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:

Lesy v Agricorp

Lesy v Agricorp 2002 ONAFRAAT 14

STATUTE:

Crop Insurance Act

HEARING:

March 7 and 8, 2002

DATE OF DECISION:

April 8, 2002

2002-14

NEUTRAL CITATION:

2002 ONAFRAAT 14

Lesy v Agricorp

IN THE MATTER OF: Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) 1996, S.O. 1996, C. 17, Schedule C.

AND IN THE MATTER OF:

An Appeal to the Agriculture Food and Rural Affairs Appeal Tribunal by Paul and Denise Lesy, Blenheim, Ontario, Ted Vercouteren, Blenheim, Ontario and Paul Vercouteren, Blenheim, Ontario from the decisions of AGRICORP to deny their claims concerning the re-planting of Black Tobacco crops in 2001.

Before:

Murray Cardiff, Chair ; Terry Denison, Vice Chair; George Klosler, Member

Appearances:

Thomas Warwick, counsel to the appellants

Peter Wechselmann, counsel to the respondent, AGRICORP

Paul Lesy, appellant

Denise Lesy, appellant

Ted Vercouteren, appellant

Paul Vercouteren. Appellant

John Tunks, AGRICORP

Harry Fraser, AGRICORP

James English, witness

Ron English, witness

Diane Beaton, witness

DECISION OF THE TRIBUNAL

This appeal was heard in Ridgetown, Ontario on Thursday, March 7, 2002 and Friday, March 8, 2002. The appellants appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the Tribunal) decisions of AGRICORP regarding re-planting claims under the Crop Insurance for Black Tobacco plan in the 2001 crop year. All witnesses were sworn.

Preliminary and Interlocutary Motions

At the outset of the hearing into this matter, Mr. Peter Wechselmann asked the Tribunal to dismiss the claim of Paul and Denise Lesy. He said Paul Lesy had admitted to re-planting black tobacco after the planting deadline of June 20, 2001 and was thus ineligible for crop insurance. He also said that Mr. and Mrs. Lesy did not have the prior consent of AGRICORP and their processor to re-plant the crop and this was also a violation of their policy. Mr. Wechselmann referred the Tribunal to the following sections of the Crop Insurance Policy contract of Insurance:

Part VIII F. The replanting must be completed by the dates specified in the applicable crop insurance document.

Part I J.1. If loss or damage occurs to an insured crop, the Insured shall not abandon, destroy, reseed or replant the acreage or use it for another purpose without the prior consent of AGRICORP. In addition, a processing crop may not be abandoned or destroyed or put to another use without the prior consent of the processor with whom the insured has a processing contract in respect of the insured crop.

Mr. Paul Lesy testified that John Tunks, AGRICORP adjuster, had informed him that the deadline for replanting was extended to June 25th in some circumstances and that he replanted after June 20th on that basis. He said he understood that his claim was denied because of a dispute over whether or not an insured peril caused the damage and the planting deadline had not been referenced. He said Mr. Tunks did not view the crop but invited him to attend a meeting on June 25, 2001 to discuss his claim.

Mr. Wechselmann also moved that Mr. Ted Vercouteren’s contract of insurance be declared void as he had breached the Crop Insurance Act (Ontario). He noted that Section 5(4) of the statute states:

AgriCorp shall not enter into a contract of insurance with a person to insure an agricultural crop or a type of perennial plant if,

(a) the contract insures less than the entire crop or all the plants of the type of perennial plant, as the case may be, in respect of which the person could enter into a contract of insurance under this Act; or

(b) a contract of insurance is already in effect to insure the crop or the type of perennial plant, as the case may be, in which the person has an interest. 1996, c. 17, Sched. C, s. 5.

Mr. Wechselmann said Mr. Ted Vercouteren initially insured only 7 acres of his crop, then attempted to add 9 acres (75% of a 12 acre crop grown with Mr. Malcolm O’Brien), then later indicated that the 12 acre parcel should be in Mr. O’Brien’s name only. He said it was clear that Mr. Vercouteren was in a landlord/tenant arrangement with Mr. O’Brien and Mr. Groenewegen and that he had failed to report all of the acres of tobacco he grew in 2001.

Mr. Ron English, Imperial Tobacco fieldman, testified that the processor had a growing contract with Mr. Ted Vercouteren and Mr. O’Brien concerning the 12 acres of tobacco in question, and that if the crop were purchased a single cheque would be issued in both names. He said there was a similar arrangement with Mr. Vercouteren and a Mr. Groenewegen regarding the 7 acres of tobacco insured by Mr. Ted Vercouteren.

Mr. John Tunks, AGRICORP adjuster, testified that he understood that Mr. Ted Vercouteren and Mr. Groenewegen had an arrangement by which Mr. Vercouteren grew tobacco on 7 acres of land owned by Mr. Groenewegen and his brother. He said the proceeds of the crop were split 75%:25% and that this arrangement had been in place for anumber of years. He said that on June 25, 2001 he was informed that Mr. Vercouteren also had an interest in the tobacco grown on Mr. O’Brien’s property. Mr. Tunks said his job was to adjust claims, not draft contracts, but that he had advised Mr. Vercouteren and Mr. O’Brien as to how to report their tobacco acreage. He said he had never advised Mr. Vercouteren that there was anything wrong with his reporting of the 7 acres grown on the Groenewegen land.

