Walsh v Agricorp, 2003 ONAFRAAT 10

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:

Walsh v Agricorp

Walsh v Agricorp 2003 ONAFRAAT 10

STATUTE:

Crop Insurance Act

HEARING:

April 22, 2003

DATE OF DECISION:

April 28, 2003

2003-10

NEUTRAL CITATION:

2003 ONAFRAAT 10

Walsh v Agricorp

IN THE MATTER OF The Crop Insurance Act (Ontario) and 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 Barry Walsh, Francis Walsh and Paul Walsh, Peterborough, Ontario, from the decisions of AGRICORP that 1. The appellants do not qualify for crop insurance for a period of at least five years effective December 11, 2002; and 2. The appellants were not eligible for crop insurance in the years 2000, 2001 and 2002, or in the alternative were paid on the basis of incorrectly adjusted claims on crops grown in 2000, 2001 and 2002, and must re-pay crop insurance claims paid to them for claims incurred on crops grown in those three years.

Before:

John Taylor, Vice Chair; Doug Flook, Member; Ralph Huckle, Member

Appearances:

Donald Good, counsel to the appellants

David Vickers, Crown Law Toronto, counsel to the respondent, AGRICORP

Peter Wechselmann, counsel to the respondent, AGRICORP

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on Tuesday, April 22, 2003, Wednesday April 23, 2003 and Thursday, April 24, 2003. Messieurs Walsh appealed an AGRICORP decision to deny them crop insurance coverage for a period of five years, and to require the repayment of previously settled crop insurance claims.

Statutory Context

Section 10 of the Crop Insurance Act (Ontario) 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).

Background

Messieurs Walsh purchased crop insurance from AGRICORP for the 2000, 2001 and 2002 crop years. AGRICORP had refused to pay a claim related to the 2000 Walsh corn crop and Messieurs Walsh appealed that decision to the Tribunal. The Tribunal proceeded to hear the matter in October 2002 but dismissed the appeal, on consent, partway into the proceeding. Mr. Francis Walsh requested the dismissal after he realized he had provided misinformation to the Tribunal with respect to a document he had prepared.

Subsequently, AGRICORP requested the repayment of crop insurance claims paid in the years 2000, 2001 and 2002 to Messieurs Walsh and disqualified them from insurance for a period of five years. Messieurs Walsh appealed that decision to the Tribunal.

The question of the adjustment of the 2000 crop insurance claim was not before this panel of the Tribunal.

Preliminary and Interlocutory Matters

Jurisdiction

Mr. David Vickers, representing AGRICORP, raised a jurisdictional question. He told the Tribunal that AGRICORP had required the repayment of crop insurance claims made to Messieurs Walsh in the 2000, 2001 and 2002 crop years as a result of provisions in the contract of insurance and the market revenue contract. He explained that AGRICORP would have to pursue a suit in the civil court in order to reclaim these monies. He submitted that the Tribunal did not have the authority to order the appellants to refund the monies paid in insurance claims, and that it therefore did not have the jurisdiction to hear the matter. Mr. Vickers said that the question of the appellants’ disqualification from the crop insurance program for a period of five years could be dealt with in a civil court as well. He argued that the issue regarding Messieurs Walsh went beyond whether they technically qualified for insurance or not.

Mr. Good acknowledged that he had difficulty from the outset over the question of the Tribunal’s jurisdiction. He said he wanted the Tribunal to determine the question of jurisdiction at the outset of the hearing and that he preferred that the two disputes not be heard by two separate bodies, as his client had cost concerns. Mr. Good suggested the Tribunal had the jurisdiction to rule on the dispute regarding the repayment of insurance claims as the dispute was over the adjustment of a loss.

The Tribunal ruled that it would hear evidence on the appeal of AGRICORP’s decision to deny the appellants insurance coverage for five years. It is the Tribunal’s view that it has the jurisdiction to hear disputes regarding the qualification of people for crop insurance. The Tribunal notes that requiring the appellants to pursue the matter in a civil court could have the effect of denying them an opportunity to the relief sought, if the court did not rule in time for the appellants to meet the 2003 crop year application deadlines.

