Agriculture, Food and Rural Affairs
Appeal Tribunal
1Stone Road West
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:
Meersseman v Farm Products Marketing Commission
Meersseman v FPMC1997 ONAFRAAT 38
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
September 12, 1997
DATE OF DECISION:
September 18, 1997
1997-38
NEUTRAL CITATION:
1997 ONAFRAAT 38
Meersseman v Farm Products Marketing Commission
IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE AND FOOD ACT.
AND IN THE MATTER OF:
An Appeal to the Farm Products Appeal Tribunal by Mr. Robert Meersseman from a September 3, 1997 decision of the Farm Products Marketing Commission denying his request for a license for processing vegetables in 1997.
Before:
Mrs. Nancy McGill, Alternate Chair; Mr. Armand Bechard, Member; Mrs. Moira Connell, Member; Mr. John Lammers, Member.
Appearances:
Mr. Paul Courey, counsel for the appellant, Mr. Robert Meersseman.
Mr. Meersseman, appellant in person.
Mr. Robert Wilson, counsel for the respondent, the Ontario Vegetable Growers’ Marketing Board.
Mr. John Mumford, general manager, Ontario Vegetable Growers’ Marketing Board.
DECISION OF THE BOARD
This matter was heard in Guelph, Ontario on September 12, 1997. This was an appeal to the Farm Products Appeal Tribunal (the Tribunal) by Mr. Robert Meersseman from a September 3, 1997 decision of the Farm Products Marketing Commission (FPMC) denying Robert Meersseman a license for processing vegetables in 1997.
The FPMC takes no position and thus did not appear before the Tribunal.
Preliminary Issues
Mr. Robert Wilson, counsel to the Ontario Vegetable Growers’ Marketing Board (the Board), by way of written motion, requested that the Tribunal declare the appeal to be one not made in good faith and refuse to hear the appeal. Mr. Wilson based his argument on the fact that Mr. Meersseman was president of Boneta Foods which had just been denied a license to process vegetables as a result of an appeal to this Tribunal heard on August 20, 1997. Mr. Wilson argued that Mr. Meersseman was attempting to do as an individual what he had failed to accomplish through the Boneta Foods corporation. Mr. Paul Courey, counsel to Mr. Meersseman, by written reply, argued that whether Mr. Meersseman was a separate entity from Boneta was the essence of the appeal since the FPMC had based its decision on the finding that they were in essence the same person. A panel of the Tribunal assembled to consider this request by Mr. Wilson and the response by Mr. Courey. From the information filed, the Tribunal agreed with the submission of Mr. Courey that the essential issue to be decided was whether or not Mr. Meersseman and Boneta Foods are essentially the same entity for the purposes of a license to process vegetables in 1997. In the opinion of the Tribunal, it was necessary to convene this hearing in order to hear the evidence upon which it could base a decision and consequently the hearing was scheduled for September 12, 1997. At the outset, Mr. Wilson reminded the Tribunal that once the hearing commenced it could at any time decide the appeal was not made in good faith and end the hearing. The Tribunal heard the complete submissions of both parties and then deliberated the evidence before arriving at its decision.
The Background
Boneta Foods owns a processing plant located on Queen Street in Tilbury, Ontario and processes primarily tomatoes. It employs 25 people directly and, indirectly, about another 25 seasonally. In addition to tomatoes, Boneta Foods processes potatoes and mushrooms. Boneta Foods’ license to process vegetables was the subject of a decision of this Tribunal dated September 4, 1997. For the reasons stated, Boneta Foods’ appeal was denied and Boneta Foods does not have a license to process vegetables for 1997. After the Tribunal decision was released verbally to the parties, the FPMC received an application for a license to process vegetables from Mr. Robert Meersseman. Mr. Meersseman told the FPMC that he had arranged a lease of the Boneta Foods’ processing plant and intended to process his own 220 acres of tomatoes at the plant. The FPMC conducted a hearing on this application and on September 3, 1997 issued its decision denying Mr. Meersseman’s licence application. This is the decision now appealed to the Tribunal.
