Joe Vink and Concrete Holsteins v Agircorp, 2002 ONAFRAAT 32

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

Joe Vink and Concrete Holsteins v Agircorp

Joe Vink and Concrete Holsteins v Agircorp 2002 ONAFRAAT 32

Crop Insurance Act

August 21, 2001

DATE OF DECISION:

September 4, 2002

2002-32

2002 ONAFRAAT 32

Joe Vink and Concrete Holsteins v Agircorp

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 Joe Vink and Concrete Holsteins, Kirkton, Ontario, from the decision of AGRICORP concerning the adjustment of claim for their 2001 soybean crop under Regulation 380/97 and the Crop Insurance Plan For Grain and Oilseeds.

Before:

Murray Cardiff, Chair; John Taylor, Vice Chair; Jim Gibb, Member.

Appearances:

John Langlois, counsel to Joe Vink, appellant.

Peter Wechselman, counsel to the respondent, AGRICORP.

Joe Vink, appellant.

Laurence Vink, witness for the appellant.

Jim Zavitz, Senior Provincial Claims Manager, on behalf of AGRICORP

DECISION OF THE BOARD

This appeal was heard in Guelph, Ontario on Wednesday August 21, 2001. Mr. Joe Vink

appealed to the Tribunal from the decision of AGRICORP not to insure and pay an adjustment of claim for 138 acres of soybeans in 2001, under Regulation 380/97 and the Crop Insurance Plan.

The Background

When AGRICORP and a producer enter into a contract of insurance, information must be submitted by the producer and recorded by AGRICORP, in its customer files. Each spring on a specified and widely published date, usually June 30th, customers wishing to insure their crop must submit to AGRICORP the total number of acres that are planted in each commodity for which they wish to purchase insurance. There is no option to insure part of a crop. For the 2001 crop year, customers were required to report the total acres planted per commodity by July 3, 2001 (June 30, 2001 fell on a Saturday). The customer could make this Final Acreage Report (FAR) to AGRICORP by telephone or written submission. After the harvest the insured completes a Yield Verification Form (YVF) that sent to him/her by AGRICORP. The YVF contains information such as the commodity type, number of acres from which the yield was harvested and the total number of bushels harvested. A representative from AGRICORP attends at the farm to verify yields. The YVF is a declaration that is signed by the producer. In a situation where a loss occurs a Regional Field Representative/Insurance Adjuster from AGRICORP endorses a Claim Release Form which releases the funds for the commodity and identifies the cause of loss and the monetary amount of adjustment.

The relevant statutes and regulations are:

Section 5 of the Crop Insurance Act (Ontario), 1996 and Regulation 380/97 Crop Insurance Act (Ontario) 1996 which states:

(1) AgriCorp shall fix the terms of contracts of insurance, or proposed contracts of insurance, subject to section 4 and the regulations made under section 12.

(2) AgriCorp has all the powers necessary to perform its duties including the power to,

(a) determine the qualifications and requirements for a person to enter into a contract of insurance;

(b) enter into contracts of insurance;

(d) fix premium rates payable by insured persons;

(e) fix the duration of contracts of insurance;

(f) specify the circumstances in which an insured person may terminate a contract of insurance and the methods that the person may use to terminate the contract;

(g) specify penalties imposed on an insured person who breaches the terms of a contract of insurance;

(h) reinsure with any other insurer the risk or any portion of the risk under its contracts of insurance; and

(i) terminate a contract of insurance on the terms that it considers appropriate.

(3) An applicant for a contract of insurance or an insured person who receives notice from AgriCorp of the terms of a contract of insurance or amendments to the terms, as the case may be, shall be deemed to have accepted them unless the recipient notifies AgriCorp to the contrary within the time period that AgriCorp specifies.

(4) 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.

Sections 2, 3 and 4 of the Regulation 380/97 Crop Insurance Act (Ontario) 1996 which state:

(1) If an agreement has been entered into under section 3 of the Act in respect of an agricultural crop or perennial plant, a landlord or sharecropper of a farm in Ontario producing the crop or plant may apply for a contract of insurance.

(2) An application for insurance shall be in a form provided by AgriCorp. O. Reg. 380/97, s. 2.

