Armstrong v. Crop Insurance Commission of Ontario, 1997 ONAFRAAT 17

Agriculture, Food and Rural Affairs Appeal Tribunal

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca

Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL: Armstrong v Crop Insurance Commission of Ontario

Armstrong v CICO 1997 ONAFRAAT 17

STATUTE: Crop Insurance Act

HEARING: May 6, 1997

DATE OF DECISION: May 23, 1997

1997-17

NEUTRAL CITATION: 1997 ONAFRAAT 17

Armstrong v Crop Insurance Commission of Ontario

IN THE MATTER OF: Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) R.S.O. 1990, c.C.46.

AND IN THE MATTER OF: An Appeal to the Crop Insurance Appeal Board by Harold J. Armstrong from the decision of the Crop Insurance Commission of Ontario, denying his claim under Regulation 221, Crop Insurance Plan for Coloured Beans.

Before: Mr. John Taylor, Vice-Chair; Mr. Ed Mailloux, Vice- Chair.

Appearances: Mr. Donald Good, counsel for the appellant. Mr. Harold Armstrong, appellant in person. Mr. Tom Graham, counsel for the respondent, AgriCorp. Mr. Peter Illncykyj, Senior Commodity Specialist, AgriCorp.

DECISION OF THE BOARD

This appeal was heard in Guelph, Ontario on May 6, 1997.

This was an Appeal to the Crop Insurance Appeal Board (the Board) by Harold J. Armstrong from the decision of the Crop Insurance Commission of Ontario (AgriCorp), denying his claim under Regulation 221, Crop Insurance Plan for Coloured Beans.

Background

In making their decision the Board used the following Regulations.

Regulation 221, Crop Insurance Plan for Coloured Beans, Form 1, Section 1

“( 2) Where in a crop year any planted acreage is harvested after the 31st day of October, the guaranteed production for the unharvested acreage shall be reduced by 2 percentage points per day until such acreage is harvested to a maximum of 50 per cent.

(3) Where the harvesting of any planted acreage is not completed and the failure to harvest was not caused by an insured peril, the contract of insurance shall cease to apply to such unharvested acreage and no indemnity shall be payable therefor.”

Regulation 256, Crop Insurance Plans - General, Form 1, Section 8

“(1) Where loss or damage to an insured crop occurs and the insured person intends to abandon or destroy the insured crop, or to reseed or replant or use the seeded or planted acreage for another purpose, the insured person shall notify the Commission in writing of such intention and shall take no further action without the consent in writing of the Commission.

(2) Where loss or damage to an insured crop occurs and the damage was occasioned at a readily ascertainable time, the insured person shall notify the Commission in writing within five days of such time.

(3) Where loss or damage to the insured crop occurs and it appears, or ought reasonably to appear, to the insured person at any time after planting and before the completion of harvesting of the insured crop that the production of the insured crop may thereby be reduced, the insured person shall, as soon as the loss or damage is apparent, notify the Commission in writing forthwith.

(4) Despite any notice given by the insured person under this paragraph, where on completion of harvesting of an insured crop the actual production is less than the total guaranteed production, the insured person shall notify the Commission in writing within five days of completion of harvest.

Mr. Harold J. Armstrong is a part-time farmer and a drainage contractor. His farm is located at Lot 5, Conc. 14, Township of Blandford-Blenheim, County of Oxford. In 1995, he planted 80 acres of beans on the home farm and rented approximately 120 acres of land in the Drumbo area where he also planted beans. The rented land was all spring-plowed. In 1995, his bean crop was as follows: 75 acres of light red kidneys, 70 acres of dark red kidneys and 75 acres of cranberries.

In 1995, Mr. Armstrong purchased crop insurance for 220 acres of coloured beans. He had a guaranteed production of 1167.14 lb/acre or 256,770.80 lbs. and harvested 177,703.93 lbs. which means he had a shortfall of 79,695.99 lbs. The price option for coloured beans in 1995 was $0.2718/lb.

Mr. Donald Good, counsel for Mr. Harold J. Armstrong, argued that his client was not able to harvest 94 acres of beans because of an insured peril of excess moisture which occurred during harvest and that timely notice was given to AgriCorp. Therefore, he argued that Mr. Armstrong is entitled to an insurance claim on the 94 acres he was unable to harvest.

Mr. Peter Illnyckyj, Senior Commodity Specialist for AgriCorp, alleged that AgriCorp could not identify an insured peril as it was not notified of a problem before harvest. Since notice was not given before harvest, and AgriCorp couldn’t identify an insured peril, it is denying the claim.

