Ruedel Farms Inc. v Ontario Processing Vegetable Growers, 2006 ONAFRAAT 25

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West

Tribunal d’appel de l’agriculture,

de l’alimentation et des affaires rurales

1 Stone Road West

Guelph, (Ontario) N1G 4Y2

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

Email:appeals.tribunal@omaf.gov.on.ca

Guelph (Ontario) N1G 4Y2

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

Email: appeals.tribunal@omaf.gov.on.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Ruedel Farms Inc. v Ontario Processing Vegetable Growers

Ruedel Farms Inc. v Ontario Processing Vegetable Growers 2006 ONAFRAAT 25

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

July 17, 2006

DATE OF DECISION:

July 26, 2006

2006-25

NEUTRAL CITATION:

2006 ONAFRAAT 25

IN THE MATTER OF THE FARM PRODUCTS MARKETING ACT AND SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT:

AND IN THE MATTER OF:

An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Ruedel Farms Inc., Paincourt, Ontario from a decision of the Ontario Processing Vegetable Growers to deny it a licence to grow carrots for the processing industry.

Before: Kirk Walstedt, Vice Chair; Graeme Hedley, Member; Cor Kapteyn, Member

Appearances:

John Taylor, counsel to the appellant, Ruedel Farms Inc.

Geoffrey Spurr, counsel to the respondent, Ontario Processing Vegetable Growers

Gerard Delrue, witness for the appellant

Marshall Schuyler, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Ridgetown, Ontario on Monday, July 17, 2006. Ruedel Farms Inc. (Ruedel) appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) from a decision of the Ontario Processing Vegetable Growers (OPVG). Ruedel sought a license to grow carrots for processing in the 2006 crop year. The OPVG declined to issue Ruedel a licence and reconfirmed that decision after a hearing.

Statutory Context

Subsection 16(2) of the Ministry of Agriculture, Food and Rural Affairs Act states:

Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal. R.S.O. 1990, c. M.16, s. 16 (2).

Subsection 16(4) allows the Tribunal to refuse to hear the appeal under certain circumstances. Subsection 16(5) requires that appellants first apply to the marketing board for a hearing, unless both parties waive their right to a hearing.

Under the Farm Products Marketing Act, the Ontario Farm Products Marketing Commission may delegate powers and authorities to local boards. Clauses (a) to (g), inclusive, of Section 10 of Regulation 440, as amended, under the Farm Products Marketing Act describe the powers related to licensing vegetable growers which have been delegated to the OPVG as follows

10. The Commission delegates to the local board its powers to make regulations with respect to vegetables,

(a) providing for the licensing of any or all persons before commencing or continuing to engage in the producing or marketing of vegetables;

(b) prescribing or providing for classes of licences and the imposition of terms and conditions on any class of licence;

(c) prohibiting persons from engaging in the producing or marketing of vegetables except under the authority of a licence and except in compliance with the terms and conditions of the licence;

(d) providing for the refusal to grant or renew a licence or for the suspension or revocation of a licence,

(i) where the applicant or licensee is not qualified by experience, financial responsibility or equipment to properly engage in the business for which the application was made or the licence granted, or

(ii) where the applicant or licensee has failed to comply with or has contravened the Act, the regulations, the plan or any order or direction of the Commission, Director or local board or of a marketing agency of Canada;

(e) providing for the imposition, amount, disposition and use of penalties where, after a hearing, the local board is of the opinion that the applicant or licensee has failed to comply with or has contravened any term or condition of the licence or the Act or the regulations, the plan or any order or direction of the local board;

(f) providing for the fixing of licence fees and the payment thereof by any or all persons who are engaged in the producing or marketing of vegetables and the collecting of the licence fees and their recovery by suit in a court of competent jurisdiction;

(g) prescribing the form of licences;

The OPVG General Regulations - 2006 state:

1. In these regulations (1) (c) “marketing” includes advertising, assembling, buying, financing, offering for sale, packing, processing, selling, shipping, storing, and transporting, and “market” and “marketed” have corresponding meanings; …

(h) “vegetables” means the following vegetables produced in Ontario and used for processing: green and wax beans, lima beans, red bets, cabbage other than cabbage used for coleslaw, carrots, cauliflower, cucumbers, sweet corn, green peas, pumpkin and squash, peppers or tomatoes; …

3. No person shall engage in the production of vegetables except under the authority of a licence of the class prescribed for that vegetable and except in compliance with the terms and conditions of the licence.

