Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone Road West
Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email: AFRAAT@ontario.ca
Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales 1 Stone Road West
Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Denby et al. v Dairy Farmers of Ontario
Denby et al. v DFO 2003 ONAFRAAT 34
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
September 15, 18, 19 and 22, 2003 and November 5, 6, and 7, 2003
DATE OF DECISION:
December 3, 2003
2003-34
NEUTRAL CITATION:
2003 ONAFRAAT 34
Denby et al. v Dairy Farmers of Ontario
IN THE MATTER OF THE MILK 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 Appeal Tribunal by Mrs. Betty Denby, Mr. John Denby and Mr. William Denby and by Mrs. Isobel Hope and Mr. Wayne Hope and by Mr. Dale McFeeters, Darmar Farms Inc. from decisions of the Dairy Farmers of Ontario by which it:
Cancelled the appellants’ licences to engage in the producing and marketing of milk (Licence Nos. 585343, 604984 and 621561)
Cancelled quota fixed and allotted to the appellants (10 kg Denby #585343, 5 kg Hope #604984 and 5 kg Darmar Farms Inc. #621561)
Required remaining quota held by the appellants to be offered for sale or sold on the June 2003 or July 2003 quota exchanges.
Cancel any quota not sold by the conclusion of the July 2003 quota exchange.
Prevent the accumulation of production credits for the use of the appellants.
Before:
Murray Cardiff, Chair; Denis O’Connor, Vice Chair; Tim Sutton, Member; Doug Flook, Member
Appearances:
Donald Good, counsel to the appellants, Betty, John and William Denby; Wayne and Isobel Hope and Darmar Farms (Dale McFeeters)
Geoffrey Spurr, counsel to the respondent, Dairy Farmers of Ontario
William Denby, appellant
Betty Denby, appellant
Wayne Hope, appellant
Dale McFeeters, appellant
Gordon Coukell, Chair, DFO, respondent
John Tripp, witness
George MacNaughton, witness
Peter Gould, witness
DECISION OF THE TRIBUNAL
This matter was heard in Guelph, Ontario on September 15, 18, 19 and 22, 2003 and on November 5, 6 and 7, 2003. The appellants appealed from the penalties assessed to them by the Dairy Farmers of Ontario (DFO) as a result of alleged contraventions of regulations related to milk shipments from their farms in April 2003.
Statutory Context
These appeals come to the Tribunal through the Ministry of Agriculture, Food and Rural Affairs Act. Subsection 16(2) of the statute states:
Idem
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 marketing board written notice of the appeal.
Subsection 16(4) allows for the Tribunal to refuse to hear the appeal under certain circumstances. Subsection 16(5) requires that appellants first apply to the marketing board for a hearing, unless both parties waive their right to a hearing.
Under the Milk Act, the DFO is delegated specific powers and authorities. The DFO has been authorized to require that milk be produced and marketed on a quota basis, and be sold through the DFO. Section 3 of DFO Milk General Regulation 08/03 (Milk Act, R.S.O. 1990, Chapter M-12, as amended) states:
Purchase and Sale of Milk
- (1) Every producer shall offer to sell and sell the milk produced by the producer to the
DFO. (2) No producer shall offer to sell or sell the milk produced by the producer to any person other than DFO.
(3) No person other than DFO shall buy milk from a producer.
(4) No person shall market any milk, except by, from and through the DFO.
The Issues
The issues before the Tribunal were:
Was milk shipped from the appellants’ farms in April 2003, shipped in violation of regulations made under the Milk Act?
Did the appellants violate ‘cease and desist’ orders issued by the DFO?
If there were infractions, were the penalties assessed by the DFO appropriate?
Preliminary Matter
Mr. Good suggested that the Tribunal alter its usual order of proceeding and have the DFO present its case first. Mr. Spurr objected as he said the procedural issue could have been raised at one of two pre-hearing conferences. The Tribunal decided to proceed in its normal fashion, and clarified that the appellants could reply to something new and unexpected, but could not split their case.
The Evidence and Submissions
Appellants’ Case
William (Bill) Denby, appellant
Mr. Bill Denby told the Tribunal he and his wife and his parents farmed a total of 773 acres of land and maintained a 100 cow dairy herd. He explained that feed grown on the farm was fed to cattle. He said a recent expansion would allow the family to milk 300 cows. He said they held 52 kg of milk quota (Licence No. 585343). He explained that they had shipped milk under export contracts before the export program was discontinued on DE 31 02. Mr. Denby clarified that his wife was not registered on the milk producer licence but was active in the business.
Mr. Denby said he was also the sole proprietor of International Dairy Direct – Broker Agent (IDDBA) which was established in January 2003. He said his broker business was distinct from the milk production enterprise. He said DFO staff had assisted him in setting up his business and applying for a permit from the United States (U.S.) Food and Drug Administration (FDA). He said it received a FDA permit on MR 19 03. Mr. Denby clarified that IDDBA did not participate in the discontinued export program. He said that export contracts made before DE 31 02 were not honoured, as they had not been registered.
Mr. Denby said he had participated on several conference calls related to a World Trade Organization (WTO) Appellate Body ruling that resulted in the discontinuation of the export program. He said he understood government agencies could not export milk and that private companies would have to export at the domestic milk price, to ensure the milk was not subsidized.
Mr. Denby said his relationship with the DFO deteriorated in April 2003. He said the DFO had tried to prevent him from developing a legal export program. He explained he had arranged to purchase milk on behalf of Liberty Milk, a U.S.-based milk broker, for sale in the U.S.. He said Mr. Peter Gould, DFO, told him and Mr. Dickenson, Liberty Milk, that Ontario regulations prevented this type of business arrangement. He said that he and Mr. Dickenson relied upon the FDA permit and the Free Trade Agreement and arranged for milk to be sent in bond, tested at the border, and tested at destination plants. He said their intent was to ship two tankers of milk (22,500 litres per tanker) to the U.S. each day, and eventually increase the volume to 10 tankers per day. Mr. Denby confirmed that he had placed an advertisement in Ontario Farmer to attract milk producers to this joint venture.
