Stetler and 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board, 2006 ONAFRAAT 26

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West

Tribunal d’appel de l’agriculture,

de l’alimentation et des affaires rurales

1, chemin Stone Ouest

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:

Stetler and 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board

Stetler and 934671 Ontario Limited v Ontario Flue-Cured Tobacco Growers’ Marketing Board 2006 ONAFRAAT 26

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

May 3, 2006 and July 13, 2006

DATE OF DECISION:

August 2, 2006

2006-26

NEUTRAL CITATION:

2006 ONAFRAAT 26

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: A decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board dated October 23, 2001, a decision of the Agriculture, Food and Rural Affairs Appeal Tribunal dated April 25, 2002 and a decision of the Ontario Superior Court of Justice (Divisional Court) dated December 18, 2003 regarding appeals/applications by Wyatt Stetler, LaSalette, Ontario and 934671 Ontario Limited regarding their alleged participation in unlawful sales of tobacco and the penalty to be imposed on the tobacco growers.

AND IN THE MATTER OF: An order of the Court of Appeal for Ontario that the matter be remitted to the Agriculture, Food and Rural Affairs Appeal Tribunal to reconsider, as it deems appropriate, the issue of penalty.

Before: Kirk Walstedt, Vice Chair; Jane Sadler Richards, Member; Doug Flook, Member

Appearances:

Burton Tait for the appellants, Wyatt Stetler and 934671 Ontario Limited

Barry Bresner for the respondent, OFCTGMB

Dudley Stetler, witness for the appellants

DECISION OF THE TRIBUNAL

This matter was heard in Guelph, Ontario on Wednesday, May 3, 2006 and Thursday, July 13, 2006. This panel of the Agriculture, Food and Rural Affairs Appeal Tribunal (Tribunal) was asked by the Court of Appeal for Ontario (dated July 8, 2005) to reconsider the penalty aspect of a decision made by a different panel of the Tribunal on an appeal by Mr. Wyatt Stetler and 934671 Ontario Limited from a decision of the Ontario Flue-Cured Tobacco Growers’ Marketing Board (OFCTGMB). The original panel’s findings on liability were not at issue.

In light of a decision of the Ontario Superior Court of Justice Divisional Court dated May 17, 2006 wherein the Divisional Court varied the penalty in the matter of William Denby et al. versus the Dairy Farmers of Ontario (Denby matter), the Tribunal decided to hear additional submissions with regard to penalty in this matter. The Tribunal continued the hearing from May 3, 2006. Additional written submissions were considered and oral submissions were heard on July 13, 2006 in Guelph, Ontario.

Statutory Context

The statutory authority for the Tribunal to hear this appeal is found in Subsection 16(2) of the Ministry of Agriculture, Food and Rural Affairs Act, which states:

Idem

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

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

Subsection 16(11) of the Ministry of Agriculture, Food and Rural Affairs Act states:

Powers of Tribunal on appeal

(11) Upon an appeal to the Tribunal under subsection (1) or (2), the Tribunal may by order direct the Commission, the local board, the marketing board or the Director, as the case may be, to take such action as it or he or she is authorized to take under the Farm Products Marketing Act or the Milk Act and as the Tribunal considers proper, and for this purpose the Tribunal may substitute its opinion for that of the Commission, the local board, the marketing board or the Director. R.S.O. 1990, c. M.16, s. 16 (11).

Preliminary Matters

Mr. Burton Tait asked the Tribunal to order that:

• All proceeds of sale of the Stetler 2005 tobacco crop be released to Mr. Wyatt Stetler, 934671 Ontario Limited and their sharegrower, Mr. Dennis Hare;
• Both parties could cite as proof evidence originating both before and after the date of the original Tribunal hearing in 2002, and in particular permitting evidence on the actual consequences of the penalty that was re-imposed by the OFCTGMB;
• The OFCTGMB produce documents the appellants had previously requested in a motion for production;
• Or in the alternative, the OFCTGMB confirm that the volume of tobacco legally marketed through by the appellants for the 2005 crop totaled 72,294 lbs and resulted in proceeds of $165,420, and that the OFCTGMB state the amount of any make-up payments that may not have been included in the above sum;
• The time for delivery of the notice of motion be abridged; and
• Such further and other orders that the Tribunal deems just.

Mr. Tait told the Tribunal the 2005 tobacco crop grown by Mr. Wyatt Stetler and 934671 Ontario Limited, via their sharegrower, had been detained by the OFCTGMB, but that the OFCTGMB had allowed the 2005 tobacco crop to be marketed on terms it dictated, and that the proceeds of the sale of the crop were held by the OFCTGMB.

Mr. Tait submitted that the OFCTGMB had misunderstood the ruling of the Court of Appeal and seized the 2005 tobacco crop as it thought its original decision on penalty had been reinstated. He said the Court of Appeal had set aside the Divisional Court’s ruling that quashed the Tribunal’s ruling on liability, but had not set aside the Divisional Court’s order regarding penalty. He said the parties had agreed that either the Court or the Tribunal could determine how the proceeds of the sale of the 2005 tobacco crop should be distributed.

Mr. Tait asked the Tribunal to determine the scope of the proceeding and submitted it should include the issue of the disposition of the proceeds of the 2005 crop and should allow evidence related to the consequences of the Tribunal decision in 2002 regarding penalty. He said this evidence would demonstrate the outrageousness of the penalty that was to be reconsidered.

Mr. Bresner argued that the Court of Appeal had remitted this matter back to the Tribunal for the sole purpose of reconsidering the penalty imposed in 2002 and providing reasons for its decision. He said the Tribunal should consider the facts known at the time and not allow evidence related to events that occurred subsequent to the 2002 hearing. He questioned whether that evidence was relevant to the current proceeding. He suggested the Tribunal look at the original penalty in the context of deficiencies the Court of Appeal identified – insufficient reasons for its decision and specifically a lack of an explanation for it putting into effect the same penalty as the OFCTGMB in spite of different findings of fact.

Mr. Bresner said he also objected to the motion on the grounds that:

• The OFCTGMB and the appellants had agreed that the 2005 crop could be marketed through an arrangement that was made without prejudice to their re-attendance before the Tribunal on the penalty matter and other proceedings.

• A panel of the Tribunal heard a similar motion regarding the production of documents related to the sale of the 2005 tobacco crop and declined to order their production; the principle of res judicata applied;

• The Tribunal did not have jurisdiction to hear appeals of OFCTGMB rulings until, at the least, the appellants had asked the OFCTGMB for a hearing into the matter and these appellants had not made such a request. He referenced subsection 16(5) of the Ministry of Agriculture, Food and Rural Affairs Act.

• The sharegrower used by Mr. Wyatt Stetler and 934671 Ontario Limited in 2005 was not a party to the proceeding.

Mr. Bresner argued that the Divisional Court specifically stated that it was not necessary to deal with the penalty issue in light of its ruling with regard to liability.

Mr. Tait replied that:

• The Divisional Court quashed both the Tribunal decision and the OFCTGMB decision in their entirety;
• Actions taken by the OFCTGMB in relation to the 2005 crop were clearly part of the penalty issue;
• It allowed for possible contradiction if this panel of the Tribunal dealt only with the 2002 situation and allowed another panel to look at the 2005 issues;
• It would be a failure of jurisdiction for the Tribunal not to deal with the issues related to the marketing of the 2005 crop; and
• It was a fundamental principle that the least expensive method be used to resolve disputes and it would be less expensive for this panel of the Tribunal to deal with all issues in dispute between the parties.

