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:
R.N.K. United Agri Inc. et al. v Ontario Flue-Cured Tobacco Growers’ Marketing Board
R.N.K. United Agri Inc. et al. v OFCTGMB 2002 ONAFRAAT19
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
April 19, 2002
DATE OF DECISION:
May 24, 2002
2002-19
NEUTRAL CITATION:
2002 ONAFRAAT19
R.N.K. United Agri Inc. et al. v Ontario Flue-Cured Tobacco Growers’ Marketing Board
IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT.
AND IN THE MATTER OF:
An Appeal to the Agriculture, Food and Rural Affairs Tribunal by R. N. K. United Agri Inc. and Neil Vanelsacker from a decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board dated January 18, 2002, by which it refused to permit the appellants to change their Declarations of 2001 Tobacco Kiln Conversion to reflect additional kilns.
Before:
Murray Cardiff, Chair; Doug Flook, Member; Andy Koopal, Member
Appearances:
Robert Nightingale, counsel to the appellants
Barry Bresner, counsel to the respondent, OFCTGMB
Neil Vanelsacker, appellant
Ronald Robert Wilson, on behalf of the respondent, OFCTGMB
W. Van Heugten, on behalf of the respondent, OFCTGMB
DECISION OF THE TRIBUNAL
This appeal was heard in Guelph, Ontario on April 19, 2002. R. N. K. United Agri Inc. and Neil Vanelsacker appealed from decisions of the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB) dated January 18, 2002, by which it refused to permit the appellants to change their Declarations of 2001 Tobacco Kiln Conversion to reflect additional kilns.
Statutory Context
Section 16 (2) of the Ministry of Agriculture, Food and Rural Affairs Act is as follows:
16(2) Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marking board written notice of the appeal.
The Issues
The issue before the Tribunal is:
Should the appellants be allowed to alter their Declarations of 2001 Tobacco Kiln Conversion to reflect additional kilns?
The Evidence
Appellants’ Case
Mr. Robert Nightingale, on behalf of the appellants, told the Tribunal that due to an error by an OFCTGMB inspector his clients were provided grants for 29 kilns that they converted to indirect heat instead of the 49 kilns owned, operated and converted by the appellants. He said his clients wanted the Tribunal to overturn the OFCTGMB’s decision of January 18, 2002 and grant them $1500 for each of 20 additional converted kilns.
Mr. Vanelsacker told the Tribunal:
His grandfather started the family tobacco farm located in Scotland, Ontario. It is a 150-acre farm with 70 acres of tobacco.
R. N. K. United Agri Inc. was a company formed by his brother Kevin Vanelsacker, his father Ron Vanelsacker and himself.
The family also owned a 120-acre farm, with tobacco on 60 acres.
Up to and including 2000, the family rented other facilities from Jack MacDonald, growing 40 acres of tobacco. There were 8 stick kilns operating in 2000 on the land rented from Mr. MacDonald.
In 2000 the family rented 5 stick kilns from Dean Saltzberry.
R. N. K. United Agri Inc. owned and operated 19 stick kilns and 6 bulk kilns in 2000.
He also owned a separate 80-acre farm where he grows 40 acres of tobacco each year.
His farm owned and operated 11 bulk and 2 stick kilns in 2000.
The stick kilns were all operational, approximately 50 years old and of top quality.
Stick kilns have a concrete foundation and are difficult to move.
Bulk kilns are brought to the premises by the manufacturer and set on concrete foundations.
All the kilns in use in the Vanelsacker operations in 2000 were direct heat kilns.
An OFCTGMB regulation required tobacco to be cured in kilns that had been converted to indirect heat. The marketing board also required that these kilns be located on land owned by the tobacco grower. By regulation, producers were to convert 25% of all kilns in 2001 and 100% of all kilns by 2002. Failure to convert 25% of kilns in 2001 would result in a quota reduction.
The Province of Ontario was providing rebates to tobacco growers who retrofitted their kilns to meet new industry standards. The OFCTGMB administered the rebate program.
In early 2001, he purchased 20 direct heat bulk kilns, and converted them to indirect heat.
Date Purchased
Vendor
No. Kilns
Delivery Date
February 12 2001
Wayne Meachem
2
July 2001
February 21 2001
De Cloet Ltd.
12
July 2001
April 10 2001
Tom Kurcy
6
June 11, 2001
All 20 purchased kilns were used to cure the 2001 crop.
A letter from the OFCTGMB explaining the regulation changes was sent to all tobacco producers on May 3, 2001. A sample of the Declaration of 2001 Tobacco Kiln Conversion form was enclosed.
The May 3, 2001 letter included the statement “… the Board has also determined that, by 2002, the curing facilities for each producer must be located on that producer’s own land”.
On May 10, 2001 the Board inspector, Ronald Robert Wilson arrived at the farm to draw a map depicting the location of kilns.
