Goyer and Green Acres Tech v. Agricorp, 2005 ONAFRAAT 14

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West Guelph, Ontario

Tribunal d’appel de l’agriculture,

de l’alimentation

et des affaires rurales

N1G 4Y2

Tel: (519) 826-3433, Fax: (519) 826-4232

Email:Tribunal@OMAF.gov.on.ca

1, chemin Stone Ouest

Guelph (Ontario) N1G 4Y2

Tél.: (519) 826-3433, Téléc.: (519) 826-4232

Email:Tribunal@OMAF.gov.on.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Goyer and Green Acres Tech v Agricorp

Goyer and Green Acres Tech v Agricorp 2005 ONAFRAAT 14

STATUTE:

Crop Insurance Act

HEARING:

March 1, 2005, March 2, 2005 and April 25, 2005

DATE OF DECISION:

May 20, 2005

2005-14

NEUTRAL CITATION:

2005 ONAFRAAT 14

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 Gilbert Goyer and Green Acres Tech from decisions of AGRICORP by which it:

1. Did not insure the entire acreage of corn and soybeans of Gilbert Goyer and Green Acres Tech in July 2003.

2. Cancelled the 2003 insurance contract between AGRICORP and Green Acres Tech.

3. Decided not to compensate them for losses in seeded corn acreage in 2003.

4. Decided not to compensate them for losses in seeded soybean acreage in 2003.

Before: John Taylor, Vice Chair; Denis Perrault, Member; Corry Martens, Member

Appearances:

Rodrigue Escayola, counsel to the appellants, Gilbert Goyer and Green Acres Tech

Stephanie Bouchard, counsel to the appellants, Gilbert Goyer and Green Acres Tech

Peter Wechselmann, counsel to the respondent, AGRICORP

Gilbert Goyer, appellant

Fred Thomson, Regional Manager, AGRICORP, witness for the respondent

Cliff Metcalfe, witness for the appellants

Francois Clement, witness for the respondent

Gerald Poupard, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Ottawa, Ontario on Tuesday, March 1, 2005, Wednesday, March 2, 2005 and Monday, April 25, 2005. Mr. Goyer and his company, Green Acres Tech, appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal from decisions of AGRICORP not to insure specific fields in 2003, cancel the contract of insurance for 2003 and pay nothing on claims for losses on soybeans and corn grown in 2003 by Mr. Goyer and Green Acres Tech.

Statutory Context

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

Subsection 3(2) of Regulation 140/96 under the Act states:

3. (2) To appeal the matter in dispute, the appellant shall file a notice of appeal with the Board and send a copy of the notice to the other party within one year of filing the proof of loss form. O. Reg. 140/96, s. 3 (2).

Preliminary Matters

Interpretation

Mr. Escayola raised a concern that one Member would hear evidence through an interpreter. He expressed confidence in the interpreter, Mr. Guy Rouleau. A different interpretation firm was used on the final day of the hearing - all testimony and final argument was made in English on that date.

Unseeded Acreage Benefit Appeals

Mr. Escayola asked the Tribunal to expand the scope of the proceeding and hear the appellants’ appeal regarding a claim for unseeded acreage benefit (USAB) for the 2003 crop year. He said his client conceded that a claim for unseeded acreage benefit (USAB) for the 2002 crop year was initiated too late and should not be heard.

Mr. Wechselmann took the position that the appeals for both the 2002 and 2003 USAB claims were statute-barred as the insured growers must bring an appeal within one year of filing the proof of loss forms. He said the 2003 USAB claim had to have been made by June 15, 2003 and the appeal filed by June 15, 2004. He said since the appeal was filed late, the Tribunal could not hear it.

Mr. Escayola said the date for filing a USAB claim had been extended to June 30, 2003 and his client had applied for a claim in time. Mr. Thomson indicated that the 2003 USAB claim had been filed on June 26, 2003. The appeal was filed with the Tribunal on November 25, 2004.

Jurisdictional Issue

Mr. Wechselmann asked the Tribunal to strike item 1 – “Did not insure the entire acreage of corn and soybeans of Gilbert Goyer and Green Acres Tech in July 2003” from the Notice of Hearing. He argued that the Tribunal did not have the jurisdiction to hear appeals of underwriting issues – what to insure and what not to insure. He also took the position that the Tribunal could not hear an appeal from AGRICORP’s decision to cancel a contract of insurance for malfeasance. He said a provision of the contract allowed AGRICORP to cancel it. He said the appellants had a remedy in the courts as they could seek relief of forfeiture.

Mr. Escayola asked the Tribunal to look at the intent of the legislation to determine its jurisdiction. He said it was clear that the Tribunal could hear disputes when AGRICORP refused to enter into a contract of insurance, and disputes regarding the adjustment of insurance claims. He submitted it could not be the intent of the statute that AGRICORP be able to shield its decisions by removing fields from a contract of insurance and by reducing the payments for certain fields. He argued it could not be the intent that a dispute over one field would be heard by the Tribunal, while a dispute over a nearby field would be heard by the courts.

Mr. Wechselmann replied that administrative law did not allow the Tribunal to extend its jurisdiction beyond that provided in the statute. He said the Tribunal could order AGRICORP to give a grower a contract of insurance, but in this case the appellants had a contract of insurance. He pointed to Section 5 of the Act and submitted that it gave AGRICORP the power to cancel contracts and impose penalties.

Mr. Escayola argued that AGRICORP was also a creature of statute and must be policed. He said the Supreme Court had ruled that administrative tribunals must look at the object of the legislation, the expertise of the tribunal and the technicality of the issues. He said insurance coverage was denied the appellants because of alleged improper farm practices and that the Tribunal was best able to judge if proper farm practices were used. He said Section 10 of the Act allowed the Tribunal to determine whether or not the appellants qualified for insurance on specific fields for which AGRICORP denied coverage. He asked the Tribunal to take a pragmatic approach to interpreting the Act.

Mr. Wechselmann said qualifying for a contract of insurance was different from being able to insure specific fields. He also said that if the appellants objected to the coverage offered by AGRICORP they should have appealed at the time. Mr. Wechselmann argued that it was AGRICORP’s role as the insurer to assess risks at the outset and determine what fields would be insured and at what coverage level. He said the intent of the Act was to limit the appeals to the Tribunal to specific types of decisions which did not include underwriting decisions.

Ruling on Jurisdiction Issues

The Tribunal ruled that it had jurisdiction to receive this appeal with respect to AGRICORP’s refusal to insure all acreage for which insurance had been subscribed. We agree with Mr. Escayola’s contention that this Tribunal is best suited to review all disputes between the insurer and AGRICORP except those which the legislation makes clear, we are not to review or hear.

There was considerable discussion as to whether the Tribunal should hear the appellants’ claim for USAB benefits. While the appellant had filed a claim for these benefits in June 2003, AGRICORP subsequently offered to honour the claim in the amount of 16 acres or so. Mr. Goyer refused to accept that offer. He took no steps to appeal the AGRICORP decision on this claim until November 2004. AGRICORP submitted that the appeal was past the limitation period of one year and therefore objected to the Tribunal entertaining the appeal on that point. The Tribunal agrees with AGRICORP that the appeal with respect to USAB coverage is not properly before this Tribunal. However, the Tribunal draws attention to the comments later in this decision about honouring the previous offer.

Adjustment of Corn Claim Appeal

Mr. Wechselmann indicated that AGRICORP did not dispute the amount of the claim for the appellants’ 2003 corn crop but said the claim had not been paid as the contract of insurance had been cancelled because of issues related to the soybean crop. He said that if the Tribunal ruled in favour of the appellants and reinstated the contract of insurance, the corn claim would be paid.