On the question of the required repayment of paid insurance claims, the Tribunal notes that the order of AGRICORP has no effect on the appellants until AGRICORP tries to recover the monies. It is not up to this panel to prejudge whether AGRICORP is entitled to the funds or not. The Tribunal decided not to hear evidence on that aspect of the appeal.

Exclusion of Witnesses

Both the appellants and the respondents requested that witnesses be excluded from the proceeding, with the exception of Mr. Francis Walsh, appellant and Mr. Wechselmann, who was a potential AGRICORP witness. Mr. Vickers said it would not be necessary to call Mr. Wechselmann. The Tribunal ordered the witnesses be excluded.

Mr. Vickers subsequently asked that Mr. Francis Walsh be excluded during the testimony of his neighbours and employee. He submitted the witnesses would be intimidated by the presence of Mr. Walsh in the hearing room. He said there was precedent for excluding a party to a hearing in these circumstances. Mr. Good objected to the motion to exclude Mr. Walsh from the hearing room. He said Mr. Walsh was entitled to hear the evidence against him and noted that he might need instruction from his client. He also argued that AGRICORP should produce evidence of intimidation, rather than rely on an allegation of intimidation. The Tribunal ruled that Mr. Walsh could remain in the hearing room. Mr. Walsh agreed to sit at the rear of the room while his employee was testifying.

The Issues

The issues before the Tribunal were:

1. Did the appellants misrepresent the volume of 2000 crop corn they sold to other farmers?

2. If there was a misrepresentation, is the penalty imposed by AGRICORP appropriate?

The Evidence

The Tribunal heard testimony from Mr. Francis Walsh, appellant, Mr. Bill White, AGRICORP, Mr. Fred Thomson, AGRICORP, Mr. Ken Macfarlane, witness, Mr. Joe Steed, witness, Mr. Dave McFadden, witness, Mr. Rollie Glover, witness and Mr. Gordon Bradfield, witness.

Both the appellants and the respondent agreed there had been a shipment of 2000 crop year corn to Mr. Macfarlane which had not been reported to AGRICORP at the time the Yield Declaration Report for the 2000 crop year was filled out and signed. There was a dispute as to whether sales of corn to Mr. Bradfield were from the 2000 crop year or the 1999 crop year.

On the third day of the hearing, the parties indicated to the Tribunal that they had reached a settlement and they asked the Tribunal to discontinue the hearing and adopt the settlement.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal decided the appeal would be granted in part, as reflected in the following order, which reflects the minutes of settlement.

The reason for this decision is that the parties achieved a mutually agreeable settlement of the dispute. However it should be noted that not all the issues that the parties agreed to resolve are within this Tribunal’s jurisdiction to rule on. The formal parts of this Order will only reference those matters over which this Tribunal has jurisdiction.

The Tribunal makes no finding with respect to the alleged misrepresentation of the 2000 corn crop yield.

ORDER OF THE TRIBUNAL

1. The Tribunal orders that the agreements, release provisions, undertakings and arrangements as set out in the minutes of settlement dated April 24, 2003 shall be appended hereto and shall form part of this Order.

2. The Tribunal formally orders that: (a) The appellants are not eligible for crop insurance for the calendar year 2003, for all crops, including their fall wheat crop planted in the fall of 2002. (b) The appellants shall keep and maintain all the usual crop yield, acreage and other data for the year 2003. (c) AGRICORP shall verify and track the appellants’ data for crop year 2003, revise and update the appellants’ crop records for the calendar year 2003, and provide the appellants with a copy thereof, as it would for insured clients in the normal course of business. (d) The appellants have the right to apply for crop insurance in the calendar year 2004 and beyond and AGRICORP shall process their application, if it is made, in good faith and in the normal course of business based on revised crop data referenced in 2(c). (e) The appellants have the right to apply for crop insurance in 2003 for winter wheat planted in the fall of 2003 for harvest in 2004. (f) The appellants may not indirectly apply for crop insurance for the 2003 crop year through any third party entirely owned by, controlled or influenced by the appellants.

