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:
Sytsma v Chicken Farmers of Ontario
Sytsma v CFO 2000 ONAFRAAT 18
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
August 15, 2000
DATE OF DECISION:
August 28, 2000
2000-18
NEUTRAL CITATION:
2000 ONAFRAAT 18
Sytsma 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 Agriculture, Food and Rural Affairs Appeal Tribunal by Mr. Garry Sytsma, Hagersville, from the March 8, 2000, decision of the Chicken Farmers of Ontario (the CFO) wherein the CFO determined that Mr. Sytsma had violated General Regulation 402, General Regulation 1106-1994, General Regulation 1165-1994 and General Regulation 1343-1996 by producing and marketing chicken without quota; producing and marketing chicken in excess of quota; failing to market all chicken through the local board; failing to pay all license fees and levies due, and owning on all chicken sold during Quota Periods A1, A3, A6, A9, A10, A13, A15, A16, A17, A18, A19, A20, A21, A22, A23 and A26. As a consequence of its finding, the CFO applied the appropriate licence fees; C.F.C. levies; and excess production levies and reduced Mr. Sytsma’s crop quota for Quota Period A-33 by 29,814 kilograms.
Before:
Jim Rickard, Chair; Ed Mailloux, Vice-Chair; Anna Andres, Member; Ralph Huckle, Member.
Appearances:
Garry Sytsma, appellant.
Ron Folkes, counsel to the appellant.
Paul Karges, on behalf of the respondent, the Chicken Farmers of Ontario.
Chris Vanderkooy, on behalf of the respondent, the Chicken Farmers of Ontario.
Geoff Spurr, counsel to the respondent, the Chicken Farmers of Ontario.
DECISION OF THE TRIBUNAL
This appeal was heard in Guelph, Ontario, on Tuesday August 15, 2000. Mr. Garry Sytsma appealed to the Agriculture Food and Rural Affairs Appeal Tribunal (the Tribunal) from the March 8, 2000 decision of the Chicken Farmers of Ontario (the CFO) wherein the CFO determined that Mr. Sytsma had violated General Regulation 402, General Regulation 1106-1994, General Regulation 1165-1994 and General Regulation 1343-1996 by producing and marketing chicken without quota; producing and marketing chicken in excess of quota; failing to market all chicken through the local board; and failing to pay all license fees and levies due and owing on all chicken sold during Quota Periods A1, A3, A6, A9, A10, A13, A15, A16, A17, A18, A19, A20, A21, A22, A23 and A26. As a consequence of its finding, the CFO applied the appropriate licence fees; C.F.C. levies; and excess production levies and reduced Mr. Sytsma’s crop quota for Quota Period A-33 by 29,814 kilograms.
The applicable section of Regulation No. 402 is as follows:
- (1) “marketing” includes advertising, assembling, buying, offering for sale, packing, processing, selling, shipping, storing and transporting and “market” and “marketed” have corresponding meanings.
Section 6 (1): All chicken shall be marketed through the local board.
The relevant sections of General Regulation, No. 1106-1994, No. 1165-1994 and No. 1343-1996 are as follows:
Section 3 – Exemptions
- (2) Chicks that are sold to a producer of chicken for production of chicken by the producer on the producer’s premises and for consumption by the producer on the producer’s premises are exempt from this Regulation other than subsection 15(1) to 15(4) inclusive.
Section 4 - Production of Chicken
(1) All chicken shall be produced on a quota basis.
(3) No person to whom a quota has been fixed and allotted for producing chicken shall produce any chicken in excess of such quota.
Section 5 - Marketing of Chicken
(1) All chicken shall be marketed on a quota basis.
(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.
Section 8 - Receiving Chicken
- 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.
Licence Fees
14 (1) Every producer shall pay to the board licence fees at the rate of $1.10 per 100 kilograms, live weight, of chicken sold. (General Regulation No. 1106-1994)
(1) Every producer shall pay to the board licence fees at the rate of $1.05 per 100 kilograms, live weight, of chicken sold. (General Regulation No. 1165 -1994)
(1) Every producer shall pay to the board licence fees at the rate of $1.05 per 100 kilograms, live weight, of chicken sold. (General Regulation No. 1343-1996)
(2) Any person who receives chicken shall deduct from the monies payable for the chicken any licence fees payable to the board by the person from whom he receives the chicken and shall forward such licence fees to the local board at its office not later than seven days from the last day of the week the chicken was received.