The Evidence

Gilbert Goyer

Mr. Goyer told the Tribunal he had farmed for approximately 30 years and soybeans was his main crop. He said he cultivated fields in 2003 on rented land in Navan, Alfred, Wendover and Cumberland. Mr. Goyer explained:

• The Cumberland farm was not planted in 2003.

• The Legault farm in Alfred had 40 acres sown in soybeans that were insured and a 37-acre field and a 188-acre field which were both sown in soybeans that AGRICORP would not insure.

• The Yeoman farm in Alfred had 43 acres sown in soybeans that were insured.

• The Legler farm in Alfred had 52 acres sown in soybeans that AGRICORP would not insure. The balance of that farm was in hay.

• The Wendover farm was sown in 82-85 acres of soybeans. AGRICORP insured 82 acres.

• The Navan farm was sown in 28 acres of corn, 48 acres of soybeans that AGRICORP would not insure, 33 acres which were accidentally burned down by the local co-operative and the balance was not seeded.

Mr. Goyer identified photographs of some of the fields he planted in 2003. He said the order of planting was:

• Yeoman farm in Alfred - in identity-preserved (IP) soybeans on or about MY 10 03.

• Legault farm in Alfred - 40-acre field in IP soybeans.

• Wendover farm – 85 acres in IP soybeans.

• Navan farm – in Roundup Ready (RR) soybeans, as there was a grass problem.

• Rain interrupted planting at Navan so RR soybeans were planted in an uninsured field on the Legault farm in Alfred.

• The Legler farm in Alfred was seeded next.

• Herbicide was applied at the Cumberland farm, but it was not seeded.

Mr. Goyer said he also seeded 46 acres for Lise Baillargeon in Alfred. These were harvested by Mr. Clement, who also harvested the Goyer soybeans. Mr. Goyer estimated these acres yielded approximately 18 tonne of soybeans. He said the soybeans were put into two gravity boxes – one was stored at the Yeoman farm in a building, the other was covered with a tarp and stored at the Legault property. He explained he assisted in the marketing of one gravity box of these soybeans.

Mr. Goyer testified that:

• He learned on JL 01 03 that AGRICORP would not insure all his fields. He had not been aware AGRICORP was looking at his fields before that date. Mr. Poupard and Mr. Charlebois informed him that some of his fields would not be covered.

• From early July 2003 to the end of harvest he knew exactly which fields were insured and which were not.

• He used the same management techniques in the insured and uninsured fields. All fields were burned down by herbicide application and seeded the same way, but with different varieties of seed.

• He re-seeded 15-18 acres in Alfred and re-seeded 25 acres in Navan on the advice of Mr. Metcalf, a crop advisor. Mr. Metcalf said 175 acres should be re-seeded. AGRICORP paid a partial claim for re-seeding as the seed had rotted.

• In 2003 planting conditions were difficult as there was too much rain. Conditions varied from one field to another.

• Approximately 16 acres of soybeans were damaged by gophers on the Legault farm in Alfred. That field was not insured.

• In one of the photographs submitted by AGRICORP as evidence of a field infested with weeds the adjuster is standing in a field. Mr. Goyer denied this field was his and stated that he did not farm this field. The adjuster’s truck in the background of the photo is actually parked in a field rented by Goyer.

• The IP soybeans he harvested were seeds he had grown himself.

• He had a right to harvest his uninsured acres and had no obligation to declare the yield from uninsured acres to AGRICORP.

Mr. Goyer said he started harvesting in November 2003 and the order he harvested his soybeans was: Navan farm; Wendover farm; Legault farm – 40 acre insured field; Yeoman farm; Legault farm – uninsured fields; Legler farm and finally the Baillargeon soybeans. Mr. Goyer said Mr. Clement did not know which fields were insured and which were not but that he, Mr. Goyer, told Mr. Clement to harvest the IP soybeans before the RR soybeans.

Mr. Goyer clarified that:

• Mr. Jacques Clement agreed to harvest Mr. Goyer’s soybeans and he started in Navan at approximately 6:00 p.m. Mr. Goyer pulled the grain buggy from the Clement yard to the Navan farm. The Goyer soybeans were put in the grain buggy. Approximately 11.5 tonne were harvested off the Navan farm. Forty-eight acres were harvested. These were uninsured soybeans.

• The next morning, Mr. Clement took the combine and soy table to the Wendover farm and cleaned the combine with an air blower. Some soybeans were emptied onto the ground.

• An employee of Mr. Clement brought four gravity boxes to the Wendover farm.

• Soybeans from the Wendover farm were put in gravity boxes – the grain buggy was not needed.

• Soybeans in the grain buggy were transferred to gravity boxes at Wendover.

• Mr. Goyer drove Mr. Clement’s employee to Navan, and he brought the grain buggy with the soybeans from the Navan farm to the Wendover farm. They were dumped into a separate gravity box than the Wendover soybeans as the Navan farm was planted with RR soybeans and the Wendover farm with IP soybeans.

• There were about 85 acres of soybeans at the Wendover farm but 14-15 acres were not harvested as the crop was poor. One gravity box was fairly full with 11-12 tonne of soybeans; another box had 2-3 tonne of soybeans in it.

• They next went to the Legler farm in Alfred. Mr. Francois Clement drove the combine and Mr. Jacques Clement pulled the soy table behind a pick-up truck. Mr. Goyer followed in his vehicle.

• The gravity box with soybeans from the Navan farm was left at the Wendover farm. The other three gravity boxes and the empty grain buggy were moved to Alfred by Clement employees. A tip trailer was also brought to Alfred from the Wendover farm by a Clement employee.

• The gravity boxes arrived first, then the grain buggy and then the tip trailer.

• The gravity boxes with the Wendover soybeans were dumped into the tip trailer at the Legault farm in Alfred.

• Mr. Jacques Clement harvested on the Legault farm, then moved to the Yeoman property. The grain buggy was taken to the Yeoman farm but the gravity boxes stayed on the Legault farm, in the 40 acre insured field.

• Only 33 of 43 acres at the Yeoman farm were harvested. The soybeans were put in the gravity boxes at the Legault farm. The boxes were fairly full and the tip trailer was empty.

• The uninsured acres on the Legault farm were harvested next, first the 37 acre field, then the 188 field. The B train truck was filled with uninsured soybeans from the Legault farm. Uninsured soybeans were also put in the tip trailer. All but 40 acres of uninsured soybeans were harvested on the Legault farm. The plants were immature and the soybeans had rotted in the abandoned acres.

• Francois Clement took the combine to the Legler farm. A Clement employee brought the grain buggy.

• Of the 52 acres at the Legler farm, all but 9-10 acres were harvested. Soybeans from the Legler farm were put in the tip trailer. It was then full, but not to the brim.

• They harvested the Baillargeon soybeans last and they were put in two gravity boxes.

Mr. Goyer also told the Tribunal:

• He dumped approximately 200 kg of soybeans on the ground to clean out the combine between harvesting the IP soybeans and the RR soybeans, because the IP soybeans were more valuable.

• Francois Clement was driving the combine when they left the Wendover farm.

• The Clement combine holds approximately 6 tonne soybeans, their grain buggy approximately 12 tonne, their B train truck approximately 36-39 tonne. Mr. Clement owned four gravity boxes.

• Mr. Jacques Clement gave him copies of weigh slips for three loads of soybeans.

• A load weighing 40.070 tonne dry weight was the load of soybeans from the insured fields. That weigh slip was dated NO 14 03 and had wagon load written on it.

• Weigh slips dated NO 12 03 and NO 13 03 were for soybeans harvested from uninsured acres.

• He made a mistake converting tonne to bushels when he filled out the AGRICORP Proof of Loss form. It should have been 1469 Bu; he wrote 1081 Bu because he used his mean average rather than 36.774 Bu/tonne in the calculation.

• Mr. Poupard and Mr. Charlebois met with him in Alfred and they talked about the two loads that were not declared and the two gravity boxes of soybeans that were owned by Ms. Baillargeon.