Subsequent to the Tribunal deliberating and reaching its decision on the motion Mr. Tait sought to introduce authorities which he indicated related to a position that he neglected to mention – that once a case is decided, the without prejudice provisions of the agreement do not apply. The Tribunal declined to accept the authorities because Mr. Tait sought to introduce them in an untimely manner i.e., after the preliminary matter had been addressed by both parties and the Tribunal had made its deliberations and decision on the matter.

The Tribunal indicated that the motion was denied, the present hearing was not a hearing de novo and it had decided it would deal only with the penalties imposed in 2001 and 2002. The Tribunal said it was interested in hearing why the penalty imposed by the Tribunal in 2002 was fair or unfair and what it should be.

The Tribunal indicated that the disposition of the proceeds of sale of the appellants’ 2005 tobacco crop was a separate issue and the process set out in Section 16 of the Ministry of Agriculture, Food and Rural Affairs Act should be followed.

The reasons for denying the motion are as follows:

The purpose of the Tribunal hearing is to reconsider the issue of penalty arising out of a decision of the Agriculture, Food and Rural Affairs Appeal Tribunal dated April 25, 2002. The intent of the ORDER of the Court of Appeal for Ontario (dated July 8, 2005) was clearly indicated in paragraph [111] of the document as follows:

111This court is not in a position to determine the proper penalty. Therefore, the matter is referred back to the Tribunal only for the purpose of reconsidering the issue of penalty and providing reasons for whatever penalty is imposed.

The ORDER of the Court of Appeal for Ontario (dated July 8, 2005) was as follows:

3. THIS COURT ORDERS that the issue of penalty be remitted to the Tribunal for such reconsideration as it deems appropriate.

In keeping with the intent of the ORDER, the Tribunal was of the opinion that matters arising after the Tribunal decision dated April 25, 2002 cannot be considered in this appeal. The Tribunal found that the ORDER of the Court of Appeal dealt only with the decisions of the Tribunal, not the decisions of the OFCTGMB prior to the appeal to the Tribunal. The decisions of the Tribunal regarding liability were upheld by the Court of Appeal. The decisions of the Tribunal regarding penalty were remitted back to the Tribunal for further consideration. As such, the hearing on May 3, 2006 is not a hearing de novo. It is a continuation of the hearing that occurred in 2002. As such, the hearing of May 3, 2006 cannot and should not hear evidence arising from actions that occurred after the decision of the Tribunal, dated April 25, 2002.

Therefore, the requests made by Mr. Tait with regard to

• The release of all proceeds of sale of the Stetler 2005 tobacco crop;
• The use of evidence originating both before and after the date of the original Tribunal hearing in 2002, and in particular permitting evidence on the actual consequences of the penalty that was re-imposed by the OFCTGMB;
• The request for documents from the OFCTGMB;
• Or in the alternative, confirmation by the OFCTGMB that the volume of tobacco legally marketed through by the appellants for the 2005 crop totaled 72,294 lbs and resulted in proceeds of $165,420, and a statement by the OFCTGMB indicating the amount of any make-up payments that may not have been included in the above sum;
• A request to abridge the time for delivery of the notice of motion; and
• Such further and other orders that the Tribunal deems just

were denied.

The Tribunal noted that issues arising from the 2005 tobacco crop should follow due process as laid out in Section 16 of the Ministry of Agriculture, Food and Rural Affairs Act.

The Evidence

Documentary evidence was submitted in advance of the proceeding. A few additional documents were accepted on the day of the hearing. In addition, Mr. Tait called Mr. Dudley Stetler to testify on behalf of the appellants. A letter from Mr. Wyatt Stetler’s physician to the effect that he should not testify, for medical reasons, was filed.

Mr. Dudley Stetler told the Tribunal he was 40 years old, was the son of Mr. Wyatt Stetler, and lived adjacent to the land farmed by Mr. Wyatt Stetler and 934671 Ontario Limited on property that he had severed off the farm in the hope he would take over his father’s tobacco growing operation at some future time. He said the farm had been in the Stetler family since 1836 and he hoped to pass it on to his sons. Mr. Dudley Stetler said the Stetler family had grown tobacco since 1929. He said he was a tobacco producer himself, with his own quota, and had assisted with his father’s operations and was very familiar with his father’s financial situation.

Mr. Dudley Stetler read a letter that his father had dictated to him in which Mr. Wyatt Stetler:

• Apologized that he could not participate in the hearing for medical reasons;

• Indicated that he had asked Mr. Dudley Stetler, Mr. Dennis Hare and Mr. Michael Murray to appear and represent him in his place;

• Assured the Tribunal he had never before had any trouble dealing with the OFCTGMB, had never been accused of anything improper and did not plan to be accused of anything improper.

Mr. Dudley Stetler also told the Tribunal:

• His father was 68 or 69 and had left school at age 15 to farm tobacco.
• The farm was approximately 100 acres; crops traditionally grown were tobacco, corn and wheat, with tobacco traditionally being the primary crop and the most valuable by a wide margin.
• He had worked on his father’s farm to the age of 19 when he took a position in the automotive industry. He returned to help his father on the farm in 2001 as his father was getting older and he had worked on the farm since that time.
• His father had never been without basic production quota (BPQ) and marketing quota (MQ) for tobacco before it was cancelled.
• His father first purchased BPQ from his own mother, along with the farm, in 1972. Since then he had acquired additional BPQ over the years and currently held 232,000 lbs of BPQ.
• MQ was issued each year by the OFCTGMB as a percentage of BPQ; the percentage varied with demand for the crop.
• In 1998-99, when the offences occurred, MQ was issued at a rate of 46.73% of BPQ.
• The approximate value of BPQ in that time period was $2 per lb; the value of the BPQ cancelled by the Tribunal was $464,000.
• Bales of tobacco weighed 38-40 lbs.
• A total of 6,040 lbs of tobacco was found to have been sold directly rather than through the OFCTGMB auction.
• Tobacco was selling for $2.00-$2.20 per lb at the time; his father tended to receive higher prices as over 90% of his tobacco was A grade tobacco.
• His father was very experienced and knowledgeable about curing tobacco.
• To his knowledge his father had never before been in trouble with the OFCTGMB and he did not believe he ever would be again.
• He could not comment on his father’s financial situation in 2001 but he was now in grim circumstances. Mr. Wyatt Stetler had entirely depleted his NISA and CAIS accounts and depleted most of his retirement fund; he was living on old age pension and Canada Pension Plan payments.

In response to questions from Mr. Bresner, Mr. Dudley Stetler added:

• He did not own enough BPQ to support his family; he also worked in renovations.
• A floor price of $1.63 per lb of tobacco in 1998 sounded right. Prices received varied according to tobacco grade.
• Mr. Wyatt Stetler was allowed to market his 1998 tobacco crop, except for 29,000 lbs of tobacco that was confiscated by the RCMP. The OFCTGMB had seized the tobacco.
• The fifth round shipping instructions for the 1998 crop were cancelled by the OFCTGMB; it cancelled MQ that had been issued to the appellants.
• The 2001 tobacco crops of Mr. Wyatt Stetler and 934671 Ontario Limited were allowed to be marketed, notwithstanding the OFCTGMB’s cancellation of their quotas.

In response to additional questions by Mr. Tait, Mr. Dudley Stetler indicated:

• The tobacco seized in 1999 was directly related to the dispute which led to the BPQ being cancelled by the OFCTGMB in 2001.

