Meat a Chick Farm Inc. v Chicken Farmers of Ontario, 1998 ONAFRAAT 13

Agriculture, Food and Rural Affairs Appeal Tribunal

Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone 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: Meat a Chick Farm Inc. v Chicken Farmers of Ontario

Meat a Chick Farm Inc. v CFO 1998 ONAFRAAT 13

STATUTE: Ministry of Agriculture, Food and Rural Affairs Act

HEARING: March 16-17, 1998

DATE OF DECISION: March 30, 1998

1998-13

NEUTRAL CITATION: 1998 ONAFRAAT 13

Meat a Chick Farm Inc. v Chicken Farmers of Ontario

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 Meat A Chick Farm Inc., from a decision of the Chicken Farmers of Ontario dated July 31st, 1997 with respect to violations of General Regulation 402 and General Regulations No.1343-1996 made under the Farm Products Marketing Act during Quota Period A-07.

Before: Jim Rickard, Chair; Andrew Osyany, Vice-Chair; Anna Andres, Member; Moira Connell, Member; Gertrude Levac, Member.

Appearances: Mr. Robert Laplante, appearing on behalf of the appellant, Meat A Chick Inc. Mr. Ronald F. Caza, counsel for the appellant, Meat A Chick Inc. Mr. Geoff Spurr, counsel to the respondent, the Chicken Farmers of Ontario.

DECISION OF THE TRIBUNAL

This appeal was heard in Ottawa, Ontario commencing on March 16, 1998 and continuing to March 17, 1998. Meat A Chick Farm Inc. (Meat A Chick) appealed to the Farm Products Appeal Tribunal; (the Tribunal), from a decision of the Chicken Farmers of Ontario (the CFO) dated July 31st, 1997 wherein the CFO found that Meat A Chick had produced and marketed 7,567 kilograms of chicken without quota, failed to report all chicks which were placed, failed to complete a Form 6 at the time of sale of chicken and failed to pay all licence fees due and owning on all chicken sold by it during Quota Period A-07, thereby failing to market all chicken through the local board in violation of General Regulation 402 and General Regulations No.1343-1996 made under the Farm Products Marketing Act. As a consequence, the CFO calculated the license fees, Chicken Farmers of Canada (CFC) levies and over production levies at $933.37 and reduced Meat A Chick’s crop quota in Quota Period A-17 by 37,835 kilograms of chicken (five times the kilograms of chicken involved in the offence).

The Background

The applicable section of Regulation No. 402 is as follows:

Section 6 (1): All chicken shall be marketed through the local board.

The applicable sections of Regulation No. 1343-1996 are as follows:

4(1) All chicken shall be produced on a quota basis.

4(2) No person to whom a quota has not been fixed and allotted for the producing of chicken or whose quota has been cancelled shall produce any chicken.

Marketing of Chicken

5(1) All chicken shall be marketed on a quota basis.

5(3) No person to whom a quota has been fixed and allotted by the board for the marketing of chicken shall market any chicken in excess of such quota.

Receiving Chicken

8(1) At the time of sale of chicken the producer shall complete three copies of the producer receipt for each load of chicken received by the processor in Form 6 and deliver such copies to the processor or the processor's agent. The producer shall ensure that the Form 6 is complete and accurate in all respects and is a Form 6 issued in respect of the registered premises on which the chicken were produced. The processor or the processor's agent shall sign the three copies of the producer receipt and return two copies to the producer and retain the yellow copy. The yellow copy must accompany the vehicle in transit to the processing plant.

14(1) Every producer shall pay to the board licence fees at the rate of $1.05 per 100 kilograms, live weight, of chicken sold.

Meat A Chick is a registered chicken producer that in Quota Period A-07 held 30,500 basic quota units issued by the CFO operating from premises at Sarsfield, Ontario.

The Issue

There are two issues before the Tribunal:

1. Did Meat A Chick produce and market 7,567 kilograms of chicken in contravention of the CFO regulations?

2. If Meat A Chick violated CFO regulations, is the penalty imposed by the CFO appropriate in the circumstances?

The Evidence and the Findings

At the request of the appellant, all witnesses at the hearing gave testimony under oath.