(3) Every producer shall pay to the board at its office all licence fees payable by him under subsection (1) that were not deducted and paid to the board in the manner prescribed by subsection (2) in respect of chicken sold in any month not later than the 15th day of the next following month.
Section 15 - Producer Information
- At the time of receipt of chicks, every producer shall complete, for each load of chicks received, three copies of a Chick Placement Report in Form 3 from the book of Form 3’s provided to the producer by the board in respect of the premises at which the chicks are placed. The producer shall ensure that the Form 3 is complete and accurate in all respects and shows the producer’s name, the producer’s file number, the date of delivery of the chicks, the location of the premises on which the chicks were placed, the number of sexed chicks placed, showing pullets and cockerels (including extras), the hatchery or dealer-broker’s name, and the crop quota period in which the chicken will be marketed.
The Background
The parties filed with the Tribunal the following agreed statement of fact:
Garry Sytsma’s farm is located at Lot N½-14, Concession 3, Township of Nanticoke, County of Haldimand-Norfolk. There are 7,000 basic quota units and 15,400 square feet of registered production space in one, two story barn.
That on August 23rd and 28th and September 5th, 1995 during Quota Period A-01 Sytsma produced and marketed 100, 120, and 121 chicken respectively to Lowbank which were not reported to the Board. The total weight not reported was 890 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $972.16 as payment.
That on December 12th, 1995 during Quota Period A-03 Sytsma produced and marketed approximately 94 chicken to Lowbank which were not reported to the Board. The total weight not reported was 227 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $256.51 as payment.
That on April 28th, 1996 during Quota Period A-06 Sytsma produced and marketed approximately 61 chicken to Lowbank which were not reported to the Board. The total weight not reported was 170 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $195.50 as payment.
That on October 2nd, 1996 during Quota Period A-09 Sytsma produced and approximately 44 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 92 kilograms and they received a dollar adjustment to their balance sheet showing a credit of $123.00 as payment.
That on December 1st, 1996 during Quota Period A-10 Sytsma produced and marketed 260 chicken to Lowbank which were not reported to the Board. The total weight not reported was 546 kilograms, and they received a dollar adjustment to their balance sheet showing a debit of $546.00 as payment to Lowbank for processing fees.
That on June 13th, 1997 during Quota Period A-13 Sytsma produced and marketed approximately 20 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 68 kilograms and they received a dollar adjustment to their balance sheet showing a credit of $88.50 as payment.
That on September 9th, 1997 during Quota Period A-15 Sytsma produced and marketed approximately 98 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 212 kilograms and they received a dollar adjustment to their balance sheet showing a credit of $275.59 as payment.
That on November 10th, and 26th, 1997 during Quota Period A-16 Sytsma produced and marketed approximately 87, and 42 chicken respectively to Lowbank which were not reported to the Board. The total weight not reported was approximately 432 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $571.02 as payment.
That on or about December 20th, 1997 during Quota Period A-17 Sytsma produced and marketed 72 chicken to Lowbank which were not reported to the Board. The total weight not reported was 41 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $54.90 as payment.
That on March 4th, 1998 during Quota Period A-18 Sytsma produced and marketed 11 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 35 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $58.50 as payment.
That on May 6th, and 13th, 1998 during Quota Period A-19 Sytsma produced and marketed approximately 50, and 7 chicken respectively to Lowbank which were not reported to the Board. The total weight not reported 192 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $249.60 as payment.
That on July 7th, 15th, 1998 during Quota Period A-20 Sytsma produced and marketed approximately 46, and 41 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 368 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $467.40 as payment.
That on August 7th, 1998 during Quota Period A-21 Sytsma produced and marketed approximately 74 chicken to Lowbank which were not reported to the Board. The total weight not reported was approximately 160 kilograms, and they received a dollar adjustment to their balance sheet of $189.00 as payment.
That on October 5th and 15th and November 13th, 1998 during Quota Period A-22 Sytsma produced and marketed approximately 107, 81, and 19 chicken respectively to Lowbank which were not reported to the Board. The total weight not reported was approximately 446 kilograms, and they received a dollar adjustment to their balance sheet showing credits in the amount of $532.37 as payment.
That on December 3rd, 1998 during Quota Period A-23 Sytsma produced and marketed approximately 103 chicken to Lowbank which were not reported to the Board. The total weight not reported was 171 kilograms, and they received a dollar adjustment to their balance sheet showing a credit in the amount of $213.75 as payment.
