Royalmar Farms Ltd. v Agricorp, 2006 ONAFRAAT 22

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales

1 Stone Road West Guelph, (Ontario) N1G 4Y2 Tel: (519) 826-3433, Fax: (519) 826-4232 Email:appeals.tribunal@omaf.gov.on.ca

1 Stone Road West Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Email: appeals.tribunal@omaf.gov.on.ca

APPEAL: Royalmar Farms Ltd. v Agricorp

Royalmar Farms Ltd. v Agricorp 2006 ONAFRAAT 22

STATUTE: Crop Insurance Act

HEARING: June 21, 2006

DATE OF DECISION: July 13, 2006

2006-22

NEUTRAL CITATION: 2006 ONAFRAAT 22

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 Royalmar Farms Ltd., Gowanstown, Ontario from a decision of Agricorp concerning the adjustment of its claim for its 2005 canola crop under Regulation 380/97 and the Crop Insurance Plan for Grain and Oilseeds.

Before: Rod Stork, Chair; John O’Kane, Vice Chair; Corry Martens, Member

Appearances: Mr. Steven Pettipiere, counsel to the appellant, Royalmar Farms Ltd. Mr. Peter Wechselmann, counsel to the respondent, Agricorp Ms. Rebecca Givens, counsel to the respondent, Agricorp Mr. Brad Martin, Royalmar Farms Ltd., witness for the appellant Ms. Anna Siderius, witness for the respondent, Agricorp

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on Wednesday, June 21, 2006. Mr. Brad Martin initiated the appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal (the Tribunal) on behalf of Royalmar Farms Ltd. (Royalmar), seeking a higher payment of a claim related to the adjustment of claim of Royalmar’s 2005 canola crop.

Statutory Context

Section 10 of the Crop Insurance Act (Ontario)provides as follows:

Referral of disputes

(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).

The Issue

The issue before the Tribunal was:

Is Royalmar entitled to a higher claim adjustment than Agricorp provided for its 2005 canola crop?

In the Appellant’s opening statement, Mr. Pettipiere indicated that Mr. Martin’s appeal was for an additional adjustment of his claim for 2005 canola for approximately $11,000. He described the legal issue on this appeal to be the interpretation of the contract of insurance. Mr. Pettipiere stated that it was Agricorp’s position that the insurance plan for canola did not address quality of production, however, he contended that the insurance plan for canola included qualitative measurement of production and that it was Royalmar’s position that claim adjustment was not an issue of quality.

The Tribunal received into evidence during opening statements the Royalmar Brief, marked as Exhibit #1 and the Agricorp Brief, marked as Exhibit #2.

The Respondent’s opening was provided by Mr. Wechselmann who gave the Tribunal an overview of the circumstances surrounding the production of canola in 2005. He stated that the crop appeared to be normal in the beginning of the year however, problems with crop quality and grading arose as the harvest progressed. Mr. Wechselmann explained that Archer Danels-Midland Company (ADM), the province’s largest canola crusher, refused to accept the crop as it was of very poor quality. As a result he explained that canola farmers with a normal yield essentially had no market for their crop. Mr. Wechselmann said that Agricorp’s canola insurance plan paid claims on shortfalls in production but it did not cover the eventuality of no market for a crop that was produced nor did it cover quality issues.

Mr. Wechselmann told the Tribunal that in Fall 2005, Agricorp decided to implement a policy whereby it treated as a zero production yield a situation where canola farmers could produce two rejection letters from grain elevators and where the canola was unmarketed, other than for a disposal rate of $50 per tonne. Mr. Wechselmann stated that under this mid-harvest adjustment policy Agricorp paid insurance claims to producers at the rate of $272 per tonne. He said that as the harvest progressed, the grading of the quality of the crop changed which led to ADM’s acceptance of the crop at it’s terminals. He said that ADM began marketing crop upon which Agricorp had already paid a claim. Mr. Wechselmann stated that when ADM began accepting canola again, it paid producers a range of $135 to $210 per tonne reflecting the lower quality canola. Mr. Wechselmann stated that as a result, depending on the timing of the adjustment of canola insurance claims and the marketing of the canola crop some producers were paid by Agricorp under a crop insurance claim and, as well, they were paid when their crop was marketed. He characterized such a circumstance as double compensation.