Mr. Robert Laplante told the Tribunal that he has been in farming all of his life. His father started farming in the early 1960’s in the dairy industry growing from seven cows to a milking herd of over 200 in 1993. In October of 1993 there was a fire and the dairy operation was destroyed. At that time they changed to a broiler business beginning in late 1994. They built two main barns and began production with 61,000 units of quota. Meat a Chick operates from one barn using 30,500 quota units and Feather Weight Farm Inc. (Feather Weight) operates from the second barn on an adjacent property. Mr. Laplante explained that he is president of Feather Weight and owns 100% of the company shares and is also the main person responsible for all the chicken production. He said his brother, Michelle Laplante, owns Meat A Chick but Robert takes care of the chicken production, paperwork etc. for Meat A Chick as well as Feather Weight. For purposes of this hearing Mr. Robert Laplante is authorized to speak for Meat A Chick.

Mr. Laplante told the Tribunal that he orders the chicks well in advance of each quota period. Once he has his crop quota for a period he confirms the number of chicks he actually needs to grow his allotment to the size agreed to with his processor. Referring to the CFO ledger sheet for Quota Period A-07 he said he placed 31,620 cockerel chicks in the barn on June 7, 1996 intending to ship 2.1 kilogram category birds. The birds were shipped to slaughter on July 21, 1996. He said when the birds are ready to be shipped he:

• arranges for catchers,

• the processors arranges for trucks to be sent to the farm,

• the time is set for loading to start,

• the catchers put the birds on the truck, and

• before the truck leaves the farm a Form 6 is completed for the load.

The chickens are slaughtered the next day and he is sent a settlement package indicating the weight of the chicken marketed, the meat inspector’s report of condemnation, the number of birds marketed, the price per kilogram and the payment for the chicken marketed.

Once the chickens have been shipped out the barn is cleaned and disinfected and he gets ready for the next flock. He usually has 10 to 14 days between flocks. He said the barns are an unusual European style barn with one floor. Each barn is 80’ x 310’ with a door 14’ x 16’ at one end so the trucks go right into the barn to load.

Mr. Laplante said that July 1996 was hot and humid and he shipped the first load on July 16, 1996 to make more room for the birds remaining so he would not get heat prostration in his flock. Mr. Laplante told the Tribunal that during Quota Period A-07 Meat A Chick placed 31,620 chicks in the barn on June 7 and no more were placed in the barn. All of these chicks were signed to be processed by Watts Poultry Inc. (Watts) using CFO form 101.

Mr. Laplante said he shipped the chicken in five loads. The first load was shipped on July 16, 1996, 6,000 birds to Watts. On July 21, 1996 the remaining birds were shipped, in four loads, two loads to processors in Quebec and two loads in Ontario. Watts had made arrangements with the Quebec processors to take the birds. He said shipping to Quebec results in less shrink for him than when he sends the chickens to Burford.

Mr. Laplante denied that Meat A Chick had failed to report all chicks placed, had produced and marketed chicken without quota and without reporting to the CFO and swore that all chicken Meat A Chick produced had been marketed through the CFO.

Mr. Laplante said that Meat A Chick did not receive money through MacEwen Agricentre (MacEwen) for chicken it produced. He said that he has never spoken with Mr. Jacques Drouin at Abattoir Plantagenet (the Abattoir). He said that he does not deal with the Abattoir except for one occasion when he first started in the chicken business and then he had a custom kill of about 50 birds at the Abattoir. He said that he dealt with Mr. Robert Cousineau at that time. He said this was the only time he was at the plant.

Mr. Laplante told the Tribunal that Mr. Denis Piché was a person who operated a chicken catching crew in the area. He said Mr. Piché had caught chickens on both farms on only two occasions. He said that he was unhappy with Mr. Piché’s work because so many birds were killed when the truck ran over them in the barn. He said he deducted the value of the killed chicken from the catching payment and that was the last time Mr. Piché caught chickens for him.