(1) A contract of insurance consists of,

(a) the application;

(b) the renewal notice and change notice, if any;

(d) the terms fixed by AgriCorp under section 5 of the Act; and

(e) this Regulation.

(2) In the event of a conflict between the terms of a contract of insurance and this Regulation, this Regulation prevails. O. Reg. 380/97, s. 3.

(1) AgriCorp may amend the contract of insurance when renewing it.

(2) An insured person who receives notice of amendment to a contract of insurance when the contract is being renewed shall be deemed to have accepted the renewed contract, as amended, unless the person otherwise notifies AgriCorp within 15 days after receiving notice of the renewal and the amendment. O. Reg. 380/97, s. 4.

The Issues

The issues before the Tribunal are:

Should AGRICORP use its discretion to allow the 138 acres alleged by Mr. Joe Vink as being reported as seeded in soybeans for 2001 to be insured?
Should the Tribunal overturn the decision of AGRICORP retroactively, to insure 138 acres of soybeans in 2001 in favour of the 100 acres for which Joe Vink's claim has been adjusted?
Is there other relief from the present adjustment of claim that the Tribunal might grant?

The Evidence

Mr. Laurence Vink

Mr. Laurence Vink, testified before the Tribunal that he is the brother of Joe Vink and that he is employed by his brother as the feed and crop manager. Mr. L. Vink told the Tribunal that it is his job to report to his brother the number of acres planted in each commodity for the purposes of the Final Acreage Report: Mr. Joe Vink does not do any of the cropping. Mr. L Vink told the Tribunal that with regard to the soybean crop of 2001, he informed Mr. J Vink that there were 138 acres of soybeans planted and 100 acres of corn. Mr. L. Vink explained to the Tribunal that he had compiled a chart for crops grown in 2000 and 2001 where, in each year, 411 acres were planted in different rotations of corn, soybeans and alfalfa.

Mr. Laurence Vink stated in response to questions that he agreed that the onus to report the total acres planted was incumbent upon the producer. Mr. L. Vink told the Tribunal that he had hand-written the number of acres of soybeans and corn that were planted, on the bottom left of the FAR form. Mr L. Vink stated that there was no indication of acres planted in each commodity on the main body of the FAR form. Mr. L. Vink testified that his family contacted Mr. Bill Quipp, their Regional Field Representative, AGRICORP in early October and informed him that they had a discrepancy in insurance coverage for acres planted versus the acres reported. Mr. L. Vink told the Tribunal that Mr. J. Vink paid his insurance premium believing it covered the correct acreage and believing that he had correctly reported the total as 138 acres of soybeans. Mr. L. Vink said the error was not discovered until just before harvest time.

Mr. Joe Vink

Mr. Joe Vink testified before the Tribunal, that he was certain he telephoned a FAR that included 200 acres of corn and 138 acres of soybeans for the 2001 crop year. Mr. J. Vink said that he did not look at the reverse side of the Crop Insurance Invoice and Summary form, where the number of acres that AGRICORP had recorded as being insured was printed. Mr. J. Vink told the Tribunal that he sees to the administrative affairs of his business once a month; paying as many as 30 invoices in one day. Mr. J. Vink said that when informed of the situation, Mr. Bill Quipp his regional Field Representative advised him to submit to AGRICORP any documents he had, that might confirm the reporting of 138 acres of soybeans. Mr. J. Vink explained to the Tribunal that:

Bill Quipp told him that there were often errors in the acres reported; leading him to believe that the error was easily rectified.
Bill Quipp advised him to contact Kim Leach to arrange a hearing before the Crop Insurance Committee and a hearing was arranged for February 20, 2002.
He submitted documentary evidence to AGRICORP that he intended to rely upon at the hearing and anticipated the arrival of similar documents from AGRICORP.
Two days before the hearing no documents from AGRICORP had arrived and he believed that the hearing was cancelled.
Subsequently, he learned the documents from AGRICORP were delivered by Purlolator Courier to the wrong address - his neighbour brought the package to him two days after the hearing had passed.
The Crop Insurance Committee decided to maintain the insurance coverage on 100 acres of soybeans.
AGRICORP was notified of the error in the number of acres of soybeans insured a few weeks before the harvest began.