DATED AT Tilbury, Ontario this 28^th^ day of April, 2003.

Appendix

IN THE MATTER OF AN APPEAL BY BARRY WALSH, FRANCIS WALSH AND PAUL WALSH (THE INSUREDS) OF A DECISION BY AGRICORP TO RECOVER BENEFITS FROM THE INSUREDS AND DENY THE INSUREDS CROP INSURANCE AND MARKET REVENUE FOR THE NEXT FIVE YEARS

MINUTES OF SETTLEMNET

The parties hereto agree to settle this appeal on the following provisions:

1. The appeal of the INSUREDS shall be decided on the basis of these minutes of settlement.

2. The settlement is agreed on the basis that there is no finding of fault or misrepresentation on the part of the INSUREDS with respect to their crop insurance, market revenue or any other program declarations or reports to AGRICORP for the years 2002 and prior.

3. By these Minutes of Settlement, AGRICORP releases the INSUREDS of any liability to repay any and all benefits for years 2000, 2001 and 2002. Without limiting the generality of the preceding sentence, in particular, the claim referred to in letters dated December 12, 2002 and February 20, 2003 from AGRICORP to the INSUREDS. These letters are attached as Exhibit A to these Minutes of Settlement. This release of liability includes any claim by AGRICORP to a third party that results in a derivative action against the INSUREDS.

4. The parties hereto agree, subject to paragraph 5 below, that the decision to cancel the INSUREDS’ crop insurance and participation in any other program as per the letter dated January 16, 2003 attached hereto as Exhibit B is rescinded in full and shall be absolutely null and void.

5. The INSUREDS are effectively cancelled for crop insurance for the calendar year 2003, for all crops, including their fall wheat crop planted in the fall of 2002.

5 (a) The INSUREDS will have to apply for crop insurance for the 2004 crop year by the applicable deadlines.

6. AGRICORP shall, subject to all rules, provisions and conditions that normally apply, continue to enrol the INSUREDS in the Market Revenue Program, including any payment for the year 2002, and all other government support programs, excluding crop insurance, for the calendar year 2003 in the normal course of business.

7. In the event the decisions of AGRICORP referred to in paragraphs 3 and 4 and this appeal process has resulted in the INSUREDS missing any deadline for programs referred to in paragraph 6, AGRICORP specifically waives these deadlines for a reasonable period of time from the date of this decision.

8. The parties hereto agree that participation in one or more programs referred to in paragraph 6 and the crop insurance program for years 2004 and beyond requires continuous and uninterrupted crop yield data, the INSUREDS agree to keep and maintain all the usual crop yield, acreage and other data for the year 2003 and AGRICORP agrees to verify such data in the normal course of business. AGRICORP shall revise and update the INSUREDS’ crop records for the calendar year 2003 in the normal course of business and provide the INSUREDS with a copy thereof, as per other clients.

9. The INSUREDS shall have the right to apply for crop insurance for the calendar year 2004 and beyond and AGRICORP shall process the application in good faith and in the normal course of business based on the revised crop data referred to in paragraph 8. The parties hereto agree that the INSUREDS may apply in 2003 for crop insurance for winter wheat planted in the fall of 2003 for harvest in 2004.

10. The INSUREDS by these Minutes of Settlement hereby release AGRICORP, Her Majesty the Queen in right of Ontario and their respective employees, servants and agents from any and all claims for slander, malicious prosecution or breach of contract or any other claim whatsoever arising from these proceedings. This release includes any claim by a Third Party who has a derivative claim against AGRICORP.