The Evidence

Mr. Gerard Delrue told the Tribunal that he and his wife own controlling shares of the company Ruedel Farms Inc. which they incorporated in 1990 for liability reasons before they entered the tomato trucking business. His son is president of the company. He said the company also owns a large warehouse including the refrigeration equipment on a property that was the former King Canning facility in Paincourt. He explained that he had farmed before starting the corporation. He said tomatoes was his main source of income but he had also grown plug plants, sweet corn, peas, cucumbers and more recently carrots. He said that he had grown vegetable crops under contract for several processors including Campbell Soups, Libby’s and Heinz.

Mr. Delrue said 2004 was the first year he grew carrots and he hired a company known as Kejay, which was owned by his nephews, to do the custom work in growing the carrots. He explained that Kejay was having cash flow difficulties and he wanted to help them out. He said he grew carrots again in 2005 and 2006 as he had made a profit on them. Kejay did the custom work in 2005 and 2006 as well. He explained that he grew for the fresh market – which is unregulated - in 2004 and 2005, but that some of the 2005 crop was ultimately sold to a processor – Campbell Company of Canada (Campbells). He said he was told he would not receive a license from the OPVG in 2005 but that he was ultimately issued one because of his association with Kejay. He explained that Campbells had originally approached Kejay in 2005 looking for carrots but Kejay did not have any and referred Campbells to Ruedel.

Mr. Delrue clarified that Kejay did the custom work on the 2004 crop but that he was paid for the carrots and did not share the profits with Kejay. He said Ruedel had an arms length relationship with Kejay in 2004, 2005 and 2006. Mr. Delrue said Kejay has good machinery and good operators and he liked good workmanship. He said he could not find another custom operator on short notice and did not know the record of other custom operators. He knew of some that he would not hire due to concerns about the quality of their work.

Mr. Delrue said he was offered a licence to grow 2,900 tonnes of carrots for processing by Campbells in 2006 but the OPVG had denied him a licence and the contract had not been signed. He testified that he would likely lose money on carrots in 2006 if they had to be sold on the fresh market, due to the high value of the Canadian dollar and an expected surplus in the market. He said he had expected to receive a licence from the OPVG as in the past the OPVG automatically issued licenses unless a grower had personally done something wrong in the past. He said he believed the OPVG did not want Kejay to make any money and this was why his licence application was denied.

Mr. Delrue confirmed that the carrots planted in 2006 belonged to Ruedel, not Kejay and that Ruedel would receive the proceeds of the crop. He said the Campbells contract was for uncrowned carrots and Campbells has a subcontracting arrangement that covered crowning.

In response to questions by Mr. Spurr, Mr. Delrue indicated:

• His carrots were planted by March 15, 2006 by Kejay, after it had secured and prepared the land.
• Ruedel was growing 300 acres of carrots in 2006 - 200 acres for Campbells and 100 acres for the fresh market.
• All of the carrot land was rented in 2006, due to a wireworm problem in his land and the need for crop rotation.
• 125 acres of land for carrots was rented from Kejay and the balance from Mr. Corsini. He may need to use carrots grown on the Kejay land to fill the Campbells contract.
• 2006 was the first year that Ruedel had rented land from Kejay; it was a one year lease.
• He knew the OPVG had a problem with Kejay but did not think that should prevent him from using Kejay for custom work.
• He received a letter from the OPVG dated February 06, 2006 outlining its concerns regarding Kejay before the carrot acreage was planted in 2006.
• By February 6, 2006 it was too late to look for other custom operators.
• Campbells approached him on January 31, 2006 about growing carrots for it in 2006.
• Campbells contacted him about his carrots which were grown in 2005 after it had approached Kejay looking for carrots.
• In 2004, Kejay had approached him for a loan due to its cash flow problems but they had no security as a bank had a claim on the land and a fertilizer company on the crop. He paid Kejay for custom work in advance as he would own the carrot crop and would help his nephews with their cash flow.
• He paid less for custom work in 2004 as the funds were all paid in advance. Also fuel costs were lower that year but he made a profit on the crop.
• He paid approximately $500 per acre more for custom work in 2005 – the total cost was approximately $1,500 per acre. He expected the cost in 2006 to be similar to that in 2005. He estimated that 45% of the costs had been paid to date.
• He purchased a processing facility in 2005 and subsequently leased it to Family Choice Produce, a company that was partly owned by his two nephews who owned Kejay.
• The facility was to be used to bag large carrots and to wash, sort, grade and pack carrots. Specialized equipment was needed to grade carrots.
• Ruedel’s carrots for processing would go through that facility if necessary.
• Ruedel pays insurance and taxes on the building but the tenant owns all the processing equipment except one tractor which belongs to Ruedel.
• He does not own any carrot production equipment.
• He now had a pay as you go system with Kejay as it no longer had a cash flow problem. He expected to pay Kejay when he received payment for carrots.
• Ruedel leased the land used to grow carrots in 2006 and would receive payment for the carrots.
• Kejay was responsible for bedding, land preparation, planting, procuring seed and transplants, fertilizing and spraying, harvesting, trucking and planting a cover crop.
• He did not know how carrots were graded. Kejay knows about carrot grading as that was the source of its trouble with the OPVG. He did not pay a premium for Kejay’s grading expertise.
• He would give Kejay a bonus if he had a particularly good crop as he has always done that with all his workers.