That on June 28th, 1999 during Quota Period A-26 Sytsma produced and marketed 353 chicken to Lowbank which were not reported to the Board. The total weight not reported is 919 kilograms, and they received a dollar adjustment to their balance sheet showing a credit of $994.56 as payment.
In total from A-01 to A-26 Sytsma produced and marketed not less than 2,011 chickens weighing not less than 4,969 kilograms, which were not reported to the Board.
The Issue
The issues before the Tribunal are:
Did Mr. Sytsma violate the CFO regulations by producing and marketing chicken without reporting this production to the CFO and without paying appropriate fees and levies?
If Mr. Sytsma did violate the CFO regulations, is a crop quota reduction of 29,814 kilograms an appropriate penalty to apply?
The Evidence and the Findings
Mr. Sytsma told the Tribunal that he and his wife have been chicken producers since 1970. They farm on the 3rd line of Oneida Township in Haldimand Norfolk. He owns 7,000 basic production quota units and his wife also owns basic production quota units. He has been active on the Board of Directors of the CFO and served a term as Chairman in 1976. He was instrumental in the formation of the National Chicken Marketing Agency and considers himself to be a strong supporter of supply management.
He said that, while he signed the agreed statement of fact, there are some minor errors in the statement. For example, it says that his farm is in Nanticoke Township not Oneida. He admitted that he produced the chicken shown on the statement of fact but he denies marketing the chicken. He told the Tribunal that marketing infers that you are doing something to make money and he did not make any money on these chickens. He said that, after the processor has taken the chicken from the barn, there are always a few left. Depending on the crop, the number could be in the 10’s or the 100’s. Some chickens are left behind doors, some get out of the barn and are loose, and some are what he termed runts and are left because the catching crew felt they are too small for the processor to use. These “left over” chickens he placed in a licenced production facility and fed until he had time to take them to the Lowbank processing facility. Lowbank is on a neighboring property (1.5-2 km away) to his production facilities. Lowbank processed these chickens for his use. After the birds are processed by Lowbank, he sometimes retrieved whole birds and sometimes he took boneless breast. He said he did not keep track of the birds in – meat out arrangement but left those details to Mr. Paul Edwards, the owner of Lowbank. He told the Tribunal that Mr. Edwards used a conversion factor to convert the live birds in to a dollar value to keep track of their arrangement.
Mr. Sytsma told the Tribunal that he used the meat from Lowbank for three purposes. The first use was for personal consumption in his home. Over the period in question he said his family consumed 1,522 kilograms of chicken.
The second use of the meat was for serving at his daughters’ weddings. Two daughters were married during this time period. He took boneless breast meat to the caterer in Shelburne to prepare and serve at the first wedding. He took cut up parts to the local high school where the meat was prepared and then served at the second wedding. In total, 1,809 kilograms were used for these two weddings.
The third use of this chicken was a donation of whole birds to the Mission Services in Hamilton. Mission Services provide comprehensive support services to under privileged people. He said that he received an income tax receipt for this donation to cover his out of pocket expenses. He received no personal gain from this donation. In total, he donated 270 birds per year for three years to Mission Services. The total kilograms involved was 1,638.
Mr. Systma told the Tribunal that he went to the hearing at the CFO offices and explained to the Board of Directors that he was embarrassed at being there and being accused of contravention of the regulations. He said he felt persecuted and was emotionally unsettled. It was never his intent to break the rules and that he did not produce this chicken and make any money marketing it. He said he had not asked for approval to use the chicken because he was not marketing the chicken as he understood the meaning of marketing.
In response to questions, Mr. Sytsma told the Tribunal that:
The arrangement he had with Lowbank could be characterized as a barter system. He took in live birds and took out equivalent value in meat product in return.
He did not keep any records of the transactions but relied on Mr. Edwards to keep track.
He did not discuss with anyone whether this production should be reported to the CFO as he felt and still feels he did not market any chicken because he did not make any money on these transactions.
He did not report any of these transactions on his income tax return.
He signed the agreed statement of fact to establish general agreement on the numbers. There are several other things which are inaccurate.
He often receives documents from the CFO but does not read all of them because of the complexity of the legal terminology.
He had not read Section 3 (2) (the personal use exemption clause) of the regulation prior to the hearing.
He paid Lowbank cash for the processing charges.
He has not discussed charity with other producers and how they handle it.