• The confiscated tobacco was never shipped.

• He showed the RCMP a letter from the OFCTGMB indicating the OFCTGMB had seized the tobacco but that did not prevent the officers from taking the tobacco.

In response to questions by the Tribunal Mr. Dudley Stetler indicated that he and his sisters Lori and Annette had helped his father manage his operation in 1998, 1999 and 2000 and also in 2001 and 2002.

Mr. Bresner did not call any witnesses. He relied upon his written submissions and argument.

Argument/Summation

May 3, 2006

Mr. Tait sought to file an excerpt from a synopsis of evidence contained within a Crown Brief which indicated two additional tobacco growers, including a member of the OFCTGMB had been involved in illegal tobacco sales but had not been charged. He pointed out that the parties had an agreement that the Crown Brief would be admissible in proceedings before the OFCTGMB.

Mr. Bresner objected to the proposed filing. He said the synopsis was specifically excluded from the evidence that could be used, at the insistence of Mr. Norman Peel, previous counsel to Mr. Wyatt Stetler and 934671 Ontario Limited. He said the information was not new and had been in Mr. Tait’s possession since 2002.

The Tribunal declined to accept this late filing indicating the information was not relevant as it would not look back to try to determine why these two growers were not charged by the RCMP. The parties were asked to focus on the fairness of penalties to growers that were found to have illegally marketed tobacco and comparisons with other cases.

Mr. Tait referred to a book of authorities that he provided to the Tribunal. He submitted that the Tribunal had the discretion to fix the penalty but that it must follow established legal direction.

Mr. Tait submitted that one of the principles in law is that the maximum penalty should be reserved for the worst offender. He referenced a criminal case Regina v. Treena Korreena Woloski as an example of this principle.

Mr. Tait referenced the Court of Appeal decision in this matter to demonstrate that a failure to admit guilt may not be used as a factor to increase the penalty assessed.

Mr. Tait referenced two cases involving the revocation of licenses to practice medicine to show that the courts have found that refusing to admit to guilt and defending oneself against charges cannot be used to increase the penalty of the defendants. He said that in one of those cases the court took into account events that occurred after the revocation of the licence in reassessing the penalty.

Mr. Tait pointed out that the Tribunal had not only taken away Mr. Wyatt Stetler’s livelihood, it had also taken away an asset – BPQ – that had significant value.

Mr. Tait said he also wished to demonstrate the concept of proportionality; he argued that the punishment must fit the crime. Mr. Tait relied on four cases where tobacco growers had been found to make illegal sales and he also referenced the Income Tax Act.

In a case involving tobacco grower Edward Chromczak Mr. Tait pointed out:

• The grower was found to have sold tobacco illegally to a buyer in BC.

• The grower claimed the tobacco was poor quality and had been rejected at the OFCTGMB auction.

• The grower said he could not afford to lose BPQ and he apologized.

• The OFCTGMB found he had deliberately misled one of its inspectors.

• The OFCTGMB wanted the penalty to be severe enough to fit the crime but still allow the grower to continue in the industry.

• The OFCTGMB cancelled half the BPQ the grower held in partnership with his wife and in a holding company.

• On appeal, the Tribunal decided to cancel 40% of the BPQ, for compassionate reasons and to give the grower a greater opportunity to remain viable in the industry.

Mr. Tait referred the Tribunal to arguments made by Mr. Gunn, counsel to Mr. Chromczak, who suggested a simple method of calculating penalty as cancelling twice the amount of BPQ needed to generate sufficient MQ to market the amount of tobacco sold to the buyer in BC.

With respect to tobacco grower Marc DeVos, an individual who was involved in the same tobacco selling scheme that the appellants participated in, Mr. Tait said there was an agreed statement of facts and a joint recommendation that the penalty be the cancellation of 220,835 lbs BPQ and a $10,000 fine. He said in that case:

• The OFCTGMB assumed 1,020 bales weighing 48 lbs per bale were sold illegally, for a total of 48,960 lbs.

• Mr. DeVos apologized to the OFCTGMB and assured it he had learned his lesson.

• The penalty amounted to the cancellation of 25% of Mr. DeVos’ quota.

Mr. Tait pointed out that Mr. DeVos had illegally sold more than eight times as much tobacco as Mr. Stetler and 934671 Ontario Limited. He said the amount of BPQ needed to yield sufficient MQ to market 48,960 lbs of tobacco was 110,419 lbs BPQ, and the OFCTGMB had cancelled twice that amount. He said the quota cancelled was 4.5 times the amount of tobacco sold illegally.

Mr. Tait also pointed to a case involving tobacco grower Paul Duval, another participant in the tobacco selling scheme in which the appellants and Mr. DeVos were involved. He said that in that case:

• The OFCTGMB had confiscated Mr. Duval’s tobacco and cancelled his BPQ.
• The Tribunal indicated that it was generally of the opinion that growers should have an unalienable right to harvest a crop in the ground.
• The Tribunal allowed the crop to be marketed but required the payment of a fine. It was concerned the timing of the OFCTGMB hearing led to a retroactive penalty, and it mentioned compassionate reasons.
• The Tribunal also cancelled 100% of Mr. Duval’s BPQ.

Mr. Tait pointed out that Mr. Duval only owned 30,000 lbs of BPQ. He said Mr. Duval’s lawyer had suggested that only the amount required to generate the MQ needed to market 6,500 lbs of tobacco – the amount sold through the illegal scheme - be cancelled. Mr. Tait said the amount actually cancelled i.e., 100% of his 30,000 BPQ, was double the amount of BPQ needed to generate that MQ, or 4.6 times i.e., 30,000/6,500, the amount of tobacco sold through the scheme.

Mr. Tait referenced a decision of the OFCTGMB regarding tobacco growers Paul and Linda Bodnar who were also involved in the same tobacco selling scheme as the appellants. He said that in that matter:

• The Bodnars admitted to two illegal shipments of tobacco, selling a total of 4,000 lbs of tobacco for $8,000.
• After being contacted by the RCMP, the Bodnars attempted to sell all of their BPQ, 49,260 lbs. The OFCTGMB deferred its decision on the transfer of the BPQ.
• The OFCTGMB ultimately cancelled the BPQ, rather than allow it to be transferred.
• The OFCTGMB concluded the Bodnars were not likely to stay in the industry anyway as they had sold their farm.
• The Tribunal allowed the Bodnars to earn some rental income on their MQ in 1999.

Mr. Tait argued that the Bodnar case was a special circumstance as the growers were exiting the industry.

Mr. Tait also argued that under the Income Tax Act, the penalty for tax evasion, a serious financial crime, was set by statute at 50%-200% of the amount of tax evaded, and up to two years imprisonment. He said an avoidance of $12,000 in taxes would not result in a prison sentence.

Mr. Tait submitted that the penalty assessed to Mr. Stetler was disproportionate when compared to penalties assessed to tobacco growers using the two times the BPQ represented by the poundage of illegal shipments that the OFCTGMB had used in other cases e.g., Chromzak and DeVos. He calculated that 6,040 lbs of tobacco shipments would have required 12,925 lbs of BPQ in 1998, as MQ was issued as 46.73% of BPQ that year. He suggested the Tribunal double that amount BPQ and cancel 25,850 lbs of BPQ. He said that using the 1999 marketing formula, 13,622 lbs of BPQ would be needed to market 6,040 lbs of tobacco. This value could be doubled and result in 27,344 lbs BPQ to be cancelled instead. Alternatively, he said using his own formula of 4.5x or 4.6x of the actual offence poundage i.e., the amount of BPQ to be cancelled would be 27,180 or 27,784 i.e., 6,040 x 4.5 or 6,040 x 4.6. In summary, Mr. Tait suggested that the cancellation of 26,000 to 27,750 lbs is warranted.

