the decision at: Max Burt vs Chicken Farmers of Ontario.  The decision includes a useful summary of the history of chicken supply management in Ontario.

Appeal Tribunal rules Ontario vet resigned, not suspended

Dr. Ken Allan, of Perth, Ontario, was a licensed practising veterinarian from 1963 until September 19, 2009. In early January 2010, he applied for a Class 1 Licence under the Livestock Medicines Act (the Act) and was issued a licence on January 8, 2010. On May 14, 2010, the Director appointed under the Act issued a letter to Dr. Allan provisionally suspending his Class 1 Licence and advising that a hearing would be scheduled to determine whether his licence would be further suspended or revoked. On July 7, 2010, the Director appointed under the Act held a hearing to consider whether to further suspend or revoke Dr. Allan's licence.  Following a hearing in Dr. Allan's absence, the Director made various findings including a finding that Dr. Allan had sold livestock medicines other than from his place of business and had obstructed Ministry inspectors in the performance of their duties.

On the basis of those findings, the Director revoked Dr. Allan's licence under the Act.  He appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal, which held a hearing de novo (meaning that the Appeal Tribunal heard all of the evidence as if it were the Director hearing the case fresh).  The Tribunal found that Dr. Allan had actually given up his licence before he received notice of it having been revoked by the Director.  Further, the Tribunal found that the Ministry had failed to provide Dr. Allan with a warning letter in accordance with its policy in advance of seeking the revocation of his licence.  For that and other related reasons, the Tribunal ruled that the original hearing by the Director should not have taken place and the findings made there must be overruled.

After considering the evidence before it, the Tribunal ruled as follows:

1. That Tribunal accepts the evidence of Dr. Allan's voluntary resignation from the licensing system, therefore the Tribunal will not order the reinstatement of his licence.
2. That all prescription and livestock medicines seized shall be returned to Dr. Allan; and, if they are expired, have been destroyed, or disposed of, then he shall be compensated for all said livestock medicines and prescription medicines.
3. That Dr. Allan's personal items and written records removed during the execution of the search warrant be returned forthwith.
4. That the Tribunal accepts the evidence that Dr. Allan voluntarily resigned from the licensing system before his licence was suspended or revoked, and therefore the Ministry shall not consider Dr. Allan's voluntary resignation from the licensing
   system negatively, should he reapply for a licence under the Act.

Read the decision at: Ken Allan vs. Director.

Assessed landowners argued they could have done drainage work for less

Two Southwest Middlesex landowners appealed a drainage assessment to the Ontario Agriculture, Food and Rural Affairs Tribunal on the basis that they could have done the required maintenance work themselves at a lower cost.  The Municipality of Southwest Middlesex had been petitioned by the County of Middlesex Road Authority under Section 4 of the Drainage Act to carry out various maintenance work, including the creation of an open drain.  The estimated cost of the work was $22,540.

Two affected landowners appealed the assessment of their shares of this cost.  One argued that from the beginning he had told the Municipality that he was willing to do the work required without the cost of the engineering report.  However, neither landowner appealed the work ordered itself.  The Tribunal found that the Municipality was compelled by the County's petition to have an engineer's report prepared and the work completed.  Given that the work was required, the assessment of costs could not be challenged on the basis that the work was unnecessary (or could have been done differently at a lower cost).  The appeals were dismissed.

Read the decision at: Proctor Drain.

Appeal Tribunal dismisses challenge to poultry export rules in Ontario

Henry Bos is a chicken producer from the Niagara peninsula who wanted to sell more of his production to chicken processors in the province of Quebec. Since November 2009, as a result of a moratorium created by regulation, Mr. Bos has been capped at selling about 20% of his production to a Quebec processor and the balance of his production to Ontario processors.