He informed Mr. Wilson that he had purchased 20 kilns to replace the ones he rented.
The kilns were not fully paid for at that time because they had not yet been delivered.
The inspector would not allow the addition of the 20 kilns to the Declaration form and advised him he would have to “take it up with the Board”.
The original “Ontario Flue-Cure Tobacco Kiln Retrofit and Conversion Rebate Program Application and Claim Form” from both the family farm and his own farm had been altered. The number of kilns identified had been changed. Neither he nor any member of his family had altered the forms.
None of the OFCTGMB’s documentation on the conversion and rebate requirements mentioned that the kilns must be on the farm for 2001. The only requirement is that they be owned by the producer and operating.
Respondent’s Case
Mr. Barry Bresner told the Tribunal that the appeal concerned the funding of the retrofitting of kilns. He said Mr. Neil Vanelsacker and R. N. K. United Agri Inc. were very successful tobacco producers. He suggested that the 20 bulk kilns bought in 2000 were intended to be extra kilns, not replacements. He suggested that the Application and Claim forms may have been altered so as to conform to the Declaration forms.
Mr. Ronald Robert Wilson told the Tribunal that up until September 2001 he was an inspector with the OFCTGMB. He said one of his roles was to verify how many kilns there were on each farm and how many were to be converted to indirect heat.
Mr. Wilson also said:
Mr. Neil Vanelsacker told him he owned 12 kilns of which 11 were to be converted.
Mr. Ron Vanelsacker reported there were 6 bulk kilns to be converted on the R.N.K. farm.
Neither gentleman mentioned the purchase of 20 additional kilns.
In response to questions, Mr. Wilson said:
The purpose of his visit to the Vanelsacker farms was to verify the maps drawn showing the location of kilns.
He did not remember whether or not he was given a copy of the OFCTGMB regulations. He was given an instructional manual.
He did not recall reading the regulations or the procedures for kiln conversion before visiting the Vanelsacker farms.
He was not sure if 100% of the 2002 crop had to be cured by indirect heat or if this curing had to be done on the grower’s own land.
He did not take any notes during his inspection visit.
Nowhere on the 2001 Declaration form does it say the kilns must be on the farmer’s own land for 2001.
He did not read the policy for the rebate program.
He made a mistake when he transposed the map from his notebook to the Declaration form.
Mr. Willy Van Heugten told the Tribunal he was a Director of the OFCTGMB and sits on the Marketing Procedures Committee. He testified that, as a result of concerns over nitrosamine levels in Ontario tobacco, the OFCTGMB required all kilns in Ontario be converted from direct heat to indirect heat by 2002. He said a business plan was created on January 30, 2001 and the OFCTGMB hoped to get joint funding for the conversion from the growers, manufacturers and the federal and provincial governments. He said the approximate cost to convert all the kilns in the province was $80 million, based on a $6,000/kiln conversion cost and an estimate of 13,360 kilns. He said that the provincial government contributed $20 million to the conversion program but that no other funding was forthcoming.
Mr. Van Heugten also told the Tribunal:
The OFCTGMB held district meetings and sent newsletters detailing the conversion requirement and the grant program.
Producers were given a copy of the Declaration form.
In order to qualify for a rebate, producers had to own 10,000 lbs. of market board quota and own the kilns on their own land. The kilns had to be part of the existing infrastructure, not kilns purchased for expansion purposes.
In response to questions, Mr. Van Heugten indicated that:
Another farmer had been granted rebate for kilns which he moved them onto his own farm after filling out his Declaration form. Those kilns were leased with the option to buy.
If the Kurcz kilns had been on the farm and operational by May 9, 2001, when the inspector visited the Vanelsacker farms, they would have been eligible for the rebate.
The Declaration forms were always filled out when the inspector was on the farm. The forms could not be left for the producer to fill out later and mail in.
The rebate funding provided by the government was not intended to be used to convert extra kilns.
Applications for grants in Year 1 are closed. Applications can be made for Year 2 grants until August 2002 but persons/businesses who did not apply in Year 1 cannot apply in Year 2.
Summations
Mr. Nightingale said the pertinent question for the Tribunal to consider was whether or not the appellants qualified for the grants in the first place. He said Mr. Vanelsacker followed the direction of the OFCTGM inspector and was penalized as a result. He pointed out that Mr. Vanelsacker and R. N. K. United could not continue to use the rental kilns because of changes in the OFCTGMB regulations. He said the appellants had to purchase kilns to replace the rental kilns and that all the purchases were made prior to the OFCTGMB designing the program for allocating the provincial funds to tobacco growers. He said Mr. Neil Vanelsacker knew he had to tell the Board what kilns he was using for 2001 yet the inspector would not record the 20 newly purchased kilns. He asked the Tribunal to reject Mr. Wilson’s testimony that Mr. Vanelsacker did not tell him about the additional kilns, as he pointed out Mr. Wilson inspected many kilns in a short time period and it would be difficult for him to remember everything.