At the Board hearing, he asked verbally for permission to donate to charity and to use his own product for a third wedding and had not received a decision from the CFO.
Mr. Paul Edwards, owner of Lowbank, told the Tribunal that he is been in the chicken business for 25 years, the last 12 years with Lowbank located at Lot 19, Con. 3, Oneida Township. He said that Lowbank is a small processor, buying live product and selling fresh dressed product. Lowbank does not freeze product. He said Lowbank specializes in custom processing. He said producers would schedule small lots – 30 birds or so – and bring them into the plant in the morning and pick up dressed product at night. That is his normal custom processing operation. His processing charge is one of the highest in the industry. For custom processing he charges $2.50 per bird if left in whole bird form, $3.00 per birds if he provides cut up services.
Mr. Sytsma was the first person to welcome Mr. Edwards in 1988 when he bought the Lowbank plant. They have been friends as well as neighbors ever since. He kept a running tab for Mr. Sytsma. Mr. Sytsma would bring in product, he would value it at the current CFO price for the category, process it and Mr. Sytsma would obtain product of equal value when he needed it. No money changed hands in the arrangement and the arrangement with Mr. Sytsma is the only one of this type that he had.
Mr. Edwards said that he had not reported this custom kill to the CFO on a Form 68 and he is not sure if he reported on a Form 68b. Form 68 is used to report to the CFO all processing of chicken that is purchased from licensed producers by a plant. Form 68b is used to report all custom slaughter to the CFO whether the slaughter is for licensed producers or individuals.
Mr. Edwards explained to the Tribunal that when Mr. Sytsma brought in chickens, most were processed and added to the tally sheets, however, sometime this chicken would be recorded on his custom kill ledger sheet as well. He could not explain why only some appear on both records.
Mr. Edwards said that since last summer he reports all of his processing to the CFO on either Form 68 or Form 68b.
In response to questions Mr. Edwards said that:
He did not report any of the transactions between himself and Mr. Sytsma as income.
Lowbank is provincially inspected and processes turkey as well as chicken.
Mr. Sytsma never received turkey products in return for live chicken.
Lowbank can slaughter 1,100 birds per day and normally works three to four days per week. In the fall the workload is heavier.
Lowbank has a retail outlet on the premises.
Payment for processing was a ledger transfer of value, no money changed hands.
A 3-kilogram bird is about ¾ usable meat.
Mr. Chris Vanderkooy, Service and Inspection supervisor for the CFO, told the Tribunal that search warrants were exercised at Lowbank in August 1999. The agreed statement of fact is based on the information obtained during that search. He said that after the search, he met in the Edwards residence with Mr. Edwards and discussed the data that had been seized. The evidence appeared to show violations of the CFO regulations by both registered and unregistered producers.
Mr. Vanderkooy said he then met with Mr. Sytsma and that Mr. Sytsma had told him essentially the same information that was presented to the Tribunal – the chicken was used for charity, home consumption and at two family weddings. After discussions with both Mr. Edward and Mr. Sytsma he drafted the agreed statement of fact and took a copy to Mr. Sytsma for discussion purposes. Mr. Sytsma decided to sign the statement so the case proceeded at the CFO on the basis of the agreed facts without getting into the details of the background evidence.
He said that when the producer chooses to use an agreed statement of fact, the CFO decision reflects consideration of the producer expediting the case. In the Lowbank investigation for first time offenders with an agreed statement of fact, the CFO decided that the producers’ records were to be adjusted to include the unreported production, fees and levies were to be applied and the producers were penalized five times the kilograms involved in the offense.
For Mr. Systma when the unreported production in the agreed statement of fact is included with the reported production an over quota levy is triggered seven times during the 16 periods in question. The total levy is $1,500.
In response to questions Mr. Vanderkooy said that:
The CFO staff interprets the personal use exemption as an amount reasonable for the size of the family that is involved. A family of two or three would be expected to consume less than a family of five or six people. Staff are flexible in that regard.
After the first meeting Mr. Sytsma was cooperative.
Mr. Sytsma appeared to be offended that he had to explain what he had transpired.
The investigation at Lowbank was not targeted at Mr. Sytsma.
While the running balance sheet was a different method of keeping track of these chickens, the end result for the producer was the same as other “black market” chicken investigations he had been involved with.
Staff did not make a recommendation to the Board of Directors of the CFO. The Directors were given the agreed statement of fact.