Mr. Ted Vercouteren said he had always viewed his arrangement with the Groenewegen brothers as a rental agreement. He said they had no interest in growing tobacco but wanted their name on the contract so that their land could continue to be used for tobacco if he decided not to grow it in the future. He confirmed that he paid the landowners 25% of the proceeds from the sale of the crop each year.

Mr. Vercouteren said the tobacco grown on the O’Brien land was originally reported under Mr. O’Brien’s name but that, on the advice of Mr. Tunks, his wife changed it to report 9 acres in his name and 3 acres in Mr. O’Brien’s name. He said it was changed back after the meeting of June 25, 2001, also on the advice of Mr. Tunks. He said he assumed Mr. Tunks was representing AGRICORP.

Mr. Jim Zavitz, AGRICORP said the amount of premiums collected in this case were the same as if the acreage had been reported correctly, but that premiums could be affected by improper reporting if the growers had different surcharges.

Mr. Warwick made a motion asking the Tribunal to order the disclosure of a tape of a meeting held on June 25, 2001 at Ridgetown College. Mr. Wechselmann said the meeting was not taped. All of the appellants testified that the meeting was tape recorded by Mr. Harry Fraser. Several witnesses called by AGRICORP said they did not see a tape recorder at the meeting. Mr. Fraser testified that he had never taped a meeting with any client and that he did not tape the meeting of June 25, 2001.

At the conclusion of the appellants’ case, Mr. Wechselmann moved that the appeals be dismissed on the grounds the appellants had not proven that an insured peril was responsible for damage to the tobacco plants. The Tribunal denied that motion and reserved judgement on the other motions.

Background

Section 10 of the Crop Insurance Act (Ontario), 1996, states:

Referral of disputes

10. (1) If AgriCorp and a person disagree whether the person qualifies for a contract of insurance, except if the disagreement relates to the time during which a person may apply for a contract of insurance or file a final acreage report or its equivalent, or if AgriCorp and an insured person fail to resolve a dispute arising out of the adjustment of a claim under a contract of insurance, either may appeal the matter in dispute to the Tribunal.

Notice of appeal

(2) To appeal a matter in dispute, the appellant shall file a written notice of appeal with the Tribunal and send a copy of the notice to the other party within the time specified by the regulations made under this Act.

Exclusive jurisdiction

(3) The Tribunal has exclusive jurisdiction to hear and determine all appeals arising under subsection (1).

Decision binding

(4) The decision of the Tribunal in an appeal is binding on the parties. 1999, c. 12, Sched. A, s. 7 (2).

The Issues

The issues before the Tribunal are:

1. Was the damage to the tobacco crops of any of Paul and Denise Lesy, Ted Vercouteren or Paul Vercouteren caused by an insured peril?

2. Should the claim of Paul and Denise Lesy be disallowed as the crop was replanted after the planting deadline?

3. Should the claim of Ted Vercouteren be disallowed due to inaccuracies in reporting the number of acres of tobacco grown by the appellant?

4. Should the claims of any of the appellants be disallowed on the grounds that the crops were replanted without the permission of AGRICORP or the processor?

The Evidence

Mike DeBrouwer, witness

Mr. Mike DeBrouwer testified that he was a cash crop and hog producer, had grown black tobacco for 17 years and was the second largest black tobacco grower in Ontario. He told the Tribunal:

• He purchased tobacco plants from Ted Vercouteren and one other supplier in 2001.
• He had used Vercouteren plants for 10 years with no problems.
• He had a claim for reseeding black tobacco in 2001 which AGRICORP paid.
• Weather varies from farm to farm. His farm is approximately 3 km from the Vercouteren farms and 20 km from the Lesy farm.
• His farm has sandy loam soil; the soil is similar to that on the appellants’ farms.
• Spring 2001 was delayed; it was wet and cold until well into June.
• Tobacco is a very weather sensitive crop.
• The Vercouteren seedlings were planted the last week of May. He called AGRICORP on June 11, 2001 to file a reseeding claim. The plants were not frost damaged but were damaged by rain and cold weather.
• His plants were stunted and wilted. Some had disfigured leaves and there was a problem in the plant hearts. The colour was unusual.
• His field is tile drained; there was damage throughout the field.
• His processor released the crop.

Paul Lesy, appellant

Mr. Paul Lesy told the Tribunal he had farmed for 20 years and that he had 275 acres split between black tobacco, popcorn, seed soybeans, seed wheat and commercial corn. Mr. Lesy told the Tribunal:

• His tobacco was grown on silty sandy loam which is systematically tile darined; wheat had been grown on the land in 2000.
• He said he had not used the pesticide Banvel on the tobacco field or any surrounding fields.
• Fertilizer was not applied until 2-3 weeks after tobacco plants exhibit growth.
• He had bought seedlings from Mr. Ted Vercouteren for five years without any problems.
• He started planting tobacco on June 7, 2001. There were delays due to rain but he finished planting on Jun 12, 2001. Normally he plants tobacco in late-May.
• Planting conditions were not ideal on June 7, 2001.
• Weather conditions vary in the area. His crop is close to Ridgetown which had greater temperature fluctuations than Shrewsbury. Ground temperatures in Ridgetown were cold when he planted his tobacco seedlings.
• The weather stayed wet and cool at night after his seedlings were planted, but daytime temperatures were very high and this fluctuation stressed the plants.
• His plants were somewhat yellow. Mr. Ron English, Imperial Tobacco viewed the field and could not identify the cause.
• He called AGRICORP to report the damage the day after he spoke to Mr. English.
• Mr. John Tunks. AGRICORP told him that there was no need for him to inspect the field. Mr. Tunks said if there was chemical damage the processor would not accept the crop.
• At a meeting held June 25, 2001, Mr. Harry Fraser said that if tests of plant tissue came back negative for chemical damage, AGRICORP would have to pay the claims of the Lesys and the Vercouterens.
• At a meeting held August 31, 2001, AGRICORP representatives indicated the claims would be paid if Mr. Ron English signed a form. Mr. English would not sign the form unless Mr. Tunks signed it first.
• Imperial Tobacco took the view that it had a growing contract with Mr. and Mrs. Lesy, not a processing contract.
• AGRICORP denied his claim as it could not determine that an insured peril caused the damage, the symptoms of the crop did not indicate cold weather and it suspected chemical damage.
• In his view, 2,4-D damage would have been identified by Mr. Ron English when he inspected the field, as he was very experienced with black tobacco.
• It cost more to replant tobacco seedlings than the maximum amount that AGRICORP will pay in insurance.
• The original seedlings looked healthy when planted; only family labour is used to plant and they would have noticed if there were damaged plants.
• He left one row with approximately 300 of the original seedlings but replanted the rest of the field. The row that was left was harvested but the plants were stunted and yielded approximately half the leaf that the second planting tobacco plants produced.
• He had read part of the insurance contract but not all the fine print. This was his first claim.
• He believed cold, wet weather was the cause of damage to the tobacco plants.
• He reported the damage on Saturday, June 16, 2001. The AGRICORP call service person told him he would be contacted.
• He knew AGRICORP had to give him permission to replant. Mr. Tunks told him the deadline could be extended beyond June 20th. He replanted June 23rd, the first day replacement plants were available.
• He also replanted the soybean field next to the tobacco field. It was not insured.

Denise Lesy, appellant

Mrs. Denise Lesy testified that she concurred with Paul Lesy’s testimony. She said she attended the June 25, 2002 meeting with AGRICORP representatives, Ted Vercouteren, Paul Vercouteren and Imperial Tobacco representatives. She said that at the end of the meeting it was agreed that plants and water sources would be tested for chemicals and if the tests were negative the Lesy and Vercouteren claims would be paid. She recalled that AGRICORP representatives indicated they would have to calculate the amount of her claim.

Mrs. Lesy said she thought cold weather stressed the tobacco plants. She said there was a significant amount of rain in late May and part of the field flooded twice. She said it took one day for the floods to drain from the field. She did not think frost was a factor.

John Clark, witness

Mr. John Clark testified that he was Mr. Paul Vercouteren’s father-in-law. He said he was present on Mr. Paul Vercouteren’s farm when an AGRICORP representative discussed replanting the crop. He said that the AGRICORP representative advised Mr. Vercouteren not to rip up more than he could replant in one day, in case the weather turned wet. He also identified photographs he had taken of the tobacco seedlings.

Mr. Clark said he was on the Vercouteren farm to help out how he could. He said the AGRICORP adjuster Mr. Tunks was on the farm when he arrived, shortly after lunch. He said there were no plants on the farm at the time and that they did not start replanting until 5:00 p.m. or 5:30 p.m..

Bruce Carroll, witness

Mr. Bruce Caroll testified that Mr. Ted Vercouteren rents a greenhouse on his property to grow tobacco plants and that his pond is the only source of water for that greenhouse. Mr. Caroll said the pond was re-dug in 1995 and that there is a stream near the pond that does not enter the pond. Mr. Caroll said that he uses the same pond to irrigate greenhouse flowers that he grows for the wholesale market. He said he grew flowers from the fall to the spring each year and that his harvest is finished by May or June.

Mr. Caroll said he did not believe the pond was contaminated with pesticides as this would be evident in the flowers, particularly impatiens as they are very sensitive to chemicals. He said he also grew nicotina, a flower that is related to tobacco. He said he thought chemicals would have a similar effect on tobacco as on flowers.

Ted Vercouteren, appellant

Mr. Ted Vercouteren told the Tribunal he had farmed for 37 years on the same farm and had grown black tobacco since 1984. He said that in 2001 he grew 19 acres of black tobacco; 12 acres with Malcolm O’Brien and 7 acres with the Groenewegen brothers. Mr. Vercouteren sais he cash cropped 11 9 acres in total.

Mr. Ted Vercouteren told the Tribunal:

• He has grown tobacco plants from seed since 1986. Mr. Jim English, an agent of Imperial Tobacco is his seed supplier.
• He did not believe there was anything wrong with the tobacco seed although the germination rate was not the best. The seed was not foundation seed but was probably certified seed.
• He rents one greenhouse from Mr. Caroll and has two others on his own farm.
• The Carroll greenhouse was used to supply Mr. DeBrouwer and Mr. and Mrs. Lesy. Some seedlings from his own greenhouses were sold to Mr. and Mrs. Lesy as well.
• His own greenhouses are irrigated with water from a stream-fed pond on his property.
• He did not test the stream or pond before using it. He agreed it was possible that chemicals could have leached into the pond, but said this would have been evident in the greenhouse.
• He had never had a pesticide problem in his pond.
• He uses Furban and a water soluble 20-20-20 fertilizer in the greenhouses. The fungicide is applied with a backpack sprayer which he purchased new, and which is not used for any other purpose.
• He has never had a disease in the greenhouses but has had ant problems and has used ant traps.
• He had a problem with cauliflower heads on tobacco plants in the Carroll greenhouse as workers had clipped some plants too short; those seedlings were never planted.
• His wife discussed this problem with Diane Beaton, OMAFRA tobacco specialist. He understood Ms. Beaton would consult with colleagues and call back.
• He sourced seedlings from another grower to put in his second crop.
• He did not need to reseed any of his other crops in 2001.
• He had wet weather from mid-May to June 2001. He started planting on June 5, 2001 under an overcast sky. The temperature was cool, but not too cool to plant tobacco.
• His soil is sandy loam and the land is systematically tiled.
• Mr. Tunks inspected his field on June 16, 2001 and said there was definitely something wrong with the plants in the field. He also looked in the greenhouse and in Paul Vercouteren’s field.
• Mr. Tunks gave permission to re-plant and advised him not to rip up more seedlings than he could replant in a day. He finished replanting his crop and his son Paul Vercouteren’s crop on June 19, 2001.
• Mr. Tunks later called Mr. Paul Vercouteren and told him that he had not told him to rip up the tobacco.
• He, Mr. Ted Vercouteren than called Mr. Tunks and was informed that the replanting of the crop was not covered by insurance, asked him if he had anything in writing regarding permission to replant and advised him to speak to Mr. Harry Fraser.
• Mr. Paul Vercouteren called Mr. Fraser and they agreed to meet on June 25, 2001.
• At that meeting, after much discussion it was decided that AGRICORP would analyze the Lesy plants and the Vercouteren water source at its expense and if it was positive for chemicals there would be no payment, otherwise the claims would be honoured.
• He attended a meeting with Mr. Jim Zavitz, AGRICORP on August 31, 2001 and was told to get third party verification for his claim and have a form signed by Mr. Ron English.
• He believed that Mr. English was prepared to sign the form, but it was not the usual form and he had to check with his employer. Mr. George Howard, Imperial Tobacco advised that the tobacco was not its crop until the company buys it and that it was not the proper procedure for the company representative to sign the form.
• AGRICORP denied his claim as it was unable to determine that an insured peril was responsible for the damage and as the processor must give prior consent before the crop is abandoned.
• His replanting cost exceeded $315/acre, the maximum rate AGRICORP will pay.
• He first noticed a problem on June 12, 2001. He consulted with Mr. Ron English and then decided to allow the plants an opportunity to ‘grow out of it’. By June 16th, there had been no improvement and AGRICORP was contacted.
• He had not made a decision to replant before meeting with Mr. Tunks, but had made inquiries into the availability of plants and planters.
• Some of the DeBrouwer plants that were replaced were from his greenhouse.
• He believed the plants were stressed from the cold but not frost damaged.
• Plants in low lying areas of the Lesy field were more damaged in low areas than in high areas. This pattern was not apparent in his field, but his land is flatter than the Lesy field.

Paul Vercouteren

Mr. Paul Vercouteren testified that he farms with his father, Ted Vercouteren, and that they share equipment. He said he had grown black tobacco for 12 years, had always purchased plants from his father and had never had a problem in the past. He said he grew 32 acres of black tobacco in 2001, as well as 250 acres planted in corn, beans and wheat. He said seed corn and soybeans were planted in fields adjacent to his tobacco land in 2001 and the tobacco field had been planted in tobacco the year before. Mr. Vercouteren indicated his soil type is heavy loam and his land is randomly tiled.

Mr. Paul Vercouteren read a statement into the record describing conditions at planting time, his interactions with Mr. John Tunks and meetings he attended on June 25, 2001 and August 31, 2001. He said Mr. Tunks gave him two options when he viewed the damaged plants – leave them in and take a chance or wait until Mr. Tunks could have experts view the crop. He said Mr. Tunks then advised him not to destroy any more tobacco than he could replant in one day and wished him luck.

Mr. Paul Vercouteren also told the Tribunal:

• He agreed with his father’s testimony.
• He had researched the tobacco industry on the Internet and found photographs of weather damaged plants with symptoms similar to his plants. These included elongated leaves and thickened leaves.
• AGRICORP denied his claim because it was unable to determine that an insured peril was responsible for the damage and because the processor did not give prior consent to rip up the crop.
• His replant bill was $21523.40 for 52 acres. His insurance coverage is $315/acre.
• His drainage is fair. It is good enough for black tobacco.
• The weather was not too cool for tobacco when he first planted in 2001. The planting conditions were not ideal.
• He thought the plants should have taken off faster than they did. He was not familiar with cold stress.
• He suggested to Mr. Tunks that the plants might have been damaged by road spray. Mr. Tunks said he did not think that was the case as the plants close to the road were no more damaged than the others.
• He also suggested cold weather and excess moisture may have caused the damage.
• He understood that his claim would be paid if the tests commissioned by AGRICORP showed no chemicals in the water or plants.
• He believed his initial planting was similar to the DeBrouwer initial planting.

Denise Beaton, witness

Ms. Denise Beaton testified that she was a tobacco specialist with the Ontraio Ministry of Agriculture, Food and Rural Affairs. She said she had little experience with black tobacco as her expertise is flue-cured tobacco. She said she had a degree in biology and experience working at a research station.