Mr. Nightingale submitted that the Tribunal could overturn the OFCTGMB’s decision without disrupting the rebate program since people whom did not apply in the past could not now apply for a grant. He told the Tribunal the appellants qualified for the rebate on all of their kilns as the form does not state that kilns have to be located on a growers’ land in 2001 and the 20 purchased kilns were on the Vanelsacker farms by August 3, 2001. He suggested the appellants were in a similar position to another farmer who had a lease agreement with an option to purchase. He said in that case, kilns were moved to that grower’s property after the Declaration form was signed and that he received a rebate on those kilns. He asked the Tribunal to find that the appellants be entitled to rebate for all their kilns.
Mr. Bresner told the Tribunal that the kiln conversion requirement and the funding program must be kept distinct. He said that prior to funding being available, it was known that 25% of each growers’ kilns had to be converted to indirect heat in 2001, that 100% of kilns had to be converted in 2002 and that all kilns would have to be located on grower’s own farms. He said that the rebate program was based on the infrastructure in place at the time grower’s signed their Declaration forms and that funding was not available to convert rented kilns. He submitted that making a down payment on kilns did not mean they were purchased and ownership is only transferred when payment is made in full. He also noted that Mr. Vanelsacker had not filled in a section on the Declaration forms that allowed for an explanation of as situation that did not fit the program.
Mr. Bresner submitted that the appellants planned to purchase additional kilns regardless of the rebate program. He said the appellants were not eligible for funding as the number of kilns eligible to receive a rebate was tied to a specific date, the date the Declaration form is signed. He said that if the appellants had informed the OFCTGMB inspector of the additional 20 kilns he would have explained they were not eligible. He said the 20 additional kilns did not belong to the appellants and were not on their farms on the date the Declaration form was signed. Mr. Bresner said the OFCTGMB wanted to treat everyone equally and that the date the inspector was on the farm and the Declaration form was signed was the critical date for all growers.
Mr. Bresner said the funding program was always described as a conversion program for existing kilns, not for additional kilns. He submitted that a decision by the Tribunal to allow funding for the 20 additional kilns in question would fundamentally change the rebate program. He also noted that the previous owner of six of the purchased kilns was eligible for the rebate on these kilns and there was a potential for double dipping.
In reply, Mr. Nightingale told the Tribunal that the appellants did not buy 20 kilns to expand their operation but to replace the rented ones. He said their crop size did not change between 2000 and 2001. He said the advice given to the appellants by the OFCTGMB inspector was not supported by the OFCTGMB regulations.
The Findings
The Tribunal finds that the 20 additional kilns purchased by Neil Vanelsacker and R. N. K. United Inc. were purchased to replace rented kilns, not expand the appellants’ tobacco operations. The Tribunal is satisfied that these kilns were purchased in February 2001 and April 2001, prior to the announcement of the rebate program.
The Tribunal favoured Mr. Vanelsacker’s evidence over Mr. Wilson’s evidence with regard to the farm visit made by Mr. Wilson in May 2001 as Mr. Vanelsacker appeared to have a clearer recollection of the visit. The Tribunal finds that the appellants’ declaration forms were filled out incorrectly in response to Mr. Wilson’s advice.
The Tribunal finds that this case is similar to another case in which the OFCTGMB allowed kilns purchased on a lease-to-own arrangement to be eligible for the rebate program, once they were relocated to land owned by the grower. The Tribunal finds that, to be consistent, the 20 additional kilns owned by the appellants on the date their declaration forms were signed should also be eligible for funding.
The evidence before the Tribunal was that declaration forms signed by Mr. Neil Vanelsacker were altered after the fact without his knowledge. While this did not figure into the Tribunal’s decision, the Tribunal notes that this is not appropriate and suggests the OFCTGMB review its practices in this regard.
Decision and Reasons
After careful consideration of the evidence and submissions made, the Tribunal decided to grant the appeal for the following reasons:
The 20 kilns in question were owned by the appellants before the date that the OFCTGMB inspector made his on farm visit.
The appellants relied upon detrimental advice of an employee of the OFCTGMB in signing the declaration forms with an incorrect number of kilns identified.
The guidelines for the rebate program can be interpreted such that the appellants’ 20 additional kilns are eligible for funding. The OFCTGMB found a producer in a similar situation was eligible for funding.
ORDER OF THE TRIBUNAL
The Tribunal orders the OFCTGMB to pay the appellants, from the funds provided for in the Kiln Conversion Rebate Program, an amount of $1,500 for each of the 20 kilns that the appellants converted to indirect heat.
DATED AT Guelph, Ontario this the 24th day of May, 2002.