Mr. Tait reminded the Tribunal that it could not use failure to apologize or actively defending oneself against charges to increase the penalty and suggested the OFCTGMB had been doing that in justifying its departure from its penalty formula. He said mitigating factors were that Mr. Dudley Stetler had been deprived of his prospects in the tobacco industry, Mr. Wyatt Stetler was in dire financial straits as a result of the penalty and Mr. Wyatt Stetler had been in the tobacco business for 50 years. He also pointed out that the RCMP seized 29,000 lbs of tobacco for with Mr. Wyatt Stetler and 934671 Ontario Limited were never paid. He said Mr. Wyatt Stetler had no previous offences.

Mr. Tait said the Tribunal had taken away Mr. Wyatt Stetler’s livelihood as well as a significant asset and his way of life, all for a $12,000 offence. He asked that the penalty be reduced to the cancellation of an amount of BPQ equivalent to twice the amount needed to generate sufficient MQ to market 6,040 lbs of tobacco. He also asked that the Tribunal explicitly state that Mr. Stetler and 934671 Ontario Limited could continue to be able to produce and market tobacco as part of the tobacco grower community.

Mr. Bresner said that Mr. Wyatt Stetler could attempt to buy BPQ in the future, apply to the OFCTGMB and it would decide on his application at that time. He noted there was an opportunity to appeal to the Tribunal if the OFCTGMB did not agree to allow BPQ to be transferred to him.

Mr. Bresner acknowledged that the OFCTGMB had used a formula on occasion in cases where there were mitigating factors when it did not feel it was appropriate to cancel the total quota holdings of a tobacco grower. He said the OFCTGMB had total control over BPQ and can allot, reduce and cancel it as it sees fit and argued that the lack of a maximum penalty with regard to quota cancellation makes comparisons with the Income Tax Act inappropriate.

Mr. Bresner pointed out that Mr. Wyatt Stetler and 934671 Ontario Limited were not given the maximum penalty the OFCTGMB could have imposed as it allowed the appellants to sell their 2001 tobacco crop, notwithstanding that their BPQ had been cancelled. He said the appellants were warned in 2000 that they grew a crop in 2001 at the risk of losing it as the disciplinary case was put on hold due to criminal proceedings. He said the value of that crop, with a floor price of $1.65 per lb and over 220,000 lbs BPQ and the associated MQ was not insignificant.

Mr. Bresner argued that the penalty given to the appellants by the OFCTGMB and upheld by the Tribunal was fair and in line with what others got for participating in the same scheme. He reminded the Tribunal that the OFCTGMB only had the power to deal with tobacco growers and said it could do nothing to the ringleader, Mr. Ronald Coucke, as he was not a grower. He said the OFCTGMB was also limited in that beyond cancelling quota and preventing the marketing of harvested tobacco it could only impose voluntary fines. He said that quota was effectively the only tool the OFCTGMB had in disciplining tobacco producers.

With respect to the Chromczak case, Mr. Bresner said the key thing to look at was that case was decided on the basis of compassion as Mr. Chromczak’s wife had been diagnosed with a brain tumor, they had newborn twins and the family was in severe financial difficulty. He said the Tribunal found in that case that Mr. Chromczak did what he did in order to provide for his family and submitted that was a very unique situation, and was not similar to the Wyatt Stetler and 934671 Ontario Limited case.

With respect to tobacco grower Marc DeVos, Mr. Bresner said:

• Mr. DeVos had 228,338 lbs of BPQ and the associated MQ cancelled.

• The RCMP seized $26,000 in cash from Mr. DeVos.

• Mr. DeVos paid a fine of $10,000 to the OFCTGMB which was the balance of the proceeds on the illegal sales.

• Mr. DeVos admitted his involvement in the scheme and admitted to far more illegal tobacco shipments than the RCMP knew of or anyone could ever prove.

• Mr. DeVos said he was led astray by an unscrupulous sharegrower but he took responsibility for his actions.

• Mr. DeVos apologized.

Mr. Bresner said there was a substantial difference between this case and the current case. He said the amount of Mr. DeVos’ BPQ cancelled by the OFCTGMB was similar to the amount cancelled for the appellants but he pointed out that unlike Mr. Stetler, Mr. DeVos was not allowed to market tobacco associated with the cancelled BPQ and MQ. Mr. Bresner calculated that using the 2001 growable percentage of 36.24%, Mr. Stetler and 934671 Ontario Limited were able to market 84,295 lbs of tobacco in 2001 on MQ derived from the cancelled BPQ and an additional 5,000 lbs of tobacco on rented MQ. He also noted that Mr. DeVos paid a fine.

Mr. Bresner agreed with Mr. Tait that a failure to claim guilt could not be considered an aggravating factor in determining penalty but he argued that an apology could be taken into account in mitigating a penalty.

With respect to Paul and Linda Bodnar, Mr. Bresner said the OFCTGMB gave them the maximum penalty it could in cancelling 100% of their BPQ. He said the Bodnars ceased being tobacco growers after the RCMP spoke with them and sold their farm in January 2000.

Mr. Bresner said the OFCTGMB also gave the harshest penalty it could to Paul Duval as it cancelled all of his 30,000 lbs BPQ and ordered that his tobacco be seized and destroyed. He said the OFCTGMB felt Mr. Duval would be an ongoing risk to the tobacco sector if he remained a producer. He said Mr. Duval had been warned that he grew a crop at his own risk. He acknowledged that the Tribunal allowed Mr. Duval to sell his tobacco, with 20% of the proceeds to be paid to the OFCTGMB. He argued that the Tribunal considered the timing of the OFCTGMB hearing and saw compassionate reasons to reduce the penalty to Mr. Duval and these were not factors in the appellants’ situation.

Mr. Bresner said that the general rule that the worst penalty be reserved for the worst offender holds true in criminal cases, but cautioned the Tribunal to consider that in a regulated marketing context the offence affects every other tobacco grower in the province. He said the auction run by the OFCTGMB was the only place that tobacco growers could legally sell their product and argued that other tobacco growers did not have an equal opportunity to access the buyer in the tobacco selling scheme in which the appellants participated.

Mr. Bresner argued that deterrence was an important factor in assigning penalties to tobacco growers. He said that because farms were scattered around the countryside it was difficult to catch growers making illegal sales. He said that because the risk of apprehension was low, the consequences had to be very serious to discourage other growers from engaging in illegal sales.

Mr. Bresner commented that the Luke Sioen case, which was not provided in this hearing, was the first in which the OFCTGMB used a formula to assess penalty, the tobacco in question was poor quality tobacco that was used only to test manufacturing equipment in PEI and did not enter the general market for consumption. He indicated the DeVos, Duval and Bodnar cases were all provided to the panel of the Tribunal that heard the Stetler matter in 2002 and it found at that time that the penalty assessed to the appellants was consistent with what the OFCTGMB had done in the past.

Mr. Bresner said in the other cases the growers all had mitigating factors. He said the OFCTGMB allowed the appellants to market their 2001 crop for compassionate reasons, but that beyond that there were no mitigating factors to allow it to reduce the penalty. He said Mr. Dudley Stetler owned his own BPQ and could purchase more so this was not a mitigating factor.