Ms. Beaton told the Tribunal:

• She would expect black tobacco and flue-cured tobacco to have a similar response to chemicals.
• She could not diagnose the problem with the Vercouteren seedlings in early June as she did not have photographs of the plants.
• Cauliflower head, the problem described to her by Mrs. Vercouteren, means there are many leaves in the centre of the plant. It can be caused by chemical or physical injury.
• Other symptoms forwarded to by Mr. Townsend included: yellow crowns, new leaves knuckled, rippled edges, heart drying up and tip turning black on plants in two different greenhouses. She could not determine the cause of the damage on receiving this information.
• She visited the Lesy farm on June 27, 2001. The tobacco had strappy leaves and rat-tails. The damage was less severe as the elevation rose.
• She recommended testing for dicamba injury as rat-tail is a symptom of exposure to that chemical. The tests came back negative for dicamba. She consulted with a colleague who told her that dicamba damage was often undetected by testing.
• Based on weather records, the temperature was not too cool for tobacco at the time the appellants’ crops were planted. There was little rain and it should not have caused damage to the tobacco plants, unless there was already water standing in the field.
• She could not conclude the cause of the damage to the tobacco on the Lesy farm. If it was a weather related problem, she would expect more claims, provided planting dates were the same and the quality of the seedlings was similar.
• She would suspect a greenhouse problem if only three claims were made and all the plants were souced from the same greenhouse.
• There were considerable differences in weather in Shrewsbury and Ridgetown in Spring 2001.
• Ground temperature can affect plants. She concentrates on air temperature.
• She has not seen rat-tail on plants damaged by cold weather or excessive rain.
• Elongated, yellow leaves are a symptom of chill injury. Leaf knuckling over canalso indicate weather related damages.
• Photos of the damaged plants did not show symptoms of cold injury.
• Wet ground would not exacerbate the effect of cold weather and the water would insulate the plant.
• She had never seen dicamba damage. Her colleague who had seen dicamba damage did not view the Lesy crop in the field but did examine one plant which was characteristic of the row.
• Dicamba is in Banvel 2, a chemical not licensed for use on tobacco. The chemical residue lasts for 30 days.
• She was unsure of the stability of dicamba in water.
• A small amount of chemicals can damage tobacco.

James English, witness

Mr. James English stated that he was a farmer but worked part time for Imperial Tobacco measuring acreage and distributing seed. He said he sold three varieties of seed to Mr. Ted Vercouteren. He said he had 27 customers for seed in total and none had complained about the seed in 2001.

Mr. English said he was present at a meeting between the appellants and representatives of AGRICORP on June 25, 2001. He said he had no recollection of a deal by which the appellants’ claims would be paid if the chemical testing proved negative. He said such a deal would be unusual. He said that AGRICORP usually requires the identification of a cause of loss before signing off and the processor usually signs off after AGRICORP. Mr. English said no one at the meeting could identify the exact cause of loss. He said he attended the entire meeting.

Ron English, witness

Mr. Ron English told the Tribunal he was a fieldman for Imperial Tobacco and that he had grown black tobacco from 1973 to 1980. He said he had 59 fired black tobacco growers as well as some air chilled growers.

Mr. English said he was at the meeting held June 25, 2001 but that he left a short time before the end. He said he suggested testing the plants on the Lesy farm for chemicals. He said he heard AGRICORP representatives state they would need to find another avenue for the cause of loss if the chemical tests were negative. Mr. English said that tobacco plants damaged by chemicals would dry up and die.

He concurred with earlier testimony that planting conditions in early June 2001 were not ideal for black tobacco but that it was not too cold to plant tobacco. He said his farm was located between the Lesy and Vercouteren farms, closer to the Vercouteren farms. He said that weather would be comparable on his farm and the appellants’ farms. He said Spring 2001 started out cold and wet but then turned very hot.

Mr. English also indicated:

• He frequently drives around the black tobacco growing area and did not see any problems on the fields, except for the appellants’ fields.
• Most of the 2001 tobacco had been shipped and that Imperial Tobacco did not reject any of it. The company’s customers had rejected some tobacco due to poor stripping.
• He viewed the appellants’ tobacco fields and saw long leaves but could not name the cause. His advice was to allow the plants an opportunity to grow out of it, and claim on reduced yield if they did not.
• Imperial Tobacco representatives normally sign off on black tobacco crops after AGRICORP and the insured grower agree on the cause of loss and the AGRICORP representative, Mr. Tunks signs the form.
• He was asked by the appellants to sign a blank form and could not do so.
• He did not see the DeBrouwer plants that were destroyed but the field was noticably wet and rutted.
• He still did not know what caused the problems in the appellants’ tobacco crops.
• The appellants’ crops were stressed.
• He saw the row of early plants left by Paul and Denise Lesy at harvest. Other plants in the area looked worse. There were no other growers near the Lesy farm.
• He was under the impression the June 25, 2001 meeting was held to resolve the claims issue.
• With weather related damage, usually some areas of the field are more affected than other areas.
• All growers in the area planted at approximately the same time in 2001.

John Tunks, AGRICORP

Mr. John Tunks told the Tribunal he had been employed part time by AGRICORP as an adjustor since 1982 and that for the past eight years he had also been certified to adjust crop failure claims due to failed herbicides.