The Evidence

Mr. Armstrong testified that he planted his beans in late May or early June. He said that when he planted the crop, the moisture in the soil that was fall-plowed was adequate; the spring-plowed land was somewhat dry. He said that some of the beans on the spring-plowed land didn’t germinate right away. However, he said that five to six days after planting they got a nice gentle rain which was just what the beans needed to germinate. He said that after the rain there was some crusting on the knolls of the spring-plowed fields and that he rotary-hoed the areas that were crusted. As further proof of his planting dates, Mr. Armstrong entered into evidence his final acreage report that was dated and signed by him on June 20, 1995.

In response to specific questions from AgriCorp about his planting dates, he said he planted 80 acres of beans on his home farm on May 10. He further testified that the rented land at Drumbo would have been planted about May 16-18. He also stated that the emergence of the beans on the home farm was good but the Drumbo fields were uneven.

In response to a question of the Board as to when he applied fertilizer and rented equipment, he reviewed the invoices that he had submitted into evidence. He stated that if the invoices said he purchased fertilizer June 8, rented equipment June 12 and got more fertilizer June 13, then it was quite possible those were the dates he planted his beans.

According to Mr. Armstrong, both he and the co-op applied the herbicides to his crops. He said the Co-op used basagran and pursuit on the lands they sprayed. On the crops he sprayed, he used a mixture of basagran, pursuit and soybean oil. He said the spraying would all have been completed about seven days after planting or just after the crop was emerging. He said there was some weed escape on one of the parcels of land at Drumbo and about 30 to 40 acres at home. He said the weeds were significant enough that he hired a wicker to come in. He admitted that this would have eliminated about half of the weeds and that the balance remaining probably reduced the yields somewhat. He said that the weeds did not cause a problem at harvest time.

During the summer months, he said he monitored the crop and it looked good. He said that he tried to harvest the crop in early September but there were a fair number of pods that weren’t mature so he had to wait for them to mature. According to Mr. Armstrong, the crop wasn’t ready to harvest until the first of November. On November 6, he proceeded to harvest the cranberries by pulling and windrowing 20 acres of the cranberry pods in the middle of the night. He did this while the pods were still tough so they didn’t shell out. He said the next day he got sunshine and the crop dried out enough to be harvested. He said his yield was around one tonne per acre or 20 tonnes. The evening of November 7, he proceeded to harvest the balance of the cranberry crop with hopes of harvesting the next day November 8. However, the dew on the pods was very heavy and there was not enough sun to dry out the pods. He said he wasn’t able to harvest the beans that were in the windrow because of excess moisture. He said he notified John Rupert of AgriCorp on November 8 that he was having trouble harvesting his crop. He said that Mr. Rupert attended at his farm on November 9 and made a report. Mr. Rupert did not attend the farm again until January 16, 1996. In his Adjuster’s Special Report, Mr. Rupert states that: “harvest was delayed because the crop had emerged late and did not have a good start”. Mr. Armstrong said he disagrees with that statement and thus did not sign the Report. Mr. Armstrong said if excess moisture hadn’t occurred at harvest time, he would have been able to harvest his crop. He said there was no damage to his crop prior to November 8 and he called AgriCorp immediately to report the problem. He said he feels he met his contractual obligations.

Mr. Armstrong produced into evidence a sample of the 20 tonnes of beans that he was able to harvest. He said he has been unable to sell these beans because the excess moisture caused some discoloration. He said that in addition to his 94-acre loss, it is his position that these beans are also a loss.

Mr. Peter Ilnyckyj, Senior Commodity Specialist for AgriCorp, called as his first witness Christine M. Brown, soil and crop advisor for OMAFRA for Oxford, Brant and Norfolk Counties. She said that ideal planting time for beans is between the lst and 15th of June with a little bit of starter fertilizer. She stated that cranberries are usually planted 10 days earlier than kidneys beans. She said that harvest for cranberries usually occurs between the lst and middle of September and harvest for kidney beans is usually 10 days later than cranberries. If beans are planted after June 20 or early part of July, she said it means lengthening the maturity date. Weed pressure and uneven emergence will also delay maturity. She said that in cases where the crop doesn’t mature evenly, desiccants are widely used to even up maturity. She said that desiccants are used particularly for beans being direct-combined and where there is significant weed pressure. If there is significant weed pressure, she said that using a desiccant means the beans don’t get stained and they go through the combine easier.