Mr. Wechselmann explained that in the case of Royalmar, it provided Agricorp with two rejection notices from elevators, and proceeded to claim a 100 percent loss in a Proof of Loss form. However, when Agricorp’s adjuster completed a yield analysis report with Royalmar’s Mr. Martin some time later, it was disclosed that part of Royalmar’s previously rejected canola crop had, in fact been marketed and Royalmar had received $135 per tonne. A portion of the crop was adjusted and a claim paid for a production yield shortfall but on the portion that was marketed at $135 per tonne, Agricorp rejected the claim and paid nothing. Mr. Wechselmann stated that Royalmar was not paid an adjustment on quality. He said that Royalmar was requesting that its claim be adjusted to pay the difference between the market price for canola when markets reopened ($135 per tonne) and the 2005 canola floating claim price ($272.36439 per tonne). He stated that to do so would alter the terms of the contract of insurance. He said that Agricorp and its customers do not have the authority to alter the contract of insurance. He also made the point that the insurance contract for canola was a production yield insurance and not a price support program.

The Evidence

Brad Martin

Mr. Brad Martin was presented as a representative of Royalmar. He explained he was 39 years old and married with two children. He told the Tribunal that he had been farming for 19 years. He stated that his farm was located six miles north of Listowel, Ontario and that he farmed 800 acres. His family had farmed there for 45 years. Mr. Martin testified that:

He has grown canola continuously since 1992. Although he has purchased crop insurance for canola every year since 1992, he has never had a claim for canola since 1992.
In 2005, the canola crop emerged as it normally did and proceeded to flower as usual, however the extreme heat during the day and at night severely damaged the crop.
He began combining at the end of August and described the seed as looking like it had been “swath cut” rather than straight cut.
When he had combined 25 of his 80 acres of canola he realized there was an issue with the crop but he kept combining and blending the harvest in the hope that he would have a marketable crop and additionally, he did not want to leave the canola in the ground due to the uncertainty of what oilseed remains would do the land.
The canola was sample grade in quality. Sample grade is the lowest grade and poorest quality of canola. The grading and rejection of the crop was confirmed by two elevators. Although the written rejection confirmations (Exhibit #2, Tab 5, pages 2 and 3) were dated September 30, 2005 and October 5, 2005, the grain elevators had actually verbally rejected the crop earlier but were awaiting Agricorp’s decision about how it was going to deal with adjusting losses in the 2005 canola crop.
It became known at the end of August, that the elevators were not accepting the poor quality crop.
Although 80 acres were harvested, the yield represented what may have been harvested from 30 acres in a normal year.
He had hoped that blending the crop would improve the quality.
The harvest was completed on September 2, 2005 and the canola was put into the stir bin at his farm, for drying.
A well known neighbour and elevator operator told him he would attempt to dispose of the canola for him, however he would receive no payment. He agreed to letting the friend remove the canola because it was an environmental hazard to dispose of by dumping it on the land and he needed to clear his bins out in preparation for harvesting corn.
He had not received the notices of rejection from the elevators at the time that he made arrangements with his neighbour to dispose of the canola.
He received a letter from Agricorp dated September 21, 2005 (Exhibit #2, Tab 5, page 4) advising canola producers that the poor quality canola would be covered by the insurance.
Prior to receiving the September 21, 2005 letter from Agricorp, he had signed a Proof of Loss form indicating that the canola yield was 0, the Total Production Guarantee was 147,532.80 and that the cause of loss was due to drought, an insured peril under the plan (Exhibit #2, Tab 5, page 1).
Although he was expecting no payment, at the end of November, 2005, Royalmar received a cheque from FS Partners in the amount of $8,405.30. The payment represented $135.00 per tonne for the canola that was disposed of through his neighbour.
Martin speculates that the canola destined for disposal was eventually marketed by the elevator operator who then, after deducting its costs divided the balance among the producers.
Martin met with an Agricorp adjuster in early November whom he informed that the elevator had paid him $8405.30 for the disposal canola.
The Royalmar claim was re-adjusted based on being paid $8405.30 from the elevator for the bulk of the canola crop. A Crop Inspection Report dated November 24, 2005 indicates that the claim was re-adjusted for payment for production shortfall of 14,587.52 lbs.
Agricorp paid the claim for yield shortfall in the amount of $272.36 per tonne. According to his calculations based on his Average Farm Yield, of 67.06 tonnes he should have received $18,058.85 from Agricorp for the production shortfall minus the $8,405.00 payment from the elevator. Agricorp should pay an additional $3,021.48: the cost of harvesting unmarketable canola for a total additional claim adjustment of $11,080.33.
Agricorp paid $50.00 per tonne for disposal of canola.
At no time did he attempt to conceal the $8,405.00 payment from the elevator.
He wished to be treated equitably with other canola producers that he was aware had been paid by Agricorp under the insurance policy based on a zero production yield and in addition had received the $135 per tonne from the elevator.
Exhibit #3 was received into evidence as Mr. Martin’s calculations of the Royalmar canola claim under the insurance contract.