Amendments to a 2005 regulation governing contractual arrangements between Ontario chicken producers and out of province processors, and a 2005 policy governing chicken production and marketing quotas implemented the 2009 moratorium.  Mr. Bos challenged the policy and regulation amendments.  The essence of his challenge was that the effect of those amendments removed his freedom to sell his chicken to whomever he chooses.  He explained, in his evidence and his arguments, that the "core character" of the impugned policy amendment and regulation amendment is to control the inter-provincial movement of chicken, and that control was beyond the jurisdiction of the marketing agency, the Chicken Farmers of Ontario (CFO).  He testified the impugned policy amendment and regulation amendment prevent him the freedom to market more than 9,025 quota units inter-provincially.  The 9,025 quota units reflected the level of Mr. Bos' contracts with a Quebec processor at the time when CFO introduced the moratorium in November 2009.

The Agriculture, Food and Rural Affairs Appeal Tribunal found that the policy and regulation amendments were within the powers of the CFO as granted by the province of Ontario.  The moratorium, the Tribunal ruled, fell within the regulation of chicken marketing in Ontario.  The moratorium was part of the control of marketing transactions within Ontario.  The fact that it temporarily and incidentally capped exports out of province did not affect the finding that the regulation and policy amendments were ones the CFO was authorized to make.  The Tribunal also noted that the moratorium is being phased out.

Read the decision at: Henry Bos vs. Chicken Farmers of Ontario (CFO).

Equipment Company had no right not to renew dealer agreement: Appeal Tribunal

In 1987, CFEI became a dealer with Ford New Holland Inc., CNH's predecessor. In June 1999, Ford New Holland sent CFEI a letter advising that it would not renew the existing Dealer Agreement and that it would terminate effective December 31st, 1999. Ford New Holland then offered CFEI the opportunity to continue as a dealer under a new Dealer Agreement.  The new Dealer Agreement created a one-year renewable term. The term renewed automatically unless either party gave at least ninety days written notice of its intention not to renew.

Both the 1987 and 1999 version of the Dealer Agreement are very similar. Both Dealer Agreements are standard form contracts drafted by the farm implement manufacturer. CFEI had no opportunity for input into any of the terms. The reality for CFEI was that if it wished to be a CNH dealer, it was obliged to sign the standard form Dealer Agreement without any changes.

In late September 2006, CFEI received a letter from CNH dated September 30th, 2006 advising CFEI that CNH would not renew the Dealer Agreement at the end of 2006.  That letter explained that CNH based its decision not to renew on "serious breaches" of the Dealer Agreement.  That letter also explained that CFEI had failed to "achieve and maintain a reasonable market share" during the previous four years. The letter included a chart giving an illustration of CFEI's performance in select product categories.

CFEI challenged the non-renewal of the relationship before the Agriculture, Food and Rural Affairs Tribunal pursuant to the Farm Implements Act.  The parties characterized the end of the relationship differently. CFEI characterized it as a termination while CNH characterized it as non-renewal. Regardless of the characterization, the practical result was the same, the end of the business relationship.

Section 35(c) of the Act provides that the Minister of Agriculture, Food and Rural Affairs may make regulations prescribing information to be included in a dealer agreement and setting out legal rights and obligations for parties to the agreement.  The Minister prescribed Ontario Regulation 123/06.  The Regulation came into force when filed on April 25th, 2006.  The Regulation created mandatory terms that must be included in any dealer agreement and that the Regulation deems are part of any dealer agreement. The Regulation provides that any provision in a dealer agreement contrary to the prescribed mandatory terms is void.

The Appeal Tribunal found that, despite any contractual wording to the contrary, CFEI has a prescribed right to renew the Dealer Agreement by giving CNH that written notice. Both counsel agreed that in this case the Dealer Agreement itself, which contemplated annual "auto-renewal", would satisfy the requirement from the Regulation for written notice. It was clear from the Dealer Agreement that the annual term starts January 1st and concludes December 31st.  While CNH had a contractual right not to renew the annual term before April 25th, 2006, the effect of the Regulation was to remove CNH's contractual right not to renew from paragraph 22 of the Dealer Agreement. The Regulation replaced that right with a regulated approval. Therefore, beginning April 25th, 2006, CNH no longer had any right not to renew the Dealer Agreement.

The consequence flowing from CNH's liability remains to be determined in the second phase of the proceeding.