• Mr. Poupard and Mr. Charlebois calculated the number of bushels in 40.070 tonne of soybeans in his presence.

• Mr. Poupard and Mr. Charlebois did not ask him to declare the uninsured soybeans.

• Subsequently, AGRICORP cancelled his insurance and reported him to the police. He was not charged.

• The insurance on his corn crop was also cancelled.

Mr. Goyer also told the Tribunal:

• He was present during harvest except when he went to get food and coffee.

• He had rented all the 2003 fields in the past.

• A seed drill was emptied at the Cumberland farm but nothing was planted there.

• His insurance coverage had a production guarantee of 26.45 Bu/acre in 2003.

• In 2003 he insured 165 acres with AGRICORP. He harvested approximately 300 acres. He had 119 acres that were not seeded.

• There were 10-12 acres of gopher damage on the Yeoman farm and 8-9 acres of gopher damage in the uninsured 37-acre field at the Legault farm.

• He did not report gopher damage to AGRICORP as it was not a significant contributor to his losses. Wet and cold weather and late planting caused the loss.

• He never toured his fields with Mr. Poupard in 2003 and did not tell him where his fields were. He expected that Mr. Poupard knew as he had farmed the fields before. He provided the lot and concession number of the farms.

• He did not know his soybeans would not yield 26 Bu/acre until he began harvesting them. He knew there had been too much rainfall but could not predict frost. The crop needed 6-10 more days to mature.

• He did not recall if he had reported potential yield losses to AGRICORP or not.

• His soybean harvest took approximately three days.

• He filled out his Proof of Loss form – no one helped him.

• He re-seeded 43 acres at the Yeoman farm in late May 2003.

• The acres which were too poor to harvest at the Yeoman farm were the same ones that had the gopher damage.

Cliff Metcalfe

Mr. Metcalfe was qualified as an expert crop consultant. He explained he provided agronomic services to crop producers, made fertility and herbicide recommendations and provided budget and marketing advice. He added that his company also had agricultural test plots. Mr. Metcalfe said his expert’s report was based on a visit to the Navan farm and a review of documents submitted by the appellants and AGRICORP to the Tribunal.

Mr. Metcalfe told the Tribunal he visited Mr. Goyer’s rented farm in Navan on JN 17 03 as Mr. Goyer wanted advice as to whether he should re-seed or not. He visited two fields totaling 61 acres, both were planted in RR soybeans and he recommended re-seeding.

Mr. Metcalfe examined photographs of the Goyer 2003 soybean crop and indicated:

• Mr. Goyer used the no-till crop production method.

• Weed control was good. He could see weeds dying when the crop is 5”-6” high – this indicated herbicide was applied at the right time.

• Burn down takes 16-28 days once Roundup is applied.

• There would be discoloration in the plants by August if there had been any nutrient deficiencies.

• The soybeans had top pod formations which meant they had not been grown under stress.

• Soybeans were sparse in one picture – this could be due to re-seeding, or poor drainage. A plugged planter could also leave patches of empty field.

• Ragweed could be seen growing in the patches in later photographs.

• A photograph of seed showed only one germinated seed and three cracked ones – this was not unusual seed. There was no inoculant in the picture of the seeder.

• Soybeans can be planted in hayfields before the hay is burned off.

• At a guaranteed production of 26.48 Bu/acre, on 165 acres yielding 1472.1 Bu, AGRICORP would pay out $26,549.74.

• If 325 acres had been insured under the same conditions and yielded 83.685 tonne, AGRICORP would pay out $50,701.91.

• On the 2003 Goyer corn crop, the pay out would be $6,303.49.

Mr. Metcalfe also indicated:

• 80% fertility was desirable in soybean seed.

• Seed bed preparation was an issue in a conventional tilled field.

• Matching seed type to soil type was important but soybeans were pretty flexible.

• Other than the Navan farm, he had no firsthand knowledge of the Goyer fields.

• He based his opinion on documents provided to him by the appellants’ counsel. He did not interview AGRICORP employees.

• A soybean yield of 8.9 Bu/acre was poor.

• Generally 2003 was a below average year but not a poor year.

• It would not be normal to plant into heavy trash as seen in one of the photographs without first burning down the field. Penetration of the planter shoe would be poor.

• Planting depth and uniformity of depth is of medium importance to soybean production – he ranked it sixth of 14 factors.

• A drop from 25 Bu/acre in September to 9 Bu/acre in November could be caused by shattering from strong winds or snow pellets, or by wildlife damage. A yield drop of that magnitude would be visible at harvest, as seeds would be on the ground.

• A soybean crop is made at 30% leaf drop, usually between September 12^th and September 18th.

• Gopher damage would occur before the soybeans were 7” tall. It should be relatively obvious as it occurs when the plants are small.

• If a crop is planted in late June it would not mature until mid-October, unless an earlier maturing variety is sown.

• The fields he viewed in Navan were tile drained. Ruts from the seeder were approximately 3 inches deep.

Francois Clement

Mr. Francois Clement testified that he was a farmer and that he had been in business with his father until he passed away in 2004. He said he was now the sole proprietor of the business. Mr. Clement said he examined the company records and spoke to employees who worked in the 2003 Goyer harvest in preparation for the hearing. He agreed that he had taken on the corporate memory of the business.

Mr. Clement verified that his company was retained by Mr. Goyer in 2003 to harvest soybeans. He said his father started the harvest in Navan with a combine, soy table and grain buggy. He said an employee told him there was only one field harvested and it was approximately 30 acres. He said the grain buggy was filled with soybeans harvested at Navan and that it held 11-12 tonne of soybeans. He agreed the yield was approximately 15 Bu/acre. He said there were no more soybeans harvested there as one field was beaten down. He said the grain buggy was emptied into a gravity box at Navan.

Mr. Clement said his father took the combine to Wendover after the Navan harvest was completed and an employee followed with the soy table and a truck. He said Mr. Goyer brought the employee back to Navan and the employee brought the grain buggy and three gravity boxes to Wendover. Mr. Clement said he did not know the acreage harvested at Wendover. He said there were three gravity boxes full of soybeans, and a partly filled tip trailer at Wendover, but that one of the gravity boxes may have held the soybeans harvested at Navan. He said each gravity box held 13-14 tonne soybeans. Mr. Clement testified that one employee took the three gravity boxes to Embrun to the Clement home farm, and the rest of the equipment was taken to Alfred.

Mr. Clement said at Alfred the tip trailer was filled the first day and the B-train truck was brought the next day and that it was also filled with soybeans from Alfred. He said there were also two small gravity boxes, with a capacity of 6 tonne each, filled with soybeans at Alfred. He said those boxes were owned by Mr. Goyer and he did not know where those soybeans were sold. The B-train truck was taken to the Clement home farm. Mr. Clement said he was told by his father and Mr. Goyer that there were still some fields in Alfred unharvested but that they were not worth harvesting.

Mr. Clement told the Tribunal he and his father combined Mr. Goyer’s soybeans and sold them for him, with payment into the Clement company account. He explained the cost of combining and transporting the soybeans to the elevator was deducted from the payment, and the balance was paid to Mr. Goyer. He said his father made the deal with Mr. Goyer.

Mr. Clement told the Tribunal:

• Trucking charges were $8-10 per tonne dry weight.

• Combining charges were $35-$40 per acre, not counting transport.

• He delivered 38.59 tonne soybeans to Port of Prescott from the three gravity boxes. The price paid was $361/tonne. The amount paid was $13,967.09. He understood the Navan soybeans were included in that shipment. That was his third delivery of Goyer soybeans.

• The second load he delivered to Port of Prescott was the tip trailer. It contained 37.45 tonne soybeans and was sold for $361/tonne. That worked out to $13,519.45.