Mr. Denby said that by late March 2003, the appellants were all in an over-quota position with regard to milk production, and would receive nothing for above-quota milk shipments to the DFO. He explained the DFO had changed its pricing policy effective AP 01 03 such that they would receive no payment for their milk and would still have to pay board fees. He said the appellants decided to implement the export milk plan but opted to do a trial run first, to see how many milkings would fill a tanker truck. He said he had contacted the Ministry of the Environment, as the intent was to dump milk produced in the first week. He said he thought there would be enough milk from the three farms to fill one tanker every other day. Mr. Denby said he had arranged for licensed milk transporters to haul the milk, but they would not do so when the DFO threatened to cancel their licences. He said as a result, he used water trucks and purchased a tanker as well as a new pump.
Mr. Denby explained that the first milk pickup was from his farm on AP 02 03, that the water truck then picked up milk at the McFeeters farm and early in the morning of AP 03 03 picked up at the Hope farm. He said DFO staff had observed some of these activities and taken photographs, and had asked the police to attend at the Hope farm. He said the milk picked up on this run and milk picked up later on AP 03 03 was dumped onto a field at the Denby home farm. He explained that two water trucks were used and DFO staff followed both trucks.
Mr. Denby said the appellants contacted the DFO on AP 04 03 and attempted to get their milk picked up, but were told they had been cut off from the market for sanitary reasons, and that they had violated the Milk Act. He said they then decided to ship milk to Wisconsin. He said they picked up milk from the three farms on AP 05 03 and AP 06 03 and pumped it into a tanker on the Denby farm. He explained they sent a decoy truck out and DFO staff followed it. He said a truck that hauled the milk to the U.S. border was also followed by DFO staff.
Mr. Denby said that load was held in detention for 22 days, as the FDA had received reports the milk was unsanitary and could contain a narcotic. He said the quality tests showed the milk was fine but that it was ultimately destroyed, as it had been stored too long. He said his farm had a good record for quality milk. However, he said that his somatic cell count was higher than usual since being reinstated to the market and he suggested there was a problem with the milk testing system.
Mr. Denby told the Tribunal he was ultimately reinstated and able to ship milk to the DFO on
AP 30 03. He explained he was required to sign an undertaking and that he understood that meant that there would be no further action taken against him.
Mr. Denby said he was under a great deal of stress in April 2003 as he could not ship his milk to the DFO for a good return; he felt the DFO was frustrating his attempts to develop an alternative market; he was under surveillance by the DFO; and he felt that the DFO had more authority than the police. He also said his reputation in his neighborhood was damaged.
Mr. Denby said that on AP 09 03 he began to investigate the possibility of having some of the Ontario milk producers listed on his FDA permit licensed by the State of Wisconsin. He said he had difficulty obtaining documents from the FDA and the DFO and he believed the DFO was working against him. He suggested that DFO staff had used their authority to inspect farms for raw milk quality in order to investigate his marketing practices.
Mr. Denby said that two tankers of milk were shipped to the border with the intention of disposing of the milk as a waste product. He said they were detained in Niagara Falls and ultimately returned to the Denby farm and spread over 25 acres of land. He explained there was a problem as the milk in one tanker had exploded while samples were being taken at the border. He said he did not know who removed the seals that were placed on the tankers at the border.
In response to questions, Mr. Denby indicated:
He was aware that the jurisdiction of the FDA began at the border.
He changed his marketing plan several times to address DFO concerns.
He intended to pay Ontario milk shippers for milk sold in the US through IDDBA.
He originally intended to export milk for the food market but changed this to a waste disposal milk plan in April 2003.
The milk that was exported to the U.S. could have been used if it had not been detained at the border. He had expected to be paid for the milk, if it had been of saleable quality.
Additional milk produced by the appellants in April 2003 was disposed of in Ontario. He had intended to dispose of some of this milk in the U.S..
He had been hopeful that milk shipped to the U.S. could be salvaged and used in cheese production.
DFO did not authorize him to dispose of the milk. It did not normally authorize the disposal of milk that producers voluntarily withhold from the market.
He had received two letters from Mr. Spurr warning him not to implement his marketing system, one on MR 24 03 and one on MR 31 03.
He felt he was in a similar position to the Georgian Bay Milk Co. which had been allowed to continue to export milk while it awaited a hearing. He understood that company had export contracts registered on an Export Contract Exchange (ECE) prior to DE 31 02.
In April 2003 he believed his licence and quota were in jeopardy.
He had always produced over-quota milk. He participated in two export programs sanctioned by the DFO but maintained quota as well and shipped to the domestic market.
Mr. Denby also clarified the movements of several tankers and tractors.
Later in the hearing, Mr. Denby was recalled as a witness to answer questions about drafts of an Agreement between Liberty Milk and International Dairy Direct. Mr. Denby clarified that the signed version dated AP 06 03 was the one that was in effect. He said the agreement was made as a result of a decision made on AP 01 03 to ship milk into the disposal market. He said it was Mr. Dickenson’s responsibility to ensure the paperwork was in order at the border. Mr. Denby also confirmed that he and the other appellants had initiated a court action against Liberty Milk to receive payment for milk that was shipped to the U.S. and milk that was detained at the border.
Mrs. Betty Denby, appellant
Mrs. Betty Denby testified that she was a partner in the Denby dairy operation and that she dealt with bill payments. She said that Mr. Bill Denby had been the key decision maker for 10-12 years. She said she signed the undertaking provided by the DFO and understood that milk would be shipped the next pick-up day and that would be the end of the matter. She did not recall seeing a ‘cease and desist’ order issued by the DFO.
Mr. John Tripp, witness
Mr. John Tripp told the Tribunal his business was delivering water but that he was asked to transport milk in April 2003. He said he had never been a milk transporter or bulk tank grader. He said his truck was once used to transport milk and that he used the same cleaning solutions on his truck as dairy farmers used. He verified that he drove a truck into a field on the Denby farm on AP 03 03 and that Mr. Bill Denby opened the valve to let out the milk. He said he was not aware that he required a licence to transport milk and he did not open a registered letter sent to him by the DFO. He said he thought the police would have contacted him if he was doing anything illegal. He explained that he did not require a special licence to haul water.
Mr. Wayne Hope, appellant
Mr. Wayne Hope told the Tribunal he and his wife Isobel Hope held a DFO milk licence but had decided to leave the dairy industry and had leased their farm, cows and equipment to their son Steve Hope. He said they tried to sell their remaining quota on the DFO exchange but DFO had not allowed the sale due to alleged infractions of DFO regulations. Mr. Wayne Hope said that it was Mr. Steve Hope that was involved in the operation in April 2003, and that Mr. Steve Hope did not receive any documents from the DFO indicating he had done anything wrong. Mr. Wayne Hope said that he had received documents from the DFO but he did not take the documents seriously as he did not think the DFO could take his quota away when he had done nothing wrong.