The Issue
The issue before the Tribunal is whether or not Mr. Robert Meersseman should be issued a license to process vegetables based on the application filed with the FPMC.
The Evidence
Mr. Robert Meersseman told the Tribunal that he is president of 1037020 Ontario Limited. The Tribunal understands that 1037020 Ontario Limited operates as Boneta Foods and will refer to the company as Boneta hereinafter in this decision.
Mr. Meersseman said that, in addition to the position of president of Boneta, he worked at General Motors as a tool and die maker and farmed growing his own tomato plug plants and supplying tomatoes to Boneta for processing. In June or July of 1996, he stopped working at General Motors but still farmed and supplied Boneta.
Mr. Meersseman said Boneta was incorporated on July 20, 1993. At various times, Mr. Tim Dick, Mr. Philip Hirst, Mr. Andy Lefaber and Mr. Allen Derksen were officers of the company. Mr. Meersseman has been president of Boneta since it was incorporated. Boneta operated without a general manager until January 1996 when Larry Moss was hired. Mr. Moss left Boneta in May of 1996. In August 1996, Boneta was restructured and Mr. Meersseman became owner of 98% of the common shares of Boneta.
Mr. Meersseman provided copies of letters from suppliers of goods and services to Boneta indicating that these suppliers were dealing with decision-makers at Boneta other than himself prior to August 1996.
Mr. Meersseman told the Tribunal that after August 1996, Mr. Allen Derksen was Secretary of Boneta. He said Mr. Derksen was not a Director or shareholder of the company. When the 1996 refinancing package for Boneta came together, it was signed by Allen Derksen and Robert Meersseman.
According to Mr. Meersseman, when Boneta received its license on September 16, 1996, he ran the production, ordered cans and like matters while Mr. Allen Derksen was responsible for receiving letters of credit, grade slips, payments, calculations for the vegetable board, tax payments and like matters. In short, Mr. Meersseman said he ran the plant while Mr. Derksen kept the financial records. Mr. Meersseman said that when he saw the auditor’s report in December or January saying that Boneta was not in compliance with the Board’s payment terms, he tried to find out what had happened and found that the books were in a poor state. Mr. Allen Derksen was relieved of his duties, new bookkeepers were hired and Mr. Meersseman now receives weekly reports of the financial position of Boneta.
Mr. Meersseman said that the management at Boneta has now changed and he is in complete charge and intends to have Boneta in compliance with the regulations.
Mr. Meeressman said:
He has access to the facilities at 351 Queen Street, Tilbury under a lease from Boneta.
He successfully graduated from St. Clair College in Food Technology.
He has worked at processing facilities and has been at the Boneta plant for five years.
Boneta has already applied to be licensed for next year. If Boneta is licensed for 1998, he will not apply to be licensed.
He has, to date, contracted for 850 tons of his 1997 crop (about one-eighth of his production) and believes he has no opportunity to sell the remaining crop.
In processing his 1997 crop, he believes he has complied with all regulations of the Board.
If a license is granted he can, and intends to, comply with the regulations as a producer and as a processor.
He intends to sell his processed products to various buyers including Boneta.
In response to questions from Mr. Wilson, Mr. Meersseman said that the lease from Boneta to himself commenced on the date that the Tribunal denied the processing license to Boneta. He said that the lease would not be necessary if Boneta had received a license to process vegetables for 1997. He said that while the lease specifies that he has leased the entire production facility, it is understood that he does not have control over the entire facility since part of the plant is already under a lease to another company that is processing chocolate at the plant. Mr. Meersseman indicated that the lease payment was $5 plus operating costs for the plant - e.g. employee wages, fuel and like costs. He said that since he was essentially bargaining with himself as president and 98% shareholder of Boneta, he was able to structure an attractive arrangement.