Read the decision at: Chesterman Farm Equipment Inc. (CFEI) vs. CNH Canada Ltd. (CNH).

Chicken Processors denied party status in Tribunal Appeal

The Agriculture, Food and Rural Affairs Tribunal in Ontario has denied a request by the Association of Ontario Chicken Processors (AOCP) to be a party in an upcoming appeal by Henry Bos.  Bos has appealed decisions by the Chicken Farmers of Ontario (CFO) denying his request for the revocation of a policy and a regulation related to restrictions on extra-provincial marketing of poultry.  The appeal hearing is scheduled to begin this Monday.  AOCP has been granted intervenor status and can make submissions to the Tribunal.  However, it cannot file evidence and will not be permitted to cross-examine witnesses. 

AOCP's request was denied in large part because it was not made until the eve of the hearing.  AOCP is an organization that represents 11 chicken processors who reflect 95% of the Ontario chicken processing industry.

Read the decision at: Henry Bos v. Chicken Farmers of Ontario (CFO) AOCP Request for Party Status.

Appeal Tribunal throws out unsigned Drainage Engineer report

A number of landowners appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal under Subsection 54(1) of the Drainage Act from decisions of the Court of Revision on the Baer Municipal Drain (the Drain) dated December 16, 2010.  The Town of Fort Erie had approved a report of a Drainage Engineer which was now being challenged by affected landowners.  However, at the opening of the appeal hearing, the Tribunal itself raised an issue with respect to the legal status of the Engineer's Report titled "Baer Municipal Drain - Final Engineer's Report, Town of Fort Erie", dated April 2010 (the Report) before it. The Report was prepared by Paul Douglas Smeltzer, an Engineer with Amec Earth and Environmental, Burlington, Ontario.

The Report was provided to the Tribunal by the Municipality as part of the evidence its representatives and the appellants would be relying on at the Hearing. The Report had been circulated, considered by Council and adopted by municipal by-law.  It was apparent in reviewing the Report that it had not been signed by the Engineer and did not have the required Engineer's seal on neither the text portion of the Report nor the drawings appended thereto. It was also apparent that the said drawings were still a "work in progress".

Despite the fact that the Engineer provided a signed and sealed copy of a subsequent report dated September 2010, which he testified was in every respect identical to the unsigned and unsealed September 2010 report circulated and subsequently brought to the municipal Council, this did not change the fact that the Town, at the beginning of the process that led to this Hearing, circulated the unsigned and unsealed April 2010 Engineer's Report to the landowners.  Further, the Town Council also considered, adopted and passed a by-law based on this same unsigned and unsealed April 2010 Report.  Accordingly, the Tribunal found that the Report was not a true report under the Drainage Act and therefore ordered that the April 2010 Engineer's Report that council adopted in July 2010 be set aside.

Read the decision at: Baer Municipal Drain.

Appeal Tribunal refuses to reinstate tobacco quota

Gubbels Farms Ltd. has grown tobacco under the marketing-system-of-the-day in Ontario since 1962. In 2008, Gubbels Farms Ltd. was licensed to produce approximately 418,000 lbs of basic production quota ("BPQ"). Gubbels Farms Ltd. did not participate in the Tobacco Transition Program ("TTP") and intended to continue producing tobacco for market. In 2009, the Ontario Flue-Cured Tobacco Growers' Marketing Board ("Board") removed the existing quota-based system for the control of production and marketing of tobacco and moved to a licensed-based system. The effect of this change was that the 418,000 lbs of BPQ associated with Gubbels Farms Ltd. ceased to exist. Also, before a licence to produce tobacco could be issued under the new system to Gubbels Farms Ltd., they had to be an eligible applicant and meet criteria set out in the General Regulations 2009 - 2010. Although Gubbels Farms Ltd. did not agree with the implementation of the licensed-based system, they complied with the new requirements and were issued licenses to produce tobacco in 2009 and 2010.