Mr. Delrue also indicated:

• He was normally paid 30-90 days after his product was shipped. In 2004 and 2005, he paid Kejay up front as it had no money. In 2006 Kejay would be paid when he was paid.
• He received a letter that was sent to all growers which indicated no one was to have anything to do with Kejay in 2006. He received legal advice such that the Tribunal order regarding Kejay did not prohibit it from doing custom work.

Mr. Marshall Schuyler told the Tribunal he was a board director for District 3. The OPVG Board has 10 or 11 directors and he is a former chair of the OPVG and is currently the only director who grows carrots. He said he grew carrots for a number of processors but had never grown for Campbells.

Mr. Schuyler explained that the OPVG negotiated the price and conditions of sale for processing vegetables, represented growers on crop insurance issues and generally developed the processing vegetable industry. He testified that OPVG negotiates contracts with the Ontario Food Processors Association each year and these are conducted within a formal procedure which is overseen by the Ontario Farm Products Marketing Commission and that a final offer arbitration mechanism is triggered if negotiations failed. He said that he was on the carrot negotiating committee last year.

Mr. Schuyler stated that Campbells had listed three carrot growers for the 2006 crop; all were large size growers and the Ruedel contract for 2.6 million kg of carrots was a good size relative to other contracts in the industry. He said growers expect a full season yield of 35-40 standard tons of dicer carrots per acre, less if they are harvested early.

Mr. Schuyler said Kejay was prohibited from growing and marketing carrots in 2006 by the Tribunal after a hearing held in 2005. He said the OPVG was able to grant a licence to Ruedel to market carrots from the 2005 carrot crop which was custom produced by Kejay because there was no prohibition on Kejay for the 2005 crop year.

Mr. Schuyler said it was rare to have custom work in the carrot sector as carrots required specialized machinery, specialized skill base and needed to be harvested at the same time. He said it was difficult to obtain a custom grower as people with the equipment would be harvesting their own carrots when the custom work was needed.

Mr. Schuyler said the fresh carrot market had higher quality standards than the processing carrot market but that there were some varieties of carrots that could be sold into either market. He said carrot processors normally wanted the entire production from a specific field dedicated to them but that this was not necessarily required by all processors. He explained that processors had the right to require grading but did not always do so if the load looked acceptable. He noted that if a load was graded and found to be unacceptable the entire load was rejected. He said that if the load is accepted, the processor must pay 100% of the contract price.

Mr. Schuyler said the OPVG introduced a licensing program for processing vegetable growers in 2005 in response to problems of inequity between growers that were not just related to Kejay. He said the OPVG had penalized Kejay in 2005 because it had disregarded the orderly marketing system that the OPVG was charged with protecting. He said the OPVG had nothing against Kejay or Ruedel.

Mr. Schuyler said an invoice which detailed the custom work undertaken by Kejay for Ruedel in 2004 covered most of the aspects of carrot production but did not mention land rental. He said he agreed with Mr. Delrue that crop rotation was essential with carrot production. He said it was usual to be invoiced and pay for custom work in the processing vegetable industry as it is completed. He said he did not view the relationship between Ruedel and Kejay as arms length as it was unusual to see custom work contracts work out to round numbers per acre. He said it was Ruedel’s association with Kejay which caused the OPVG concern.