In response to questions from the panel, Mr. Meersseman said that he had more contracts than he had product to sell. He intends to sell product to Boneta to keep that company going. He said that, in his opinion, the essential difference between Robert Meersseman and Boneta is that, as an individual, he controls his own destiny but with the corporation there are other shareholders who have a say in what happens. The Tribunal understands that the other shareholders hold non-voting preference shares and as such, have no say in the company operations.
Mr. Stefan Camire told the Tribunal that he holds a Bachelor’s degree in Commerce from the University of Ottawa and is at the 3rd level of his designation as a certified general accountant (CGA). He has had seven years’ experience working with Revenue Canada. He operates a company which, among other things, provides bookkeeping services to clients. He said he is now responsible for keeping the books at the Boneta plant. He confirmed Mr. Meersseman’s testimony that the books were in a poor state when he arrived in January 1997. He told the Tribunal that he now provides weekly statements to Mr. Meersseman. He said he was not aware of any non-compliance issue with either Mr. Robert Meersseman or Mr. Isaac Klassen who has contracted to process 850 tons of Mr. Meersseman’s 1997 tomato crop using the Boneta plant under a sub-lease agreement with Mr. Meersseman. Mr. Camire told the Tribunal that, in his opinion, Mr. Robert Meersseman can successfully run the processing plant. Mr. Camire characterized the arrangement between Mr. Klassen and Mr. Meersseman as one of offsets. He said Mr. Meersseman has been paid for his tomatoes but the cost of the cans, processing etc. is offset by product from Mr. Klassen rather than Mr. Klassen paying for and taking possession of all of the product.
Mr. Isaac Klassen appeared before the Tribunal under a summons from the Board. Mr. Klassen told the Tribunal that he is President of Klassen Canning. Mr. Klassen said that he agreed to lease the Boneta facilities to process 250 tons of tomatoes. Under the arrangement, Mr. Meersseman would sell Mr. Klassen his tomatoes and then process the tomatoes through the plant into juice. Mr. Klassen then sold the finished product back to Mr. Meersseman who marketed it to customers that he had waiting for product. The arrangement started at 250 tons and has grown to 850 tons. Mr. Klassen explained to the Tribunal how difficult it is for small processing plants to attract and maintain customers. He said he would negotiate with a customer only to find out that one of the larger companies undercut his bid and the customer was gone.
In the opinion of the Tribunal, the lease of the Boneta facilities is better characterized as an arrangement rather than a lease of a processing plant. In the opinion of the Tribunal, the only purpose of the lease is to provide Robert Meersseman with access to processing equipment.
Since August 1996, Boneta has operated with Mr. Meersseman as President and 98% shareholder. It has operated since February 1997 with Mr. Meersseman as sole director of the corporation. The Tribunal shares the concern of the FPMC and the Board that Mr. Meersseman and Boneta are effectively one and the same since August 1996. In his own evidence, Mr. Meersseman had difficulty separating his personal plans from his plans for Boneta. He indicated that if the Boneta license were approved, he would not have applied for this license, would not have needed the “lease”, and if Boneta’s application for licensing in 1998 is approved, he will not apply. He indicated he intends to sell product that is processed under his personal license, if granted, to Boneta to keep the company going through 1997. In the opinion of the Tribunal, this application by Mr. Meersseman is simply an attempt to do as an individual what he has been denied the opportunity to do through his company.
Decision and Reasons
After careful consideration of all the evidence and submissions before it, the Tribunal decided to uphold the decision of the Farm Products Marketing Commission to deny Mr. Robert Meersseman a processor license for 1997.
The reason for this decision is that, in the opinion of the Tribunal, Boneta and Mr. Robert Meersseman are indistinguishable one from the other for the purposes of obtaining a license as a processor of vegetables.
DATED at Guelph, Ontario this 18th day of September, 1997.