He had not applied discretion on the unreported production for personal use as he had two sources of evidence – the custom kill journal and the “running tab.” He could not determine if all of the chicken production was accounted for on these records so counted all of the “running tab” as unreported production.
His interpretation of personal consumption use is that a producer takes chicken into the plant and gets his own chicken out of the plant. In this case, Mr. Sytsma took chickens into the plant, received a credit for that production and then later took production out of the plant. The product taken out of the plant was not, in most cases, his own chickens. The running tally was operated like a “meat bank.”
With the agreed statement of fact, the Directors at the CFO took the evidence as a producer admitting that 4,969 kilograms were produced and marketed and not reported to the CFO.
Custom kill is exempt from some items of the regulations but the processor is required to report all custom kill and indicate it as custom kill, not as chicken bought.
Mr. Paul Karges, Vice–Chair of the Board of Directors of the CFO, Director for District 8, told the Tribunal that he has been on the Board for the past two years and four months. He was at the Sytsma hearing before the Board. He said that the Directors saw the arrangement between Sytsma and Lowbank as a meat bank. Live chicken was taken to the plant and for all intents sold – a tally credit was given – then when product was needed, meat was withdrawn – a tally debit was charged. He said that the Directors view custom kill for personal use as a producer taking live chicken to a processor in the morning and picking up the same birds after processing that same day. That is the character of the exemption in the regulations.
He said providing product for serving 225 people at a wedding is not personal use, especially when live birds are exchanged for boneless breast meat. If a producer wants to use their own product for a family function, the producer should report the marketing to the Board on a Form 6, have the birds processed and then supply the product to the function.
Mr. Karges told the Tribunal that the penalty is distinct from the adjustment of producer records. Adjusting the records to include the unreported production is taking back into the record what was already produced. The penalty applied is five times the kilograms involved. He said that all in the industry are aware of the “Watt’s Investigation” and the reluctance of the Tribunal to put a producer out of business. Therefore, the CFO had to deal with penalties in such a manner that the penalty did not bankrupt a producer. Once the violations involved with Watt’s had been dealt with by the CFO, the Directors decided that the minimum penalty for unreported production would be five times the kilograms involved. He said this was a significant penalty for first time offenders and would be increased by the Directors for repeat offenders or multiple offences. He said how payment is made for the unreported production is not as significant to the Directors as the plan to deceive the CFO. He said that one producer involved with the Lowbank investigation had been penalized under the Watt’s investigation. This producer had less than 1,000 kilograms unreported in the Lowbank investigation but the Directors cancelled basic quota for this repeat offence.
Mr. Karges said that the Directors feel that the producers should be aware of the regulations. They have been more lenient with a new producer – someone in business for less than a year, but with long-term producers, ignorance is not an excuse.
In response to questions, Mr. Karges said that:
The Directors use as a guideline a minimum penalty of five times the kilograms involved in an infraction. This was discussed at the district meetings but has not been printed and distributed to producers.
The exception for personal use is for consumption on the producer’s premises – a whole chicken is taken to the plant and the same whole chicken is returned to the producer.
The Directors were concerned that the records show custom killing separate from that shown on the “tally sheet.”
This is the first time that he has dealt with charity as a Director. The regulations say that marketing is to be reported to the CFO. He said that, in his opinion, if someone markets to a charity it has to be reported. This is marketing and the producer should know it is marketing.
The regulations cannot be comprehensive enough to cover every eventuality. He interprets the regulation to say that once a chicken leaves the farm it is marketed.
There was no desire among the Directors to make an example of Mr. Sytsma. The Directors saw this case as a well documented “meat bank.” This was not something seen before and the Director’s were not sure what the motive is behind it, but felt this was unreported marketing. The Director’s saw no mitigating circumstances to use to justify reducing the penalty from the minimum.
The Director’s did not see or suggest malicious intent in this case.
In his summation, Mr. Folkes argued that this is an unusual case and clearly different than the other instances of “black market” chicken the CFO has dealt with. While the method of tracking is unusual, it is clear that the chicken involved in this case was for charity, for personal consumption and for family functions. He said that the definition of marketing in the regulation implies there must be some commercial use. For home consumption there is a specific exemption. The regulation does not deal with charity and use for extended family. He argued that it is reasonable to find that some of the production was used for personal consumption and clearly should be exempted from the reporting requirement. He argued that, if it is found that this production was marketed, a more appropriate penalty would be a warning and then a directive to all producers on how the use of product for family functions and charity are to be handled.