Mr. Tunks said:

• AGRICORP did not authorize him to allow payment of crop insurance claims if no cause of loss could be determined.
• He did not tell the appellants that their claims would be paid if the chemical tests were negative.
• He inspected the Vercouteren crops on June 16, 2001 and ruled out road drift as a cause of damage.
• Both Paul Vercouteren and Ted Vercouteren had a good stand of plants but all had the same symptoms – ratail, cauliflower head and cupping. The roots were fine.
• He ruled out wind, compaction, frost and group 2 pesticides as causes for loss.
• He thought water contamination might be the problem but he would have expected to see misses by the sprayer if that were the case. All plants were damaged but some were worse than others.
• He was fairly certain that excess rain was not the problem because the fields were fairly flat and usually tiles rise and plants on rises would not have been damaged. There was no sign of excess rainfall damage to the Vercouteren fields.
• He did not think the symptoms were right for chill damage.
• Insects and disease were also ruled out as causes of the damage.
• He understood Ron English had not authorized Paul and Ted Vercouteren to replant their crops, but they intended to do so anyway.
• He told them not to rip up any more plants than they could replant in one day as thunderstorms were forecast and as they would need to know they had enough replacement plants. He also suggested consulting a specialist.
• He did not give permission to rip up the plants; he was told they were going to replant. He cautioned them not to do anything without the processor’s release.
• In hindsight, he should have told them not to replant.
• Ted Vercouteren told him there were other bad fields in the area but he checked several and was unable to find any with crop damage.
• He did not think the damage to the crop occurred in the field as there were many other growers in the area with no damage. He thought at that time it could be a greenhouse problem, as pesticides could drift into greenhouses and as clipping could cause cauliflower heads.
• He concurred with earlier testimony that there were heavy rains in late May and early June 2001, followed by hot, dry weather.
• No cause of loss was determined at the meeting held June 25, 2001.
• No cause was ever established for the damage to the crops. He still believed the damage must have occurred in the greenhouse.
• Two other growers had replant claims in 2001; both crops were planted in May and were affected by thunderstorms and rain.
• Plants from Mr. Ted Vercouteren’s greenhouse looked fine in photographs. But, the crop can be damaged in the greenhouse and the stress of planting causes the damage to appear.
• There was no sign that 2,4-D had been used near the greenhouse. He checked for dead dandelions.
• He did not learn of the Lesy claim until Wednesday, June 20, 2001.
• He adjusted claims for replanting soybeans planted in early May 2001.
• He had a good working relationship with representatives of Imperial Tobacco.
• Heat units have a bearing on tobacco production. The heat units shown in the weather data provided were cumulative and were sufficient to grow tobacco. The rainfall amounts were not detrimental.
• He did not prepare a written adjuster’s report for his farm visits on June 16, 2001. Normally crop inspections reports are written but growers do not always sign them if they disagree with the adjuster’s opinion.
• He spoke to Mr. Paul Vercouteren and Mr. Ted Vercouteren on June 20, 2001 and informed them AGRICORP could not pay their claims as no cause of damage could be determined.
• He would not have authorized payment of the claims, even if a representative of Imperial Tobacco had signed the AGRICORP form, as he could not name the cause of the damage.
• He wanted to help the growers determine a cause of loss. It was their responsibility to prove that an insured peril caused the damage to their tobacco.
• If the growers had someone credible determine a cause of loss he would have tried to verify this with another expert.

Harry Fraser, AGRICORP

Mr. Harry Fraser testified that he had been employed with AGRICORP since 1988 and had been the Regional Claims Manager for the counties of Essex, Kent and Lambton for four years.

Mr. Fraser told the Tribunal:

• Mr. Tunks called him on June 20, 2001 to report a potential problem with the claims of the three appellants. A meeting was set up for June 25, 2001. At that meeting the appellants were unsure of the cause of loss but suggested chemical drift, cold weather and wet weather.
• He authorized the testing of the Lesy tobacco plants and the Vercouteren water sources. It is very unusual for AGRICORP to commission this testing but he was very concerned that no one was able to determine the cause of loss for the appellants’ damaged tobacco crops.
• He was afraid there would be a rash of claims where no identifiable loss could be determined.
• No deal was made to pay the claims if the tests were negative for chemicals.
• It was said that if the plants and water tested negative for chemicals, that could be eliminated as a potential cause of damage.
• AGRICORP never pays claims without establishing a cause of loss.
• Ms. Beaton collected three plants from the Lesy property and Ron English provided plants from the Vercouteren greenhouse. Ms. Beaton arranged for the plants to be tested. The results were negative for seven chemicals.
• After the meeting with the appellants. Mr. Ron English told Mr. Tunks and Mr. Fraser that he did not believe the damage was weather related and that the claim should not be paid. Mr. Fraser said this information was not brought out at the meeting.
• Ms. Beaton informed him that her colleagues felt the damage was herbicide damage, despite the negative test results.
• AGRICORP gave the appellants an opportunity to have an independent third party verify that the claim was caused by an insured peril. Third party verification was discussed at every meeting. He did not explain what third party verification was as he assumed the appellants knew.
• AGRICORP did not believe cold, wet weather was the cause of the damage.
• Rainfall varies between nearby fields.
• Mr. Ron English was asked to determine the cause of loss but would not. He informed Mr. Fraser that his employer had indicated to him that it was not company policy to sign crop insurance release forms. This was not the practice followed by Imperial Tobacco in the past.
• The AGRICORP policy requires that the processor release the crop before a claim can be paid.
• Mr. Malcolm O’Brien told him that his crop was replanted by Mr. Ted Vercouteren but that there had been no claim. He said the hearts of the plants looked funny from the day they were planted.
• Plants in the field did not look normal in photographs presented.
• He was not aware of the alleged contractual violation by Mr. Ted Vercouteren until their second meeting. He did not learn of the alleged contractual violation by and Mr. and Mrs. Lesy until their appeal was initiated.
• The June 20th planting deadline is firm, but AGRICORP has made adjustments in final planting dates in the past, at the request of associations when a large number of farmers are affected.
• Approximately eight claims were denied in his region in 2001 in total, for a variety of reasons.
• He was aware of claims being denied due to failure to establish a cause of damage on three or four previous occasions.
• The year 2001 was a record year for claims paid by AGRICORP but the claims paid in the Spring were not unusually high.
• AGRICORP staff have no financial incentive to deny claims. The crop insurance program is funded 50% by growers and 50% by government. AGRICORP delivers the program.