11. Further to paragraph 5, the INSUREDS agree that they shall not indirectly apply for crop insurance for 2003 through any third party entirely owned, controlled or influenced by the INSUREDS.

12. The parties hereto agree that these Minutes of Settlement are a part of the Tribunal’s Order on the resolution of the appeal.

13. These Minutes of Settlement bind the heirs, successors, assigns and personal representatives of the INSUREDS and the successors and assigns of AGRICORP.

Dated at Guelph the 24^th^ day of April, 2003.

AGRICORP

FRANCIS WALSH binding

the partnership of Francis Walsh, Barry Walsh and Paul Walsh. I have the authority to bind the partnership.

EXHIBIT A

Letter dated December 12, 2002 to Messieurs Walsh from Paul Cudmore, Director-Operations, AGRICORP

Letter dated February 20, 2003 to Messieurs Walsh from Paul Cudmore, Director-Operations, AGRICORP

WORKING TOGETHER TO STRENGTHEN ONTARIO’S AGRI-FOOD INDUSTRY

TRAVAILLER ENSEMBLE AFIN DE CONSOLIDER AGRO-ALIMENTAIRE EN ONTARIO

1 Stone Road West

Box 3660, Stn. Central

Guelph, ON N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118

1, rue Stone ouest

C.P. 3660, Station central

Guelph (Ontario) N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118

December 12, 2002

COPY

Barry & Francis & Paul Walsh,

c/o Skibbereen Farms

2144 Keene Road

RR#8

Peterborough, Ontario

K9J 6X9

Client #30806947

Subject: Cancellation of Crop Insurance

Pursuant to 5.2 (i) of the Crop Insurance Act, Ontario Regulation 380/97 5-1 (b), (c), (d), and 5-2, and the terms and conditions of your crop insurance policy, AGRICORP is cancelling your crop insurance coverage effective immediately for the 2000, 2001 and 2002 crop years. This is a result of the intentional misrepresentation made by you pertaining to documents related to the calculation and validity of your 2000 crop insurance corn claim. AGRICORP has also determined that you are not eligible for participation in the Crop Insurance program or any other program offered by AGRICORP for a period of at least 5 years effective December 11, 2002, after which you will have to apply to AGRICORP considering the reinstatement requirements detailed on page 11 of the Crop Insurance Policy. All applications regarding AGRICORP programs are subject to approval by AGRICORP.

Also, AGRICORP has the authority to recover any funds paid to you through the Crop Insurance program during the aforementioned time period. This amount, summarized below, equals $140,777.75 (one hundred forty thousand seven hundred seventy-seven dollars and seventy-five cents), and is to be returned to AGRICORP no later than January 31, 2003.

Crop Insurance Claims Paid 2000-2002

2000

$66,079.09

2001

$55, 372.95

2002

$19,325.71

Total

$140,777.75

Please note that premiums paid by you for the crop years 2000, 2001 and 2002 will not be refunded.

Given the above circumstances, AGRICORP is also reviewing the appropriateness of other funds paid to you via different programs, such as Market Revenue, during the 2000, 2001 and 2002 crop years. A letter will be sent to you shortly outlining the details of this review.

It is suggested that you contact our finance department immediately to make arrangements to return the outstanding funds by the prescribed deadline.