In response to a question of AgriCorp, she said she had reviewed the sprays used by Mr. Armstrong and noted that he applied only half the amount recommended and used soybean oil. She said that herbicide and chemical companies do not endorse or stand behind that practice and that using soybean oil is not a recommended practice. She said that soybean oil does not harm the crop but increases the risk of weeds.

Ms. Brown said that in 1995, 80% of the crop in Oxford County had been harvested by the end of September. She said she does not know why Mr. Armstrong’s harvest was so late.

Mr. Martin Kiefer also testified on behalf of AgriCorp. He stated that in 1995 he was a District Coordinator and part of his area included the combined township of Blandford-Blenheim. He entered into evidence an “Average Actual and Underwritten Yield/Acre Analysis” for AgriCorp clients for Blandford-Blenheim. It indicated that 1995 was an average year for coloured beans. He said that drought in 1995 was one of the biggest problems clients experienced. He stated that clients who had weed problems applied desiccants so their harvest wouldn’t be delayed. Mr. Kiefer said that AgriCorp’s interpretation of the insured peril of excess moisture typically means that a client can’t get on the land to harvest or plant a crop. According to Mr. Kiefer, heavy dew is not considered the peril excess moisture. In his opinion, if the crop wasn’t mature by the end of September, good management practices would be that you apply desiccant in early October. Good management practices also means getting the crop off early to avoid staining problems. He said he denied this claim as AgriCorp was unable to determine the cause of loss and it was not notified until harvest occurred that there was a problem with the crop. In his opinion, the client should have been aware of a problem before November 8.

He read into evidence Regulation 221, Section 1, subsection (2) which states: “where in a crop year any planted acreage is harvested after the 31st day of October, the guaranteed production for the unharvested acreage shall be reduced by 2 percentage points per day until such acreage is harvested to a maximum of 50 per cent”. He said this means that even if Mr. Armstrong was paid a claim, AgriCorp would have deducted the guaranteed production for the unharvested crop by 2%/day after October 31.

Mr. Kiefer stated that the 20 tonnes of beans in storage are considered harvested crop. He said that AgriCorp does not insure for quality of crop or inability to market crop.

Findings

Mr. Good argued that Mr. Armstrong did get his crop planted before June 30 which is the final date for planting coloured beans as is specified in Regulation 221, Crop Insurance Plan for Coloured Beans. He said that Mr. Armstrong’s testimony is that during the summer the crop looked normal. He said that the crop was not mature enough to harvest until November. He argued that when Mr. Armstrong pulled the beans on November 7th, instead of having sun the next day he had excess moisture which was the cause of his failure to harvest. He stated that excess moisture is an insured peril. Mr. Good argued that the term excess moisture is not defined in the regulations. He said that Mr. Armstrong’s beans were unfit to harvest due to excess moisture from the heavy dew.

He stated that Mr. Armstrong did not contact AgriCorp any earlier than November 9 as there was not a problem with his crop before that date. He argued that Mr. Armstrong met his obligations by notifying AgriCorp of a problem as soon as it occurred.

Mr. Good further argued that the only hard evidence in this case is that of the appellant which, in his opinion, clearly says the Board can apply the contra preferendum rule. He said that since the only eye witness is Mr. Armstrong, he is the only credible witness.

Mr. Illynykyj argued that there is some confusion about the planting dates of the beans. He said that Mr. Armstrong stated that his beans were all planted by May 18 but some receipts indicated planting occurred June 12. He said the final acreage report indicates that all acreage was planted by June 20. If this actually occurred, he said AgriCorp cannot understand why the beans would not have been mature by September.

He further argued that General Regulation 256 clearly states: “where the loss or damage to an insured crop occurs and the damage was occasioned at a readily ascertainable time, the insured person shall notify the Commission in writing within five days of such time”. In his opinion, since the crop wasn’t harvested in October, AgriCorp should have been notified at that time or earlier. He stated that since Mr. Armstrong did not call AgriCorp until November 9, staff were not provided the opportunity to see the crop to identify an insured peril. In the opinion of AgriCorp, the peril could have been weed infestation. Weeds are a result of poor management and management practices are not insured perils. He said that Agricorp could not pay a claim as it couldn’t identify an insured peril.

He further stated that the “2% rule”, applied when harvest occurs after October 31, is meant to be applied in the case where a farmer is harvesting another crop instead of getting the beans harvested. In this case, Mr. Armstrong stated that the beans were not ready to harvest before October 31 so a full loss should be applied since there is an uninsured peril affecting the crop.