Mr. Martin responded to questions. He stated that:

He understands that the contract of insurance is deemed to be renewed unless a written cancellation notice is sent to Agricorp.
The Notice of Renewal is sent to customers by Agricorp each spring. The notice indicates the crops covered, Average Farm Yield by crop, Guaranteed Production per acre and level of coverage.
The Claim Price as indicated on the 2005 Renewal Notice is 100 percent float for canola. This means that, should a claim for canola arise in 2005, any claims will be adjusted based on the price of the canola crop at time of loss.
Customers must telephone Agricorp with changes/corrections to the Renewal Notice.
He received the Crop Insurance Policy and 2005 update from Agricorp. He understands that the indemnity he purchased for canola 2005 is for production shortfall as specified under the Crop Insurance Policy Section D.
The Crop Insurance Policy for the corn plan provides a salvage benefit for insured perils that affect the quality of corn crops, however, the Crop Insurance Policy does not contain a provision for indemnity from insured perils that affect the quality of canola.
He had information that Agricorp was going to make a decision with respect to payment on the unmarketable canola before the decision was actually publicized by way of letter dated September 21, 2005. The notices of rejection from the elevators were obtained after Agricorp sent its letter dated September 21, 2005.
His appeal is based on Agricorp’s September 21, 2005 letter which indicated that insured perils that affected the quality of the canola crop would be covered by crop insurance.
The Proof of Loss dated September 19, 2005 was amended to reflect the production shortfall that he believed was now covered by the contract as explained by Agricorp in its September 21, 2005 letter.
He signed The Crop Inspection Report dated November 24, 2005 because he would not receive any money from the claim unless he did so. The amended yield recorded on the November 24, 2005 Crop Inspection Report indicated that the claim of $1800.70 that was paid was adjusted by subtracting the yield from the Guaranteed Production.
He is requesting that Agricorp pay him $272.00 per tonne (production shortfall) and the difference between the $135.00 per tonne that he received from the elevator and the production shortfall.
He should be treated similarly to all other producers.
He took the canola to the elevator for disposal on September 29, 2005.
The $8,405.30 payment for the disposed of canola was totally unexpected.
The quality of canola can be assessed from the time it is cut and drying in the swathe. In 2005 it looked very poor in the swathe.
Although the term consignment is listed on the receiving tickets for the canola that was disposed of at the elevator, it does not convey the usual meaning with respect to payment.
He acknowledged receipt of the documents found in Exhibit #2, Tab 3.
He acknowledged receipt of the insurance contract found in Exhibit #2, Tab 2.

Mr. Wechselmann made a motion (a non-suit motion) requesting the Tribunal to dismiss the appeal as the appellant had not demonstrated proof of his case in his testimony. Mr. Wechselmann reminded the Tribunal that the burden of proving the case lies with the appellant.

Mr. Pettipierre asked the Tribunal to put Agricorp to its election on the non-suit motion.