Paul Cudmore

Director-Operations

cc: Peter Wechselmann, Counsel

Randy Jackiw, CEO

Mike Vlcek, Director Marketing and Sales

Ken Kapustiak, Director Finance

Jim Zavitz, Senior Manager Provincial Claims

WORKING TOGETHER TO STRENGTHEN ONTARIO’S AGRI-FOOD INDUSTRY

TRAVAILLER ENSEMBLE AFIN DE CONSOLIDER AGRO-ALIMENTAIRE EN ONTARIO

1 Stone Road West

Box 3660, Stn. Central

Guelph, ON N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118

1, rue Stone ouest

C.P. 3660, Station central

Guelph (Ontario) N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118

February 20, 2003

COPY

Barry & Francis & Paul Walsh,

c/o Skibbereen Farms

2144 Keene Road

RR#8

Peterborough, Ontario

K9J 6X9

Client #30806947

Subject: Cancellation of Market Revenue coverage

Further to our letter to you January 2, 2003, this letter is to inform you of the cancellation of your Market Revenue coverage pursuant to Section 15 of the Canada–Ontario Market Revenue Agreement. This cancellation is effective immediately for the 2000, 2001, and 2002 crop years. This is a result of the 2–year investigation into your 2000 Crop Insurance corn claim and the intentional misrepresentation made by you pertaining to documents related to this claim. As the Ontario Crop Insurance program forms backbone for the delivery of many safety net programs such as Market Revenue, a breach to the conditions of the Crop Insurance program also implies a breach to the programs linked to it.

AGRICORP has also determined that you are not eligible for participation in the Market Revenue program or any other program offered by AGRICORP for a period of at least 5 years effective December 11, 2002, after which you will have to apply to AGRICORP. All applications regarding AGRICORP programs are subject to approval by AGRICORP.

AGRICORP has the responsibility to recover any funds paid to you through the Market Revenue, Ontario Grain Stabilization, the Canada–Ontario Grain and Oilseed Payment, and the Ontario Bridge Funding Payment programs during the aforementioned time period. This amount, summarized below, equals $132,563.36 (one hundred and thirty-two thousand, five hundred and sixty-three dollars and thirty six cents) and is to be returned to AGRICORP no later than March 31, 2003.

Crop Year

Market Revenue

Ontario Grain Stabilization Program

Canada Ontario Grain & Oilseed Payment

Ontario Bridge Funding Payment

Total

2000

$39,478.36

$32,844.56

$24,543.13

$0.00

$96,866.05

2001

$18,789.63

$0.00

$0.00

$0.00

$18,789.63

2002

$0.00

$0.00

$0.00

$16,907.68

$16,907.68

Total

$58,267.99

$32,844.56

$24,543.13

$16,907.68

$132,563.36

It is suggested that you contact our finance department immediately to make arrangements to return the outstanding funds by the prescribed deadline.

Paul Cudmore, Director-Operations

cc: Peter Wechselmann, Counsel

Randy Jackiw, CEO

Mike Vlcek, Director Marketing and Sales

Ken Kapustiak, Director Finance

Jim Zavitz, Senior Manager Provincial Claims

EXHIBIT B

Letter dated January 16, 2003 to Messieurs Walsh from Paul Cudmore, Director-Operations, AGRICORP

WORKING TOGETHER TO STRENGTHEN ONTARIO’S AGRI-FOOD INDUSTRY

TRAVAILLER ENSEMBLE AFIN DE CONSOLIDER AGRO-ALIMENTAIRE EN ONTARIO

1 Stone Road West

Box 3660, Stn. Central

Guelph, ON N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118/9

1, rue Stone ouest

C.P. 3660, Station central

Guelph (Ontario) N1H 8M4

Tel. 1-888-247-4999

Fax (519) 826-4118/9

January 16, 2003

Barry & Francis & Paul Walsh,

c/o Skibbereen Farms

2144 Keene Road

RR#8

Peterborough, Ontario

K9J 6X9

Client #30806947

Subject: Cancellation of Crop Insurance for 2003

AGRICORP has cancelled your winter wheat Crop Insurance for 2003 and a refund of the premium for the amount of $2679.00 is enclosed.

As stated in an earlier letter AGRICORP has determined that you are not eligible for participation in the Crop Insurance program or any other program offered by AGRICORP for a period of at least 5 years effective December 11, 2002, after which you will have to apply to AGRICORP considering the reinstatement requirements detailed on page 11 of the Crop Insurance Policy. All applications regarding AGRICORP programs are subject to approval by AGRICORP.

Paul Cudmore

Director-Operations