Mr. Hope said the farm where the milking herd is housed does not have any residences on it and the laneway was blocked with farm equipment to prevent persons entering the farm.
Mr. Hope testified that he was involved with the farm business in an advisory capacity in early April 2003, and that he and Mr. Steve Hope had accompanied the tanker of milk shipped to the U.S. as far as Windsor, Ontario.
Mr. Hope testified that when he signed an undertaking provided by DFO staff he understood he would not be paid for milk shipped off the farm on AP 03 03, AP 05 03 and AP 06 03. He said he believed he had done nothing wrong and the matter would be sorted out.
In response to questions, Mr. Hope indicated:
He was unsure of the volume of milk produced on the Hope farm in April 2003.
He and his son asked DFO staff to leave their farm on AP 02 03 as they did not think it was appropriate for them to be there.
He did not think the DFO had the authority to cancel quota and his licence; but he was planning to have his licence cancelled after the last of his quota was sold.
He was not aware that bulk tank graders were agents of the DFO.
He accompanied Mr. Denby to a meeting with the FDA regarding the tanker of milk that exploded because he wanted to ride in a small plane.
He met Mr. Kevin Dickenson of Liberty Milk in April 2003.
He was present when the Hope farm was reinstated to ship milk to the DFO.
He leased his farm to his son, effective AP 01 03.
He was now active in the business again. Mr. Steve Hope and another son also work on the farm.
Mr. Dale McFeeters, Appellant
Mr. Dale McFeeters testified that he had been a dairy farmer since 1978 and that his farm was originally a sole proprietorship but was incorporated in 1997. He said that he and his wife, who are separated, were the shareholders.
Mr. McFeeters told the Tribunal he had not been prepared to ship milk to the DFO at a loss. He said milk picked up on his farm on AP 02 03 and AP 03 03 was dumped on the Denby farm. He said milk shipped from his farm on AP 05 03 and AP 06 03 was shipped to Wisconsin.
Mr. McFeeters said he remembered signing the undertaking prepared by the DFO, as his estranged wife was required to sign it as well before the farm could be reinstated so milk could be shipped to the domestic market.
In response to questions, Mr. McFeeters indicated:
He had shipped milk in the export market for approximately two years and was shipping approximately 60% of his production to the export market when the program was discontinued.
He had expected to be able to continue to ship milk through IDDBA, after his contract with Internat Dairy Services expired in January 2003. He understood he would receive domestic price for milk shipped to IDDBA – approximately $62/hl.
He had received at most $38/hl under the export program that was discontinued on DE 31 02.
He paid $500 to IDDBA and understood it was a membership fee to join Liberty Milk. He expected to be licensed as a Wisconsin milk shipper.
The plan to ship disposal milk was made over the telephone and he did not expect payment for disposal milk
He attended a meeting with the FDA with Mr. Wayne Hope and Mrs. Gwen Denby.
He agreed that the term salvage milk was used at the meeting with the FDA. He said if milk could be salvaged he would have accepted payment for it.
The cost of having Mr. Tripp transport milk was split equally between himself, Mr. Bill Denby and Mr. Wayne Hope.
He had not paid any other costs and was not aware of the cost of disposing of milk.
He authorized the milk pick-ups from Darmar Farms Inc. in April 2003.
He and the other producers involved were determined to dispose of milk as a protest, as the DFO would not pay for it.
He received a ‘cease and desist’ order which was hand delivered by DFO staff. He received it before milk was shipped to the U.S. and after receiving a verbal notification that he had been shut-off from the market.
He decided to export milk in April 2003 after he was shut-off from the market. He was concerned that he would be fined by the Ministry of the Environment if more milk was dumped. He was aware that Mr. Denby had a FDA permit.
He was not involved in arranging the trailers used to ship milk to the U.S..
He briefly met Mr. Kevin Dickenson in April 2003.
A document in one of the exhibits contained incorrect information. He signed it under duress as his wife would not sign the DFO undertaking unless he signed this document, which was prepared by her lawyer.
He milked 100 cows and farmed 770 acres.
He understood the WTO Appellate Body had only ruled against subsidized exports, not exports by private brokers or non quota holders.
DFO Case
George MacNaughton, witness
Mr. George MacNaughton told the Tribunal he worked for the DFO as the Manager of the Raw Milk Quality Program and the Manager, Farm Policies and Programs. He said he was appointed as an inspector by the DFO and also as a fieldperson for the Raw Milk Quality Program.
Mr. MacNaughton explained that he was notified of an advertisement placed in the Ontario Farmer by Mr. Denby in a letter from Mr. Spurr. He said a staff meeting was called to develop an action plan for dealing with producers shipping milk in contravention of DFO regulations. He said letters were sent to several producers and his staff had 19 producers under surveillance on AP 01 03. He said milk was not picked up at four of those producers’ farms. He said by AP 02 03 only the appellants’ farms were under investigation.
Mr. MacNaughton said he coordinated the surveillance operation and entered staff reports into his computer as they were received. He said he contacted the Lindsay branch of the Ontario Provincial Police (OPP) before the investigation was initiated to apprise the police of the situation, and during the investigation when he was concerned there was a potential for violence. He said his staff had some difficulty gaining access to the appellants’ farms.
Mr. MacNaughton said the appellants were shut off from the market on AP 04 03 due to concerns about milk quality. He said when staff were prevented from viewing activities on a farm, the farm is suspended from the marketplace as it cannot be inspected and it is assumed it is not up to specifications. He said the water truck and pump used by the appellants in early April 2003 did not meet the minimum quality standards and the milk was not sampled by a licensed bulk milk tank grader. He said he and his staff had delivered ‘cease and desist’ orders to the appellants on AP 03 03.
Mr. MacNaughton said he spoke to Mr. Bill Denby and Mr. McFeeters on AP 04 03 and AP 05 03 and he understood they wanted to be reinstated to the market, on the condition that they be able to determine where their milk was allocated. He explained that all three farms were subsequently found to meet Grade A standards and were reinstated on MY 01 03, after the producers had signed undertakings. He said DFO then recommenced picking up the appellants’ milk.