The Tribunal recessed to consider the motion and decided to dismiss Agricorp’s non-suit motion. The hearing proceeded.

Anna Siderius

Ms. Anna Siderius testified before the Tribunal. She stated that she is Manager of Production Insurance and has held the position since August of 2005. Ms. Siderius explained that her duties include plan development, claims, and liaison with commodity groups. Ms. Siderius told the Trubunal that:

Canola production yield is measured in pounds
In 2005, Agricorp paid claims for production shortfall against the level of Guaranteed Production. Reseeding benefits were also paid.
In 2005, the canola plan did not provide for quality or “salvage benefit”. Ms. Siderius contrasted the canola provisions of the insurance contract with the corn provisions to demonstrate the distinction between production yield coverage (canola) and quality coverage (corn).
She made the point that if a farmer can produce a crop it cannot claim under the insurance policy. She stated Agricorp does not make up the difference if a farmer gets a reduced value for its crop.
The 2005 canola crop production shortfall coverage was for grades 1 and 2 that were purchased for the crusher market.
At the beginning of harvest (early August 2005) canola was marketed as usual. The price for canola was low.
In mid-August 2005 ADM refused to accept any more canola for shipping as the quality had declined to grade 3 and sample grade. Grade 3 and sample grade are the lowest quality of canola produced.
Agricorp met with industry stakeholders to discuss issues. It was determined that the cause of the poor quality crop was excess heat and drought.
Under the canola plan, drought is an insured peril.
Agricorp was advised that P and H Elevators would purchase 2005 canola for $25 per tonne. Agricorp accepted that $25 per tonne was essentially worthless and Agricorp decided to treat any harvested crop as worthless or “0 yield”. Agricorp recognized that it was not appropriate to dispose of an oilseed crop by dumping it on the fields.
Agricorp informed all customers by way of letter dated September 21, 2005 that there were issues with the marketability of the canola crop and advised producers to report damage to Agricorp, as well it provided instructions for obtaining grading slips from elevators.
Agricorp decided to make field visits to all canola producers who had not reported a yield and began to adjudicate claims for the 2005 canola crop.
Sometime in December 2005 it became known that some producers were receiving payment in the range of $135.00 per tonne to $207.00 per tonne for canola that was to have been disposed of. This was in addition to the $50.00 per tonne that Agricorp acknowledged that producers were receiving from elevators as a disposal fee.
Agricorp insures canola against production shortfall due to insured peril. It does not insure against market conditions.
In 2005, canola that was marketed was considered to be yield. Producers who did not market the canola above the $50.00 per tonne disposal fee were considered to have “0 yield” and were compensated by insurance as if they had experienced a 100 percent loss.
Producers may make changes to their levels of coverage at the time that the renewal packages are sent out each spring. Mr. Martin was insured under the canola plan in 2005
The contract of insurance for canola specifically states that indemnity is for production shortfall only.
Agricorp made a field visit to Mr. Martin’s farm that resulted in the November 24 2005, Crop Inspection Report because Mr. Martin filed the September 19, 2005 Proof of Loss which indicated that he had no yield.
The November 24, 2005 Crop Inspection Report indicated that Royalmar had been paid $135.00 per tonne for canola so that Agricorp could not consider that Royalmar had experienced a “0 yield”.
A revised Proof of Loss form dated November 24, 2005 indicated that Royalmar’s revised yield was 132945.28 lbs; the production shortfall was 14587.52 lbs.
Mr. Martin was paid a claim based on production shortfall. He was treated similarly to other producers in that his canola that was not marketed was considered to be “0 yield”.
Agricorp’s adjustment of claim based on “0 yield” is an acceptable practice under the canola plan.
The crop insurance scheme is based on a federal-provincial agreement and Agricorp cannot change the insurance contract without the approval of both levels of government.