Mr. Schuyler said that carrots for processing would need to be crowned and if Campbells is buying uncrowned carrots they would have to be sent to Family Choice Produce or a similar facility to be crowned.

In response to questions from Mr. Taylor, Mr. Schuyler indicated:

• It would be acceptable if Ruedel had hired a custom operator other than Kejay.
• The OPVG would need to see all the evidence in order to evaluate other situations.
• Growers were all informed of the 2005 Tribunal decision regarding the prohibition on Kejay from producing and marketing carrots in the 2006 crop year.
• Marketing is defined in the Farm Products Marketing Act.
• Ruedel was not independent of Kejay. Mr. Delrue knew of the OPVG concerns regarding Kejay for 2006 when he entered into his contract.
• In 2005, the Tribunal made a different decision than the OPVG and gave Kejay a significantly less severe penalty.
• The OPVG had given significant penalties to a tomato grower who had been undermining the marketing system eight or nine years before.
• The OPVG had to maintain a level playing field so that one grower does not have an advantage over other growers.
• The OPVG did not penalize the processor in the Kejay case. It had no authority to do so as vegetable processors were accountable to the Ontario Farm Products Marketing Commission.
• He agreed that in 2005 the OPVG felt it would be unfair to prevent Kejay from marketing the 2005 crop, as a processor was expecting to receive those carrots. The same situation did not apply in 2006 as Campbells was aware that there was some risk in dealing with Kejay through Ruedel.
• It was possible that Campbells would not get all the carrots it wanted.
• It was not necessary to plant carrots by March 15th; he had planted some in May and he was not that far east of Ruedel.
• The 2005 Tribunal decision does not specifically mention custom work but clearly prohibits Kejay from producing and marketing carrots in 2006.
• Kejay’s infraction was that it sold carrots for less than the negotiated price. If growers and processors do not respect the negotiated price, the orderly marketing system collapses. It is a larger issue than the licensing of Kejay or Ruedel.
• The OPVG did not know all the elements of the contract between Ruedel and Kejay.
• He believed the intent of the 2005 Tribunal decision is that Kejay was not to benefit from growing carrots in 2006.
• He could not prejudge how the OPVG would deal with a licence application from Kejay in 2007.
• The OPVG is not holding back funds that it was supposed to pay to Kejay.

In response to questions from the Tribunal, Mr. Spurr said that Kejay had recently provided the OPVG a written undertaking as ordered by the Tribunal in 2005.

Summations

Mr. Taylor told the Tribunal that the question before it was did the local board – the OPVG – have the power to deny a license to Ruedel because it had custom work done by Kejay. He referred to the Tribunal decision dated August 17, 2005 and submitted that there was nothing in it to prevent Kejay from doing custom work for Ruedel or any other grower, as it had done in the past. He said Ruedel had no carrot growing equipment and Mr. Delrue relied on his nephews to provide their expertise and equipment.

Mr. Taylor argued that Ruedel had done nothing wrong in requesting a contract from Campbells and could not have expected that the OPVG would interpret the 2005 Tribunal decision such that Ruedel could not use Kejay as a custom operator. Mr. Taylor said the evidence was that the OPVG had initially tried to impose a huge financial penalty in excess of $300,000 on Kejay in 2005 (varied by the Tribunal) and had exonerated the processor in that case. He said the OPVG had demonstrated no sympathy for the grower and had imposed a penalty that was disproportionate to the offence, as only $55,000 worth of carrots were improperly marketed. He pointed out a local company had recently been fined only $100,000 for dumping chemicals in the St. Clair River which he submitted was a much more serious offence. Mr. Taylor suggested the OPVG directors may be jealous of Kejay. He argued that the OPVG was going beyond the penalty imposed by the Tribunal in 2005 in seeking to prevent Kejay from doing custom work for Ruedel. He said Kejay should not be deprived of a livelihood and it needed to grow carrots to make use of specialized equipment for which it had incurred debt.