Mr. Joe Vink responded to questions that:

He has purchased crop insurance for 10 years.
He made his FAR to AGRICORP by telephone.
He did not submit the FAR and Coverage Confirmation form to AGRICORP where the acreage totals for corn and soy were hand-written by Laurence Vink on the form.
He was very certain that he reported the correct amount of FAR of 138 acres by telephone to AGRICORP.
He did not look at the back of the Crop Insurance Invoice and Summary form but only the front of the form where the amount of premium, due date and the address for sending the payment was printed.
He ignored most of the other information on the Invoice and Summary form.
He did not change his FAR as he believed he reported it correctly.
He indicated in an April 29, 2002 letter from his counsel to AGRICORP that he was not certain who made the error, himself or AGRICORP, but he was now quite certain that the mistake was made by AGRICORP.
If his brother had told him to report 200 acres of corn and 100 acres of soybeans he would have questioned it, as it is very unusual in his farm business to have even acreages planted in one crop, let alone two crops.
The corn and soybean crops were financed through the Agriculture Commodity Corporation in 2001.
He maintains all the business ledgers himself.

Mr. Jim Zavitz

Mr. Jim Zavitz testified before the Tribunal that he was the Senior Provincial Claims Manager for AGRICORP and that he had been with AGRICORP since 1994. Mr. Zavitz told the Tribunal that he had compiled the record submitted by AGRICORP for the present proceeding and that he had included all records of telephone transactions between Joe Vink and AGRICORP. Mr. Zavitz told the Tribunal that a telephone transaction record for June 12, 2001 indicated that Mr. Joe Vink entered his FAR on June 12, 2001. Mr. Zavitz explained to the Tribunal that the final acres are simultaneously entered into another data file when the FAR is entered. Mr. Zavitz told the Tribunal that the data generated by the telephone transaction for the FAR indicates the type of commodity the acreage planted, and the premium to be paid.

Mr. Zavitz explained to the Tribunal that:

The Customer Service Representatives who take information over the telephone are provided with a script to follow in order to verify that they are receiving the same information that the customer is reporting.
A telephone transaction report for November 29, 2001 indicated that Mr. J. Vink had telephoned to inform AGRICORP that the number of acres reported for his 2001 soybean crop was incorrect. He was told by the Customer Service Representative that the information could not be changed at that time.
Field staff randomly check yields and Mr. J. Vink was not singled out for inspection by the Yield Inspector in 2001.
AGRICORP has accepted the yield reported by Mr. J. Vink for his 2001 soybeans.
The calculation for adjustment of claim for the 2001 soybeans included the yield from 138 acres and the coverage that was purchased for 100 acres. The adjustment of claim was for 100 acres of soybeans.
AGRICORP will not change the FAR if is it not notified before the deadline. AGRICORP cannot change the FAR as it cannot determine if the customer has intentionally or mistakenly reported acreage incorrectly.
The FAR also affects calculations for Average Farm Yield figures.
Mr. Quipp had no authority to encourage the belief that the FAR could be changed in the Fall of 2001. Mr. Quipp works from his home and his records are not integrated with AGRICORP's records.
If an error was made it was made during the telephone call reporting the FAR. It is unlikely that a Customer Service Representative who handled the call made the error as they follow a script and calls are randomly monitored; however, he cannot say with certainty how closely the Customer Service Representative in this situation followed the script. He had no statistics regarding the accuracy of information recorded for clients in the Customer Call Center.
The AGRICORP Crop Insurance Policy (Indemnity Limitations and Exclusions #5 and #4) stipulates that the number of acres reported in the FAR will be the number of acres for which the indemnity is calculated.
If Mr. Vink had not harvested the 38 acres that were not reported it would have been looked upon as an improper farm practice.
Mr. J. Vink was compensated for the difference between his Guaranteed Production per Acre, which was 41.48 bushels per acre, and his yield, which was 13.83 bushels per acre. He was not compensated for the difference of 525 bushels over the disputed 38 acres not reported.
He is certain that he has in this case and others applied AGRICORP policies consistently and fairly across all claims.