Gubbels Farms Ltd. appealed to the Board on April 1, 2010, asking for an exemption from the licensing requirements under the General Regulations 2009 - 2010 and for a refund of license fees paid to the Board for 2009 and 2010. The Board denied the request on April 22, 2010.  Gubbels Farms Ltd. appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal for relief from the April 22, 2010, decision of the Board with the following request:

Gubbels Farms requests that their permanent BPQ be reinstated and that, as a result, they be licensed to grow tobacco under the previous system. Furthermore, Gubbels Farms requests that the Board refund to Gubbels Farms all monies that it paid to the Board for the redundant licences (#65) for the 2009 and 2010 growing seasons.

The Tribunal found that the legislative and regulatory framework relative to the Board's absolute authority over quota, which included the BPQ, was in effect when the Board made its decision to drop the quota-based system and move to the license-based system. In short, the Board had the authority to remove the BPQ.  The Tribunal also found that the relief sought by the Appellant to have their BPQ reinstated was impossible to grant under this appeal. Pursuant to the Ministry of Agriculture, Food and Rural Affairs Act, the Tribunal could direct the Board to take any action that it is authorized to take under the Farm Products Marketing Act, and for this purpose may substitute its opinion for that of the Board.

This appeal, however, requested the reinstatement of the BPQ previously associated with Gubbels Farms Ltd. The Board's authority to issue tobacco quota was removed by the Farm Products Marketing Commission under the Farm Products Marketing Act Ontario Regulation 208/09 Tobacco - Powers of Local Board effective June 1, 2009. Furthermore, since the previous quota-based system no longer exists, there is no present or future opportunity for the Appellant to be licensed to grow and market tobacco under that previous system. Therefore, the licenses issued to the Appellant for the 2009 and 2010 growing seasons were not redundant. The fees associated with said licenses complete the licensing requirements of the Board and were authorized by Ontario Regulation 208/09.

Read the decision at: Gubbels Farms Ltd v. Ontario Flue-Cured Tobacco Growers' Marketing Board.

Appeal Tribunal rules that drainage engineer didn't favour downstream mayor

The McWilliam-Campbell Drain is a closed tile drain located on Lots 6 to 8 Broken Front Concession A in the Municipality of Dutton/Dunwich. The drain was originally constructed under the Drainage Act in 1965. In its existing state, the tile is comprised of approximately 525 ft (160 m) of open ditch and 2,775 ft (845 m) of closed tile ranging in size from 6" (150 mm) to 12" (300 mm) diameter. The drain outlets to the Thames River and serves a watershed of approximately 44 hectares (109 acres) on both sides of Coyne Road. The lands within the watershed are predominantly agricultural with some wooded areas.

Robert and Susan McWilliam appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal under Section 48(1) and 54(1) of the Drainage Act (The "Act") from the Engineer's Report (the "Report") dated July 22, 2010, and from a decision of the Court of Revision dated September 1, 2010. John M. Spriet, (the "Engineer") a professional engineer with the firm Spriet Associates Limited was appointed under Section 78 of the Act to prepare the Report.  The work proposed by the Engineer's Report encompasses the replacement of the lower portion of the existing 12" (300 mm) diameter tile with a new 24" (600 mm) tile, including a new crossing at Coyne Road and three new catch basins. The Engineer's estimated cost of the proposed works is $44,000 which is assessed against two affected landowners and Coyne Road.

Susan McWilliam testified that she and her husband believe the Engineer favoured the downstream landowner throughout the process, who is also the Mayor for the Municipality of Dutton/Dunwich. She said that they do not dispute that the existing drain tile has problems and that they need an outlet for their lands. However, she stated that their issues have not been addressed and that the Engineer ignored their questions and concerns throughout the process. She said that the 24" (600 mm) tile proposed by the Engineer will not fix the problems on the drain and she believes that the costs are too high relative to the benefit they will receive. She added that the Engineer's Report does not provide evidence that the drainage issues will be resolved and that costly maintenance repairs will persist even after construction of the larger tile. In further testimony directly from Robert McWilliam, he explained that their share of the costs to repair the existing 12" (300 mm) tile drain have been on average about $600 per year. He reasoned that since the new tile drain is larger, the yearly cost to maintain the new tile will also increase. Additionally, he said that they would have to make payments of $2,500 per year for the construction of the larger tile. He complained that this would be a huge burden on them.