Mr. Laplante told the Tribunal that he buys about 1800 tonnes of chicken feed each year from MacEwen at an average price of about $300 per tonne. Mr. Laplante said that he had asked Mr. MacEwen why the Abattoir paid two cheques to MacEwen in August and September 1996 and was told that the file was confidential but Mr. MacEwen did provide an affidavit that the cheques were not for the credit of either Feather Weight or Meat A Chick.

Mr. Laplante told the Tribunal that on occasion he had over-produced his quota and had paid over-production penalties to the CFO. On one occasion the penalty amounted to about $4000.00. He said that his allocation for quota period A-07 was 69,611 kilograms and his actual production was 68,280 kilograms. Subtracting the under production (1331 kilograms) from the alleged unreported production (7,567 kilograms), allowing for the 5% production sleeve before over production penalties are assessed he would have had to pay a penalty of about $836.00 for this alleged production. Mr. Laplante said it did not make sense that he would risk being assessed a penalty for not reporting chicken production and marketing by the CFO for such a small amount.

Mr. Denis Piché told the Tribunal that he worked for the Abattoir in the plant and sometimes drove the live haul truck. He also ran a chicken catching business employing several people. He said that he had caught chicken in the Laplante barns on several occasions. In his verbal testimony, Mr. Piché said that he did not recall what happened on July 22, 1996. He thought he picked up chicken at the St Onge farm at Alfred. He clearly recalled going to the Laplante barns to pick up chicken one night and returning without catching any chicken or receiving any payment even though he had to pay his catching crew. This was two nights after he had picked up chicken at what he remembered to be the St Onge farm at Alfred.

Mr. Richard Cousineau told the Tribunal that he had worked at the Abattoir for ten years. He said he had worked in various capacities and in 1996 he was the accountant/bookkeeper. His duties included accounts payable and accounts receivable for the Abattoir.

Mr. Cousineau told the Tribunal that he had met Mr. Robert Laplante on two occasions. He said Mr. Laplante came to the plant twice to pick up payment for chicken sold to the Abattoir. Mr. Cousineau said he divided the amount owing into two cheques because the Abattoir was in a difficult financial situation. There was a two to three week interval between the cheques so the Abattoir could get money into its account so the cheques would be honored by the bank.

Mr. Cousineau said that Mr. MacAllister talked to him in early August 1996. He said Mr. MacAllister had found out that the chickens from Mr. Laplante were illegal chickens. He gave Mr. MacAllister photocopies of cheque stubs and the other documents that related to the purchase of the chicken. The first cheque was made to Robert Laplante. He said Mr. Laplante had come to the Abattoir to ask him to make the cheques payable to MacEwen so he rewrote the cheques. Mr. Laplante had to come twice as there were two cheques to pick up. Mr. Cousineau told the Tribunal that the Abattoir had no business with MacEwen and he would not have written any cheques that he did not have to write because of the financial situation of the Abattoir. Mr. Cousineau told the Tribunal that he gave the cheques to Mr. Laplante.

Mr. Cousineau said that the Abattoir charged a 4% service charge when it processed illegal chicken. He said that explains the difference between the amount shown on the settlement sheet and the total of the two cheques made to MacEwen.

Mr. Jacques Drouin told the Tribunal that he has operated the Abattoir under that name for nine years. He first started processing chicken in the barn on the property in 1981. The Abattoir went bankrupt last year and was purchased by Maple Lodge. Normal processing days at the Abattoir were Monday, Wednesday and Friday.

Mr. Drouin said that in 1996 the Abattoir had contracts for the chicken produced by Mr. Laplante. Only the papers were signed and the birds were slaughtered elsewhere. He said Mr. Laplante wanted all of the birds removed from the barns in one night and that was too large a volume for him to process at once. He knew he would not have Mr. Laplante as a regular customer of the Abattoir. On one occasion in 1996 he was informed by Mr. Richard Payette, an employee, that Mr. Laplante had a shipment of birds that he wanted processed at the Abattoir and that is the only time that the Abattoir processed Laplante chicken. He sent his truck to the Laplante farm and picked up chicken and processed it the next day. He remembered that the chicken was picked up on a Monday and processed on a Tuesday because Tuesday was not a regular processing day. He had to make special arrangements for the provincial meat inspector and his staff to work on that date. He said that initially two loads were to be picked up within a week. Only the first load was picked up. At the time of the first scheduled pick up the catchers noticed Don MacAllister on the road but the chicken was picked up anyway. The birds were picked up July 22, 1996 and slaughtered July 23, 1996. On the second night, July 24th, when the catchers went to the farm they again saw Mr. MacAllister and it was decided not to pick up the chicken that night.