Mr. Bresner argued that it was not appropriate to look at how much income could have been generated with the BPQ that was cancelled in considering whether it was a proportionate penalty. He said cancelling quota was similar to cancelling a licence to practice law or medicine and a licence could never be cancelled if future income was considered.

Mr. Bresner asked the Tribunal to consider the direction of the Court of Appeal and ask if it makes a difference that two illegal shipments of tobacco were made rather than three. He argued that Mr. Stetler would have continued to ship tobacco through Mr. Coucke if he had been paid up front for it and submitted that it was not fair to tie the penalty to the bales of tobacco shipped on the two occasions the appellants were caught.

Mr. Bresner asked the Tribunal to consider the Court of Appeal comment to the effect that it was unclear if the original panel considered the failure to apologize to be a factor in establishing penalty. He submitted it had not. He also pointed out that the Court of Appeal found it was unclear if Mr. Wyatt Stetler’s sales of tobacco through neighbours were taken into account by the original panel. He asked that the Tribunal affirm the decision of the panel of the Tribunal that heard the case in 2002.

Mr. Tait replied that Mr. Bresner was asking the Tribunal to consider that the OFCTGMB allowed the marketing of the 2001 crop in the face of its refusal to allow the marketing of the 2005 crop. He asked the Tribunal to ignore that submission as a previous panel had indicated a grower has an inalienable right to harvest and sell the crop in the ground.

Mr. Tait said it would be wrong to simply look at the three points suggested by Mr. Bresner when reconsidering the penalty. He submitted that his proposed approach would result in a financial penalty of approximately $54,000 which he argued was an important penalty and proportionate to the amount earned through the offence. He pointed out that Mr. DeVos had admitted to many more sales. He told the Tribunal it could not base its penalty on Mr. Bresner’s allegation that there may have been a future sale if Mr. Stetler had been paid up front as there was no evidence that this was the case. Mr. Tait also asked the Tribunal to consider the current medical condition of Mr. Wyatt Stetler and the fact that Mr. Dudley Stetler gave up his career in the automotive sector to farm.

July 13, 2006

Mr. Tait submitted a brief comparing the proportionality of penalties that were assessed against producers by the OFCTGMB and the penalties assessed against the producers in the Denby matter. Mr. Tait submitted that the central issue with respect to penalty was that the penalty must be commensurate with the magnitude of the offence. Mr. Tait said that in the matter of DeVos versus the OFCTGMB, Mr. DeVos’ offence was far greater than that of Mr. Stetler, however he was assessed a far milder penalty.

Mr. Tait told the Tribunal that the volumes of milk involved in the offence in the Denby matter were not known so that a precise parallel between penalty and severity of offence could not be drawn. Mr. Tait stated that the Divisional Court considered that the producers in the Denby matter lost quota that had monetary value, as well, it determined that the short duration and severity of the offence was not proportionate to the magnitude of the penalty. Mr. Tait reminded the Tribunal of Mr. Bresner’s submission in instances prior to the day’s proceeding, where Mr. Bresner had argued that a progressive line of logical scrutiny of the facts of the case was not present in either the Denby or Stetler decisions of the Tribunal, to indicate that the loss of livelihood was the logical consequence of assessment of penalty. Mr. Tait submitted that there is no appropriate legal basis for the penalty against Mr. Stetler. He stated that it would only be reasonable to cancel a portion of Mr. Stetler’s quota based on the severity of the offence. He argued that the Divisional Court relied upon the premise that penalty must be proportional to the severity of the offence. He said that this premise was upheld by the DFO and the Tribunal in the Denby matter, as it differentiated between producers, and assessed a higher penalty to Mr. Denby as the instigator of the offences. He reminded the Tribunal that in the Denby matter, the two producers who did not instigate the committing of the offences were assessed less severe penalties. He stated that the DFO suspended 10 kg of quota from Mr. Denby which the Tribunal reduced to 6 kg and suspended 5 kg of quota each from the other two producers, which the Tribunal reduced to 2.5 kg. Mr. Tait argued that although he did not hold quota, the worst offender in the Stetler matter was Mr. Coucke. He submitted that in the cases of DeVos versus the OFCTGMB the penalty was smaller despite the illegal sale of far more tobacco than was involved in the Stetler matter. He submitted that in the case of Duval versus the OFCTGMB the penalty imposed was also smaller in proportion to the amount of illegal tobacco sold. Mr. Tait referred to his submission detailing the proportions of tobacco sold illegally in the DeVos and Duval matters. He submitted that based on the proportionality of penalty to the seriousness of the offence in these instances; the penalty for Mr. Stetler should be the cancellation of approximately 27,244 lbs of BPQ. Mr. Tait stated that the penalty imposed upon Mr. Stetler was 38.5 times as severe as the penalty imposed on the worst offender. He stated that the penalties in the Stetler matter were randomly applied.

Mr Tait argued that in the Denby matter the Divisional Court recognized the notion of proportionality and limits to penalty. He stated that the Divisional Court decided that the producers in the Denby matter should not be deprived of their right to participate in the industry. Mr. Tait submitted that similar limits and proportionality should be considered with respect to the penalty against Mr. Stetler. He requested that the penalty against Mr. Stetler be reduced to the cancellation of 27,000 lbs of BPQ. Mr. Tait submitted that the son of Mr. Stetler relied in part, upon his father’s tobacco production as livelihood, but that since the penalty was imposed the Stetler family had no quota and no license to produce tobacco.

Mr. Tait pointed out that in the Denby matter, the Divisional Court placed some reliance on the good conduct of the producers after the offences had been committed until it made its decision on the matter. Mr. Tait submitted that the factors to which the Divisional Court attached weight in mitigating the penalty in the Denby matter, should be the same factors to which the Tribunal attached weight in it consideration of the appropriate penalty. He reiterated that the Divisional Court considered the subsequent actions of the producers in the Denby matter in mitigating the penalties.

Mr. Tait requested that the Tribunal reduce the penalty against Mr. Stetler. He referred to the proportion of cancellation of total quota penalty against the producers in the Denby matter. He submitted that equivalent comparisons in the Denby matter were: cancellation of 11.5 percent of total quota, against Mr. Denby; cancellation of 5.8 percent of total quota against Darmar Farms and 2.1 percent of total quota against Mr. and Ms. Hope. Mr. Tait told the Tribunal that the Divisional Court’s apportionment of more penalty against the instigator in the Denby matter, should be paralleled in the Tribunals determination of the penalty against Mr. Stetler. He reminded the Tribunal that Mr. Stetler was not the instigator of the committal of the offence and that the single offence was committed over a short period of time as compared to the numerous offences committed over several days in the Denby matter. Mr. Tait submitted that Mr. Stetler was not afforded sufficient opportunity to prove that he could operate within the system with no subsequent offences because he was prevented from producing tobacco.

Mr. Tait told the Tribunal that Mr. Stetler’s defense of himself or absence of apology could not prejudice the Tribunal’s determination of the appropriate penalty. He submitted that there is no logical sequence of facts in the matter that could lead the Tribunal to uphold the thoroughly disproportionate penalty and removal of means to livelihood. He stated that Mr. Stetler’s poor health would be aggravated by the strain of attending the hearing and that the Tribunal should also consider that due to the timing of completing the hearing Mr. Stetler was prevented from planting a crop in 2006. Mr. Tait stated that there should be no further cancellation of Mr. Stetler’s quota.