Ms. Siderius responded to questions. She stated that:

Agricorp’s September 21, 2005 letter to producers does not constitute an amendment to the contract of insurance. It was issued to producers to serve as a clarification of Agricorp’s duties to its customers.
The Agricorp Internal Review Committee brief for Royalmar’s canola dispute was prepared in February 2006, months after Agricorp became aware that some customers who had been paid a claim had also received payment for canola from elevators in amounts greater than the $50.00 per tonne disposal fee.
She does not feel that Royalmar has been treated differently to any other producer.
Although it was not stated in the letter of September 21, 2005, Agricorp encouraged the disposal of the canola at the rate of $50.00 per tonne. Producers were encouraged to dispose of canola during visits by field staff.
Mr. Martin was never specifically advised in writing, to dispose of his canola.
She is not a lawyer nor was she involved in the preparation of the canola plan, however she is qualified to provide Agricorp’s interpretation of the canola plan.
Agricorp does not dispute that a contract of insurance was in place for Royalmar’s 2005 canola and that damage to the crop was caused by an insured peril.
The dispute is with regard to Royalmar marketing canola at the reduced rate of $135.00 per tonne. The canola plan indemnifies against production loss, not reduced price from markets.
Under the canola plan there is no obligation to salvage or market canola, the coverage is for production shortfall only.
Pursuant to subsections P (1) paragraphs A through E, of the Crop Insurance Policy, there is no specific reference to limit or exclude indemnity based on the quality of crop.
Paragraph 14, of the Crop Insurance Policy Section “Crop Condition” specifically states that the production per acre will not be valued with the inclusion of the cost of harvesting the crop unless stipulated in the plan for a particular crop.
Part 11 of the Crop Insurance Policy does not specifically prohibit the insured from having a claim adjusted based on quality issues.
Agricorp paid Royalmar a claim in the amount of $1800.70
The contents of Agricorp’s September 21, 2005 letter should be read in context with the respect to any reference to “downgraded quality”.
The Crop Insurance Policy does not contain reference or definitions for the terms “downgraded” or “unmarketable”.
All producers who obtained two rejection notices from elevators were required to wait until an Agricorp field representative made a field visit before disposing of his/her canola.
Mr. Martin never sought to conceal the fact that Royalmar received $135.00 per tonne for canola that was disposed of by the elevator, however his honesty may be seen to disadvantage him with respect to the position of other producers who also received payment for canola that was to have been disposed of.
Agricorp will be determining how it will proceed in future with respect to customers who received payments on claims for 2005 in addition to market payments for their 2005 canola.
Shortly after Agricorp decided to value the unmarketable crop as “0 yield”, ADM began accepting Ontario canola again.
Agricorp was not able to send a field representative to the Royalmar farm until late November.
To the best of her knowledge, the damage to the canola crop that occurred in 2005 was unprecedented.
Of the approximately 300 insured canola growers in Ontario approximately 200 had canola crop insurance claims in 2005.

Summations

In summation, Mr. Pettipierre argued that Mr. Martin’s loss was due to an insured peril. He stated that Mr. Martin’s forthrightness benefited Agricorp by decreasing the payment on claim by $135.00 per tonne that was paid by the elevator. He suggested Royalmar would have been better off if it had burned the crop. He reminded the Tribunal that the contract of insurance contains no exclusions for adjustment of claim based on quality. He said that Royalmar was legally obligated to mitigate the loss and that was what it had done. He was seeking $11,080.33 on behalf of Royalmar on the basis of an improper denial of the claim. He reminded the Tribunal that Ms. Siderius had testified that the circumstances of drought and poor quality canola in 2005 were unprecedented. Mr. Pettipierre told the Tribunal that it should award legal costs to Mr. Martin because he was seeking compensation under a contract of insurance which is an indemnity for losses, which would include legal costs. Mr. Pettipierre reminded the Tribunal that Agricorp had in house legal advice. He requested that he be permitted to make written submissions should the Tribunal rule in his clients favour with respect to legal costs.