Mr. Drouin told the Tribunal that the Abattoir did not conduct any business with MacEwen and the cheques from the Abattoir to MacEwen were in payment for chicken.

Mr. Drouin said that he pled guilty in provincial court to contravention of the marketing legislation because he had in fact violated the regulations by processing illegal chicken from the Laplante farm and when he was caught he admitted his guilt.

Mr. Drouin said that the illegal chicken he processed were produced for Watts but the Abattoir took 2400 or 2800 birds. He said there were 240 cages at 10 or 12 chickens per cage. He said Tony at Watts took the second load.

Mr. Drouin told the Tribunal that the Abattoir slaughtered illegal chicken from its regular suppliers and was caught twice in July 1996. He said that the suppliers were not placing chicken to have extra, sometimes the kilos were over, for example when the chicken was ready Saturday but was not going out until Sunday night, and he would hide the extra kilograms.

Don MacAllister, field services officer with the CFO for 15 years, told the Tribunal that he got a tip of information that illegal chicken would be shipped from the Laplante farm on July 22nd. On the night of the 22nd he observed a truck with empty cages that was on the road to the Laplante farm. He said it was the Ferme Jacque Drouin truck. He said on July 23rd he went to the plant and observed that the receiving area doors were shut, there was a normal amount of vehicles in the yard for a killing day, the OMAFRA meat inspector’s car was there as well. He said he did not go into the plant. His information was that there would be two shipments and the second was to be Wednesday night. On Wednesday night he again observed a truck at the Laplante farm Mr. MacAllister said that he went to the Abattoir a few days later he got the copies of two cheque stubs from Richard Cousineau.

Mr. Fred Lewis, chicken producer and Director of the CFO from District 3, told the Tribunal that the CFO imposed a penalty of five time the number of kilograms involved because there were serious violations of policy and regulations. There are unreported day old chicks, non reporting of marketing of chicken, and a total of 7.5 tonnes of chicken not reported. He said it was a harsh penalty but the CFO had to send a strong message that producers must comply with the regulations that protect them. Unreported product cannot be allowed. He told the Tribunal that a few years ago the CFO imposed penalties of twice the kilograms involved, this was raised to three times and still that did not work. The CFO is now using a penalty of five times the kilograms involved and hopes that will get the message out to producers that all chicken must be produced and marketed within their allotted quota.

The Tribunal examined the evidence presented. All verbal evidence was entered by way of sworn testimony of the witnesses. The fact that the evidence was sworn was of no assistance to the Tribunal in assessing the credibility of the evidence. The account of the events provided by Mr. Laplante was noticeably different from the accounts provided by the other witnesses. Mr. Laplante testified that he had not been to the Abattoir except for one “custom kill” just after he began chicken production. Mr. Cousineau testified that Mr. Laplante came to the Abattoir on two occasions to pick up cheques for payment for chicken sold to the Abattoir. Both cannot be truthful.

The Tribunal finds that the most credible witness was Mr. Cousineau. The Tribunal found enough corroboration of evidence from the other witnesses that on the balance of probabilities illegal chicken was marketed from Meat A Chick and slaughtered at the Abattoir on the 22nd of July 1996.