• The first load he delivered to Port of Prescott was the B-train truck. It was 44.43 tonne of soybeans sold at $355/tonne. The payment was $15,722.65

• The prices were more or less the going prices on the day of delivery. They made two different contracts in advance, a few days before delivery.

Mr. Clement agreed that:

• The trucking charge would be approximately $1,084.23 at $9/tonne.

• The combining charge would be approximately $9,602.86.

• Mr. Goyer was paid $32,536.00.

• The math worked out to a harvest of 274.37 acres at a combining charge of $35/acre or 240.07 acres at $40/acre.

Mr. Clement also indicated:

• He did not know which fields were insured and which were not and was not told to keep soybeans separated.

• No Clement soybeans were mixed with Goyer soybeans; the Clement soybeans were harvested earlier.

• It was not normal to have payment for a customer’s soybeans paid to the Clement company account. Mr. Goyer made that arrangement with Mr. Jacques Clement.

• The Goyer harvest was started in the afternoon of N0 09 03 and completed late in the night of NO 11 03.

• He was not aware of anyone else harvesting soybeans owned by Mr. Goyer in 2003.

• The soybeans were delivered to the elevator on N0 12 03, NO 13 03 and NO 14 03.

• His company combined soybeans for Mr. Goyer in 2002 and 2003.

• His company had several contracts with London Agricultural Commodities (LAC) in 2003. One contract was for 120 tonne IP soybeans.

• IP soybeans are used for human consumption and can receive a $10-$40 per tonne premium. He was unable to obtain a premium on the Goyer IP soybeans, as they did not meet the quality standard.

• IP soybeans and crusher soybeans are normally kept apart. He did not know if IP soybeans and RR soybeans from the Goyer crop were kept apart. If it was apparent the quality was poor in the field they could have been mixed.

• It cost more to plant IP soybeans.

• The B-train load, delivered NO 12 03 had ground damage so would not receive the premium even if it was IP soybeans. The soybeans on the tip trailer load delivered NO 13 03 were also too damaged to receive a premium.

• The wagon loads were delivered on NO 14 03. The moisture content in that load was much higher than in the two previous loads.

• The documents indicated at least one load – the tip trailer – contained IP soybeans. All three loads were sold as crusher soybeans, as they did not pass the quality test.

• He knew at all times which container of Goyer soybeans was in each load. He wrote on the weigh slips to identify each load.

• There was no written contract with Mr. Goyer – his father made a handshake deal.

• He would have known if his father had made a deal that included a favour as payment. The Clement company had no such deals in 2003. They had taken a field of soybeans in payment in the past.

• He did not have direct knowledge of which fields were harvested or not at Navan and Wendover; he relied on what his employees told him.

• His father did most of the combining of the Goyer crop. He, Francois Clement, combined for approximately three hours.

• He had no direct knowledge of which Goyer fields were insured and which were not; he relied on information provided by AGRICORP staff in a statement he made in February 2005.

• He was sure the combining charge was between $35-$40 per acre but did not know the exact price. He did not have direct knowledge of the number of acres harvested.

• It was clear that soybeans from Navan and Wendover were mixed; they were both put in the gravity boxes.

• Mr. Goyer told him there were still acres at Alfred which were not harvested.

• He was confident that approximately 250 acres of soybeans were harvested for Mr. Goyer, based on the LAC documents and his own calculations.

• He can combine approximately 15 acres per hour in fair conditions.

• The Clement company used a combine monitor to track the number of acres combined. He did not check the monitor after the Goyer soybeans were harvested.

Gerald Poupard

Mr. Gerald Poupard told the Tribunal he had farmed for many years and was in his fifteenth year working as a crop adjuster. He said he kept up to date with new farming techniques by attending educational seminars each year and that to be successful at no till production, growers must burn down their fields in the Fall.

With regard to Mr. Goyer’s 2003 soybean crop, Mr. Poupard told the Tribunal:

• He met with Mr. Goyer on JN 13 03 to adjust a re-seeding claim. They inspected Mr. Goyer’s fields in Alfred first and went on to inspect fields in Navan.
• Mr. Goyer identified the fields for him; he was familiar with the fields.
• Mr. Goyer misled him that day as to where his vehicle was parked and he refused to drive Mr. Goyer back to Alfred.

Mr. Poupard stated that he inspected the Goyer fields with Richard Charlebois, an adjuster with a neighbouring area on JN 16 03 and observed:

• The Yeoman farm at Alfred had 43 acres of soybeans that had been planted about May 20^th. The crop looked good and the acreage was ultimately insured.
• On the Legault farm in Alfred, 40 acres was accepted even though there were quite tall grasses in the field. The remaining fields were not insured as the grasses in these fields were even higher and had not been burned down until June.
• They refused insurance coverage on 100 acres at the Legler farm, also because of tall grasses.
• Fields on an 87-acre farm in Wendover looked good and the farm was insured.
• A 60 acre field in Navan which Mr. Goyer had told him was his had not yet been seeded. He later discovered it was slated for development and was not rented to Mr. Goyer.
• An additional 100 acres in Navan had been sown in early May. The seedbed was rough and there was a heavy infestation of grasses.
• On Emmott Road, Cumberland, 65 acres had not been burned down, had poor seedbed preparation and poor weed control.
• Seeds were inspected at the Legault farm and the quality was poor with many splits and signs of rot and germination. There was no sign the seeds had been inoculated and the seeder did not have the tubes installed which would be required to add inoculant. Over four visits, he never saw signs of inoculant on the farm.
• Based on what he saw on JN 16 03 he originally recommended that no insurance coverage be offered to Mr. Goyer due to his farming practices and the bad example it would give to other growers if he insured poorly managed crops.

Mr. Poupard said that to be fair and to be sure they made the right decision, he and Mr. Charlebois returned to the Goyer fields the next day. He said they decided to recommend that 82 acres on the Wendover farm, 43 acres on the Yeoman farm and 40 acres on the Legault farm be insured, as the farming practices used on these fields were acceptable to AGRICORP. He said over 400 acres were denied coverage due to poor farming practices which included: planting into thick grass growth which would interfere with soybean development, poor seedbeds, weed infestations, including white clover infestations which should have been burned down before seeding, poor seed quality and poor drainage. Mr. Poupard said he could have insured all the acres but assigned a yield potential to zero to the poorly managed fields, but that Mr. Goyer would then have had to pay the premium on his total acreage.

Mr. Poupard identified photographs which he had taken and said they showed the conditions into which soybeans were being planted on some of the fields that were rejected. Mr. Poupard also told the Tribunal:

• It was possible to compensate for poor quality seed by planting at a higher density rate, but soft seeds jammed in the seeder. Split seeds will not germinate.
• He saw signs that Mr. Goyer was planting one day after burn down.
• Mr. Goyer identified late planting as one of the causes of his yield losses; this was not an insured peril.
• He and Mr. Charlebois visited the Goyer fields in late August 2003 and estimated the yield on the insured acres would be approximately 25 Bu/acre.
• On AU 27 03 he and Mr. Charlebois made it very clear to Mr. Goyer that he had to keep the soybeans from his insured acres separate from the soybeans harvested from his uninsured acres.

Mr. Poupard said he adjusted the soybean insurance claim on JA 09 04. He said Mr. Goyer told him he harvested 284 acres, including all of the 165 insured acres. He calculated that 119 uninsured acres were harvested. He said Mr. Goyer told him he had harvested 1,081 Bu from the insured acres, but provided him with a weigh slip that corresponded to 1,492 Bu. He said Mr. Goyer told him he harvested 12 tonne of soybeans from uninsured acres. Mr. Poupard calculated Mr. Goyer’s yield on insured acres to be 8.92 Bu/acre which he said was unusually low. He said 2003 was an average year for soybeans in the area.