In his summation, Mr. Spurr argued that this is a case where chicken was marketed within the meaning of the regulations. It is not a case of custom kill; it is a meat bank where a producer inputs live chicken when it is available and withdraws processed product when needed for the producer’s purposes. It is a commercial transaction in that while money may not have been spent, money was saved. It is a carefully documented arrangement showing delivery of live birds, a banking exercise, an evaluation placed on the chicken and draws on the credit. It is carefully recorded because it is a commercial transaction. Mr. Spurr said that while the donation to Mission Services is a laudable cause, a licensed producer has a privilege that excludes everyone else without quota from producing and marketing chicken. That privilege has obligations. When a producer wants to supply a charity or a family wedding, the producer is obligated to report the production on Form 6. If the producer did not understand this, then a reasonable producer would see that the action was unusual and would have asked what the procedure should be. This arrangement was only discovered because of a search warrant. It was not disclosed to the CFO. He argued that the agreed statement of fact states that the marketing took place and Mr. Sytsma agreed. That is the starting point for the CFO and the Tribunal. Since the marketing is admitted, the issue to be determined is the penalty. Mr. Spurr said that those involved in the Lowbank investigation received a minimum penalty of five times the kilograms involved. This is an appropriate penalty to apply in the circumstances of this case.
The Tribunal examined the evidence filed and submissions made. While the CFO characterized this as a commercial relationship between the parties, the Tribunal believes it was an arrangement between two friends who set up the “meat bank” in a fashion that worked for them and then convinced themselves that it was an appropriate arrangement. For the vast majority of the entries in the “bank” the custom slaughter charge that Lowbank charges is more than the live weight value of the birds that Mr. Sytsma brought to be slaughtered. Obviously there is some other motive than profit in the arrangement.
Mr. Sytsma has been on the Board of Directors of the CFO and therefore ought to know what the regulations say. He produced chickens and marketed to a processor and while he was not paid dollars for this production the benefit took a different form. The Tribunal sees no reason to eliminate the exemption for home use by Mr. Sytsma in this case. Mr. Sytsma claimed 1,522 kilograms as home use and the Tribunal will allow him that amount as exempted production.
The Tribunal agrees with the CFO that Mr. Sytsma received a benefit from the production used at the family weddings and decided that this production should have been reported to the CFO in the normal manner. This 1,809 kilograms is to be treated as unreported production with the normal adjustment to Mr. Systma’s production records and a penalty for not reporting applied.
The Tribunal feels that charity is a noble endeavor and should be encouraged when possible. However, the CFO has no clear policy to deal with charity. The Tribunal agrees with the CFO that a reasonable producer ought to have ascertained what the policy said before beginning charitable donations unless the producer followed the normal reporting required for all other production, then made the donations. However, since this is the first instance of this type that the CFO has had to deal with, the Tribunal feels that the penalty applied should be somewhat mitigated. The Tribunal finds that the 1,638 kilograms donated to charity should have been reported.
Decision and Reasons
After careful consideration of the evidence filed and submissions made the Tribunal decided to partially grant the appeal.
The reason for this decision is that the Tribunal was convinced by the evidence that there are sufficient mitigating circumstances in this case to moderate the penalty applied by the CFO.
ORDER OF THE TRIBUNAL
The Tribunal orders the CFO to amend the production records of Garry Sytsma by:
Treating 1,522 kilograms of the production recorded in the ledger maintained by Lowbank as personal consumption exempt from reporting.
Treating 1,809 kilograms of the production recorded in the ledger maintained by Mr. Edwards and used by Mr. Sytsma at family functions as unreported production. The production record of Garry Sytsma is to be adjusted by including this 1,809 kilograms of production, levies and fees are to be applied. As a penalty for not reporting this production, the crop quota of Garry Systma in Quota Period A-38 is to be reduced by the sum of (1,809 x 5) 9,045 kilograms.
Treating 1,638 kilograms of the production recorded in the ledger maintained by Mr. Edwards and used by Mr. Sytsma as a charitable donation as unreported production. The production record of Garry Sytsma is to be adjusted by including this 1,638 kilograms of production, levies and fees are to be applied. As a penalty for not reporting this production, the crop quota of Garry Systma in Quota Period A-38 is to be reduced by the sum of (1,638 x 1) 1,638 kilograms.
Dated at Guelph, Ontario this 28th, day of August, 2000.