Mr. MacNaughton confirmed that he and his staff had observed milk transported to the Denby home farm and Mr. Tripp’s residence from the McFeeters and Hope farms; and had followed the tanker which transported milk to the U.S. as far as Windsor.
Mr. MacNaughton confirmed that he had written to the FDA in support of Mr. Denby’s application for a permit for IDDBA. He said he later contacted the FDA in late March 2003 to let them know what was happening. He said the Director, Mr. Peter Gould wrote the FDA on AP 03 03, with regard to concerns about the quality of milk being picked up on three Ontario farms by IDDBA. Mr. MacNaughton said he could not attest to the quality of any milk marketed outside the DFO. He said he had contact with staff at the Departments of Agriculture of several northern states with regard to milk exported from the appellants’ farms.
Mr. MacNaughton said his staff periodically monitored the appellants’ farms after AP 06 03. He said they saw one trailer believed to contain milk moved to Oshawa on AP 24 03. He said in total they saw six trailers of milk in April 2003, of which one made it across the border and two were turned around at the border. He said he removed the FDA tags on the two trailers that were turned around at the border and replaced them with DFO seals. He said he believed those two trailers were parked at Terratec Environmental Ltd. in Niagara Falls from AP 28 03 until the milk was disposed of on fields in May 2003. He said DFO had tested samples of the milk from the tanker that had exploded but could not determine the cause.
Mr. MacNaughton also said:
He was personally on the Hope farm twice and spoke first to Mr. Wayne Hope. He said he only briefly spoke with Mr. Steve Hope.
Mr. Bill Denby gave him a revised business card on AP 02 03. This card indicated he was in the disposal milk business.
He recalled a discussion at a coffee shop with Mr. Bill Denby on AP 03 03. He said he wanted to be sure that Mr. Denby was aware of the consequences of his actions.
On AP 05 03, Mr. Denby showed him a copy of a contract he had with Liberty Milk but did not let him keep it. The contract was unsigned.
DFO staff did not view the disposal of all the milk produced in April 2003, as some was to be spread at 2:00 a.m..
He did not tell the appellants that signing an undertaking prepared by DFO would resolve all their problems. He did advise them in early April that the sooner they signed an undertaking and were reinstated into the market the better off they would be.
He did not have the authority to assess penalties for infractions of marketing regulations, but spoke from his observation of DFO actions in past incidents.
DFO had no way to influence laboratory results on milk samples collected from producers.
In response to questions, Mr. MacNaughton indicated:
Raw milk quality was a provincial responsibility but DFO administered the quality program.
Three staff meetings were held in late March 2003 to develop a course of action to respond to potential regulatory infractions.
DFO has a written protocol for investigations involving the OPP.
The Denby-Hope-McFeeters investigation was the largest DFO staff had ever undertaken.
DFO staff and a private individual followed the tanker that crossed the border at Windsor. The individual was not compensated. Mr. MacNaughton declined to provide the name of the private individual when asked to do so.
There was no evidence that milk produced on the appellants’ farms during the time they were cut off from the market, was shipped into the domestic market.
Milk produced on a farm and fed to calves on that farm does not have to be marketed through the DFO as long as it is not first put into the bulk tank.
Milk in the bulk tank that is not marketable can be disposed of under the authorization of DFO. It may be mixed with manure on farm, or picked up by a sewage operator. If the producer disposes of it, DFO does not have to authorize the disposal, but staff follow up when no milk is found where it would routinely be picked up.
It is not a common practice to move milk from one bulk tank to another tank on a different farm.
The Milk Act provides him with the authority to inspect milk conveyances.
Producers were now limited in how much over-quota milk they can produce, as there is no payment made for milk shipped in excess of 103% of their quota.
Mr. Good objected to Mr. MacNaughton’s refusal to name the private individual involved in surveillance of the tanker truck. The Tribunal decided the name of the individual was not necessary, but stated that Mr. MacNaughton’s refusal to name the individual could be raised in summation.
Peter Gould, witness
Mr. Peter Gould testified that his position as Director of Regulatory Compliance, Raw Milk Quality is a position appointed by the provincial Minister of Agriculture. He said that he also worked for the DFO in the capacity of marketing, milk supply allocation and quota administration. Mr. Gould told the Tribunal that in March1998, the DFO took over the functions of inspection and quality enforcement from the Ministry of Agriculture and Food. Mr. Gould said that there is no interference by the Board of Directors with the functions of the Director of Regulatory Compliance. He stated that his dual roles were separate and distinct. He said that he administers the Raw Milk Quality Program pursuant to Ontario Regulation 761 under the Milk Act.
Mr. Gould told the Tribunal that:
He appoints field staff/inspectors whose duties are to inspect farms, milk houses, investigate the cause of problems, and advise producers.
If field staff/inspectors are not permitted to access farms, the farm is shut-off until the access difficulties are resolved.
As Director of Regulatory Compliance, he may set the criteria necessary for reinstatement to market following shut-off.
Field staff/inspectors have the authority to inspect yards, barns, cow areas and any conveyance that moves milk that is to be offered for sale.
He wrote a letter dated AP 03 03 to Mr. Robert Schilder of the U.S. Public Health Service, Division of Dairy and Egg Safety. In the letter he described the conditions surrounding the milk pick up on the appellants’ farms and indicated he could not vouch for the quality of the milk. In the letter, he also stated that Mr. Denby had told him that the milk was destined for import to the U.S. and suggested that the FDA should revoke the importation license for the milk which was to be shipped under the auspices of International Dairy Direct.
The FDA recognizes Ontario milk quality standards as equivalent to the standards for quality that are required in the U.S., but only on farms inspected by the DFO.
The appellants were notified by way of letters dated AP 04 03 that their farms had been shut-off from market. The letters also referred to an 'undertaking' that was to be signed by the appellants with respect to their obligations for reinstatement to market.
Several tanker trucks loaded with milk from the Denby, Hope and McFeeters farms were sealed as a precaution against the sale of the milk they contained. Two of the sealed tanker trucks were taken from Niagara Falls where they were sealed, to the Denby farm, where the milk was spread on the fields. The DFO was not able to confirm that the tanker trucks were emptied.
The appellants were served with orders dated AP 03 03 by the DFO wherein they were to ‘cease and desist’ from selling milk to any party other than the DFO. The ‘cease and desist’ orders quoted Section 3, (1), (2), (3), and (4) of DFO regulation 08/03. The DFO had the authority to make such an order because its obligations extend to making licensing decisions pursuant to the Milk Act and its Regulations.