Mr. Taylor also pointed out that Campbells liked the carrots produced by Ruedel and said he did not know who would fill the contract if the Tribunal did not allow Ruedel to supply Campbells with carrots in 2006. He suggested that the OPVG was not protecting growers by denying Ruedel a license. He said that Campbells was expecting the Ruedel carrots. He said it would not undermine the 2005 Tribunal decision to allow Ruedel to fill this demand as it was silent on the question of custom work and there was no legitimate reason to deny Ruedel a licence based on its association with Kejay. He said Kejay would not market the carrots but they were hired to produce them and would do so.

Mr. Taylor asked the Tribunal to grant a licence to produce and grow carrots for processing in 2006 to Ruedel. He also asked it to order that the appellants costs related to this hearing and the hearing before the OPVG be paid by the respondent.

Mr. Spurr told the Tribunal that the definition of marketing used by the OPVG, which was drawn from the Farm Products Marketing Act included advertising, assembling, buying, financing, offering for sale, packing, processing, selling, shipping, storing and transporting. He said the crux of the respondent’s position was that Kejay was effectively producing and marketing carrots through Ruedel and calling it custom work. Mr. Spurr reminded the Tribunal that Point 2 of the 2005 Tribunal decision said the OPVG was not to issue a license to produce and market carrots for processing in 2006 to Kejay. He suggested the onus was on Ruedel to prove that it, not Kejay, was producing and marketing carrots in 2006.

Mr. Spurr submitted that Ruedel and Kejay were working together to defeat the 2005 Tribunal order and that both companies would receive remuneration from carrots produced and marketed by Kejay. Mr. Spurr said the evidence was that Ruedel’s role was to pay rent on land used and cover some of the operating costs. He reminded the Tribunal that Mr. Delrue had said he had no specialized equipment for carrot production, no expertise in carrot production and no knowledge of the carrot grading system which Mr. Spurr submitted was necessary to market the crop. Mr. Spurr said Kejay was responsible for bedding, land preparation, planting, procuring seed and transplants, fertilizing and spraying, harvesting and trucking the carrot crop, as well as providing land to rent to Ruedel to grow carrots and providing the equipment. He said the principals of Kejay had leased a processing plant which was available if needed for storage or for sorting and grading the carrot crop. Mr. Spurr pointed out that Kejay would be paid when Ruedel was paid and could expect a bonus if it grew a good crop. He argued that this financial arrangement was like Kejay owned the crop, not like typical custom work.

Mr. Spurr pointed to correspondence that had been filed with the Tribunal which he said showed that Mr. Taylor had conceded that Kejay was producing the Ruedel carrot crop. He said it was clear that Kejay would be needed to market the crop as well.

Mr. Spurr said Mr. Delrue had acknowledged there was an issue related to Kejay and that he had received a letter from the OPVG dated FE 06 06 in which it outlined its position. Mr. Spurr argued that Campbells was also aware of this issue as all carrot processors had been informed in writing of the OPVG intent to honour the 2005 Tribunal decision.

Mr. Spurr asked the Tribunal to dismiss the appeal. He submitted that Kejay is effectively producing and marketing carrots, and that if a licence to produce and market carrots for processing was issued to Ruedel, that it would be contrary to the 2005 Tribunal decision.

Mr. Spurr submitted that a cost award was not warranted. He pointed out that Rule 28 of the Tribunal’s Rules of Procedure contemplates cost awards when a party wrongly brings an appeal or behaves inappropriately. He argued that the OPVG had not acted in a manner to merit a cost award.

Mr. Taylor replied that there was no evidence of Kejay marketing carrots except perhaps of transporting them. He said there was no evidence that Kejay had negotiated the 2006 contract with Campbells and that it was irrelevant that Ruedel had leased a facility that could be used to wash and sort carrots to a company partially owned by the principals of Kejay. Mr. Taylor suggested the onus was on the OPVG to show why Ruedel should not be granted a licence as the OPVG had introduced new licensing provisions in 2005.

Mr. Taylor said the parties agreed that Ruedel had legitimate arrangements with Kejay in 2004 and 2005. He said he had provided cancelled cheques at a hearing before the OPVG and did not think it necessary to produce them for the Tribunal. He reminded the Tribunal that Kejay was free to produce carrots for the fresh market as it is unregulated. He said Ruedel did not interpret the 2005 Tribunal decision the same way as the OPVG and should be allowed to use Kejay as a custom operator. He argued that the decision should be interpreted using its ordinary and plain language meaning. He argued that it was not unusual in the vegetable industry for a producer to wish to be paid before he pays for his custom work.