Mr. Poupard said that because Mr. Goyer’s yield was unusually low he contacted Mr. Francois Clement, and Mr. Clement told him he had harvested approximately 200 acres of soybeans for Mr. Goyer and that three truck loads and two gravity boxes of soybeans were harvested. He said Mr. Clement also told him he had not been asked to keep insured soybeans separate from uninsured soybeans or RR soybeans separate from IP soybeans. Mr. Poupard said he concluded that the total amount of soybeans harvested by Mr. Goyer was not reported to AGRICORP and the claim was denied.

Under cross examination, Mr. Poupard indicated:

• He visited the Goyer fields officially on JN 13 03, JN 16 03, JN 17 03, JN 27 03, possibly JN 29 03, JL 01 03 and once in late August 2003. He unofficially drove by 3-4 times in the growing season and possibly once in September 2003.
• He does not necessarily document unofficial visits. Growers were not always present on official visits - he had difficulty reaching Mr. Goyer.
• He and Mr. Charlebois met with Mr. Goyer on JN 27 03. Mr. Goyer would not sign their report. He, Mr. Poupard, did not sign it until JL 01 03 as he thought Mr. Goyer might have a change of heart.
• The core part of his JN 27 03 report was written on JN 17 03. He must have added a paragraph later that month.
• He and Mr. Charlebois showed Mr. Fred Thomson the Goyer fields on JN 29 03. Mr. Goyer was not present. It was not necessary that the client be present when fields are inspected.
• He had been the crop insurance adjuster for Mr. Goyer and his brother in previous years.
• He made a mathematical error in one of his reports in calculating the insured acreage.
• The test as to whether or not to insure a crop is whether or not best farming practices are used. Good farming practices were seen on the insured fields on both JN 16 03 and JN 17 03.
• AGRICORP required the insured to keep the harvest from the insured crop separate from the harvest from the uninsured crop; the yield from the uninsured crop needs to be reported in order for the system to work.
• He was told the Legler farm would be planted in soybeans; he later learned the back 60 acres was to be left in hay.
• Seed samples were taken at the Legault farm and at Cumberland.
• The Cumberland field was being planted on JN 26 03. He saw the field in the growing season as well.
• Of 522 acres he inspected, 165 acres were insured.
• Mr. Goyer planted more than 119 acres of uninsured soybeans; only 119 acres were harvested. There was probably another 100 uninsured acres that were planted but not harvested.
• Mr. Goyer indicated his intention to plant 630 acres on his USAB eligibility form.
• On AU 29 03, 40 acres of the uninsured soybeans looked to have a good crop. The 165 insured acres looked to have a good crop. The rest of the crop looked poor.
• Mr. Goyer told him that 12 tonne of soybeans were harvested from uninsured fields so he recorded it in his report; it was not included in the yield calculation for the insured crop.
• He discovered the weigh slip provided by Mr. Goyer did not match the bushels reported after the fact - mistakes can be made.
• The re-seeding claim was for 119 acres. The claim was not paid on land that was under development; it was paid on 16 acres in a different location. Those acres were suitable for farming but poorly drained so he had been unable to seed them.
• Mr. Goyer was a difficult client because he was hard to reach and did not listen. He had nothing personal against him and got along well with him.
• RR soybeans are more expensive to purchase. A better price can be obtained for white hilum IP soybeans, but they could be mixed with RR soybeans.

Mr. Poupard also indicated:

• There were 357 uninsured acres and 165 insured acres planted.

• Mr. Goyer did not show him any land leases in 2003. Mr. Goyer told him he intended to plant all the acreage he showed him.

• He verbally informed Mr. Goyer he had to keep the insured soybeans separate in August 2003.

• Usually he writes his reports in the field, but sometimes takes notes and re-writes them at home.

• Mr. Goyer’s re-seeding claim triggered his first visit. It is not unusual to inspect fields in the Spring.

• AGRICORP seldom insures partial acreages but it does happen.

Fred Thomson

Mr. Fred Thomson told the Tribunal he was a Regional Manager, Customer Service with AGRICORP for the past three years and had been an adjuster for ten years. He said he had farmed for almost 30 years and had grown soybeans.

Mr. Thomson said he had visited some of the Goyer fields in June 2003, had received the adjusters’ reports and had corresponded with Mr. Goyer. He said that after the Goyer claim was investigated he realized there had been an error in reporting the soybean yield; he suspected it was not a simple error and he referred the matter to the OPP Rural Crime Unit. He said it was routine to refer cases to the OPP where fraud was suspected.

Mr. Thomson stated that based on his personal observation of the Goyer fields in June 2003 good farm management practices were not being followed in planting the crop. He supported the decision of Messieurs Poupard and Charlebois to not insure all the fields.

AGRICORP insured 165 acres of soybeans where better farming practices were used; he expected a higher yield from the insured acres.

Mr. Thomson said the farm management problems he was concerned with were failure to adequately prepare the seedbed and the use of shriveled, discoloured and sprouted seed. He said poor seed affected both germination and vigour. He stated that if growing conditions were ideal the crop would still produce a good yield, but if stressed poor seeds would have a poor yield. Based on the photographs submitted, Mr. Thomson said he was concerned that the burn down was not done far enough in advance of seeding, there was a heavy stand of clover and no sign of inoculant.

Mr. Thomson said he did not see the Goyer crop late in the season, but based on adjusters’ reports and yields of other growers in the area, the yield Mr. Goyer reported – 8.92 Bu/acre seemed quite low. He said that based on the three receipts from the Port of Prescott elevator, if 80 tonne were harvested from 119 uninsured acres, that would mean they produced approximately 25 Bu/acre, almost three times that reported for the insured crop. Mr. Thomson said the weigh slips did not indicate whether or not IP or RR soybeans were shipped in each load.

Mr. Thomson also said:

• Mr. Goyer phoned in his seeded acreage to AGRICORP on JN 26 03.
• He sent correspondence directly to Mr. Goyer at the address on record with AGRICORP. He knew one letter did not arrive as it was returned by Purolater because it could not locate the property and the phone number was out of service.
• He was asked to inspect the Goyer fields in June to give an opinion as to their eligibility for crop insurance. It was not unusual to have two adjusters inspect a crop, but it was not a routine practice.
• If Mr. Goyer had harvested 80 tonne of soybeans off 284 uninsured acres, the average yield would be 10.828 Bu/acre.
• He would have investigated the Goyer insurance claim based on the unusually low yield, even had the investigators not interviewed Mr. Clement.
• Mr. Goyer did not accept AGRICORP’s adjustment of his USAB claim.
• From AGRICORP’s records of telephone interactions with Mr. Goyer, it appeared that he reported that he planted 482 acres of soybeans. If he ultimately planted 522 acres then not all acres were offered to AGRICORP for insurance purposes, as is required by the contract of insurance.
• The adjustors told Mr. Goyer to keep his insured harvest separate; he was not aware of a written directive to that effect.
• The cost of harvesting soybeans equates to 3-4 Bu/acre; any yield lower than that is not worth harvesting.

Summations

Mr. Escayola asked the Tribunal to hold AGRICORP to a very high standard of proof in considering this matter, as he argued that the contract of insurance was cancelled due to suspicion of fraud, a criminal offence. He presented the Tribunal with case law to support the use of a high standard and argued that the onus was on AGRICORP to prove Mr. Goyer intended to deceive it. He said a simple mathematical error was not fraud. He said it was clear that Mr. Goyer had difficulty using a calculator and did not intend to mislead AGRICORP.