He attended a DFO Board hearing on MY 02 03 where he commented on the nature of the activities of the appellants during the month of April 2003. There was no objection by the appellants to the Board's consideration of their activities during the full month of April 2003.
The DFO re-regulation in light of the World Trade Organization ruling was undertaken late in February 2003. Under the previous regulation non quota holding producers were permitted to market milk on the Export Contract Exchange. Re-regulation would permit existing contracts by non quota holding producers to be filled until AP 30 03. If non quota holding producers signed an agreement to purchase a minimum of five kg of quota by JL 31 03, they would be permitted to continue to market milk.
The ECE contracts no longer exist and producers must market milk through the DFO.
In his view, the appellants had a clear intention and a specific plan to market milk in the U.S.
Mr. Gould responded to questions that:
There is an administrative agreement that outlines his duties as Director of Regulatory Compliance Raw Milk Quality Program from the transfer of the authority from OMAF.
There are no specific provisions under Ontario Regulation 761 of the Milk Act for scheduling farm inspections; nor is there any provision under the regulation for the involvement of the DFO in matters determined by the Director of Regulatory Compliance.
It is conceivable but not likely that raw milk quality matters could be positioned to influence market supply of milk.
The actual files of the Director of Regulatory Compliance are physically available to both Marketing and Raw Milk Quality staff at the DFO.
No milk was picked-up by the DFO at the Denby, Hope or McFeeters farms in the month of April 2003. The appellants were reinstated to market at the end of April 2003, by virtue of signing the 'undertaking'.
DFO has the jurisdiction to hold hearings to determine the status of producer licenses.
References to specific dates in the Notices of Hearing prepared by the DFO prior to its hearing were not meant to release the appellants from responsibility, if findings from the investigation by the DFO upheld the allegations of violations under the Milk Act, during the entire month of April 2003.
He believed that it was reasonable to assume that activities by the producers during the entire month of April 2003 was the subject of the DFO hearing. He noted that letters to the appellants dated MY 05 03 reminded them that counsel to the appellants did not contest the facts contained in the documentary evidence of the Board at the hearing.
In reaching its MY 05 03 decisions the DFO Board did not overreach its authority to include jurisdiction to penalize violations under Ontario Regulation 761 of the Milk Act.
The decisions of the DFO were stayed by virtue of the appeals to the Tribunal, therefore the appellant producers were able to continue to ship milk.
Mr. Gould was questioned with regard to the tanker trucks that were sealed. He responded that:
DFO seals on two tanker trucks located in Niagara Falls, Ontario were removed without DFO consent.
At its request, George McNaugton removed FDA seals from the two tanker trucks parked at Niagara Falls so that the FDA could take additional samples.
The seals on the tanker truck located at the Denby farm were removed with the permission of the DFO.
The DFO sealed the tanker trucks as it has a responsibility and authority under Ontario Regulation 761 to ensure that the disposal of milk is properly carried out.
The unauthorized removal of seals by someone at the Denby farm was not one of the issues dealt with at the DFO hearing because it occurred after the signing of the 'undertakings' and no regulatory action was taken as a result.
Mr. Gould also stated:
He did not impose a penalty for use of illegal hoses and pumps used by the producers because an investigation of their activities was ongoing.
He considers milk to be 'marketed' whenever a connector is made to the bulk tank.
It is sometimes the case that a producer will have a tank full of milk that will not be picked up due to shut off. It is the shut off producer’s responsibility to dispose of this milk; if he/she disposes of milk by dumping it on a field, this is an exception to what is considered marketing.
Mr. Bill Denby was open with him about his actions.
Mr. Bill Denby's statement of claim initiating a lawsuit clearly demonstrated his intentions with regard to marketing milk.
Gordon Coukell, witness
Mr. Gordon Coukell Chair, DFO told the Tribunal that licensed producers in Ontario must market milk to the DFO. He stated that the milk is considered to be offered for sale when placed in the bulk tank and that milk is considered sold when it is removed from the bulk tank by the DFO. Mr. Coukell explained that at the point of sale milk is sampled and graded, and that the price paid is based on the milk’s constituent components. Mr. Coukell said that all Ontario milk is co-mingled; therefore poor quality milk from one producer’s tank can spoil a truckload of milk.
Mr. Coukell stated that he was present at the MY 02 03 hearing for the appellants. He stated that neither Mr. Gould nor Mr. McNaughton were present during the DFO’s deliberations. He stated that the DFO made its decision from the hearing based on evidence filed in its document brief and audio taped voice mail messages. He said the appellants gave verbal evidence at the hearing.
Mr. Coukell submitted that:
The DFO has the authority to issue milk production licenses and to cancel licenses due to non-compliance under the Milk Act. In this context, the DFO may consider the milk marketing history of the producer and quality of milk production under Ontario Regulation 761.
The operation of the DFO Board and the Raw Milk Quality Regulation program is integrated.
The DFO Board of Directors becomes involved with milk quality issues in situations where the Director of Regulatory Compliance refers a producer to the Board due to repeated violations from provisions of the Milk Act and/or Ontario Regulation 761.
Many producers were affected by the WTO decision but they adjusted their production to comply, by purchasing quota and/or selling cows.
In April 2003 DFO decided not to pay producers for milk produced in excess of 103 percent of individual quota. This decision was made to reinforce to producers that there is no market for large amounts of surplus milk. A three percent sleeve was determined to encourage producers to produce 100 percent of their individual quota.
The Canadian Milk Supply Management Committee (CMSMC) also adopted a policy of no payment for over-quota milk for all provinces that exceed their nationally allotted quota for milk production.
A group known as Dairy Farmers of Justice and headed by Mr. Bill Denby opposed the zero payment policy for milk shipped in excess of 103% of quota.
The appellants knew that their actions were in deliberate contravention of the Act and Regulations under which milk in Ontario is produced. The appellants had no regard for human health issues, or marketing regulations with regard to their production of milk.
The activities of the appellant producers were unprecedented and unique. The DFO repeatedly warned them that their activities were in violation of the statutes and DFO General Regulations.
The DFO imposed a penalty that it felt was commensurate with the seriousness of the violations.