The Tribunal found no evidence to substantiate the Appellants' claim that the Engineer favoured the downstream landowner, Cameron and Anne Marie McWilliam. The Tribunal also found no evidence that the downstream landowner, Cameron McWilliam, who is also the current Mayor for the Municipality of Dutton Dunwich, knowingly influenced the Drainage Act process. Accordingly, the Tribunal was satisfied that the Engineer's Report is a "true report" pursuant to Section 11 of the Act.  The Tribunal also found no evidence to substantiate the Appellants' claim that the Engineer did not carry out a proper investigation of the condition of the existing tile drain.

In view of the evidence, the Tribunal found that the work proposed by the Engineer's Report was reasonable under the circumstances and declined to order any amendments.  However, the Tribunal did find that the Appellants were justified in their claim that the Assessment for Maintenance is unfair.  The Tribunal did not accept the Engineer's explanation as to why his Assessments for Maintenance significantly deviated from his Assessments for Construction.  The Tribunal therefore ordered changes to the Assessments for Maintenance.

Read the decision at: McWilliam Campbell Drain.

Appeal Tribunal denies landowner's appeal of adverse costs award in drainage case

Last August, I wrote about a Drainage Act decision of the Agriculture, Food and Rural Affairs Tribunal in which a landowner was hit with a $10,000 cost order after failing to show up for the hearing (landowner boycotts drainage hearing).  The landowner, Richard Gosselin, applied for a review of the Tribunal's decision (by the Tribunal itself).  All aspects of the landowner's review application were dismissed.  With respect to the $10,000 costs award in favour of the municipality, the Tribunal wrote the following:

The Tribunal appropriately considered all of the circumstances prior to making its award of costs against the Appellant. If the Appellant had attended the hearing, he could have spoken to the issues of cost and provided testimony in response to the Township's submissions on costs. Further, the Rules clearly state that failing to attend a hearing constitute circumstances amounting to bad conduct. The Appellant, prior to refusing to attend the hearing, ought, or should have known that the failure to attend may result in an adverse cost award pursuant to Rule 28.04. Further, on June 10, 2010 the Appellant attempted to circumvent the Tribunal's processes and procedures by: writing panel members directly; failing to comply with the Tribunal's interim Order of May 28, 2010; and requesting numerous adjournments absent providing any evidence in support of the request.

Read the decision at: Hambly Sabourin and Beach Beaulac Municipal Drains.

Drainage Appeal dismissed by Agricultural, Food and Rural Affairs Tribunal

The Baird municipal drain comprises a watershed of approximately 245 hectares of agricultural and wooded lands in the geographic municipality of the Township of Turnberry, now in the municipality of Morris-Turnberry. The drain is comprised of an open channel main drain and three branch drains, Branch A, Branch B and Branch C. Pursuant to a drainage petition filed by Bill Fralick, an engineer’s report was prepared providing for the construction of a new Branch D tile drain on the lands of Donald and Marion Eadie. The Eadies appealed the engineer’s report to the Agricultural, Food and Rural Affairs Appeal Tribunal. They asked that the report be amended to provide for the construction of a new drain outside of their lands. In the alternative, if the new Branch D tile drain was to remain on their property, then they asked for certain changes to the set up of the drain. The Eadies also asked that the allowances to be awarded to them as part of the project (the allowances being compensation for land taken and damages caused) be increased.

The Tribunal considered the appellants’ suggestion that the area requiring drainage could be diverted southerly to a different drain watershed.  However, the Tribunal noted that the appellants did not produce any professional evidence to substantiate that suggestion.  Therefore, the Tribunal accepted the engineer’s evidence.  It also considered the appellants’ request to move the proposed catch basis from the top of the drain to another location.  Again, the Tribunal accepted the engineer’s testimony on the reasons for which this proposed change could not be made.