On the question of AGRICORP’s decision to deny coverage for specific fields, Mr. Escayola argued that the evidence was that AGRICORP adjusters had done sloppy work – miscalculating the number of acres insured and investigating the wrong fields offered for insurance. He said his client had annoyed Mr. Poupard and he did not want to offer him any insurance coverage. He argued that Mr. Poupard based his decision first on what other growers would think, then on what would be fair, rather than using the standard of whether or not correct farming practices were used. He said AGRICORP was not justified in withholding insurance on 417 acres based on two conflicting Adjuster’s Reports made within days of each other. Mr. Escayola said the expert report indicated there was confusion as to which acres were offered for insurance. He also pointed out that Mr. Poupard had acknowledged that one of the uninsured fields had a good crop of soybeans.

Mr. Escayola reminded the Tribunal that Mr. Metcalfe had testified that it was acceptable to burn down shortly before seeding, that Mr. Goyer’s seeder was adapted to this type of soil and that there is no seedbed preparation done when the no till method is used. He said Mr. Metcalfe disagreed with AGRICORP witnesses regarding the quality of seed and weed control in the fields photographed. Mr. Escayola said Mr. Goyer’s seeder was emptied at the Emmott Road farm and theorized that was what Mr. Poupard observed on JN 26 03.

With regard to the adjustment of the soybean claim, Mr. Escayola submitted that the appellants had no obligation to keep insured soybeans separate from uninsured soybeans, but that Mr. Goyer knew at all times which fields were insured and which were not. He pointed to a provision of the contract of insurance that allows AGRICORP to decide how much of the harvest was from insured acres in the event that the crop is mixed. He said Mr. Goyer’s testimony that he harvested 284 acres of uninsured soybeans and 165 acres of insured soybeans was supported by his early report that he intended to plant 630 acres. He said Mr. Clement’s testimony was that the crop was harvested in 2.5 days and he could combine 15 acres/hour. Mr. Escayola calculated this would mean he harvested 449 acres, using 11 hour days. He pointed out Mr. Clement had no direct knowledge of the contract Mr. Goyer had with his company and asked the Tribunal to disregard the reverse math calculations used by AGRICORP to estimate the acreage harvested. He also pointed out that some of the evidence Mr. Clement provided was hearsay and said AGRICORP could have called Mr. Clement’s employees to get direct testimony. Mr. Escayola said both parties agreed it was cold and wet in Spring 2003 and said the expert identified signs of water damage in the photographs before the Tribunal.

Mr. Escayola asked the Tribunal to order the soybean claim to be paid on the acres insured, and the acres that AGRICORP refused to insure. He calculated this to be a loss of $26,552.76 for the insured acreage and $50,698.89 on the non-insured acreage of 325 acres. He also asked that the corn claim be paid, interest be paid on the claims and the appellants be eligible for Market Revenue payments in 2003 and 2004. The total of the above losses came to $83,555.00 on which he claimed interest at 2.3% which amounted to $795.77.

Mr. Wechselmann told the Tribunal AGRICORP relied on its clients to provide it with information with regard to the number of acres planted. He said the evidence showed that Mr. Goyer showed Mr. Poupard 522 acres he intended to plant and that AGRICORP insured 165 of these acres. Mr. Wechselmann argued that Mr. Goyer misrepresented the acreage to AGRICORP as he had leases on different lands than the fields shown to AGRICORP. He said AGRICORP did not insure the total acreage offered by Mr. Goyer due to well documented poor farming practices on the rejected fields. He pointed out that Mr. Goyer seemed to accept that at the time, as he did not immediately appeal AGRICORP’s decision.

Mr. Wechselmann said Mr. Metcalfe’s testimony had no probative value as he did not have first hand knowledge of the fields that were denied coverage and admitted he had been hired to do a rush job and discredit AGRICORP. He said the testimony was not balanced as Mr. Metcalfe could not identify anything AGRICORP did right. He said Mr. Poupard acknowledged he was angry with Mr. Goyer, but that he also said he had nothing against him.

Mr. Wechselmann said Mr. Goyer told the adjusters he harvested a total of 284 acres and that 12 tonne of soybeans were taken off the uninsured acreage. He said this acreage was supported by the testimony of Mr. Clement who estimated 200 acres were harvested before he examined his company records, and somewhat higher after he made some calculations. He reminded the Tribunal that Mr. Clement had been unshakeable with regard to the number of acres harvested under vigorous cross-examination. He also pointed out that Mr. Clement delivered the soybeans to the elevator and was not told to separate the soybeans by type of bean or insured/uninsured field.

Mr. Wechselmann said AGRICORP was prohibited from paying a crop insurance claim if yield could not be proven. He pointed to Mr. Clement’s testimony that gravity boxes which had been partly filled when brought to Wendover from uninsured fields at Navan were completely filled when taken away from the insured fields at Wendover. He submitted this proved that the harvest from uninsured acres was mixed with the harvest from insured acres. Mr. Wechselmann said the onus was on Mr. Goyer to establish the actual production and damage to the crop and submitted he had not done so.

Mr. Wechselmann suggested the appellants’ argument was not credible as if Mr. Goyer were to believed his best land, the insured fields yielded 8.92 Bu/acre, while his poorer fields yielded either 25 Bu/acre or 11 Bu/acre, depending on which party had the correct information on the number of acres harvested. He reminded the Tribunal that two adjusters estimated the yield in the insured fields to be 25 Bu/acre in late August 2003 and said Mr. Goyer had not explained what could have caused a dramatic yield loss. He said any damage from a wet, cold Spring would have been evident by late August and that late planting, the appellants’ other suggested cause of loss, was not an insured peril.

Mr. Wechselmann argued that AGRICORP had the right, under Section K(2) of the insurance contract, to impose additional terms, including the requirement that soybeans harvested from the insured acres be kept separate from uninsured soybeans.

Mr. Wechselmann told the Tribunal the jurisprudence cited by Mr. Escayola related to the Insurance Act and was not directly applicable to the statutory scheme established for crop insurance. He pointed to Sections 2 and 5 of the Crop Insurance Act (Ontario) and said these exempted crop insurance from the Insurance Act and gave AGRICORP the ability to set terms in contracts, specify penalties and cancel the contract of insurance. He said the respondent also relied on Subsections 5(1)(b) and 5(1)(c) of Regulation 380/97 which allow it to refuse to enter into or to cancel a contract of insurance with an applicant or insured grower

(b) misrepresents or fails to disclose material information;

(c) contravenes or fails to comply with the Act, this Regulation or a term of the contract of insurance.

Mr. Wechselmann submitted that Mr. Goyer also failed to notify AGRICORP of the alleged crop damage within five days of noticing the damage, did not cooperate with AGRICORP and made himself difficult to reach by giving the wrong address and disconnecting his telephone, and failed to disclose leases with pertinent information on acreage to AGRICORP.

Mr. Escayola replied that AGRICORP had not asked the appellants for copies of the leases or maps depicting the farms to be cultivated. He said the expert report was filed in time in accordance with the Tribunal’s Rules of Procedure. Mr. Escayola clarified that a high standard of proof should be used in assessing AGRICORP’s allegations of fraud, but not on the question of the fields that were denied insurance coverage.

Ms. Stephanie Bouchard asked the Tribunal to award the appellants punitive damages. She argued that AGRICORP had a responsibility as a Crown Corporation to act in the best interests of its clients and an insurer must have the client’s peace of mind as a top priority. Ms. Bouchard said AGRICORP behaved badly as it did not take care that the appellants’ fields were inspected properly, did not use the good management test in denying insurance coverage, did not give Mr. Goyer the chance to review his calculations and correct his claim and initiated an OPP investigation against him. She said AGRICORP had hurt Mr. Goyer’s reputation with allegations of fraud and also took away his insurance.

Ms. Bouchard also asked that costs be awarded to her clients on a substantial indemnity basis as she submitted AGRICORP alleged fraud but did not prove it. She also said it took over one year for AGRICORP to provide her with its file on Mr. Goyer which caused an unnecessary delay in the proceedings. She referenced Rule 28 of the Tribunal’s Rules of Procedure. She said the appellants’ costs were $54,637.