It is admitted by all parties that the Abattoir processed illegal birds on July 23rd 1996. The question for the Tribunal is whose birds were processed? Robert Laplante gave forthright evidence insisting that he had nothing to do with the growing and marketing of illegal birds and that he had no knowledge of why cheques should be made out in his name and then changed to MacEwen. On the other side is the evidence from Mr. Drouin that he had made prior arrangements with Mr. Laplante for the marketing of two loads of 3,000 chickens each. A call was received on July 22nd that the first load of birds was ready for pick up. Mr. Drouin arranged for his driver to make the pick up in course of the evening. Mr. MacAllister was observed on the road in the vicinity of the farm. Mr. Drouin said he talked to Robert Laplante about Mr. MacAllister but they decided to go ahead and the birds were picked up and delivered. Arrangements had been made for the workers and meat inspector to be at the Abattoir. Mr. MacAllister observed activity at the Abattoir that lead him to conclude there was a slaughter taking place on July 23rd. Mr. Drouin said the birds were sold to Watts. The next shipment was scheduled for two night later July 24th. A driver was sent out, with catchers, to make the pick up. Mr. MacAllister was again discovered and the operation was aborted. No illegal birds were picked up that night. When the illegal birds were processed the meat inspector filled out the form for condemns, and according to usual practice, a settlement package was prepared by Richard Payette. It shows Robert Laplante as the producer. The Abattoir was in dire financial straits and although normally the producer would be paid in a week, the Abattoir was not in a position to make payment immediately or in one lump sum. On August 30th a cheque for half the settlement amount was written in the name of Robert Laplante. It was the custom of the Abattoir to keep the board fees that would normally be remitted plus a 4% discount for the illegal birds. The settlement cheques worked out to confirm that practice. Richard Cousineau was the bookkeeper for the Abattoir. He had a new cheque prepared and issued for August 30th payable to MacEwen Agricentre, because he had been asked to do so by Robert Laplante. A second cheque for the same amount plus one cent was issued to MacEwen Agricentre on September 13, 1996. This cheque had also been made out initially to Robert Laplante but was changed when he came in and asked to have the cheque changed.

Mr. Drouin provided copies of the documents to Mr. MacAllister, and then subsequently Cousineau provided copies to Mr. MacAllister.

Many witnesses demonstrated the frailty of memory complicated by the stressful times they had in 1996. The CFO put together a reasonable consistent picture of the events. Initially, Mr. Laplante does not have to say more than deny involvement. Once the CFO provided credible evidence, in particular the redirected cheques to MacEwen, there is an obligation on Mr. Laplante to deal with this evidence and provide an explanation.

Robert Laplante was a half million dollar or more customer for MacEwen and he received monthly statements. The custom was for him to work out his plan for production and present it to MacEwen who would supply the feed program and items would be shipped based on the plan. At the end of the production period, when Laplante received payment from the processor, MacEwen would be paid. Despite this close business relationship and the crying need for information to show what happened with the redirected cheques and how Mr. Laplante’s finances were handled with MacEwen the Tribunal was not presented with any documents from Robert Laplante. The Tribunal finds the allegations of the CFO were amply made out and the finding of the CFO is affirmed.

The Tribunal considered the question of penalty. There is no previous history of infractions by Meat A Chick however, the CFO in imposing the penalty considered three factors, specific to this case. The factors identified are the initial under-reporting of placement of chicks (Form 3), the omission of filing of Form 6 for the marketing of the chicken and third, the significant quantity of chicken involved - seven tonnes. The evidence from the Director of the CFO was that this type of infraction attracted a penalty of double the amount of unreported shipment for one production period but that was insufficient deterrence and the penalty was raised to a three fold penalty which was still insufficient for deterrence. Recently the CFO raised the penalty to a five fold multiplier which this Tribunal accepts as a policy of the CFO but is prepared to consider mitigating circumstances which could result in a different penalty. The Tribunal finds no mitigating circumstances in this case and thus finds no reasons to depart from the usual multiplying factor.

Decision and Reasons

After careful consideration of the evidence presented and the submissions made the Tribunal decided to deny the appeal.

The reason for this decision is the Tribunal was convinced by the evidence presented that Mr. Laplante did ship seven tonnes of chicken on July 22nd , 1996 to Abattoir Plantagenet without reporting to the Chicken Farmers of Ontario the placement of the chicks or the marketing of the kilograms of chicken.

Dated at Guelph, Ontario this 30th day of March, 1998.