The Board noted that the final acreage report was made out on June 20 and that Mr. Armstrong submits that all of the acreage was planted by that date. There was some suggestion that the final acreage report may have been made out prior to the last planting. In any event, the evidence of AgriCorp is to the effect that coloured beans planted up to mid to end of June is within the acceptable range for an average crop that would be expected to mature by mid September. The appellant also produced evidence that he had employed proper practices such as fertilizing the ground and applying sprays for weed control. It was suggested by one OMAFRA witness that the herbicide sprays were applied at an inadequate rate. However, the Board finds that the alleged rates of application were within acceptable farming ranges.

The Board also heard evidence from the appellant that the rented land was mostly spring- plowed. To minimize the adverse affects from this, he testified that he properly packed the lands after planting to conserve as much moisture as possible. While the Board heard no evidence to contradict this, it suspects that the spring plowing may have been a contributing factor to the lateness of maturity of crop. Most of the unharvested acreage was on the rented spring-plowed land.

Given all of the evidence both from AgriCorp’s witnesses and the appellants, one would have expected that these varieties of colored beans, if planted on or before June 20, should have been mature and ready for harvest by mid-September. Various factors might have delayed the maturity a few weeks. The problem with uneven maturity could have been remedied by a timely application of a desiccant. AgriCorp witnesses said this should have been considered. Obviously the appellant must have thought otherwise because he let the crop stand until the first week of November or so. On November 7, he was able to harvest approx. 20 acres which produced an average yield. Unfortunately, the beans from this portion of the harvest were discoloured. The appellant, using the traditional method of harvesting coloured beans, continued the next day to pull the plants and put them in windrows. From that point on however, because of wet conditions attributed to heavy dew and cold weather, he was unable to harvest the balance of his crop. The net result is that he left 94 acres unharvested out of the total of 220 acres. It has not been made clear to us during what months or weeks the other acreage was harvested. The Board is led to the conclusion that there were generally good harvesting conditions for the appellant to be able to harvest that portion of the crop. The only reasons that the unharvested portion were left are because the crop was either not fit or the weather conditions prohibited the continued harvesting. The Board concludes that there was a combination of both problems. The appellants own evidence indicates that, until November 1, the beans in the area of concern were still immature. Based on that evidence, in the Board’s opinion, some factor other than an insured peril caused this immaturity.

This leads the Board to the problem of deciding how much of the loss is due to an insured peril and how much is due to an uninsured peril. The Board identified as suspected uninsured perils the combination of using spring-plowed lands, inadequate weed control, and lack of use of a desiccant. The Board ascribes 50% of cause of the loss uninsured perils and 50% to the insured perils of excess moisture and lack of moisture at planting time.

The appellant’s solicitor suggested that the term excess moisture is broad enough to include heavy dew, fog or other wet conditions not necessarily produced by falling rain. On the other hand, AgriCorp’s position is that the term excess moisture, as used in the regulations affecting this crop, means rain that has made the ground conditions too wet either to plant, grow or harvest crops. It is admitted that there is no definition of excess moisture contained in the acts or in the regulations. This Board finds that the term excess moisture can include the conditions that are alleged to have affected the harvest of this crop.

The Board also noted that under the provisions of the Crop Insurance Plans for Coloured Beans, Regulation 221, Section 1 (2) it states: “where in a crop year any planted acreage is harvested after the 31st day of October, the guaranteed production for the unharvested acreage shall be reduced by 2 percentage points per day until such acreage is harvested to a maximum of 50 percent”. Because of this provision, in the opinion of the Board, that portion of the loss attributable to an insured peril should be further modified by the application of this provision.

In response to Mr. Good’s argument that the contra preferendum rule applies, in this case the Board finds that it is a legitimate common law legal point but there is also an onus to prove that, on the balance of probabilities, that the peril did affect this crop.

Decision and Reasons

After careful consideration of all the evidence before it, the Board decided to partially grant this claim and assess 50% of the cause of the loss to the insured and 50% to an insured peril. The Board calculates the loss as follows:

Total guaranteed production (GP) = 256,770.80 lbs. Less quantity harvested = 177,073.93 lbs. Equals shortfall = 79,696.87 lbs.

Revised GP due to late harvest (less 14%) = 68,539.31 lbs.

Loss due to insured peril (50%) = 34,269.66 lbs.

The reason for this decision is:

In the opinion of the Board, 50% of the loss is due to the uninsured peril of poor management and 50% of the loss is due to the insured perils of lack of rain in the spring and excess moisture at harvest time.

Order of the Board

The board directs that AgriCorp allow Harold Armstrong a loss of 34,269.28 lbs. due to an insured peril.

DATED AT Guelph, Ontario this 23rd day of May, 1997.