Mr. Bresner made his submissions on penalty stating that the state of Mr. Stetler’s health was not the same at the time that he committed the offence as it was today. He contended that if the Tribunal were to consider mitigating factors in the matter they should be confined to such reasons as financial hardship that may have influenced Mr. Stetler’s actions at the time the offence was committed. He stated that factors that occurred after 1999 should not be taken into consideration by the Tribunal. Mr. Bresner told the Tribunal that the pronouncement of the Divisional Court in the Denby matter with respect to the penalty being too harsh does not oblige the Tribunal to make a similar finding in the Stetler matter which is a separate and distinct case. Mr. Bresner reminded the Tribunal that each matter before it must be decided on its own merits. He submitted that Mr. Tait’s analysis of proportionality rendered as numerical comparisons between the producers in the Denby matter and Mr. Stetler is not a suitable method of determining the level of penalty. He argued that the Tribunal must consider the mitigating and aggravating circumstances. He stated that the penalty in the Denby matter was varied by a decision of an intermediate level court. He stated that the authority of a decision is derived from the authority of the court making the decision. Mr. Bresner told the Tribunal that the Divisional Court’s ruling in the Denby penalty matter had no bearing on the Stetler matter because it did not change the laws. He referred to his written submissions to the Tribunal dated June 6, 2006 where he stated that the method of commencement of the Denby matter before the Divisional Court under an application for judicial review and the Stetler matter as referred by the Court of Appeal to the Tribunal for its reconsideration of the penalty are different due to the authority of the court hearing the matter, reason for the matter being before the court and argued that it is implicit in the Court of Appeal’s referral of the Stetler matter back to the Tribunal that the Court of Appeal did not find that the penalty was inappropriate or disproportionate as was the case with the Divisional Court’s findings in the Denby matter.

Mr. Bresner stated that the Denby matter was distinct from the Stetler matter because of the context of the entitlement of the producers to export milk due to a decision of the World Trade Organization that precipitated a policy change and the perception by the producers that a stay of the DFO’s regulation that prohibited their activities was in place. Mr. Bresner stated that in the Stetler matter there was no regulation change by the OFCTGMB and Mr. Stetler was aware that his nocturnal activities were illegal. Mr. Bresner stated that the Stetler offences occurred over a period of approximately 6 months.

Mr. Bresner stated that the Denby matter was not particularly relevant to the case before the Tribunal. He argued that the regulated marketing systems governing tobacco and milk production are very different. Mr. Bresner explained that under the marketing system for milk producers must have a license in order to purchase quota, however, there is no similar provision under the tobacco marketing system. Mr. Bresner referred to exhibit 8 submitted into evidence on May 3, 2006. He reminded the Tribunal that the tobacco producers are required to apply each year for quota to market tobacco. He stated that the Notice of Allotment form issued by the OFCTGMB to producers contained such information as the license to market and the amount of marketing quota allocated to producers. He said that unlike the regulated system for milk, tobacco producers are not prevented from purchasing production quota by virtue of cancellation of their marketing license. He said that the comparison of the effect of license cancellation under the two different regulated marketing systems was futile; the notion of licensing under the milk marketing system was based on entirely different criteria and exercise than licensing under the tobacco marketing system.

Mr. Bresner referred to his previously submitted brief containing the decision of the Supreme Court of Canada decision in the matter of Cartaway Resources Corp. versus the Ontario Securities Commission (Cartaway). He stated that the Supreme Court overturned the decision of the Court of Appeal in the Cartaway matter on the basis that penalty does not carry the same principle of precedent from one case to the next as may be the case with other aspects of the common law. Mr. Bresner said that, in the Cartaway matter, the Supreme Court of Canada determined that the Court of Appeal acted outside of its jurisdiction in making a determination with respect to penalty. He stated that the setting of penalty also serves as a deterrent to would be offenders. Mr. Bresner cited the decision of the Nova Scotia Supreme Court in the matter of Pottie versus the Nova Scotia Real Estate Commission (Pottie). He submitted that in the Pottie decision the Nova Scotia Supreme Court determined that the application of penalty need not be based on precedence, or the application of formulae, but that the deciding body is well within its purview in taking into consideration the context, magnitude and nature of the offence. Mr. Bresner said that in the Pottie decision, the Nova Scotia Supreme Court stated that each case must be decided on its own merits. He stated that equally, the decision of the Divisional Court in the Denby matter need not be applied to the Stetler matter.

Mr. Bresner cited the cases of Donini versus the Ontario Securities Commission (Donini) and the Law Society of New Brunswick versus Ryan (Ryan). He stated that in the Donini matter the Court of Appeal in its authority, overturned the decision of the Divisional Court which reduced the suspension of Mr. Donini’s registration to trade securities from 15 years, as determined by the Ontario Securities Commission, to four years. He argued that similarly, the Supreme Court of Canada in the Ryan matter, reinstated the decision of the Law Society of New Brunswick in favour of the decision of the Court of Appeal. Mr. Bresner stated that the decision of the Court of Appeal in the Donini matter and the decision of the Supreme Court in the Ryan matter illustrated that the courts recognized the expertise of the respective adjudicative bodies in determining matters that came before them and that the level of authority to which matters are appealed is significant particularly when the case is referred back to the body that decided the matter initially. He stated that the setting aside of the decisions of the respective courts in the Ryan and Donini matters, in favour of the decisions of the respective adjudicative bodies was analogous in the Stetler matter because the Court of Appeal in its referral of the Stetler penalty matter back to the Tribunal demonstrated the Court of Appeals recognition of the Tribunal’s expertise in matters which it adjudicated. He stated that in the Ryan matter, the Supreme Court of Canada made it clear that where the standard of reasonableness and distinct line of analysis is traceable in the decision of a lower adjudicative body, it is not proper for the court to rescind the decision of the lower adjudicative body in favour of its own determination as the Divisional Court had done in the Denby matter. Mr. Bresner maintained that the Court of Appeal has acted properly in referring the matter of penalty in the Stetler matter back to the Tribunal for its reconsideration of the reasons that support its decision with respect to penalty.

Mr. Bresner submitted that Mr. Stetler committed an offence most injurious to the tobacco marketing system. He stated that the offence undermined the value of tobacco quota. He reminded the Tribunal of the esteem in which the Supreme Court of Canada held the decision of the adjudicative body in the Ryan matter. He stated that the case of Denby cannot be considered singly but that it must be examined in the context of decisions such as Cartaway, Donini and Ryan. He reminded the Tribunal that the Denby producers were participants in regulated marketing for milk, not tobacco. He maintained that the decision of the Divisional Court in the Denby matter carried less authority as it was made at a lower level court.

Mr. Tait objected to the citation of the Ryan matter, stating that, Mr. Ryan’s conduct was offensive to his profession to the utmost degree whereas Mr. Stetler had made two shipments of 6,000 lbs of tobacco. He said a comparison of the two offenders was preposterous.

Mr. Tait responded to Mr. Bresner’s submissions stating that his submission comparing the proportionality of penalties in the DeVos, Duval, Stetler and Denby matters was not an exercise in the application of formula to issue of penalty but rather the provision of a reasonable guideline that should be considered in the Tribunal’s decision. He stated that contrary to Mr. Bresner’s submission, the Divisional Court did not vary the decision of the Tribunal in the Denby matter in favour of its own determination, it merely pointed out that there was no line of analysis to support a penalty beyond the quota sanctions. He stated that Divisional Court correctly relied on a standard of reasonableness. He maintained that the Court of Appeal referred the matter of Stetler back to the Tribunal because it found that the conclusions were not supported by the evidence.