Mr. Fraser said the claims of the appellants were denied because:

Reasons for not paying claim were

• AGRICORP was not satisfied an insured peril was the cause of the loss.
• There were only two other claims for replanting black tobacco in the province.
• The original reason given to the adjuster for the loss was spray drift; normally the first reason stated is what happened.
• Mrs. Vercouteren called Ms. Beaton on June 12, 2001 regarding the cauliflower hearts; AGRICORP should have been notified at that time.
• Th appellants could not provide third party verification of their claim.
• The appellants failed to receive the processor’s release of the crop before replanting.
• Mr. O’Brien indicated there was something wrong from the start.
• Mr. Ron English was unable to identify the cause of the loss.

Summations

Mr. Warwick cited a case where it was found that insurance contract in Ontario are not to be invalidated by erroneous statements made in the application unless the statements are material. He suggested the confusion over the ownership of the crops grown by Mr. Ted Vercouteren was not material. He also noted that Mr. Vercouteren and Mr. O’Brien were relying on Mr. Tunk’s advice. With regard to the late planting of the second Lesy crop, Mr. Warwick pointed out the exceptions have been made in the past and he said this was a unique case.

Mr. Warwick said it was hard to believe that there was not an agreement made to pay the appellants’ insurance claims if no chemical residue was discovered. He said that the producers’ claims should have been denied up front if AGRICORP was not going to rely on the test results. He told the Tribunal that photographs of the plants from the greenhouse showed they were healthy and suggest something must have happened due to the unusual weather in Spring 2001. He said that Ms. Beaton was not an expert on black tobacco and there was no proof of chemical damage. He also said his clients had saved AGRICORP money by claiming for replanting, rather than for poor yield. He asked that the claims be paid and a portion of their costs be paid by AGRICORP.

Mr. Wechselmann told the Tribunal that the case cited by Mr. Warwick clearly indicated that if false statements are made that are material to the policy then the contract can be voided. He submitted that requiring producers to report the correct acreage is key to the crop insurance system. He said that all acres must be reported or a producer can split the risk. He said AGRICORP had not cancelled the Ted Vercouteren policy as the issue was under appeal. He said that AGRICORP gave advice as to how to insure based on the information provided and could not be faulted for giving bad advice if incorrect information was provided to the adjuster. He suggested Mr. and Mrs. Lesy did not do all they could have to ensure they could replant the crop before the June 20th deadline.

Mr. Wechselmann said the evidence was that neither AGRICORP nor the appellants could determine the cause of the loss. He pointed out the appellants had suggested any of road spray, excess moisture and/or low temperature could have caused the loss. He also noted that only two reseeding claims were paid in 2001 for black tobacco and that those growers were in different situations than the appellants. He said that both sides of the dispute agreed that the weather was not adverse to planting tobacco at the time the appellants planted their seedlings. He said the appellants’ fields were well tiled. He said that as all the affected plants came from Mr. Ted Vercouteren’s greenhouses, the logical conclusion was that there was a problem with the greenhouse or the water supply. Mr. Wechselmann said that AGRICORP had tried to help the appellants determine the cause of the problem, and the only conclusion it can draw is that the problem was caused in the greenhouse

Mr. Wechselmann said the Tribunal did not have the jurisdiction to award costs.

The Findings

The Tribunal, as a matter of evidence, finds that chemical damage to the tobacco plants was ruled out on the balance of probabilities. The testing of plants and water undertaken by AGRICORP found no evidence of chemical residue. The plants appeared to be healthy in photographs taken after they were removed from the greenhouse.

The Tribunal heard considerable evidence from all of the parties about the effect of weather conditions on the planting and maturing of black tobacco plants. What the evidence showed, both from the weather records introduced by the parties, as well as by anecdotal evidence, is that the Spring 2001 was “backwards” for planting black tobacco. The early part of May was warm. The latter part of May was wet and cool, and overcast. The daily heat units during that period were below the norm. The beginning of June was not ideal. The ground was saturated and did not dry up as in other years so as to permit equipment to be driven on the fields for planting. This caused the planting to be delayed beyond the normal start time. The Tribunal finds, on a balance of probabilities, that the combination of rain late in May, cooler than normal weather, overcast skies and low temperatures at planting time would result in a condition of “excessive moisture”, which is an insured peril under the contract of insurance. This would be so, even though there was not excessive rainfall after the planting dates. The Tribunal accepts that cold weather would exacerbate a moisture problem. The testimony of Ms. Beaton that the plants in a low lying area of the Lesy field were more damaged than plants on higher ground also suggests that excessive moisture was the cause of loss.