With respect to allowances under Section 29 of the Drainage Act, the engineer testified that he obtained land sale data from Farm Credit Canada to establish a per acre land value of $4,000 used to calculate the allowances.  Mr. Eadie presented a letter from a Mr. Crispin showing the sale for parcels of land for prices higher than $4,000 per acre, but Crispin was not called to testify.  The Tribunal placed limited weight on that evidence.  Ultimately, the Tribunal found that the allowances under Section 29 of the Drainage Act provided in the engineer’s report were fair and equitable and in conformance with the Act. The Tribunal also found that the engineer’s allowances under Section 30 of the Act for crop losses determined to be $500 per acre were fair and equitable and in conformance with the Act.

Read the decision at: Baird Municipal Drain.

Burford, Ontario farmer denied permission to exceed quota to make up for past undermarketing

Victor Osztrovic farms in the Burford area. The farm is a mixed cash and specialty crop operation (including tobacco) and since 2002 Osztrovic has been a chicken producer holding production and marketing quota of 66,841 kilograms (kgs.) in each quota period. The quota is issued to him by the provincial regulator, Chicken Farmers of Ontario (CFO).

Early in 2009, Osztrovic experienced higher than usual bird mortality and as a result, he ended that quota period marketing 12,783 kgs. below his quota of 66,841 kgs.  The chicken industry describes the marketing result Osztrovic experienced as "undermarketing".  Undermarketing is significant to chicken producers because in the usual course of business they cannot make up the lost opportunity represented by that 12,783 kgs. due to the operation of the quota system.  As an example, in the usual course of business Osztrovic could not simply increase his production in a future quota period by the lost 12,783 kgs. since doing so would put him over his quota and expose him to penalty levies on his excess production and a corresponding quota reduction.

However, CFO has enacted Quota Policy 170-2005 that addresses undermarketing.  Section 2.22 of that Policy permits an undermarketed producer like Osztrovic to re-grow up to 10% of his quota allocation, or 6,684 kgs., spread over two future quota periods.  The Policy operates to "exempt" that 10% production "re-grown" from the otherwise strict operation of the quota, which would entail penalty levies and a quota reduction.

Osztrovic, however, wanted the opportunity to re-grow all 12,783 kgs. that he lost.  He applied to CFO seeking relief above and beyond the 10% allowed in section 2.22 of the Policy.   CFO denied Osztrovic's requested policy relief and he then appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal under section 16(1) of the Ministry of Agriculture, Food and Rural Affairs Act (MAFRAA).

In denying his appeal, the Tribunal said the following:

In the circumstances and facts of this case, the Tribunal declines to grant Victor the requested relief.

CFO developed the undermarketing policy as a "fault free" entitlement. Producers can access the 10% re-grow entitlement if they undermarket for any reason [emphasis added]. The evidence is clear that CFO developed that policy to address undermarketing arising from weather conditions, among other factors. However, the policy contains no threshold criteria. Producers who undermarket due to laziness or negligence or poor chick quality or bad feed or mechanical failures or weather conditions can all access the undermarketing policy and re-grow up to 10% of their quota.

In a quota based regulatory system, exemptions are the exception rather than the norm. In the case of chicken quotas, the CFO has created a standing exemption arising from undermarketing through its Quota Policy 170-2005, section 2.22. That Policy allows producers who undermarket to re-grow the lost kilograms to a maximum of 10% of quota over two future quota periods.

If everything that happened to cause undermarketing gave rise to an exception, the quota policy would become meaningless and that would undermine the regulatory regime. That is even more so where there is a standing exemption as in section 2.22 of the Quota Policy.

Therefore, the Tribunal concludes that to obtain relief above and beyond the undermarketing Policy, Victor must satisfy us, on a balance of probabilities, that something truly unique and exceptional occurred to cause the undermarketing.

Probably more than any other businesses, farmers are particularly at the mercy of the weather. However, weather conditions, even extreme weather conditions such as Victor experienced, are not unique and exceptional in Ontario.

The Tribunal is not satisfied that there was anything truly unique and exceptional about the weather event that resulted in the barn conditions that caused Victor's crop loss.

Read the rest of the decision at: Victor Osztrovic vs Chicken Farmers of Ontario (CFO).