Summations

Mr. John Langlois told the Tribunal there was no precedent to rely upon in a previous Tribunal decision in the appeal of Eric Stallaert as the appellant in that case had simply forgotten to report some acres that were planted, whereas the Joe Vink and Concrete Holstein appeal was the result of an error being made in recording the FAR. Mr. Langlois told the Tribunal that the AGRICORP Crop Insurance Committee did not provide comprehensive reasoning for arriving at its decision. Mr. Langlois said that Mr. Quipp's comment that mistakes were made frequently in the reporting of FAR was proof that the system was not fail safe. He said that Mr. Vink notified AGRICORP of the error as soon as he discovered it. Mr. Langlois argued that AGRICORP should not be allowed to benefit from a lower claim adjustment and pay-out in the case of Mr. J. Vink. Mr. Langlois told the Tribunal that Mr. J. Vink was, as were all farmers, captive clients to AGRICORP and that he had no right to negotiate the insurance contract. Mr. Langlois told the Tribunal that Mr. Vink relied on the fact that he had reported his acreage correctly and that AGRICORP had not demonstrated that the Customer Service Representative who recorded the FAR, followed the script and made the correct submission.

Mr. Peter Wechselman stated that AGRICORP did not allege any intended wrongdoing by the appellants. Mr. Wechselman said that Mr. J. Vink had ample opportunity to review the summary of acres planted and to correct the FAR and that the choice not to do so, was solely the his responsibility. He told the Tribunal that Section 5(3) of the Crop Insurance Act clearly puts the onus on the customer to correct any errors in the FAR regardless of who may have misreported the information. Mr. Wechselman said that the Tribunal's decision on the appeal of Eric Stallaert was relevant because in both cases the appellants had opportunity to review the summaries of information provided by AGRICORP and to correct the data reported to AGRICORP. Mr. Wechselman told the Tribunal that the error was Mr. Vink's, as he did not verify and then correct the information reported to AGRICORP.

The Findings

The Tribunal finds that there is no irrefutable proof that 138 acres of soybeans were reported as being seeded rather than the 100 acres for which the claim was adjusted. However it is clear that 138 acres of soybeans were harvested. The Tribunal is satisfied that the error in FAR was discovered before harvest and that Mr. Joe Vink had no intentions of deceiving AGRICORP.

The Tribunal recognizes from the evidence presented that instructions to review, verify and correct any errors in the information recorded by AGRICORP, are clearly stated on the front of the Invoice and Summary form. Mr. Joe Vink had ample opportunity to follow the instructions, but through his own neglect he did not review the information and did not discover the error within the time frame available to correct the error.

The Tribunal finds that there are several negative consequences to Mr. Vink arising from an incorrectly reported FAR. Firstly, in calculating the adjustment of claim AGRICORP did include the 38 acres of soybeans that were in dispute as being reported as planted. The inclusion of the 38 acres lowers the figure for 'Average Farm Yield' which affects the figure calculated by AGRICORP for 'Guaranteed Production per Acre'. The adjustment of claim is based on a percent of the 'Guaranteed Production per Acre'. Secondly, Mr. Vink could not neglect to harvest the disputed 38 acres as this would be seen as a poor crop management practice, a factor that might prejudice Mr. Vink's ability to purchase insurance in future. Thirdly, the Tribunal finds that AGRICORP benefits from the error of mis-reporting in the FAR as it adjusts the claim to a lessor amount for the 100 acres that was recorded as being covered.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal decided to partially grant the appeal for the following reasons:

The Tribunal perceives a double penalty for the error of the mis-reported acres, Mr. J. Vink has no coverage for 38 acres of soybeans and the yield he was able to recover from the 38 acres reduces his claim over the 100 acres that were recorded as being insured. The legislation governing contracts of insurance must be interpreted to prevent mischief to the insured and the insurer.

ORDER OF THE TRIBUNAL

The Tribunal orders AGRICORP to recalculate the claim based on a total yield of 1,383 bushels or 13.83 bushels per acre on 100 acres of insured crop.

DATED AT Guelph, Ontario this 4th day of September, 2002.