The appellants and AGRICORP all referred to a meeting that took place at Ridgetown College on June 25, 2001. The accounts of this meeting confirm some facts and on others there is divergence. Mr. and Mrs. Lesy, Mr. Paul Vercouteren and Mr. Ted Vercouteren all gave evidence that Mr. Harry Fraser informed them at the outset of the meeting that he would be recording the meeting and that he took out a small tape recorder to do so. The appellants subsequently requested that Mr. Fraser provide them with a copy of the recording because they believed that it would prove an agreement reached between the appellants and AGRICORP wherein AGRICORP would pay for testing of samples of tobacco plants and water for chemical residue, and that the appellants’ claims would be paid if the testing was negative for chemicals.

The witnesses called by AGRICORP gave a different account of the meeting held on June 25, 2001. The Tribunal heard from Mr. Tunks, Mr. Ron English, Mr. Jim English and Mr. Fraser. All of these witnesses denied that they had heard Mr. Fraser say he was going to record the meeting or that he had done so. Mr. Fraser emphatically denied that he had taped the meeting, although he suggested that it was possible that the appellants had seen his cell phone on the table and had mistaken it for a tape recorder. He swore that there had never been a tape of the meeting. All of the AGRICORP witnesses confirmed the evidence given by the appellants to the effect that AGRICORP would have testing carried out to determine if the cause of the problem with the tobacco plants was chemical. Where the versions diverged was as to what would happen if the tests were negative for chemicals. The AGRICORP witnesses denied that there was a promise to pay the claims if the chemical tests were negative. The AGRICORP version was that if a chemical test was negative, that would rule out that possibility and leave it open for the appellants to find a cause of loss which was an insured peril under the insurance contract.

Had a tape of the meeting been available for the Tribunal to hear it would have had probative value in resolving the divergence in the evidence about what was agreed to happen if the chemical tests were negative. Mr. Warwick made a motion requesting the Tribunal to order AGRICORP to produce the tape to the appellants. The Tribunal accepts the evidence of Mr. Fraser that the tape was never made. The Tribunal, in making this finding of fact does not discount the honest beliefs of the appellants in their testimony that there was a tape. The Tribunal finds that the appellants’ beliefs were based on a misunderstanding of what was said by Mr. Fraser at the outset of the meeting, combined with his placing a cell phone on the table which was mistaken for a recording device. Given these findings, the Tribunal denies Mr. Warwick’s motion.

The evidentiary value of the tape to confirm or dispel the alleged agreement about what AGRICORP would do if the chemical test was negative is unimportant to the outcome of the appeals.

A letter written by Mr. George Howard, Imperial Tobacco, which was submitted into evidence clearly indicates that the processor did not consider that it had any ownership in the appellants’ tobacco crops and did not consider that its authorization was required in order for the claim to be paid. Given this evidence, the Tribunal finds that it was not possible for the appellants to have the processor approve the replanting of the crop.

The Tribunal finds that the undisputed testimony that Mr. Tunks told Mr. Ted Vercouteren and Mr. Paul Vercouteren not to rip up more tobacco than they could replant in one day could be interpreted as permission to replant their tobacco, even though it may not have been his intent to give this permission.

The Tribunal does not fault Mr. Lesy for not following up with AGRICORP once he reported damage to his crop. The Tribunal finds he did make a reasonable effort to get the attention of AGRICORP but that there was no opportunity for AGRICORP to give him permission to replant before the deadline date, due to the delay in the AGRICORP central office informing Mr. Tunks of the claim. Therefore, the Tribunal has decided to extend the planting deadline for Mr. and Mrs. Lesy only.

The Tribunal finds that the arrangements Mr. Ted Vercouteren had with the Groenewegen brothers and with Mr. O’Brien were sharegrower arrangements. The evidence was clear that the acreage reported by Mr. Ted Vercouteren was incorrect. But, there was undisputed testimony that AGRICORP had accepted that the Groenewegen arrangement was a rental arrangement in the past, and that Mr. Tunks advised Mr. Vercouteren as to how to report the acreage on the arrangement he had with Mr. O’Brien. Mr. Tunks testified that he spoke to all parties involved. The Tribunal finds that Mr. Ted Vercouteren had detrimental reliance on the advice he received from an agent of AGRICORP and is not inclined to invalidate his contract of insurance on the grounds that the acreage was not reported correctly. The Tribunal notes that all acreage was reported to AGRICORP and all acreage was insured. AGRICORP is not to use this reporting error as a grounds to refuse to insure Mr. Ted Vercouteren’s future tobacco crops.

Decision and Reasons

After careful consideration of the evidence filed and submissions made, the Tribunal decided to grant all three appeals for the following reasons:

1. Excessive moisture was responsible for the damage to the appellants’ black tobacco crops.
2. The processor indicated that it did not have a processing contract with the appellants; hence it was not necessary for them to have processor approval to replant the crop.
3. Mr. Tunks’ comments to Mr. Paul Vercouteren and Mr. Ted Vercouteren could reasonably be interpreted as permission of AGRICORP to replant the tobacco. There was no opportunity for AGRICORP to give permission to Mr. and Mrs. Lesy to replant, due to a delay in the reporting of the claim to the adjuster.

Orders of the Tribunal

1. The Tribunal orders AGRICORP to pay the claims of the appellants at the rate of $315.00/acre.
2. The Tribunal orders that the incorrect reporting of acreage by Mr. Ted Vercouteren for the 2001 tobacco crop, and previous crops, is not to be used as a grounds for refusing him insurance coverage in the future.

Dated at Guelph, Ontario this 8th day of April, 2002.