Mr. Tait responded to Mr. Bresner’s submissions with respect to the differences in licensing between the milk marketing system and the tobacco marketing system. He told the Tribunal that the majority of applications for the purchase of quota under the milk marketing system are approved. He said that tobacco producers cannot grow tobacco without a license and that a tobacco producer must have a license to purchase marketing quota.

Mr. Tait reiterated that Mr. Stetler’s lack of contriteness and his method of defense are not factors that can be considered in the matter of penalty. He said that he agreed with the Pottie case that was cited; each case should be decided on its own merits. Mr. Tait submitted that the Divisional Court had considered the good conduct of the producers in the Denby matter since the offences had occurred and that similar consideration should be given to Mr. Stetler.

The Findings

The issue for this panel of the Tribunal to determine is set out in point 3 of the ORDER of the Court of Appeal for Ontario, which is:

3. THIS COURT ORDERS that the issue of penalty be remitted to the Tribunal for such reconsideration as it deems appropriate.

The intent of the ORDER of the Court of Appeal for Ontario (dated July 8, 2005) was clearly indicated in paragraph [111] of the document as follows:

111This court is not in a position to determine the proper penalty. Therefore, the matter is referred back to the Tribunal only for the purpose of reconsidering the issue of penalty and providing reasons for whatever penalty is imposed.

Nature of the Offence

In reconsidering the issue of penalty the Tribunal first reviewed the nature of the offence. The production and marketing of flue-cured tobacco is regulated via a marketing plan and regulations made under the Farm Products Marketing Act. Quota is the regulatory vehicle that comes from the statute through the Ontario Farm Products Marketing Commission to the OFCTGMB. The sale of tobacco outside the parameters of this regulated system is the worst offence that a tobacco grower, who has previously agreed to participate in this system and abide by its rules, can undertake. This type of deliberate illegal act, by any grower, strikes at the heart of the whole regulated system. In the opinion of this Tribunal, it is imperative that the OFCTGMB maintains absolute control over the production and marketing of tobacco in Ontario in order to maintain the authority and power granted to it under the regulations and statutes it is governed by. Therefore, whether one bale or 100 bales of tobacco are sold illegally, or whether an illegal sale occurs on one occasion or more than one occasion, the Tribunal views each situation as a very serious offence in its own right.

Weighting of Evidence

When reconsidering the issue of penalty, the Tribunal gave weight to the act of illegal sale and did not give weight to the amount of tobacco sold or the number of illegal transactions. Thus, the fact that the OFCTGMB found liability on three occasions and the first panel of this Tribunal (first Tribunal) found liability on two occasions had no impact on the reconsideration of penalty by this Tribunal.

This panel of the Tribunal heard a brief comment related to tobacco shipments that Mr. Wyatt Stetler admitted he made through the OFTGMB auction in the names of other tobacco growers. This panel of the Tribunal gave this evidence no weight during its reconsideration of penalty.

The Tribunal does not consider the failure to apologize an aggravating factor in the Wyatt Stetler and 934671 Ontario Limited case and agrees with Mr. Tait’s submissions in that regard. The Tribunal also agrees with Mr. Tait that an accused grower has the right to defend himself against charges and that a more severe penalty cannot be levied against him as a result of that defense. Therefore, the Tribunal did not give any weight to the failure to apologize during its reconsideration of penalty.

Consideration of Penalty

The Tribunal heard evidence on why the penalty imposed by the Tribunal in 2002 was fair or unfair and what it should be.

The criminal case and the cases related to the revocation of physicians’ licences that were referenced by Mr. Tait relate to matters involving a single victim or relatively few victims. The Tribunal recognizes the gravity of these offences, the devastating effects they may have on the victims and the additional serious, but indirect, effects they may have on parties associated with the victims. However, the Tribunal is of the opinion that the illegal sale of tobacco represents an example of broad-based victimization. Therefore, the Tribunal agrees with Mr. Bresner that all Ontario tobacco growers are harmed by illegal sales and finds that, ultimately, the entire industry is affected. The illegal sale of tobacco directly affects all growers within the tobacco industry by seriously undermining the system on which they must rely to establish a fair and just market for their tobacco and on which, by extension, all or a portion of their livelihoods and well-beings depend.

The Tribunal heard the argument presented by the appellants that the central issue with respect to penalty was that the penalty must be commensurate with the magnitude of the offence. The Tribunal agrees with this statement but believes that ‘magnitude’ can not be measured strictly in mathematical terms. Therefore, the Tribunal rejected the argument of proportionality as subsequently presented by the appellants in reference to the Denby case. The Tribunal accepted the argument of the respondent that mitigating and aggravating circumstances must be considered in the assessment of penalty. The Tribunal also heard from the appellants that the Divisional Court decided that the producers in the Denby matter should not be deprived of their right to participate in the industry. The Tribunal took this into consideration in its decision. The conduct or health of the appellants after the decision of the first Tribunal was given no weight during deliberations by this Tribunal since, as ordered by the Court of Appeal, its reconsideration of penalty related to the actions of the appellant prior to the date of the decision of the first Tribunal.

The Tribunal considered the relative severity of the penalty given to the appellants compared with the penalties given to other tobacco growers who were found to have made illegal sales of tobacco.

The Tribunal finds that the Chromczak case, in which 94,340 lbs of BPQ (40% of the grower’s total BPQ) was cancelled, is of limited use for comparison purposes as it was clearly a case where compassion was exercised for a grower who was in a considerably different situation than the growers i.e., Duval, Bodnar, DeVos and Stetler/934671 Ontario Limited, involved in the tobacco selling scheme run by Mr. Coucke.

Mr. Duval and the Bodnars produced relatively small amounts of tobacco with each holding only 30,000 lbs of BPQ and 49,260 lbs of BPQ, respectively. In both cases, all of their BPQ was cancelled as a penalty for their illegal sales. The Tribunal allowed them some use of the MQ that was associated with the BPQ that was cancelled. Mr. Duval was permitted to market his 2001 crop, with a fine of 20% of the proceeds paid to the OFCTGMB and the Bodnars were allowed to rent out and retain the proceeds from 30% of their 1999 MQ.

Mr. DeVos produced a relatively large amount of tobacco with quota holdings in excess of 800,000 lbs of BPQ. He was penalized according to a formula that the OFCTGMB acknowledged it sometimes uses by which it cancelled double the amount of BPQ needed to generate the MQ required to market the tobacco sold illegally, had it been sold through the OFCTGMB auction. This resulted in the cancellation of 220,838 lbs of BPQ, which was approximately 25% of Mr. DeVos’ total BPQ. Mr. DeVos also paid a fine and he received no concession from the OFCTGMB to allow him to use any of the MQ associated with the cancelled BPQ.

Mr. Wyatt Stetler also produced a relatively large amount of tobacco with quota holdings a totaling 232,604 lbs of BPQ in his own name and that of his company, 934671 Ontario Limited. The OFCTGMB cancelled 100% of the total BPQ of Mr. Stetler and his company, but allowed him to use the associated MQ to market his 2001 crop.

In comparing the penalties assessed to the appellants by the first Tribunal and those levied against Mr. Duval and the Bodnars, the Tribunal finds that the penalties are similar in that in each case all of the BPQ was cancelled but the use or partial use of the associated MQ was allowed. Clearly, the financial impact on Mr. Stetler, a relatively large grower, was greater than the impact on the other two growers, who had less investment in the tobacco industry.