Ms. Rebecca Givens made closing arguments for Agricorp. She stated that the Tribunal must decide the matter based on the legal provisions of the contract of insurance. She referred the Tribunal to Section 8 of Ontario Regulation 380/97 which gives Agricorp the authority to determine yield. She reminded the Tribunal that with respect to the 2005 canola crop, Agricorp determined that the yield was “0” for un-marketed canola. Ms. Givens stated that the Regulation also provided for Agricorp to determine how claims are to be adjusted. Ms. Givens argued that Section P of the Crop Insurance Policy specified that waivers under the contract must be made in writing. She argued that the appellant was claiming an additional $3021.48 for costs of harvesting the crop, however there was no provision in the policy for such a claim.

Ms. Givens maintained that the policy did not provide for indemnity against loss due to poor canola quality. She stated that there is no provision for salvage of the canola crop. Ms. Givens referred to Section D of the Crop Insurance Policy which stipulated the type of coverage against insured perils. She said that Mr. Martin has testified that he understood how the contract applied to the canola crop. She reminded the Tribunal that the canola provisions of the policy that do not address quality can be contrasted with the corn provisions of the policy that do address quality issues. She reminded the Tribunal that Agricorp was permitted some latitude in determining crop yield. She said that Agricorp had gone to great effort to accommodate its customers by assessing yield as zero for the useless crop. She argued that Royalmar had been paid $135.00 per tonne for canola; Royalmar received the payment before his claim was adjusted. Ms. Givens said that the contract of insurance did not cover payments on claims based on poor quality and that to do so would be tantamount to amending the contract. She stated that Agricorp cannot amend the contract of insurance.

Ms. Givens told the Tribunal that although other producers had been paid as much as $207 per tonne by elevators, Agricorp could not decide Royalmar’s appeal based on the payments that other producers received. Ms. Givens said that Agricorp intended to treat all its customers fairly under the contract. She argued that Mr. Martin was requesting payment based on a poor market. She told the Tribunal that it’s decision in the matter would reflect whether it interpreted the contract as indemnity against production and quality shortfalls rather than the way it was written. Ms. Givens said that many other producers would be interested in the outcome of the appeal.

The Findings

The evidence given by Brad Martin on behalf of Royalmar was delivered in a forthright and earnest fashion.

There was no dispute in this matter as to the facts that there was a shortfall in canola production for Royalmar in 2005 and that this shortfall was caused by drought, an insured peril. The Tribunal finds that the amount of the Royalmar production shortfall covered by the policy of insurance was approximately 14,000 lbs.

It is clear from the testimony of Mr. Martin, and from the Proof of Loss and adjusted Proof of Loss forms, that he initially expected that he would not be paid for the 132,945 lbs of canola that he did harvest (Exhibit 2, tab 5 page 130) However, a buyer was eventually found for the canola and Royalmar was paid at a rate of $135.00 per tonne. Mr. Martin took the position that Royalmar’s claim was not adjusted fairly because Agricorp did not include the volume of poor quality canola which was sold when it calculated his claim payment. Mr. Martin submitted that Agricorp included volumes of poor quality canola sold by some other canola growers when it adjusted their claims on their 2005 crops. Sometime in 2005 it became known to Agricorp that some producers were receiving payments in the range of $135.00 to $207.00 per tonne for canola that was to have been disposed of and that Agricorp had adjusted as “0 yield”. Agricorp took the position that those growers’ claims were incorrectly adjusted.

Mr. Pettipiere argued that the contract of insurance does not exclude quality. He pointed out that quality was not included in a list of specific indemnity limitations and exclusions (Crop Insurance Policy Contract of Insurance Part I, Section P). He argued that Agricorp had considered quality in its adjustment of other growers’ claims and was obligated to include the undisputed quality problems with Royalmar’s 2005 canola crop in the adjustment of the appellant’s claim.

Ms Givens argued that the contract of insurance provided coverage for production shortfalls, not quality shortfalls (Crop Insurance Policy Contract of Insurance Part II, Section D). She said there was a provision in the contract that allowed for payments related to reduction in quality of corn (Crop Insurance Policy Contract of Insurance Part II, Section G) but that this did not apply to canola.

In essence, the Tribunal was asked to decide:

Does the contract of insurance for canola guarantee payment in the event of quality shortfalls, as well as production shortfalls; and

Even if it does not, should the appellant’s claim be adjusted in a manner similar to that of some other canola growers who were in a similar position, as a matter of fairness?