Mr. Wechselmann argued that the Tribunal had no jurisdiction to award punitive damages and said that AGRICORP had not acted in a frivolous or vexatious manner. He said AGRICORP did not release information automatically when litigation is underway and he did provide the file to Ms. Bouchard when she made a Freedom of Information request. He also suggested Ms. Bouchard acted inappropriately in trying to reach him at his office and speaking to his superior, when she knew he was in attendance at this proceeding.

The Findings

The Tribunal identifies the following issues that it was asked to make a decision upon:

1. A decision by AGRICORP not to insure all the soybean acreage that the appellants offered in 2003.
2. A decision by AGRICORP to cancel the contract of insurance it had with Mr. Goyer and Green Acres Tech.
3. A decision to deny payment of the appellants’ claim on their 2003 soybean crop.
4. A decision to deny payment of the appellants’ claim on their 2003 corn crop.
5. A request for interest on the unpaid claims.
6. A request for costs and punitive damages.

With regard to the decision by AGRICORP not to insure the total soybean acreage offered by Mr. Goyer, the Tribunal finds that looking at all the evidence, including the testimony of Messieurs Goyer, Poupard and Thomson, who viewed the fields in June 2003, there is justification for denying insurance to those acres that did not appear to be conducive to growing a soybean crop in 2003. Mr. Metcalfe and Mr. Goyer testified to the contrary. Nevertheless, the Tribunal finds on the preponderance of the evidence that AGRICORP was justified in refusing insurance coverage to the appellants. Evidence that supports denying coverage included photographs taken of a number of fields during the planting period, poor seed which looked to the Tribunal to be combine run or bin run beans, combined with no use of inoculant, and the testimony of Mr. Poupard regarding the lack of effective burn down before planting.

Where an insured has engaged in poor farm practices or poor management, the crop insurance policy itself gives AGRICORP wide discretion and power to refuse insurance or to deny claims. We quote from the following provisions contained in the crop insurance policy,

K.3. Where, in the discretion of AGRICORP, the Insured is engaged in farming practices, farm management procedures or operations, or improper conduct or improper procedure, which directly or indirectly contributed to a loss for which the Insured is claiming an indemnity, or where the loss in respect of which the Insured claims has been caused by the conduct of any person or persons other than an Insured, AGRICORP may: a. deny liability under the contract; b. reduce the amount of the indemnity by the amount AGRICORP determines was caused by the conduct of such person or persons, or by such farming practices, management procedures or operations, or other improper conduct or improper procedure. K.4. Without in any way limiting the scope of sectionsK.1, K.2, and K.3, the Insured shall be deemed to have engaged in farming practices, farm management procedures or improper conduct or improper procedure, which directly or indirectly contributed to a loss where the Insured has: a. failed to follow good farm management standards and practices; b. failed to follow acceptable practices, procedures and operations used by prudent farmers in the adjacent townships having similar soil and climate; c. used unviable, damaged, old or unadapted seed; …

f. improperly prepared the seed bed;

h. failed to properly apply measures for the control of insects, plant diseases or weeds;

l. failed to obtain labour, machinery repairs or seed on a timely basis;

… p. neglected the insured crop

After the fact, Mr. Clement and Mr. Goyer both testified that several uninsured acres were too poor to harvest, notwithstanding the forty uninsured acres on the Legault farm that both parties acknowledge turned out a good crop.

With regard to all the other issues, there is an element of whether or not Mr. Goyer was attempting to mislead or indeed de-fraud AGRICORP. The respondent took the position it had the prerogative to cancel the contract of insurance and deny all claims. Mr. Wechselmann cited Section K1 of the contract of insurance:

K.1. If an Applicant, or an Insured, in any way: a. gives false particulars of the insured crop;

b. misrepresents or omits to report, whether intentionally or not, any circumstance that is material to AGRICORP in order to enable it to judge the risk to be undertaken or that has been undertaken;

c. breaches a provision of the Contract;

d. commits a fraud;

e. willfully makes a false statement in respect of a claim under the contract,

the Contract is void as to all crops for which insurance is provided, and not just with respect to the insured crop in relation to which the misrepresentation or omission was made, the breach of contract related, the fraud was committed or the false statement was made.

Considerable argument was presented by Mr. Escayola that when a court or Tribunal considers allegations that are similar to fraud that a higher standard of proof is required, than the civil standard of balance of probability. Counsel presented several cases where courts have held insurers to a higher standard when a quasi-criminal act is alleged on the part of the insured. Without deciding that those cases, which have been decided under the Insurance Act, also apply to cases coming before the Tribunal under the Crop Insurance Act (Ontario), the Tribunal does note that the Crop Insurance Act (Ontario) gives AGRICORP a much broader group of reasons for denying insurance to potential clients or denying claims. Specifically Subsection 5(2) of the statute where the legislature empowers AGRICORP to determine the qualifications and requirements to enter into a contract, specify the penalties imposed where an insured person breaches the terms of a contract and terminates a contract of insurance on terms it considers appropriate. Further Section 5(1) of Regulation 380/97, which governs the terms of insurance contracts, empowers AGRICORP to cancel a contract of insurance with an insured person who (a) does not meet the necessary qualifications and requirements; (b) misrepresents or fails to disclose material information; (c) contravenes or fails to comply with the Act, this Regulation or a term of the contract of insurance; or (d) owes a debt to AgriCorp. Those powers coupled with the provisions of Section K of the Crop Insurance Policy as quoted above, certainly seem to give AGRICORP wide latitude in determining under what circumstances it can honour or dishonour a claim. While this Tribunal has the specific power to review any decision of AGRICORP respecting the adjustment of a claim, it certainly would not allow AGRICORP to act in a capricious manner.

In defending its decision to cancel the contract of insurance, AGRICORP takes the position that Mr. Goyer only reported that he harvested 40 tonne of soybeans from the insured acres, and an additional 12 tonne from the uninsured fields, while it was able to find evidence of an additional 80 tonne of soybeans harvested from Mr. Goyer’s fields. The Tribunal finds the evidence of the adjuster, Mr. Poupard to be credible. There is no reason for him to lie about what he was told. Mr. Goyer later claimed the additional 80 tonne discovered by AGRICORP was harvested from his uninsured acres.

There was also evidence that on his Proof of Loss form Mr. Goyer claimed only 1081 bushels was harvested on the insured acreage, when his own documentation showed 40 tonne. The Tribunal accepts that Mr. Goyer made a simple arithmetic error in converting tonne to bushels when he reported this yield to AGRICORP.

Because AGRICORP had accepted 165 acres to be insured, while knowing that the appellant had planted additional acres that were not insured, it insisted that Mr. Goyer take extra care to segregate the insured beans from uninsured beans. While Mr. Goyer claims he did do that, the evidence of Mr. Clement, the harvester, was that the crops were mixed.

The Tribunal notes that Mr. Poupard inspected the insured fields in late August 2003 with Mr. Charlebois and they estimated the yield to be 25 Bu/acre. The Tribunal finds Mr. Poupard’s evidence on this point to be credible. No explanation was provided by the appellants as to what would cause the yield of the crop to drop to 8.92 Bu/acre by harvest. The appellants’ position that the uninsured acres had a higher yield than the insured acres is simply not plausible. The preponderance of the evidence presented was that the uninsured acres – with the exception of a small field on the Legault farm – produced a poor crop in 2003.

While the above evidence would tend to show that Mr. Goyer was not forthright and failed to make full disclosure to AGRICORP, the Tribunal does not find that the totality of the conduct amounts to attempted fraud. The Tribunal agrees however, that Mr. Goyer tried to mislead AGRICORP but not defraud it.