In comparing the penalties assessed to the appellants by the first Tribunal and those levied against Mr. DeVos, the Tribunal finds that the penalties were modified according to the mitigating circumstances of each case. The end result was that Mr. DeVos retained approximately 75% of his BPQ whereas all of the BPQ held by the appellants was cancelled. The Tribunal notes there were mitigating factors identified by the OFCTGMB in the DeVos case. That grower admitted to more shipments than those the RCMP was aware of, had acted under the influence of his sharegrower, apologized and appeared contrite.

This panel of the Tribunal looked for mitigating factors in the Wyatt Stetler and 934671 Ontario Limited case but could find none. The Tribunal cannot consider the present state of Mr. Wyatt Stetler’s health as a mitigating factor in offences committed in 1998 and 1999. There is no evidence that he was in any financial difficulty at the time of the illegal act or in 2002 when the Tribunal first heard this case. The OFCTGMB did allow the appellants to market their 2001 crop although the Tribunal also notes that the appellants were denied the marketing rights to 29,000 lbs of tobacco seized by the RCMP in 1999. Mr. Dudley Stetler, the son of the appellant, is a tobacco farmer in his own right and is therefore free to purchase additional BPQ if he wishes to make it his full time occupation.

The penalty levied against Mr. Wyatt Stetler and 934671 Ontario Limited by the first Tribunal was indeed different than that levied against Mr. DeVos by the OFCTGMB due to the presence of mitigating circumstances and the subsequent use of a formula to determine penalty in the DeVos case. While the OFCTGMB clearly used a formula for calculating the penalty to Mr. DeVos, it also clearly stated that it “has not adopted a formula, which will be appropriate in every case. Rather, as in the past, the Board will consider each case, which comes before it on its own particular facts” (Exhibit 7, Tab 9, page 2).

Mr. Tait argued that the Tribunal should use a formula approach when reconsidering penalty in this case. He asked that, during its deliberations, the Tribunal consider the relative value of BPQ and the amount of tobacco sold illegally by his client. He suggested that either the formula the OFCTGMB used in the past for the DeVos case or a formula that would cancel BPQ at a rate of approximately 4.5 times the weight of tobacco sold in illegal shipments would be appropriate.

The Tribunal rejects this argument. As stated previously, whether one bale or 100 bales of tobacco are sold illegally or whether an illegal sale occurs on one occasion or more than one occasion, the Tribunal views each situation as a very serious offence in its own right. The Tribunal is concerned that an approach to assessing penalties that is based on a predetermined formula would cause the resulting penalty to simply act as a licence fee or a manageable risk that would, in essence, encourage growers to undertake infractions. While the assessment and levy of penalties must be open and transparent to the industry, the penalties themselves should be flexible enough to consider aggravating and mitigating circumstances in each case. Each resulting penalty should be significant enough to deter tobacco growers from engaging in infractions of the regulations, including the illegal sale of tobacco.

This panel of the Tribunal does not see that it would have done anything differently than the first panel of the Tribunal that heard the appeal by Mr. Wyatt Stetler and 934671 Ontario Limited. The Tribunal finds that the penalty assessed by that panel – cancellation of the entire quota holdings of Mr. Wyatt Stetler and 934671 Ontario Limited – is in line with penalties assessed to other growers in similar circumstances and that the severity reflects the very serious nature of the offences.

Finally, this Tribunal is of the opinion that the appellant, having been duly penalized for his illegal acts, has the right to apply to purchase tobacco quota, subject to all terms and conditions in place at the time of application. Therefore, subject to approval of such an application to purchase tobacco quota, the appellants may continue to participate and pursue a livelihood within the industry.

Decision and Reasons

After careful consideration of the evidence filed and the submissions made the Tribunal orders:

1. that the OFCTGMB cancel all BPQ allotted to Mr. Wyatt Stetler and 934671 Ontario Limited as of April 25, 2002.

2. that the OFCTGMB allow Mr. Wyatt Stetler and/or 934671 Ontario Limited, to apply to purchase tobacco quota, subject to all terms and conditions in place at the time of application.

The reasons for the decisions are as follows:

1. The sale of tobacco outside the parameters of the regulated system is the worst offence that a tobacco grower, who has previously agreed to participate in this system and abide by its rules, can undertake. This type of deliberate illegal act, by any grower, strikes at the heart of the whole regulated system. In the opinion of this Tribunal, it is imperative that the OFCTGMB maintains absolute control over the production and marketing of tobacco in Ontario in order to maintain the authority and power granted to it under the regulations and statutes it is governed by. Therefore, whether one bale or 100 bales of tobacco are sold illegally, or whether an illegal sale occurs on one occasion or more than one occasion, the Tribunal views each situation as a very serious offence in its own right. Cancellation of quota, which takes away the right to market the associated tobacco, remains the single most significant deterrent available to the OFCTGMB in exercising its authority.

2. The Tribunal is of the opinion that the illegal sale of tobacco represents an example of broad-based victimization. The illegal sale of tobacco directly affects all growers within the tobacco industry by seriously undermining the system on which they must rely to establish a fair and just market for their tobacco and on which, by extension, all or a portion of their livelihoods and well-beings depend. The cancellation of quota is the single most significant signal available to the OFCTGMB that it can use to send the message to the industry that illegal sales cause harm to the industry and those who purchase quota and then participate in illegal sales risk losing their right to market tobacco in Ontario.

3. This panel of the Tribunal looked for mitigating factors in the Wyatt Stetler and 934671 Ontario Limited case but could find none. Therefore, the outcome of the reconsideration of penalty in this case was closer to the outcomes in the Duval and Bodnar cases although the Tribunal recognized that since the appellants had invested more in tobacco quota than those involved in the other cases, they also had risked more when they chose to engage in illegal sales. The mitigating factors in the DeVos case i.e., that the grower admitted involvement in and to more illegal shipments than those the RCMP was aware of, had acted under the influence of his sharegrower, apologized and appeared contrite, resulted in a significant penalty, but one that was less than 100% cancellation of quota. When reconsidering the issue of penalty, the Tribunal gave weight to the act of illegal sale and did not give weight to the amount of tobacco sold or the number of illegal transactions. Thus, the fact that the OFCTGMB found liability on three occasions and the first Tribunal found liability on two occasions had no impact on the reconsideration of penalty by this Tribunal.

This panel of the Tribunal heard evidence related to tobacco shipments that Mr. Wyatt Stetler admitted he made through the OFTGMB auction in the names of other tobacco growers. This panel of the Tribunal gave this evidence no weight during its reconsideration of penalty.

The Tribunal does not consider the failure to apologize as an aggravating factor in the Wyatt Stetler and 934671 Ontario Limited case and agrees with Mr. Tait’s submissions in that regard. The Tribunal also agrees with Mr. Tait that an accused grower has the right to defend himself against charges and that a more severe penalty cannot be levied against him as a result of that defense. Therefore, the Tribunal did not give any weight to the failure to apologize during its reconsideration of penalty.

4. Finally, this panel of the Tribunal is of the opinion that the appellants, having been duly penalized for their illegal acts, have the right to apply to purchase tobacco quota, subject to all terms and conditions in place at the time of application. Therefore, subject to approval of such an application to purchase tobacco quota, the appellants may continue to participate and pursue a livelihood within the industry.