Mr. Coukell responded to questions that:
Georgian Bay Milk Company is presently permitted to market milk to an agent other than the DFO until NO 30 03. It is exempt form DFO General Regulation 08/03 by virtue of a decision of the Ontario Minister of Agriculture.
Producers have a right to refuse field staff/investigators access to their farms, but to do so may result in being shut off from the market.
The DFO Board specified marketing issues in its Notice of Hearing for the appellants, but it became clear during the hearing that there were quality issues as well.
There is an unwritten understanding among DFO staff that they are not to interact with DFO Board members.
He has never had a conflict of interest issue during his tenure as Chair.
He saw a printed advertisement in the Ontario Farmer that was placed there by Mr. Bill Denby. The advertisement indicated that International Dairy Direct held export contracts to the U.S. and needed producers to fill them. He did not have any knowledge of where or by whom the milk would be processed in the U.S..
Mr. Bill Denby invited him to come to his farm to observe the activities. He did not visit the Denby farm. He understood that DFO staff were looking into the situation and felt that his interference was not necessary. It appeared that Mr. Denby was not attempting to hide his activities.
Mr. John Karn, Secretary to the DFO, drafted the ‘cease and desist’ orders that were delivered to the appellants. Mr. Coukell reviewed the wording and added his signature.
The ‘cease and desist’ orders refer to sections of the DFO General Regulation 08/03 that were being contravened by the appellants.
The DFO Notice of Hearing specifies the same sections of DFO General Regulation 08/03 that were contravened and it states dates on which the violations took place.
The removal of milk from a bulk tank by an unlicensed operator is considered to be marketing. If milk is unsuitable for sale due to cows freshening or being treated with antibiotic it is often fed to calves. In his experience milk for calf feed has never been removed from the farm.
He did not have any involvement in drafting a letter to Mr. Schilder, FDA, that described the situation surrounding shipments of milk from the appellants’ farms.
The Secretary to the DFO, Mr. John Karn, liaises with legal counsel to ensure that the DFO makes decisions within its legal authority.
He is not aware of any time limitation that governs the sending or receiving of Notices of Hearing by DFO.
An unlicensed producer may apply for licensing when his premises have been graded A, through inspection.
There was no involvement at the federal level with the planning and implementation by DFO and FPMC for the ECE, which commenced operating in September 2000.
The ECE operated under an exemption provided for under DFO General Regulation 03/02 and 03/03 but was deleted under DFO General Regulation 05/03 as of March 1, 2003.
Mr. Good requested that the record show, that the Tribunal denied a request to introduce further evidence with respect to how the DFO regards a stay of its decisions pending the outcome of an appeal to the Tribunal.
Summations
Donald Good
Mr. Good told the Tribunal that the appeal before it was very significant to the appellants as the fines ranged from $135,000 to $270,000. He said that the cancellation of their licenses would disrupt a way of life for the appellants, whose families had been dairy farmers for several generations.
Mr. Good said that the DFO's powers were not unique and that the Horse Racing and Securities Commissions were similarly empowered to police, prosecute and judge their members. He submitted that the DFO's ability to self regulate once it accepted the responsibility for the raw milk quality program in 1998 was compromised. He said the DFO Board could be in conflict of interest. Mr. Good reminded the Tribunal that testimony by Mr. Gould and Mr. Coukell indicated that DFO staff hold joint responsibilities with regard to marketing and quality and that the DFO operational method is integrated. He suggested that the DFO Board had allowed milk quality concerns influence its decision with regard to the alleged regulatory infractions.
Mr. Good told the Tribunal that Mr. Bill Denby had been prevented from casting proxy votes at a DFO annual meeting, in an effort to defeat the budget and the current Board of Directors, because the Board did not view him as an ally. He said it was unfair that the same Board considered his case and decided it. He submitted that the appellants believed there was an apprehension of bias because of the actions of the DFO.
Mr. Good submitted that the present matter before the Tribunal was a hearing de novo and that the Tribunal was not obliged to defer to any rulings by the Board. He said that the producers came before the Tribunal with a clean slate and that the onus is on the DFO to prove allegations of wrong doing, although most of the facts of the matter were not in dispute.
Mr. Good stated that the key issue was whether or not an appeal by IDDBA acted as a stay on DFO General Regulation 08/03 such that the regulation was not in effect. He said that if the Regulation was stayed, a producer could not violate that regulation. Mr. Good said that IDDBA challenged the MR 14 03 decision of DFO to re-regulate which affected a stay of DFO General Regulation 08/03. He argued that with respect to Mr. Bill Denby and IDDBA the stay of the DFO decision was in effect until it was lifted AP 17 03.
Mr. Good submitted that Mr. Spurr's insinuation that Mr. Bill Denby withheld information regarding his activities is untrue. He said that the contract between Liberty Milk and IDD was not an issue of the present hearing. Mr. Good explained that the export marketing plan for IDD was a work in progress at the time the WTO ruling was made and that its plans were never concealed from the DFO.
Mr. Good told the Tribunal that the purpose of the DFO hearing was not clearly indicated. He said producers accused of wrongdoing with possible penalties have a right to know specifically what the charges are. He said that the producers were defending their activities on the days that were specified on the DFO Notice of Hearing.
Mr. Good said that conflicting testimony from Mr. Gould indicated that farmers were responsible for disposing of any milk in their bulk tank if they were shut off, but also that removing milk from a bulk tank is considered marketing. He submitted that no evidence was presented to prove that the appellants intended to market milk that eventually found its way onto a field on the Denby farm. Mr. Good explained that intention may imply an action but that intention was not proof of an action. He said that with respect to AP 05 03 and AP 06 03 it was never disputed that attempts were made to market milk other than to DFO on those dates. However he pointed out that although a tanker truckload of milk cleared the border on AP 06 03 it was never processed into the food system.
Mr. Good asked the Tribunal to overrule the decision of the Board on the grounds that there were no violations to the regulation made on the dates alleged by the DFO. He reminded the Tribunal that the appellants had no conflicts with the DFO prior to April 2003. He asked that, in light of the producers’ prior records, if the Tribunal did find that the producers were guilty of the alleged violations the penalties should be cancellation of 0.1 kg of quota for each producer and no recovery of over quota production. He submitted that there was a disagreement with regard to the effect of the stay and the rights of the parties. Mr. Good stated that the appellants attempted to develop an export marketing program that was legal and that it was their right as citizens to take any action that is not prohibited. Mr. Good asked the Tribunal to quash the decision to revoke the appellants' licenses.