The Tribunal has carefully considered the evidence of Mr. Clifford Metcalfe and his report which was filed as Exhibit 6. He was qualified as an expert before this Tribunal. It seems that his original involvement with Mr. Goyer was to provide advice on the question of whether the farmer should reseed the soybean acreage he had planted. His conclusion on that point was that the fields he had observed should have been reseeded. He did not view all of the Goyer fields. As the reseeding claims had been denied, these fields were not reseeded. The report did not hold out much hope for a good crop from the two fields that he had examined. The crop insurance adjuster reported similar conditions in the other fields on which they had denied coverage.

While Mr. Clifford suggested that applying the burn down herbicide shortly before planting was still a recommended farm practice, other witnesses who were experienced farmers did not agree. A better farm practice is to apply the burn down spray in the Fall prior to the planting or at a time that is at least a month or more before planting. The Tribunal was not persuaded by the witness Metcalfe and his report that AGRICORP’s assessment of the field conditions or the farm practices of Mr. Goyer were wrong. Their reasons to deny coverage were justified.

The Tribunal does not totally agree with AGRICORP’s decision to cancel the contract of insurance because while the insured is asked to sign adjusters’ reports, it does not seem that in all cases the insured is given a copy of those reports in a timely manner. The Tribunal recommends that AGRICORP disclose adjusters’ reports shortly after they are filed. Insured clients should be made aware by adjusters that reports filed may help or hinder their future claims.

With regard to the adjustment of the 2003 soybean claim, the Tribunal agrees with AGRICORP that it is difficult to determine what was harvested from the insured acreage and what was harvested from the uninsured acreage. The Tribunal is prepared to find that the total of three loads of soybeans sold to Port of Prescott elevator for Mr. Goyer, by Messieurs Clement - 123.65 tonne of soybeans – was harvested from the uninsured and insured acreage planted by Mr. Goyer. There was some evidence presented by AGRICORP that an additional 12 tonne were harvested from Mr. Goyer’s uninsured acres. Mr. Goyer’s evidence is that those two boxes belonged to a neighbour on whose land, Mr. Clement also harvested soybeans. The Tribunal accepts Mr. Goyer’s direct evidence that these were not his soybeans. It was supported by Mr. Clement’s evidence that those soybeans were not sold to the elevator along with Mr. Goyer’s soybeans.

However, the Tribunal did not find Mr. Goyer to be a credible witness. He was evasive and unable to answer some of the direct questions that were put to him, instead going off onto tangents. As well there was evidence that he attempted to claim an unseeded acreage benefit on a field that was prepared for development, and that was not leased to him.

Mr. Escayola further argued that there was sloppy work on the part of the AGRICORP adjusters. While there was truth to this allegation insofar as AGRICORP attempted to quantify the insured and the harvested acreage, we do not believe that this alters our findings that the adjusters were justified in denying coverage.

The Tribunal finds that AGRICORP had no alternative but to deny the payment of the claim on the soybean contract because of misinformation and incomplete information that the appellant supplied them. Mr. Goyer had a duty and obligation to keep more accurate records and to substantiate the information that he was providing. He failed to do this to either AGRICORP or the Tribunal. Therefore the position taken by AGRICORP in denying the appellants’ claim with respect to the insured soybeans acreage of Gilbert Goyer and Green Acres Tech in 2003 is upheld.

However with respect to the 2003 corn crop, the Tribunal is prepared to vary the decision of AGRICORP. Since the Tribunal is setting aside the decision of AGRICORP to cancel the contract of insurance, the claim on the 2003 corn crop is to be paid by AGRICORP. The parties were in agreement that a shortfall of 1,984.10 bushels on 28 acres of corn was caused by excessive rain in Spring 2003 and drought in Summer 2003. The Tribunal further finds that the appellant is entitled to interest at the rate of 5% per annum to be payable on the claim for the corn shortfall commencing 60 days after the filing of the proof of claim to the date of payment.

The issue of USAB coverage does not seem to have been brought to Tribunal in a timely manner. Mr. Goyer had to make his USAB claim by June 30, 2003 and the evidence is that he did. However, he did not appeal AGRICORP’s adjustment of his USAB claim until November 2004. The Tribunal notes that AGRICORP previously offered to settle this claim. The Tribunal strongly urges that AGRICORP reinstate this offer.

The appellants’ counsel put forward a claim for punitive damages for the appellant based on mistreatment on the part of AGRICORP. For the reasons already given, the Tribunal does not find that there was any mistreatment that warrants it to allow such a claim. On the other hand, this Tribunal is not satisfied that it has the jurisdiction to entertain such a claim in any event. However it is not necessary to make a ruling on jurisdiction as the Tribunal was not persuaded that AGRICORP acted unreasonably.

Counsel for the appellant also submitted that the Tribunal should consider awarding costs against AGRICORP for requiring his client to institute these proceedings when there was no justifiable reason for denying his claim. Given that the Tribunal has found that AGRICORP was justified in refusing coverage to a substantial part of the acreage that Mr. Goyer proposed to plant in 2003, and was justified in denying payment for the loss in the insured acreage of soybeans, the appellants appeal for the most part has been unsuccessful and therefore is not entitled to consideration for an allowance of costs. Moreover, it is the policy of this Tribunal to award costs only in the exceptional case.

In those submissions the Tribunal heard allegations that AGRICORP was not forthcoming in providing a copy of the file it maintained on Mr. Goyer to the appellants’ counsel. It was demonstrated that Mr. Escayola initiated a request for information as early as JA 27 2004 and supplied AGRICORP with written authorization from Mr. Goyer, who was AGRICORP’s client. It does not appear that Mr. Escayola received a satisfactory response to his request until December 2004 or later. We agree with the appellant that such refusal on the part of AGRICORP is unacceptable. However, we do not find that such refusal should be compensable by way of an award of costs to the appellant. While the initiation of the appeal process was delayed, we do not think the delay justified the awarding of costs. AGRICORP has submitted that it expects its insured clients to be open and honest with it when arranging for insurance coverage or submitting claims. It is the Tribunal’s view that AGRICORP should demonstrate the same kind of openness with its insured growers who are considering making an appeal to its decisions.

The Tribunal detected that the primary adjuster in this matter and the insured were at odds from the beginning with regard to the 2003 contract of insurance. This is evident not only from Mr. Goyer’s evidence, but from Mr. Poupard as well. In such cases, the Tribunal believes it is incumbent on the adjuster and his supervisors to consider assigning a different adjuster to the claim.

Decision and Reasons

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

1. The Tribunal was not persuaded that Mr. Goyer deliberately set out to defraud AGRICORP.

2. The Tribunal was not presented with credible evidence as to the actual yield from the insured acres of soybeans grown by Gilbert Goyer and Green Acres Tech.

3. The Tribunal accepts that AGRICORP’s refusal to insure some acreage and refusal to allow the claim for soybean losses were justified on the evidence and in keeping with the statute, regulation and insurance policy.

4. The evidence presented by the appellants in an attempt to quantify the actual production of soybeans and differentiate such production from the insured acreage as opposed to the uninsured acreage was inconclusive. The Tribunal preferred the evidence of the AGRICORP witnesses to that of the appellant and his witnesses in this regard.

Order of the Tribunal

The Tribunal orders that:

1. AGRICORP is to reinstate the contract of insurance it had with Gilbert Goyer and Green Acres Tech in 2003 with respect to the crops it accepted for insurance.

2. AGRICORP’s refusal to accept appellant’s request for insurance on the bean field in excess of 165 acres is upheld.

3. AGRICORP is to pay the corn claim of Gilbert Goyer and Green Acres Tech in 2003 in the amount of $6,303.49 plus interest at the rate of 5% per annum calculated from a date 60 days after the filing of the proof of loss until the date of payment.

4. AGRICORP’s refusal to pay any claim for the shortfall in soybean harvest for the year 2003 is upheld. All other claims of the appellant are dismissed.

5. There shall be no order as to costs.