The Tribunal finds that the contract of insurance on the 2005 canola crop provides production insurance but not quality insurance. The Tribunal rejects Mr. Pettipiere’s arguments that because quality was not specifically excluded in a general list of limitations and exclusions that it should be covered. The Tribunal finds that Part II of the contract of insurance, the Grain and Oilseeds Insuring Agreement, clearly provides for payment to be made for production shortfalls, but has no provision for payments for poor quality canola. The Tribunal heard some argument as to the effect of a letter dated September 21, 2005 which was sent to growers by Agricorp. The Tribunal finds that this letter did not constitute an amendment to the contract of insurance. The letter related to the adjustment of claims of insurance, in which, under the Regulations, Agricorp is given a wide discretion.

The Tribunal finds that Mr. Martin demonstrated in his testimony that he understood the contract of insurance and there was no evidence brought forward to suggest that either he or Agricorp did anything wrong. The Tribunal finds there are no grounds to say the contract of insurance has been breached. There was canola production by Royalmar in 2005; the canola was harvested and a market price was ultimately achieved for that production. A claim was paid in the amount of $1,800.70. due to production shortfall as a result of drought. The appellant sought an additional payment in the amount of $11,080.33 as compensation for poor quality and crop removal compensation. The contract of insurance quite simply does not cover financial losses related to quality with respect to canola or with respect to crop removal as claimed.

The Tribunal acknowledges that Mr. Martin testified that he felt compelled to sign the Proof of Loss forms as he felt if he did not his case would not be considered and he would not receive a payment of his claim. The Proof of Loss forms, although considered carefully by the Tribunal, were not determinative of our decision.

With respect to the question of fairness, the evidence of Agricorp was that canola growers who were in a position to file a crop insurance claim in 2005 fell into several categories one of which had their claims adjusted early in the process and received a payment from Agricorp based on the contract float price of $272 per tonne and then later also received payment from the market. The undisputed evidence of Mr. Martin was that, but for the timing of the adjuster’s visits to his farm, he would have fallen into that category and would have received those same amounts for the Royalmar canola crop. Agricorp argues that the growers in that category were overpaid.

The Tribunal has some sympathy for the fairness argument put forward by the appellant. In principle all canola growers in similar positions should be treated the same. Nonetheless, the Tribunal finds that crop insurance claims must be adjusted according to the terms of the contract of insurance. The Tribunal finds that the appellant’s claim was fairly adjusted according to the terms of the contract.

The Tribunal put no weight on the respondent’s argument that a ruling in the appellant’s favour would lead to other canola growers asking for the same treatment and causing Agricorp financial harm. The Tribunal hears each case on its own merits.

The Tribunal strongly urges Agricorp to take appropriate action to recoup monies that were paid to canola growers for production shortfalls on volumes of canola that were harvested and sold. Such action would resolve the inequity identified by the appellant in this case.

On the question of costs, Rule 28 of the Tribunal’s rules of procedure provides that costs may be awarded where a party has acted clearly unreasonably, frivolously, vexatiously or in bad faith. Both parties in this matter acted professionally, appropriately and in a forthright manner. The Tribunal will not make an order regarding costs.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal decided to dismiss the appeal of Royalmar.

The reasons for this decision are:

The 2005 canola insurance contract coverage provided indemnification for production shortfalls and not the quality of the canola crop or the price that the insured grower might receive from the marketplace.
In 2005 Royalmar harvested a canola crop, and submitted a Proof of Loss for production shortfall due to drought of 14,587.52 pounds.
Agricorp paid Royalmar $1,800.70 based on the production shortfall as claimed in the Proof of Loss.
Agricorp’s decision to deny the adjustment of Royalmar’s claim for any additional losses for the 2005 canola crop was in accordance with the canola insurance contract.
The Tribunal finds that the claim by Royalmar was adjusted according to the terms of the contract as accepted by Royalmar.

DATED AT Guelph, Ontario this 13th day of July, 2006.