Geoffrey Spurr
Mr. Spurr told the Tribunal that the matter before it was not limited to the presentation of the parties at the DFO hearing. He said the activities of the appellants during the full month of April 2003 should be considered. He stated that the producers did not stop any of their activities until all their efforts were defeated. He also said that prior to AP 17 03 the status quo was that producers could only market milk through the DFO.
Mr. Spurr said that the appellants had full knowledge of the risks and consequences of their actions. He stated that Mr. Bill Denby began a partnership with Mr. Jim Skinner under the name of International Dairy Direct and held discussions with Liberty Milk of the U.S.. He said that his joint venture with Mr. Skinner never held an export contract under the ECE, therefore, the exportation of milk could not be considered as the 'status quo', as it never happened. Mr. Spurr said that Mr. Bill Denby never took issue with DFO telling him that his activities were illegal. Mr. Spurr said that the scheme to export milk was clearly planned, as there was co-ordination of trucks, pumps, hoses and a pick up schedule to carry out the plan. Mr. Spurr said that the intent of the plan clearly indicated the producers' objectives.
Mr. Spurr said that Mr. Wayne Hope indicated that he was marginally involved and then changed his testimony to indicate that he was deeply involved in the scheme. He said that Mr. Wayne Hope had spoken of getting out of the dairy industry but that he traveled to the Canadian-U.S. border in a vehicle accompanying a tanker truck carrying milk. He said that Mr. Hope also accompanied Mr. Bill Denby to a meeting with the FDA in Buffalo. He said Mr. Hope had produced an undated lease that contained no information with regard to quota registered to Mrs. Isobel Hope and Mr. Wayne Hope. Mr. Spurr argued that neither Mr. McFeeters nor Mr. Denby gave any indication that Mr. Hope was only peripherally involved in the scheme.
Mr. Spurr told the Tribunal that only certain provisions of the DFO General Regulation 05/03 were stayed by virtue of the IDDBA appeal, and that because IDDBA had no export contracts, it was not exempt from the requirement to market milk through the DFO. He stated that even if the full regulation was suspended, operations would be carried out under the previous regulation, which also required that milk be marketed only to the DFO. Mr. Spurr argued that the DFO re-regulation resulted in an amendment of DFO General Regulation 03/03, to DFO General Regulation 05/03. He said Regulation 05/03 revoked an exemption for producers using the ECE as an avenue for marketing milk. Mr. Spurr cited a previous case that was before the Tribunal in support of his position that the scope and effect of a stay does not apply to all subsequent appeals.
Mr. Spurr stated that there is no apprehension of bias in the appeal before the Tribunal. He cited cases which he said showed that the hearing of a matter by the Tribunal remedies any apprehension of bias at a prior proceeding. Mr. Spurr said that the appellants had ample opportunity at the pre-hearing to raise any issues of bias but did not. Mr. Spurr said that the present hearing before the Tribunal is completely new with new evidence that was not brought forth at the DFO hearing.
Mr. Spurr told the Tribunal that numerous activities are defined as marketing, under the Milk Act. He said that the milk quality aspects of Ontario Regulation 761 are relevant to the marketing violations because the milk was marketed for human consumption.
Mr. Spurr told the Tribunal that there was no evidence of inappropriate behavior by DFO field staff and inspectors appointed by the Director of Regulatory Compliance. He said that being licensed to produce milk is a privilege which bears the responsibility to produce and market milk pursuant to Ontario Regulation 761. He said that in this matter the producers disregarded the authority of the DFO and of the marketing system. Mr. Spurr argued that the producers persisted in their activities despite ‘cease and desist’ orders, advice not to proceed and surveillance. Mr. Spurr argued that there were no mitigating factors in the matter before it and that the producers do not acknowledge any inappropriate behavior.
Mr. Spurr said that the producers attempted to disguise their activities by disallowing DFO field staff/inspectors access to their farms. Mr. Spurr stated that the DFO made a harsh and difficult decision based on the evidence before it. He said the intent of the decision of the DFO was to send a message that this type of behavior will not be tolerated. Mr. Spurr said that the Tribunal had upheld the decisions of other marketing boards where the penalties included cancellation of quota/licenses. Mr. Spurr asked the Tribunal to uphold the decision of the DFO.
Donald Good
Mr. Good made submissions in reply to Mr. Spurr's summation. He told the Tribunal that no greater reliance should be placed on the DFO’s understanding of the definition of a stay, than on Mr. Denby's interpretation of a stay. Mr. Good stated that the Mr. George McNaughton treated Mr. Bill Denby and IDDBA as one entity so that it is not appropriate to disassociate Mr. Bill Denby from IDDBA and its former appeal.
Mr. Good said that the appellants had never denied that they were in violation of some of the provisions of the regulations but that they maintained that they did not violate the sections of the regulation that they were called upon to defend at the DFO hearing. He stated that it was not the case, as Mr. Spurr stated, that a new matter with new evidence was presently before the Tribunal. He said that the appeal of the producers is from the charges and decision determined by the DFO. Mr. Good said that the appellants consented to the documentation recording activities for the full month of April 2003, because of the serious nature of the penalties and not because of any degree of guilt or innocence. Mr. Good said that to agree with Mr. Spurr's assertions would be to characterize the present appeal as a defense by the appellants against charges other than those determined at the MY 02 03 DFO hearing. Mr. Good pointed out that the producers had complied with the DFO rules and regulations since MY 01 03.
The Findings
The appellants allege that their hearing before the DFO was unfair, as DFO Board members were prejudiced toward the appellants and as the appellants were not given proper notice of the subject matter of the hearing. Proceedings before this Tribunal are ‘hearings de novo’ which means that it looks at all the evidence with a fresh view; it does not rely upon findings made by another body. Therefore, any problems with the equity of the process followed by the DFO and any biases on the part of individual DFO members, are not relevant. The Tribunal hearing is separate and distinct from the DFO hearing, and as such provides a remedy to any flaws of the DFO hearing. It is therefore not necessary for the Tribunal to make a determination as to whether or not there were inequities in the appellants’ hearing before the DFO.