The Findings

The issue before this panel of the Tribunal is - Does the arrangement between Ruedel and Kejay for the production and marketing of carrots for processing in 2006 amount to a violation of the Tribunal order dated August 17, 2005?

The Tribunal ordered:

1. KEJAY FARMS INC., Kejay Investments, KEJAY INVESTMENTS INC. (JASON STALLAERT), Kejay Investments Inc. (J. & K. Stallaert) and Kejay Brothers Farms pay a monetary penalty in the amount of 10% of the outstanding balance on their deliveries of carrots to Strathroy Foods made between October 24, 2004 and December 3, 2004, inclusive.

2. The OPVG is not to issue a license to produce and market carrots for processing in 2006 to KEJAY FARMS INC., Kejay Investments, KEJAY INVESTMENTS INC. (JASON STALLAERT), Kejay Investments Inc. (J. & K. Stallaert) and Kejay Brothers Farms.

3. KEJAY FARMS INC., Kejay Investments, KEJAY INVESTMENTS INC. (JASON STALLAERT), Kejay Investments Inc. (J. & K. Stallaert) and Kejay Brothers Farms are to sign an undertaking in writing to comply with, and not be a party to any arrangement the effect of which is contrary to, the Farm Products Marketing Act and Regulations, the General Regulations of the OPVG, any order or direction of the OPVG or any negotiated agreement or award respecting carrots for processing, before the OPVG may consider applications from these companies for licenses to produce and market processing carrots in 2007.

4. All other penalties with respect to the restrictions, cancellation and limitation of licences with respect to any processing vegetable other than carrots produced by KEJAY FARMS INC., Kejay Investments, KEJAY INVESTMENTS INC. (JASON STALLAERT), Kejay Investments Inc. (J. & K. Stallaert) and Kejay Brothers Farms are rescinded.

There was no dispute with respect to the facts that the appellant Ruedel had entered into an agreement with Kejay for custom work with respect to a carrots for processing contract of approximately 200 acres for 2006. Similarly there was no disagreement that Kejay was providing all the expertise, equipment and labour in producing the carrots. Mr. Delrue also agreed under cross-examination that Kejay was to transport the carrots and prepare the crop for processing by washing, bagging and sorting the carrots. The Tribunal finds that the arrangement was that Kejay would produce and market the 2006 crop.

The Tribunal accepts the testimony of Mr. Schuyler that custom work is not common in the carrots for processing sector. The Tribunal also notes that Mr. Delrue testified that he first learned of Campbells’ desire for carrots for processing after Kejay referred Campbells to him. We also note that, of 300 acres of carrots grown in 2006 of which 200 acres were required to fill the Campbells contract, 125 acres were planted on land owned by Kejay.

The Tribunal concludes that, if licensed, Ruedel acting through an arrangement with Kejay would be allowing Kejay to effectively produce and market carrots for processing in contravention of the Tribunal order that Kejay not do so in 2006. Therefore the OPVG is justified in not granting the licence. The Tribunal also finds that a licence should not be granted to Ruedel Farms Inc. for the 2006 crop year for processing carrots.

Ruedel is providing the means for Kejay to market carrots, which is contrary to the order of the Tribunal. The onus was on the appellant to convince the Tribunal that it was producing and marketing carrots solely on its own as Ruedel Farms Inc. and the evidence was clearly to the contrary.

With regard to the request for costs, the Tribunal will only make a cost award where the conduct of a party to a hearing is clearly unreasonable, frivolous, vexatious or in bad faith.

The Tribunal finds there was no bad faith on behalf of the OPVG or Ruedel and no justifiable reason to award costs.

Decision and Reasons

After careful consideration of the evidence filed and the submissions made, the Tribunal has decided to deny the appeal.

The reasons for this decision are:

1. The evidence was that the producing and marketing of carrots for the proposed processing contract was to be done by Kejay, not by Ruedel. Ruedel merely provided a legal entity to attempt to allow Kejay to grow for the processing carrot market in 2006.

2. The appellant was made aware prior to planting that there was a risk that a license to produce and market carrots for processing may not be granted in 2006 due to its association with Kejay (Exhibit 2, tab 10). The testimony of Mr. Schuyler was that the processor in question – Campbells – was also aware of the risk.

3. The Tribunal notes that Ruedel may sell carrots produced for the fresh market as no licence is required to participate in that market.