On the testimony of the appellants, it was clear that milk was transported and marketed from the Denby, Hope and McFeeters farms to Liberty Milk, through IDDBA. This was supported by the testimony of Mr. MacNaughton. The regulations clearly state that milk must be marketed to the DFO. The appellants did not have the option of marketing their milk to IDDBA, Liberty Milk, or any other entity aside from the DFO. The Tribunal finds that the appellants were in violation of DFO Regulation 08/03 in April 2003. It was clear from some of the appellants’ own testimony that they deliberately chose to withhold milk from the DFO in protest of regulatory changes. Further, when they tried to be reinstated to the market on AP 04 03, they attempted to impose a condition to ensure their milk was marketed into a disposal market. It was also clear that they then attempted to market milk for export, in contravention of Regulation 08/03.
The Tribunal heard arguments to the effect that the regulations did not apply to Mr. Bill Denby, in light of a stay that was in effect as a result of an appeal by his company IDDBA in another matter. The Tribunal finds that a stay that is in effect as a result of the IDDBA appeal would be applicable only to IDDBA. It is not applicable to other businesses operated by Mr. Denby. Mr. Denby’s own testimony made it very clear that the milking operation he operated with his family was distinct from the milk brokerage business that he operated. Mr. Bill Denby is not the same entity as IDDBA. The Tribunal finds that the appellant milk producers were not exempt from the regulations made under the Milk Act by virtue of an appeal, and the associated stay, initiated by IDDBA.
The Tribunal is not restricted to considering actions taken by the appellants before AP 06 03, but it finds that the regulations were disregarded both before and after this date. However, it does recognize that the appellants have complied with the DFO regulations since being reinstated to the market in May 2003.
Mr. Hope testified that he and his wife did not participate in any marketing of milk in April 2003, except in an advisory capacity. The Tribunal does not find this to be credible, as testimony of other witnesses suggested that Mr. Wayne Hope was a decision maker and that he paid part of the costs to transport the milk in April 2003. Mr. Hope was not forthcoming in his testimony. As well, Mr. Wayne Hope and Mrs. Isobel Hope have taken steps to collect payment from Liberty Milk. The Tribunal was convinced that Mr. Wayne Hope and Mrs. Isobel Hope were in contravention of Regulation 08/03. The Tribunal finds that Mr. Hope was deeply involved in marketing milk in contravention of the regulation.
Mr. Good argued strongly that the appeals in their entirety should be granted. He said that if the Tribunal found that there should be a penalty, that the cancellation of 0.1 kg of quota per producer, and the cancellation of production credits is appropriate. Mr. Spurr argued that a penalty of 5 kg quota cancellation for Mr. and Mrs. Hope and Darmar Farms Ltd., and 10 kg of quota for Mr. John Denby, Mr. Bill Denby and Mrs. Isobel Denby, as well as the cancellation of production credits and the cancellation of all the appellants’ licences is appropriate.
The Tribunal understands that the cancellation of a producer’s licence is a severe penalty. However, in these instances the Tribunal finds that a licence cancellation is appropriate.
The Tribunal notes that the appellants were warned by DFO staff that they were in contravention of DFO regulations, and were served ‘‘cease and desist’’ orders which they initially ignored.
It is particularly important, in the face of ongoing trade challenges to the supply management system that the authority for the marketing and exporting of milk lie within the existing framework. Allowing schemes without respect to this authority places the marketing system in jeopardy. The penalties for these producers must be significant enough to discourage these producers and others from undertaking their own schemes. At the same time, producers must feel that they are able to discuss potential programs and opportunities for Ontario milk and milk producers with DFO staff and Board members.
With regard to the quota and production penalties suggested by the parties counsel, the Tribunal finds that there is some justification for assessing Mr. Bill Denby, Mr. John Denby and Mrs. Betty Denby a higher penalty than the other appellants. The evidence was that the Denby farm served as the base of operations for the alternative marketing activities and that Mr. Bill Denby was the chief coordinator of the scheme. The Tribunal finds that Mr. Wayne Hope and Mr. McFeeters were also involved in the decision making process that led to the ‘off-board’ marketing of the milk. The Tribunal notes that milk from all three farms was picked up and disposed of in a similar manner and that all three farm operators shared equally in the cost of marketing this milk.
The Tribunal also finds that the quota penalties assessed by the DFO were too harsh, but it finds that the penalty suggested by Mr. Good would not provide a deterrent. The Tribunal has decided to assess a quota penalty of 2.5 kg to Mr. and Mrs. Hope (Producer Licence #604984) and Darmar Farms Inc. (Producer Licence # 621561) and to assess a quota penalty of 6.0 kg to Mr. Bill Denby, Mr. John Denby and Mrs. Betty Denby (Producer Licence #585343). As well the Tribunal will cancel all production credits and require the appellants to dispose of all remaining quota in their possession by MR 31 04, or forfeit it to the DFO.
The Tribunal will order that the licences to produce and market milk held by Mrs. Betty Denby, Mr. John Denby and Mr. William Denby and by Mrs. Isobel Hope and Mr. Wayne Hope and by Mr. Dale McFeeters, Darmar Farms Inc. will be cancelled. The date of cancellation is the last date on which the producers hold quota, or MR 31 04, whichever comes first. DFO is to continue to pick-up milk from these quota holders for as long as they hold their licences, and meet all regulatory requirements.
Decision and Reasons
After careful consideration of the evidence filed and the submissions made the Tribunal orders:
The DFO is to cancel 6 kg of the quota fixed and allotted to Producer #585343 (Betty, John and Bill Denby).
The DFO is to cancel 2.5 kg of the quota fixed and allotted to Producer #604984 (Isobel and Wayne Hope).
The DFO is to cancel 2.5 kg of the quota fixed and allotted to Producer #621561 (Darmar Farms Inc).
All remaining quota held by the producers referenced in points 1, 2 and 3 of this order, is to be offered for sale or sold through the DFO quota exchange by MR 31 04. Any quota not sold on the quota exchange is to be cancelled by the DFO, effective MR 31 04.
No production credits may be accumulated or used by the appellants.
The DFO is to cancel the producer licences #585343, #604984, #621561 effective the last date on which the producers hold quota, or MR 31 04, whichever comes first.
The reasons for this decision are:
The Tribunal finds that the producers in question did contravene DFO regulations, and did disregard ‘cease and desist’ orders issued by the DFO.
The Tribunal finds that the regulatory infractions were deliberate and were of a serious enough nature to warrant the cancellation of these producers’ licenses to produce and market milk and the cancellation of a portion of their quota.
Dated at Ethel, Ontario the 3rd day of December, 2003.